ASSET PURCHASE AGREEMENT
Agreement made and entered effective the first day of September, 1997 (the
"Effective Date") between and among BLACK WARRIOR WIRELINE CORP., a Delaware
corporation with its principal place of business at 0000 Xxxxxxx 00, Xxxxx,
Xxxxxxxx, Xxxxxxxxxxx (hereinafter referred to as "Purchaser") and DIAMONDBACK
DIRECTIONAL, INC., a Texas corporation, which includes its successor by way of
name change (hereinafter referred to as "Seller" or the "Corporation") along
with XXXX XXXX and XXXXXXX XXXX XXXXXX (hereinafter referred to as "Principals")
who are the holders of eighty-five percent of all stock of all classes of
Seller.
WHEREAS, Purchaser and Principals are the parties to that certain Letter of
Intent dated September 3, 1997, relating to the acquisition by Purchaser of
Principals' shares in the Corporation;
WHEREAS, the parties desire to amend the letter of intent so that Purchaser
acquires all of the assets of Seller, and to further record their agreement and
provide for the closing thereof.
NOW, THEREFORE, the parties agree as follows:
I. Sale of Assets
Subject to the terms and conditions set forth below, and to the payment of
the Purchase Price set forth in paragraph 2 herein, the sufficiency of which is
hereby acknowledged, Purchaser agrees to buy and Seller agrees to sell and
convey clear and merchantable title to Purchaser of all of Seller's assets (the
"Assets"), free and clear of all liens and encumbrances, upon the terms and
conditions set forth below. Unless excluded herein the Assets include all of the
assets needed by the Corporation for its continued operation, utilizing the same
means of operation as employed by the Corporation in the past, and include, but
are not limited to:
1.1 The trade name Diamondback Directional, and all related trade names,
trademarks, emblems and descriptions related thereto;
1.2 All of the assets of the Corporation used or useful in the
directional drilling business, whether or not in currently useable condition,
including, but not limited to:
1.2.1 Cash, investment accounts, certificates of deposit, bonds,
prepaid insurance, prepaid utilities, and all other deposits and cash
equivalents of every kind and character, provided that at Closing, the balance
of Seller's existing banking and investment accounts shall be paid over to
Purchaser by wire transfer, with the exception that the $100,000 Xxxxxxx Money
provided for by this Agreement shall be retained by Seller.
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1.2.2 Copies of the books and records of the Corporation, including
a copy of the Corporation Books, as described above, and all other accounting
and bookkeeping records of every kind and character, including but not limited
to, all computer hardware and software; files; invoices; receipts; indications
of payment; cancelled checks; bank statements and reconciliations, etc;
1.2.3 Telephone Numbers. The telephone numbers, as follows:
(000) 000 0000, (000) 000 0000 and (000) 000 0000
1.2.4 All customer lists;
1.2.5 All leases, including the Equipment Leases and the Real
Property Lease;
1.2.6 All vehicles;
1.2.7 The Receivables.
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II. Purchase Price
The Purchase Price for the Assets shall be the sum of:
2.1 the "Xxxxxxx Money" paid upon execution of the Letter of Intent, the
sum of one hundred thousand dollars ($100,000);
2.2 $2,650,000.00 in cash, which shall not be offset by the Xxxxxxx
Money, to be delivered by wire transfer to the account of Seller at Closing;
2.3 a note (which is one of the "Notes"), in the form attached hereto as
Schedule 2.3, for the sum of $3,000,000.00, said note bearing interest at the
rate of Six and One-Half Percent (6 1/2%), interest to be paid quarterly, and
the principal to be due August 31, 1999, and which Note is subject to adjustment
as provided in Sections 3.3 and 9.8 hereof;
2.4 a note (which is one of the "Notes"), in the form attached hereto as
Schedule 2.3, for one-half of "net receivables", as defined herein, said note
bearing interest at the rate of Six and One-Half Percent (6 1/2%), interest to
be paid quarterly, and the principal to be due August 31, 1999, and which Note
is subject to adjustment as provided in Sections 3.3 and 9.8 hereof;
2.5 six hundred forty-seven thousand five hundred sixty-nine (647,569)
shares of unregistered common stock in Purchaser with a total value of
$3,000,000.00, based on the average bid price of BWWC stock during the
twenty-one (21) days immediately prior to August 28, 1997, which was $4.6327;
2.6 Assumption of the Payables, as that term is hereafter defined; and
2.7 Reservation of the Stock Options provided for in Section 8.6 hereof.
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III. Closing Financing Matters
3.1 Certain Definitions. As used in this Agreement, the following terms
are defined as:
3.1.1 Payables. The debts of the Corporation, but only to the
extent reflected on the Closing Financial Exhibit, as hereinafter defined, for
all goods, services, supplies, subcontracts, salaries, equipment rental and all
other debts and expenses incurred by the Corporation, together with all other
liabilities of the Corporation of every kind or character, including a payable
to Seller reflecting income tax liabilities (the "Tax Payable") on Seller's
income from January 1, 1997 through August 31, 1997, calculated as if Seller's
income were taxed at the rate of 39.6%. Payables shall be separately scheduled
on Schedule 3.1.1 hereto.
3.1.2 Receivables. The trade accounts receivable of the
Corporation. Receivables shall be separately scheduled on Schedule 3.1.2 hereto.
3.1.3 Net Receivables. Receivables, less Payables, subject to the
"Adjustment for rebooking IM2 Transaction", shown on Schedule 3.2.
3.2 A Closing Financial Exhibit shall be prepared by Sellers and
attached to this Agreement as Schedule 3.2. The Closing Financial Exhibit shall
reflect that the assets and liabilities of the Corporation as of August 31,
1997, on an accrual basis, including but not limited to, an accrual for taxes,
and insurance audit exposure, for all periods prior to Closing. The Closing
Financial Exhibit shall also confirm the Net Receivables, which shall be used
for the preparation of the note required by Section 2.3 hereof.
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3.3 On or before December 31, 1997, and one (1) year and two (2) years
following Closing, Purchaser and Seller shall review the Closing Financial
Exhibit and make adjustments thereto to reflect: (i) actual collections of
Receivables and write-off of bad debts; and (ii) any increase or decrease in
Payables, including the Tax Payable, as otherwise provided by this Agreement.
The December 31, 1997 adjustment shall reflect the changes to Receivables and
Payables as a result of work in progress at August 31, 1997, it being recognized
that it will not be possible to book such work in progress at closing. As a
result of such reconciliations, the amount of the Notes shall be adjusted.
3.4 Closing of this transaction is subject to the Corporation meeting
the following financial conditions:
3.4.1 The debts of the Corporation at August 31, 1997 shall be as
set forth on the Closing Financial Exhibit.
3.4.2 The Assets shall be in good working order, ordinary wear and
tear excepted. Some of the Assets are listed on Schedule 3.4.2 hereto.
Compliance with this requirement shall be verified by representatives of
Purchaser, consulting with Seller immediately prior to Closing.
3.4.3 The Closing Financial Exhibit shall accrue all liabilities of
the company as of August 31, 1997.
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3.4.4 The accrued vacation, salary and job bonus benefits due, or
possibly due, to the Corporation's employees and subcontractors, if any,
effective through the close of business on August 31, 1997, shall be as set
forth on Schedule 4.17 hereto.
3.5 In addition to, and without in any way limiting, the warranties and
representations of Seller and Principals granted in this Agreement, Seller and
Principals do hereby jointly and severally warrant the Closing Financial
Exhibit. Seller and Principals hereby indemnify and hold Purchaser harmless from
any and all liabilities of the Corporation existing as of the close of business
on August 31, 1997 that are in excess of the liabilities reflected on the
Closing Financial Exhibit.
IV. Warranties and Representations of Sellers
Seller and Principals do hereby, jointly and severally, give the following
warranties to Purchaser as of August 31, 1997 and as of the Closing Date, which
warranties shall survive Closing:
4.1 Principals warrant that they hold eighty-five percent (85%) of all
of the outstanding stock of the Corporation, cumulatively 850 shares held by
Principals. Principals hold said shares free and clear of all liens,
encumbrances, contracts and commitments. No person holds a preferential right to
purchase said shares held by Principals, nor is any person entitled to any
interest in the proceeds of the sale of said shares.
4.2 The remaining fifteen percent (15%) of the outstanding shares of
stock in the Corporation, being 150 shares, are owned by Xxxx X. Xxxxxxxx, the
only other shareholder of the Corporation. Neither the Corporation nor the
Principals are party to any contract, agreement, undertaking or understanding of
any kind or character with Xxxx X. Xxxxxxxx. Seller and Principals have no
knowledge that any person holds a preferential right to purchase the shares of
Xxxx X. Xxxxxxxx. The sole role and relationship of Xxxx X. Xxxxxxxx with the
Corporation is as a shareholder.
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4.3 The Corporate Books of the Corporation, a copy of which shall be
delivered to Purchaser contemporaneously with execution of this Agreement,
consists of the following:
Articles of Incorporation, dated February 8, 1995. Bylaws, dated March
1, 1995.
Minutes of Organizational Meeting of Directors, dated March 31, 1995.
Minutes of Annual Meeting of Shareholders dated January 9, 1997.
Minutes of Annual Meeting of Directors dated January 9, 1997.
Consent of the Directors dated June 6, 1997.
Consent of the Directors date June 13, 1997.
Evidence that Certificate No. 1, for 425 shares, was issued to Xxxxxxx
Xxxx Xxxxxx.
Evidence that Certificate No. 2, for 425 shares, was issued to Xxxx
Xxxx.
Evidence that Certificate No. 3, for 150 shares, was issued to Xxxx X.
Xxxxxxxx.
Said Corporate Books and records are true and correct in every respect.
All meetings reflected in said Minutes were held and the Minutes accurately
reflect the proceedings which occurred.
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4.4 The Corporation has been operated in the ordinary course of business
during the entirety of its existence. The income and expenses reflected on the
financial books and records of the Corporation are accurately stated. With the
exception of the Xxxxxxx Money, there are no items of income other than income
from the directional drilling business, and the expenses are not understated.
Without limiting the generality of the foregoing, from and after September 1,
1997, with the exception of receipt of the Xxxxxxx Money, the Corporation has
been operated in the ordinary course of business, and there have been no
payments to or transactions with Principals, other than payment of salaries and
ordinary business expenses.
4.5. The Assets are free and clear of liens and encumbrances, except as
reflected on Schedule 3.4.2, hereto. There exists no condition affecting the
title to or use of any part of the Assets which would prevent Purchaser from
using or enforcing its rights with respect to any part of the Assets, after
Closing, to the same full extent that the Corporation could continue to do so if
the transactions contemplated hereby did not take place. The Assets include all
of the assets needed by the Corporation for its continued operation, utilizing
the same means of operation as employed by the Corporation in the past.
4.6 Schedule 4.6 attached hereto is a complete list containing the name,
address, telephone and facsimile number, and name of contact, for all customers
of the Corporation (herein the "Customers"). Seller and Principals are not aware
of any situation or state of facts and circumstances which would cause the
Customers to discontinue the use of the Corporation for directional drilling
services, to the extent that such Customers require directional drilling
services in the future.
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4.7 Schedule 4.7 represents a complete listing of all equipment and
other personal property leases (herein the "Equipment Leases") to which the
Corporation is a party at the date of this Agreement. All of the Equipment
Leases are valid and in full force and effect, and fully state the agreement
between the Corporation and the Lessor. There is no default existing in any of
the Equipment Leases. Unless indicated on Schedule 4.7, all of the Equipment
Leases may be cancelled on not more than thirty (30) days' notice by the
Corporation. Unless noted on Schedule 4.7, the execution of this Agreement will
not violate the terms of any of the Equipment Leases. To further clarify, Seller
has received notice from Bico that the existing lease arrangement will end on
October 8, 1997, and that thereafter, the lease arrangement will be on a time
and materials basis.
4.8 The Corporation is party to a real property lease (herein the "Real
Property Lease") with Xxx Xxxxxx covering the Corporation's office and shop
located in Conroe, Texas. The Real Property Lease expires October 31, 1997,
however the Lessor has indicated that the Corporation may hold over on a month
to month basis pending its anticipated move to larger quarters. All of the Real
Property Leases are valid and in full force and effect, and fully state the
agreement between the Corporation and the Lessor. There is no default existing
in any of the Real Property Leases.
4.9 Schedule 4.9 is a complete listing of all subcontractors, (herein
the "Subcontractors"), utilized by the Corporation within the past six (6)
months. There are no agreements of any kind or character, written or oral, which
require the Corporation to continue to use the Subcontractors. Except as noted
on Schedule 4.9, Sellers are not aware of any set of facts or circumstances
which would cause the Subcontractors to not perform services for the Corporation
in the future, if requested by the Corporation. All amounts due to driller
Subcontractors have been either paid in full or booked on the Closing Financial
Statement, with the exception of amounts due for work in progress at August 31,
1997, which shall be included in the December 31, 1997 adjustment provided for
in Section 3.2 hereof.
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4.10 Schedule 4.10 contains a complete listing of all suppliers of goods
and services to the Corporation within the past six months, other than the
Equipment Leases and the Subcontractors, pursuant to contracts which either (i)
involve expenditures of greater than $10,000 annually, or (ii) which cannot be
cancelled by the Corporation on notice of thirty (30) days or less.
4.11 The Corporation and the business that it operates is in compliance
with all applicable laws and regulations, including without limitation licensing
and environmental laws.
4.12 The financial records and descriptive information relating to the
operation of the Corporation previously furnished to Purchasers, including,
without limitation, the tax returns, financial statements, income statements and
customer lists, as well as the Closing Financial Exhibit, are true and correct.
4.13 The operating assets of the Corporation are in good and workable
condition, ordinary wear and tear excepted.
4.14 The Corporation is a corporation, duly organized, validly existing
and in good standing under the laws of Texas. All of the outstanding capital
stock of the Corporation is validly issued, fully paid and non-assessable.
Without limiting the generality of the foregoing, the Corporation has no
obligation to issue any stock to any person.
4.15 Seller's execution, delivery or performance of this agreement,
including without limitation the execution and completion of any agreement
contemplated hereby, has been approved by Seller's Board of Directors, and shall
be submitted to a vote of Seller's shareholders pursuant to Article 5.10 of the
Texas Business Corporation Act. Principals shall vote in favor of approval of
this agreement, both in their capacity as directors and as shareholders. Subject
to such shareholder approval, the execution, delivery and performance of this
agreement, including without limitation any agreement contemplated hereby, will
not violate or conflict with any provision of the Corporation's Certificate of
Incorporation, Bylaws or other corporate documents, nor will it violate or
constitute an event of default, or permit acceleration of any obligations,
pursuant to any agreement, including, without limitation, debt agreements, to
which the Seller is a party.
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4.16 Except as provided in Schedule 4.16, the Corporation is not party
to any contracts calling for the Corporation to either provide or acquire goods
or services. Without limiting the generality of the foregoing, there has been no
contract or quotation, arrangement or understanding for the future sale of
services by the Corporation which extends beyond thirty (30) days, except for
the outstanding quotes and proposals scheduled on Schedule 4.16, hereto.
4.17 Other than the Employment Agreements called for in Article X
hereof, the Corporation is not a party to any labor contracts of any kind,
including, without limitation, collective bargaining agreements. There are no
compensation plans, pension, and retirement plans, bonus and saving plans,
vacation or sick leave plans or policies (except as disclosed on Schedule 4.17
hereto), or disability plans to which the Corporation is a party. The accrued
vacation for each employee is scheduled on Schedule 4.17 hereto. The Corporation
maintains group heath insurance coverage on of its employees.
4.18 The Corporation has filed all tax returns and filings which the
Corporation is required to file with the appropriate government agencies, and
the information set forth in tax returns is true, correct and complete. Without
limiting the generality of the foregoing, the income and franchise/share tax
returns (for U.S. and all required States) have been filed and is correct.
4.19 Except as reflected on Schedule 4.19, there is no litigation,
pending or threatened, against the Corporation. Except as reflected on Schedule
4.19, there is no litigation, pending or threatened, against the Principals with
respect to the directional drilling business of the Corporation.
4.20 Set forth on Schedule 4.20 is a list of all permits, licenses,
approvals or authorizations of any governmental authority or other person which
are used to conduct the business of the Corporation. All such permits, license,
approvals and authorizations are in full force and effect. To the knowledge of
Principals, no proceeding is pending to revoke or limit any of such permits or
otherwise impose any conditions or obligations on the possession or transfer of
any of them, to the extent the same are transferable. Without limiting the
generality of the foregoing, as of Closing, Seller and Principals are unaware
that the plan of Principals to build and operate motors and associated downhole
equipment will require Purchaser to obtain a license from any person, or will
infringe on any patent.
4.21 Except as set forth on Schedule 4.21, no officer, director or
employee of the Corporation, and no relative thereof: (i) owns, directly or
indirectly, any interest in any tangible or intangible property, asset or right
which the Corporation uses in its business; (ii) has any cause of action or
claim against, owes any amount to, or is owed any amount by the Corporation;
(iii) is a party to any Contract with the Corporation; or (iv) is a supplier of
goods and/or services to or a subcontractor of Seller.
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4.22 Investment Representation Letter. At Closing, Seller shall have
full authority to execute and deliver the Investment Representation Letter
attached hereto as Exhibit 4.22.
V. Debts, Liabilities
5.1 Purchaser shall be responsible for and shall pay only the debts and
liabilities reflected on the Closing Financial Exhibit, together with those
debts and liabilities incurred in the ordinary course of business subsequent to
12:00 midnight on August 31, 1997, none of which shall be the responsibility of
Seller.
5.2 Purchaser shall not assume or become liable to Seller, or to any
other person, firm, corporation or entity, for any other liabilities or
obligations of Seller, whether accrued, absolute, contingent or otherwise.
Seller and Principals hereby indemnify the Purchaser from all liabilities and
obligations arising from operation of the Corporation prior to 12:00 midnight on
August 31, 1997, other than those reflected on the Closing Financial Exhibit,
including, without limitation, any of the following not reflected on the Closing
Financial Exhibit: any indebtedness for borrowed money, any liability for taxes,
any liability for goods or services purchased, sold or rendered, or any suit or
claim seeking recovery for injury to persons or property resulting from any
product or service heretofore sold or rendered by the Corporation, plus
reasonable attorney fees; provided that such indemnity shall be secondary to any
and all insurance available, including but not limited to insurance purchased by
the Corporation prior to Closing and insurance purchased by the Corporation or
Purchaser subsequent to Closing.
5.3 Purchaser agrees to indemnify Seller from and against any and all
claims, damages, losses, charges, liability and expenses, including reasonable
attorney fees, imposed upon the Sellers but arising out of or resulting from
operation of the business from and after 12:00 midnight on the Closing Date;
provided that such indemnity shall be secondary to any and all insurance
available, including but not limited to insurance purchased by the Corporation
prior to Closing and insurance purchased by the Corporation or Purchaser
subsequent to Closing.
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VI. Representations and Warranties of Purchaser
6.1 Purchaser is a corporation duly organized and existing under the
laws of the State of Delaware. Execution and closing of this Agreement has been
authorized by all requisite authority of Purchaser.
6.2 Purchaser has obtained all necessary approvals of all regulatory
bodies for the execution of this Agreement and the closing of this transaction.
6.3 Timely Filing of Reports. Purchaser covenants and agrees that it
will file all reports required to be filed by it pursuant to the Securities Act
of 1933 and the Securities Exchange Act of 1934, each as amended from time to
time, and the rules and regulations adopted by the Commission thereunder (or, if
Purchaser is no longer required to file such reports, it will, upon the request
of Seller, make publicly available such other information for so long as it is
necessary to permit sales under Rule 144 promulgated under the Securities Act of
1933, as amended), and it will take such further action as Seller may reasonably
request, all to the extent required from time to time to enable Seller to sell
shares of Common Stock without registration under the Securities Act within the
limitations of the exemptions provided by Rule 144, as the same may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of Seller, Purchaser will deliver to Seller a
written statement as to whether it has complied with such requirements.
Purchaser shall bear all costs associated with compliance of this Section 6.3.
6.4 NASDAQ Quotation. Purchaser agrees to use all reasonable efforts to
cause the shares of Purchaser's Common Stock issuable to Seller pursuant to this
Agreement to be approved for quotation on the NASDAQ Stock Market, subject to
official notice of issuance, on or before the Closing Date.
6.5 Registration Rights. On the Closing Date, Purchaser and Seller shall
each execute and deliver a Registration Rights Agreement providing that if at
any time and from time to time Purchaser shall determine to pursue an
underwritten public offering of its Common Stock, other than a registration
relating to securities offered under employee benefit plans, Purchaser shall
promptly give written notice to Seller thereof, and shall request the managing
underwriter or underwriters to include in such registration, and in any
underwriting involved therein, the number of shares of Common Stock owned by
Seller as specified in a written request from Seller. Such Registration Rights
Agreement shall provide that all expenses incident to Purchaser's performance of
or compliance with the registration obligations pertaining to shares of its
Common Stock held by Seller, including without limitation, all registration and
filing fees payable to the Securities and Exchange Commission (the "Commission")
and the National Association of Securities Dealers, Inc., printing expenses,
fees and disbursements of counsel for Purchaser and its independent certified
public accountants, but excluding underwriting discounts and commissions
attributable to the sale of shares held by Seller, shall be borne by Purchaser.
In the event the number of shares requested to be including in the offering,
when combined with the number of shares to be included in the offering by other
selling shareholders is greater, in the opinion of the managing underwriter,
than can be accommodated without adversely affecting the proposed offering, then
the amount of shares of Common Stock held by Seller included in the Seller
request for registration, as well as the number of securities of any other
selling shareholders, so long as such other selling shareholders do not hold
senior registration rights, shall be proportionately reduced to a number deemed
satisfactory by the managing underwriter.
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VII. Closing
Closing shall occur not later than ten (10) days following receipt by
Purchaser of the items required by Section 7.1(iv), below, but in no event later
than October 15, 1997 (the "Closing Date"), effective at midnight Central time
on the Effective Date. At Closing:
7.1 Sellers shall deliver to Purchaser the following:
(i) a fully executed Transfer, Xxxx of Sale and Assumption
Agreement, in the form attached hereto as Schedule 7.1(i)(1)
and a fully executed Assignment and Assumption of Real Property
Lease in the form attached hereto as Schedule 7.1(i)(2); and;
(ii) Certificates of title to all vehicles;
(iii) the Employment Agreements described in Article X hereof, fully
executed by Sellers; and
(iv) Minutes, certified by Principals, of the meetings of the Board
of Directors and Shareholders of Seller, approving the
execution and performance of this contract by Seller, together
with all notices related thereto;
(v) the Investment Representation Letter attached hereto as Exhibit
4.22, fully executed by Seller; and
(vi) such other documents and agreements as are reasonably required
to complete the transaction contemplated hereby.
7.2 At Closing, Purchaser shall deliver to Sellers the following:
(i) the cash referred to in Article II;
(ii) the Notes referred to in Article II;
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(iii) the Employment Agreements described in Article X hereof, fully
executed by Purchaser;
(iv) a resolution of Purchaser's Board of Directors, approving this
Agreement and the Closing thereof;
(v) a fully executed Transfer, Xxxx of Sale and Assumption
Agreement, in the form attached hereto as Schedule 7.1(i)(1)
and a fully executed Assignment and Assumption of Real Property
Lease in the form attached hereto as Schedule 7.1(i)(2); and;
(vi) such other documents and agreements as are reasonably required
to complete the transaction contemplated hereby.
VIII. Conditions to Closing
This Agreement and the Closing thereof is subject to the following
conditions:
8.1 All representations and warranties made by the Seller, Principals
and Purchaser shall be true and correct as of the Closing Date;
8.2 Seller shall furnish a certificate of good standing for the
Corporation, in the State of Texas.
8.3 Seller shall furnish the complete results, including copies of a
Form UCC-11 Search for financing statements relating to the Corporation and all
of the Assets, showing no liens other than those reflected on the Closing
Financial Exhibit.
8.4 Seller's execution, delivery or performance of this agreement,
including without limitation the execution and completion of any agreement
contemplated hereby, shall be submitted to and approved by a vote of Seller's
shareholders pursuant to Article 5.10 of the Texas Business Corporation Act.
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8.5 Purchaser's execution, delivery or performance of this agreement,
including without limitation the execution and completion of any agreement
contemplated hereby, shall be submitted to and approved by a vote of Purchaser's
Board of Directors.
IX. Access to Information, Post-Closing Matters,
Continued Assurances
9.1 Prior to Closing. Prior to Closing, Purchaser shall have full and
complete access to the Assets, along with all offices and facilities of the
Corporation and to the Corporation' books and records for the purpose of
reviewing same in connection with the transaction contemplated hereby. Should
the transaction contemplated hereby not close for any reason whatsoever,
Purchaser agrees to maintain the confidentiality of all information gathered
during its evaluation of the Corporation' business and the Corporation' assets,
and hereby agree not to use in any way, or disclose such information, unless
Purchaser is legally obligated to disclose any such information.
9.2 Continued Access to Records.
9.2.1 From and after closing, and for three years thereafter, the
corporate, financial and other records and documents of the Corporation prior to
Closing, not otherwise provided for herein (the "Books") shall be available on
three days prior written notice during normal business hours of 8:00 am to 5:00
pm Columbus, Mississippi time for inspection, use and copying by Seller.
9.3 Continued Assurances. Purchaser, Seller and Principals will do,
execute, acknowledge and deliver, all and every such further acts, conveyances,
transfer orders, notices, releases and acquittances and such other instruments
as may be reasonably necessary or appropriate to assure to Purchasers, Seller
and Principals, their successors and assigns, more fully all of the respective
properties, rights, titles and interests, estates, remedies, powers and
privileges by this agreement granted, bargained, sold, conveyed, assigned,
transferred, set over and delivered, or otherwise vested in Purchaser and/or
Seller or intended to be so. Without limiting the generality of the foregoing,
Seller, Principals and Purchaser agree to provide such statements and
confirmations as are required from time to time by their respective accountants
in their continued work for the parties, including without limitation, audit
confirmations.
9.4 Payment of Tax Payable. The Tax Payable shall be paid to or for the
benefit of Seller on January 14, 1997, by wire transfer or other immediately
available funds, as directed by Seller.
9.5 Final Action by Sellers. The Seller shall prepare and file all tax
filings required of it, including income tax returns. Within 30 days after
Closing, Seller shall change its name, so as to not include the words
"Diamondback" or "Directional."
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9.6 Stock Options Reserved. Purchaser has reserved stock options
covering 250,000 shares of Purchaser's stock for distribution to certain
employees, other than Principals, said employees to be hired at the direction of
Xxxx Xxxx and Purchaser. Said options shall be distributed annually according to
vesting schedules as set forth in employment agreements to be executed with such
employees as approved by Xxxx Xxxx and Purchaser. Said options are to be issued
pursuant to Purchaser's Omnibus Stock Option Plan, as approved by Purchaser's
Shareholders. Nothing in this Agreement, including without limitation this
Section 9.6, shall be deemed for the benefit of such employees, it being the
intent and agreement of the parties that such employees are not third-party
beneficiaries of this Agreement.
9.7 Investment in Capital Items. Purchaser commits to make approximately
Four Million Dollars ($4,000,000) available to the business which operates or
uses the name and/or trademark sold hereunder, in the form of a loan or other
appropriate financial undertaking, for capital improvements. These investments
are to be undertaken on projects as agreed by Xxxx Xxxx and Purchaser, it being
anticipated that these investments will be made during the calendar years 1998
and 1999.
9.8 Post-Closing Performance Standard, Possible Notes Adjustment. The
Notes are subject to a possible downward adjustment, as set forth in Section
9.8.2 and 9.8.3, if the results of the directional drilling business to be
formed by Purchaser with the Assets, to be known as Diamondback Directional
Company and to be operated as a separate division of Purchaser, or of
Purchaser's subsidiary, Xxxxx Wireline Co., Inc. (herein, the "Business") do not
meet the performance standards set forth in Section 9.8.1.
9.8.1 Performance Standard. The Performance Standard shall be
ninety percent (90%) of the sum of: (i) the gross receipts of Seller for the
period January 1, 1997 through August 31, 1997, as reflected on the Closing
Financial Exhibit, and (ii) the gross receipts of the Business for the period
September 1, 1997 through December 31, 1997.
9.8.2 Adjustment for 1998 results. If the gross receipts of the
Business for the period September 1, 1997 through August 31, 1998 (the "1998
Results") are not at least equal to the Performance Standard, then the principal
balance of the Notes, as previously adjusted, shall be adjusted downward, as
follows:
(a) the balance of the Notes, after considering the adjustments
required by Section 3.3 hereof (the "1998 Balance"), shall be divided by two,
the result of which shall be the "1998 Initial Amount";
(b) the 1998 Initial Amount shall be multiplied by the 1998
Results, and the product thereof shall be divided by the Performance Standard,
the final product thereof being the "1998 Final Amount"; and
(c) the balance of the Notes, as previously adjusted, shall be
reduced by the difference between the 1998 Initial Amount and the 1998 Final
Amount.
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9.8.3 Adjustment for 1999 results. If the gross receipts of the
Business for the period September 1, 1998 through August 31, 1999 (the "1999
Results") are not at least equal to the Performance Standard, then the principal
balance of the Notes, as previously adjusted, shall be adjusted downward, as
follows:
(a) the balance of the Notes, after considering the adjustments
required by Section 3.3 hereof and the adjustment required by Section 9.8.2 (the
"1999 Balance"), shall be divided by two, the result of which shall be the "1999
Initial Amount";
(b) the 1999 Initial Amount shall be multiplied by the 1999
Results, and the product thereof shall be divided by the Performance Standard,
the final product thereof being the "1999 Final Amount"; and
(c) the balance of the Notes, as previously adjusted, shall be
reduced by the difference between the 1999 Initial Amount and the 1999 Final
Amount.
X. Employment and Non-Competition Agreements
10.1 At or prior to Closing, Purchaser and Xxxx Xxxx shall enter into an
Employment Agreement calling for his employment with Purchaser, which Employment
Agreement shall include a non-competition agreement, prohibiting competition in
the Directional Drilling Business in the States of Texas, Louisiana, New Mexico,
Wyoming, Colorado, Montana, Oklahoma, Alabama, North Dakota, South Dakota and
Mississippi, which area is deemed reasonable by the parties considering the
prior and anticipated business plan of the Purchaser. The form of the Employment
Agreement is attached hereto as Schedule 10.1.
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10.2 At or prior to Closing, Purchaser and Xxxx Xxxxxx shall enter into
an Employment Agreement calling for his employment with Purchaser, which
Employment Agreement shall include a non-competition agreement, prohibiting
competition in the Directional Drilling Business in the States of Texas,
Louisiana, New Mexico, Wyoming, Colorado, Montana, Oklahoma, Alabama, North
Dakota, South Dakota and Mississippi, which area is deemed reasonable by the
parties considering the prior and anticipated business plan of the Purchaser.
The form of the Employment Agreement is attached hereto as Schedule 10.2.
10.3 It is agreed by the parties hereto that, in the event of any breach
of the non-competition provisions of the Employment Agreements, legal remedies
available to the Purchaser would be inadequate. Therefore, in the event of such
breach, the Purchaser is specifically authorized to apply to a court of
competent jurisdiction to enjoin any violation of such provision.
XI. No Assignment
Neither this Agreement, nor any right, interest or obligation hereunder,
may be assigned by either of the parties hereto without the prior written
consent of the other party(s), except that Purchaser may assign this Agreement,
in whole or in part, to its subsidiary Xxxxx Wireline Co., Inc., provided that
no such assignment shall relieve Purchaser of any obligations created hereunder.
XII. Multiple Counterparts
Any number of counterparts of this Agreement may be executed, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one and the same agreement, binding
on both the parties notwithstanding that both parties have not signed the same
counterpart.
XIII. Modifications
This Agreement contains the entire agreement between the parties, and there
shall be no waiver, modification or change of the terms of this Agreement
without the written approval of the parties hereto.
XIV. Captions
The titles of the Articles and Paragraphs and the captions of this
Agreement have been assigned thereto for convenience and reference only and in
no way define, describe, extend, or limit, nor be construed as limiting,
defining or affecting the substantive terms, scope or intent of this Agreement.
XV. Entire Agreement, Integration, Amendment
This Agreement, together with the accompanying Schedules attached hereto,
constitutes the entire agreement among the parties hereto, as a complete and
final integration thereof. All understandings and agreement heretofore had
between and among the parties with respect to the subject matter of this
Agreement are merged into this Agreement, which alone fully and completely
expresses their understandings, and this Agreement supersedes all prior
memoranda, correspondence, conversations and negotiations.
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There have been and are no agreements, representations or warranties
between the parties other than those set forth or provided herein.
No representation or warranty made by any party which is not contained in
this Agreement or expressly referred to herein has been relied on by any party
in entering into this Agreement.
XVI. Notices
All notices, requests, demands, and other communications hereunder shall be
in writing and shall be deemed to have been duly given and delivered upon
personal delivery or, if mailed, upon depositing such notice in the United
States mail, with first class postage prepaid, and
(i) If to the Purchaser, to:
Black Warrior Wireline Corp
0000 Xxxxxxx 00, X
Post Office Box 9188
Columbus, Mississippi 39705
Attn: Xxxxxxx X. Xxxxxxx
(ii) If to the Seller, to:
Diamondback Directional, Inc.
00000 Xxxxxxx 000 Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
(iii) If to Principals, to:
Mr. Xxxx Xxxx
00000 Xxxxxxx 000 Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Xx. Xxxxxxx Xxxx Xxxxxx
00000 Xxxxxxx 000 Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Any party may change the address to which notices are to be delivered to such
party, by notice given in accordance with this subparagraph to the other party.
XVII. Governing Law
The laws of the State of Mississippi shall govern the validity,
construction, and interpretation of this Agreement.
XVIII. Miscellaneous
18.1 Gender, Number. All personal pronouns used in this Agreement shall
include all genders, whether used in the masculine, feminine, or neuter gender.
Singular nouns and pronouns shall include the plural, as may be appropriate, and
vice versa.
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18.2 Severability. All of the terms, provisions, and conditions of this
Agreement shall be deemed to be severable in nature. If, for any reason, the
provisions hereof are held to be invalid or unenforceable to any extent, to the
extent that such provisions are valid and enforceable, a court of competent
jurisdiction shall construe and interpret this Agreement to provide for maximum
validity and enforceability of this Agreement.
18.3 Successors. This Agreement shall bind the parties and their heirs,
successors, assigns, next of kin, and personal representatives.
18.4 Construction. This Agreement shall be construed in its entirety
according to its plain meaning and shall not be construed against the party who
provided or drafted it.
18.5 Party. The terms party and parties refer to the parties to this
Agreement, unless otherwise stated.
18.6 Subdivision. References to paragraphs, subparagraphs, and like
subdivisions are references to such subdivisions of this Agreement, unless
otherwise stated.
18.7 Hereof. Terms such as "hereof", "hereto", "hereunder", "herein",
and the like refer to the entire Agreement and not only to the subdivision in
which such terms appear.
18.8 Costs on Default. In the event of any default by any party as to
any duty, warranty or undertaking owed to another party, which default results
in efforts by the non-defaulting party to remedy same (whether a lawsuit is
filed or not), the defaulting party shall pay, in addition to such other sums as
may be due hereunder, all costs and expenses of such efforts, including, but not
limited to, a reasonable attorney's fee.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
effective on the day and date first above written.
PURCHASER:
WITNESS: BLACK WARRIOR WIRELINE CORP.
BY:
Xxxxxxx X. Xxxxxxx, President
SELLER:
WITNESS: DIAMONDBACK DIRECTIONAL, INC.
BY:
Xxxx Xxxx, President
WITNESS: PRINCIPALS:
XXXX XXXX
WITNESS:
XXXXXXX XXXX XXXXXX
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