1
EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 10th day of February 2000, by and between XXXXXXX X. XXXXXX d/b/a TRINITY
SERVICES ("Seller") and SIERRA WELL SERVICE, INC., a Delaware corporation
("Purchaser").
RECITALS:
A. Seller owns and operates a well servicing business based out of
Kingsville, Texas (the "Business").
B. Purchaser desires to purchase and acquire, and Seller is willing to
sell and transfer, certain of the properties and assets comprising the Business
as hereinbelow more particularly described.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.01 TRANSFER OF ASSETS. At the Closing, which shall occur on the
Closing Date (both terms as defined in Section 7.01 hereof), and subject to the
terms and conditions of this Agreement, Seller shall grant, sell, convey,
assign, and deliver to Purchaser, and Purchaser shall pay for and accept from
Seller, all of the following assets:
(a) All of the assets, properties, equipment,
inventories, and rights of every kind, character, and
description, whether tangible or intangible,
comprising or used in the business operated by Seller
under the name "Trinity Services," save and except
the Excluded Assets (hereinafter defined), all such
items being sold hereunder being hereinafter
collectively referred to as the "Assets." Seller is
not selling and the Assets shall not include (i) any
accounts receivable, notes receivable, deposits,
prepayments, bank accounts, cash, and other liquid
assets of a similar nature of Seller as of the
Closing Date, (ii) any contracts that by their terms
are non-assignable or for which Seller is unable to
obtain requisite consents to assignment at or prior
to Closing notwithstanding its good faith efforts or
that Purchaser may elect not to assume under the
terms of this Agreement, and (iii) any personal items
belonging to Seller or his family which are not
necessary to the operation of the Business, as listed
on EXHIBIT A attached hereto and made a part hereof
(items (i)-(iii) being hereinafter collectively
referred to as the "Excluded Assets").
2
(b) Without limiting the foregoing, the Assets shall
include the following assets, properties, and rights
of Seller:
(i) all of the machinery, equipment, tools,
vehicles, rolling stock, furnishings, goods,
and other tangible personal property
described on EXHIBIT B attached hereto and
made a part hereof for all purposes,
together with all attachments and accessions
thereto and all associated personal property
used or obtained for use in connection
therewith (the "Tangible Personalty");
(ii) all of Seller's rights under the service and
supply contracts, leases, commitments, and
agreements which may relate to the clients
listed on EXHIBIT C attached hereto and made
a part hereof for all purposes, together
with any other such agreements entered into
by Seller between the date hereof and the
Closing in accordance with this Agreement,
(collectively, the "Contracts") save and
except any such Contracts which by their
terms are non-assignable or for which Seller
is unable to obtain requisite consents to
assignment at or prior to Closing or which
Purchaser may elect not to assume under the
terms of this Agreement;
(iii) any usable and salable raw materials and
supplies of the Business as of the Closing
(the "Inventory");
(iv) all technologies, methods, formulations,
data bases, patents, trademarks, trade
secrets, know-how and other intellectual
property used in the Business;
(v) all existing and assignable guaranties and
warranties (express or implied), if any,
issued in connection with the purchase,
lease, construction, alteration, and/or
repair of any property included within the
Assets;
(vi) all information, files, records, data,
plans, and recorded information, including
supplier lists and customer lists, relating
to the ownership and operation of the
Business, provided that Seller shall be
entitled to keep, retain and utilize copies
of all accounting and tax records maintained
by Seller;
(vii) all goodwill of the Business and all right,
title, and interest of Seller in and to the
name "Trinity Services" and any other trade
or assumed names used by Seller in the
operation of the Business; and
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 2
3
(viii) any and all other assets of Seller
comprising or used in the Business other
than Excluded Assets.
1.02 PURCHASE PRICE. At the Closing, in accordance with the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of Seller, and subject to adjustment as hereinafter provided,
Purchaser shall purchase the Assets from Seller for a purchase price (the
"Purchase Price") of ONE MILLION SEVEN HUNDRED FORTY-NINE THOUSAND AND NO/100
DOLLARS ($1,749,000.00), together with the additional amounts described below,
payable as follows:
(a) Purchaser shall pay the sum of $1,499,000.00 to
Seller in immediately available funds at the Closing;
(b) Purchaser shall execute and deliver to Seller at
Closing its promissory note in the face principal
amount of $250,000.00, bearing interest and payable
to the order of Seller as therein provided, said note
to be substantially identical in form and substance
to that attached hereto as EXHIBIT D (the "Note") and
to be secured by a security agreement which covers
the Assets and is substantially identical in form and
substance to that attached hereto as EXHIBIT E (the
"Security Agreement");
(c) Purchaser shall reimburse Seller for certain costs of
repairs and refurbishments as more particularly
provided in Section 5.12; and
(d) Purchaser may pay certain Extension Fees (as defined
in Section 7.01) to the Escrow Agent (hereinafter
defined) and such Extension Fees shall either be
delivered to Seller as additional consideration for
this sale of the Assets or shall be otherwise
disposed of as provided in this Agreement and the
Escrow Agreement.
Seller and Purchaser hereby allocate the Purchase Price among the Assets as set
forth on SCHEDULE 1.02 attached hereto and made a part hereof and agree to be
bound by such allocation for federal income tax and all other purposes incident
to this agreement.
1.03 ESCROW AGREEMENT/BREAK-UP FEE. Contemporaneously with the
execution and delivery of this Agreement, Seller, Purchaser, and The Kleberg
First National Bank (the "Escrow Agent") are entering into an escrow agreement
that is substantially identical in form and substance to that attached hereto as
EXHIBIT F, pursuant to which Purchaser shall deposit the sum of Fifty Thousand
and No/100 Dollars ($50,000) in immediately available funds with the Escrow
Agent for retention, investment, and ultimate disposition by the Escrow Agent as
provided therein. As used in this Agreement, "Break-Up Fee" shall mean and refer
to such $50,000 deposit, together with all interest accruing thereon while held
by the Escrow Agent. If the sale contemplated hereby is closed pursuant to the
terms of this Agreement, the Break-Up Fee shall be applied to a corresponding
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 3
4
amount of the Purchase Price payable by Purchaser to Seller at the Closing. The
Break-Up Fee shall otherwise be applied, remitted, or paid as elsewhere provided
in this Agreement and the Escrow Agreement.
1.04 WARRANT. As a material consideration of this Agreement to Seller,
upon the occurrence of any Sierra IPO (as defined in Section 7.01), Purchaser
shall issue to Seller a warrant for the purchase of common stock in Seller that
is substantially identical in form and substance to that attached hereto as
EXHIBIT G (the "Warrant"). The number of shares of common stock that is subject
to the Warrant shall be determined by dividing 250,000 by the share price at
which common stock is issued in any Sierra IPO. Seller shall have the option and
right to offset any indebtedness owing by Purchaser to Seller under the Note
against the purchase price payable by Seller to Purchaser in exercising its
rights under the Warrant.
1.05 ASSUMED LIABILITIES. At the Closing, Purchaser shall assume and
agree to pay, discharge, or perform, as appropriate, all liabilities and
obligations of Seller arising following the Closing Date under only any
Contracts which Purchaser elects to assume pursuant to this Agreement and for
which Seller obtains requisite consents to assignment and assumption by
Purchaser.
1.06 LIABILITIES NOT ASSUMED. Except as expressly provided in Section
1.05 hereof, Purchaser does not assume or agree hereunder to pay, perform, or
discharge any debt, obligation, tax, or liability, known or unknown, contingent
or otherwise, of Seller of any kind or nature whatsoever. Without limiting the
foregoing, in no event shall Purchaser assume or incur any liability or
obligation under this Agreement or otherwise in respect of any of the following:
(a) any claim for injury to person or property,
regardless of when made or asserted, which arises
out of or is based upon any express or implied
representation, warranty, agreement, or guarantee
made by Seller, or alleged to have been made by
Seller, or which is imposed or asserted to be imposed
by operation of law, in connection with any service
performed or product sold or leased by or on behalf
of Seller or arising from events occurring on or
prior to the Closing Date or any action or inaction
of Seller;
(b) any federal, state, or local income or other tax
payable with respect to the business, assets,
properties or operations of Seller or any member of
any affiliated group of which Seller is a member, or
incident to or arising as a consequence of the
negotiation or consummation by Seller of this
Agreement and the transaction contemplated hereby,
save and except: (i) any applicable property taxes
for calendar year 2000 which will be prorated by the
parties as of the Closing Date with an appropriate
credit to Purchaser at the Closing, and (ii) any
sales or transfer taxes resulting from the
consummation of this transaction, which will be the
sole responsibility of Purchaser;
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 4
5
(c) any liability or obligation arising prior to the
Closing Date under any law, ordinance, or
governmental or regulatory rule or regulation,
whether federal, state, or local, to which Seller or
Seller's business operations, assets, or properties
are subject relating to pollution or protection of
the environment;
(d) any liability or obligation arising prior to or as a
result of the Closing to any employees, agents, or
independent contractors of Seller, whether or not
employed by Purchaser after the Closing Date, or
under any benefit arrangement with respect thereto,
including any obligations of Seller under any defined
benefit plan, employee benefit plan, or severance
plan;
(e) any liability or obligation of Seller incurred in
connection with the negotiation, preparation, and
execution of this Agreement and the transactions
contemplated hereby, including fees and expenses of
counsel, accountants, and other professionals, except
as specifically provided in Section 6.02(c).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, warrants, and covenants to and with Purchaser as of
the date hereof and the Closing Date, as follows:
2.01 AUTHORITY; ENFORCEABILITY. Seller has full power, authority, and
legal right to enter into this Agreement and to consummate the transactions
provided for herein. All actions on the part of Seller necessary to consummate
the transaction contemplated by this Agreement have been duly taken as required
by applicable law and any applicable agreements. This Agreement has been, and
the other agreements, documents, and instruments required to be delivered by
Seller in accordance with the provisions hereof have been or will be, duly
executed and delivered by Seller and constitute (or will at Closing constitute)
the valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws now or
hereafter in effect relating to or limiting creditors' rights or by legal
principles of general applicability governing the availability of equitable
remedies.
2.02 ABSENCE OF VIOLATION OR CONFLICTS. To the best of Seller's
knowledge, the execution, delivery and performance of the transactions
contemplated by this Agreement by Seller do not and will not (a) violate,
conflict with, or result in the breach of any term, condition, or provision of,
or require the consent of any other person under, (i) any law, ordinance, or
governmental rule or regulation known to Seller and to which Seller, the Assets,
or the Business is subject, (ii) any judgment, order, writ, injunction, decree,
or award of any court, arbitrator, or governmental or
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 5
6
regulatory official, body, or authority which is known to Seller and which is
applicable to Seller, the Assets, or the Business, (iii) any mortgage,
indenture, or other instrument, document, or understanding, oral or written, to
which Seller is a party, by which Seller may have rights, or by which any of the
Assets or the Business may be bound or affected, and (b) give any party with
rights thereunder the right to terminate, modify, accelerate, or otherwise
change the existing rights or obligations of Seller thereunder. To the best of
Seller's knowledge, no authorization, approval, or consent of, and no
registration or filing with, any governmental or regulatory official, body, or
authority is required in connection with the execution, delivery or performance
of this Agreement by Seller.
2.03 TITLE TO ASSETS. Seller has (or will have at Closing) good and
marketable title to all the Assets, free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions, and other
encumbrances and defects of title of any nature whatsoever, except for (i) liens
for current ad valorem or similar taxes which are not yet due and payable and
(ii) required consents to assignment of the Contracts (collectively, the
"Permitted Encumbrances").
2.04 CONTRACTS. To the best of Seller's knowledge, Seller is not in
material default (nor is there any event which with notice or lapse of time or
both would constitute a material default) under any of the Contracts.
2.05 COMPLIANCE WITH LAW; AUTHORIZATIONS. To the best of Seller's
knowledge, Seller has complied with each, and is not in violation of any, law,
ordinance, or governmental or regulatory rule or regulation, whether federal,
state, local or foreign, to which Seller and Seller's business, operations,
assets, and properties are subject ("Regulations"). To the best of Seller's
knowledge, Seller owns, holds, possesses, or lawfully uses in the operation of
the Assets and the Business all licenses, permits, easements, rights,
applications, filings, registrations and other authorizations ("Authorizations")
which are in any manner necessary for such ownership and use by Seller, free and
clear of all liens, charges, restrictions, and encumbrances and in compliance
with all Regulations. To the best of Seller's knowledge, Seller is not in
default, nor has it received any notice of any claim of default, with respect to
any such Authorization.
2.06 LITIGATION. No litigation, including any arbitration,
investigation, or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body, or authority, is pending in which
Seller is a party and in which Seller has been served with process or otherwise
notified or, to the knowledge of Seller, threatened against Seller which relates
to the Assets, the Business, or the transactions contemplated by this Agreement,
nor does Seller know of any reasonably likely basis for any such litigation,
arbitration, investigation, or proceeding, the result of which could materially
adversely affect the Assets, the Business, or the transaction contemplated
hereby. Seller is neither party to nor subject to the provisions of any
judgment, order, writ, injunction, decree, or award of any court, arbitrator, or
governmental or regulatory official, body, or authority which may materially
adversely affect Seller, the Assets, the Business, or the transaction
contemplated hereby.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 6
7
2.07 ENVIRONMENTAL MATTERS. There is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, investigation of which Seller has been notified, or
proceeding pending or, to the knowledge of Seller, threatened, against Seller in
connection with the ownership, use, or operation of the Assets or the Business
or with the transaction contemplated hereby, relating in any way to
Environmental Laws and Regulations (hereinafter defined).
As used herein, "Environmental Laws and Regulations" shall include, but
not be limited to:
(i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42
U.S.C.ss.ss.9601-9657, and any amendments thereto;
(ii) the Resource Conservation and Recovery Act, 42
U.S.C.ss.ss.6901-6987 and any amendments thereto;
(iii) Safe Drinking Water Act, 42 U.S.C.ss.300(f) et seq.
and any amendments thereto;
(iv) Any and all environmental acts, statutes, and other
laws of the State of Texas; and
(v) Any and all regulations, rules, and administrative
orders issued or promulgated pursuant to any of the
foregoing.
(b) Seller agrees to cooperate reasonably with Purchaser
in connection with Purchaser's application for the
transfer, renewal or issuance of any permits,
licenses, approvals, or other authorizations or to
satisfy any regulatory requirements involving the
transfer of the Business to Purchaser.
2.08 TAX AND OTHER RETURNS AND REPORTS. Seller has not received any
notice of assessment or proposed assessment in connection with any of the
Assets or the Business and, to the knowledge of Seller, there are no pending tax
examinations or tax claims asserted against any of the Assets or the Business.
There are no tax liens (other than any lien for current ad valorem taxes not yet
due and payable) on any of the Assets or the Business.
2.09 CONSENTS. Seller is not aware of any consent, approval, order, or
authorization of, or registration, qualification, designation, declaration, or
filing with, any federal, state or local governmental authority or any other
person on the part of Seller which is required in connection with the completion
of the transactions contemplated by this Agreement and the operation by
Purchaser of the Business in the manner in which it is currently conducted.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 7
8
2.10 FINANCIAL MATTERS.
(a) Financial Statements. Seller has previously furnished to
Purchaser unaudited financial statements of Seller for the years ended December
31, 1998 and 1997 and for the interim period ended September 30, 1999. These
financial statements have been prepared in a manner that is consistent with the
books and records of Seller and present fairly the information contained therein
in the same manner as such information has been historically reported by Seller.
(b) Liabilities. To the best of Seller's knowledge, except for
the liabilities reflected on the financial statements specified above, there are
no, and on the Closing Date will be, no other material liabilities of any
nature, whether accrued, absolute, contingent, or otherwise and whether due or
to become due, or arising out of transactions entered into, or any state of
facts existing, prior to the Closing Date which will encumber the Assets or
impair the use, value, or ownership thereof by the Purchaser following the
Closing. There has been no material adverse change in the financial condition,
results of operations, assets, liabilities, business or prospects of the
Business since September 30, 1999, except that certain pay raises, as previously
disclosed by Seller to Purchaser in writing, have been provided to employees of
Seller in the ordinary course of Seller's business.
2.12 ABSENCE OF CERTAIN CHANGES. Since September 30, 1999, except as
disclosed in writing to Purchaser or as otherwise permitted or contemplated by
this Agreement, there has not been (i) any amendment, termination, or
revocation, or threatened termination, revocation or modification of any
license, permit, or franchise required for the continued operation of the
Business; (ii) any sale or transfer of the Assets; (iii) any pledge or
subjection to lien, charge or encumbrance of any kind, of, on or affecting any
of the Assets; or (iv) any material damage, destruction, or loss of or to the
Assets, whether or not covered by insurance.
2.13 OTHER. No representation or warranty by the Seller in this
Agreement and no written information furnished by Seller to Purchaser pursuant
to or in connection with the transactions contemplated by this Agreement
contains as of the date made any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein not
misleading.
ARTICLE III
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser hereby represents and warrants to Seller as of the date
hereof and the Closing Date, as follows:
3.01 ORGANIZATION. Purchaser is a corporation duly organized and
existing in good standing under the laws of the State of Delaware and has the
power and authority to carry on its business as contemplated by this Agreement.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 8
9
3.02 AUTHORITY. Purchaser has full power, authority, and legal right to
enter into this Agreement and to consummate the transaction provided for herein.
The execution and delivery of this Agreement and the other instruments specified
herein, and the consummation of the transaction provided for herein, by
Purchaser have been duly and validly authorized by all necessary action on the
part of Purchaser and are in compliance with applicable law. This Agreement has
been, and the other agreements, documents and instruments required to be
delivered by Purchaser in accordance with the provisions hereof have been or
will be, duly executed and delivered by Purchaser and constitute (or will at
Closing constitute) the valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws now or hereafter in effect relating to or limiting creditors' rights or by
legal principles of general applicability governing the availability of
equitable remedies.
3.03 ABSENCE OF VIOLATIONS OR CONFLICTS. The execution, delivery, and
performance of the transaction contemplated by this Agreement by Purchaser do
not and will not violate, conflict with, or result in the breach of any term,
condition, or provision of, or require the consent of any other person under,
(a) any law, ordinance, or governmental rule or regulation known to Purchaser
and to which Purchaser is subject, (b) any judgment, order, writ, injunction,
decree, or award of any court, arbitrator, or governmental or regulatory
official, body, or authority which is applicable to Purchaser (c) the governing
documents of Purchaser or any securities issued by Purchaser, or (d) any
mortgage, indenture, or other instrument, document, or understanding, oral or
written, to which Purchaser is a party or by which Purchaser may have rights. No
authorization, approval, or consent of, and no registration or filing with, any
governmental or regulatory official, body, or authority is required in
connection with the execution, delivery or performance of this Agreement by
Purchaser
3.04 OTHER. No representation or warranty by Purchaser in this
Agreement and no written information furnished by Purchaser to Seller pursuant
to or in connection with the transactions contemplated by this Agreement
contains as of the date made any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein not
misleading.
3.05 DUE DILIGENCE. Upon Closing hereunder, Purchaser will have
conducted such examinations, inquiries, and other due diligence as Purchaser
deems necessary and appropriate to conclude the transaction contemplated hereby
in light of the express representations, warranties, and covenants of Seller
under this Agreement. Purchaser is not presently aware of any material
inaccuracy of any of Seller's representations and warranties in this Agreement.
ARTICLE IV
SURVIVAL AND INDEMNIFICATION
4.01 SURVIVAL. The parties agree that all of the representations,
warranties and covenants contained in this Agreement or in any document,
certificate, instrument, schedule or exhibit delivered
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 9
10
pursuant to this Agreement shall survive the Closing without time limitation,
except that (a) the representations and warranties of Seller in Sections 2.04 -
2.13 and the representations and warranties of Purchaser in Section 3.04 shall
survive only for a period of one (1) year following the Closing unless the party
claiming a breach shall assert the same by written notice to the other party
within such one-year period and (b) Seller will have no liability for the breach
or inaccuracy of any of its representations or warranties under Article II of
this Agreement unless, prior to any termination or expiration of such
representations or warranties pursuant to the foregoing, Purchaser notifies
Seller in writing of the alleged breach or inaccuracy, specifying the factual
basis of the claim with reasonable certainty to the extent then known by
Purchaser and the amount of actual damages incurred by Purchaser as a result
thereof to the extent then known by Purchaser. Notwithstanding any provisions of
this Agreement to the contrary, (a) Seller shall have no liability for the
breach of any of its representations or warranties under Article II of this
Agreement unless the total of all damages incurred by Purchaser as a result
thereof exceeds $20,000; and (b) in no event shall Seller's liability for the
breach or inaccuracy of its representations and warranties under Article II of
this Agreement or for indemnification under Section 4.02(a) ever exceed the
principal sum of $250,000, exclusive of interest, attorneys' fees, and expenses
of litigation; provided, however, that such limitations shall be inapplicable to
any damages incurred or sustained by Purchaser as a consequence of the breach of
Seller's title covenants and warranties in Section 2.03 of this Agreement.
4.02 INDEMNIFICATION BY SELLER. Subject to the limitations of Section
4.01, Seller agrees to indemnify, hold harmless, and defend Purchaser after the
Closing Date against and in respect of any of the following matters which may be
asserted or established:
(a) Any and all damages, losses, expenses, liabilities,
or deficiencies resulting from any breach of the
warranties, representations and covenants of Seller
contained in this Agreement or in any schedule
hereto;
(b) Any and all liabilities, damages, losses, or expenses
incurred or paid by Purchaser as a result of the
nonpayment or assessment of taxes with respect to the
Assets or the Business attributable to periods prior
to and including the Closing Date;
(c) Any and all damages, losses, expenses, liabilities,
or deficiencies incurred or paid by Purchaser as a
result of a claim of any kind arising from the
ownership or operation of the Assets or the Business
prior to and including the Closing Date (except for
those obligations and liabilities of Seller, if any,
that are expressly assumed by the Purchaser pursuant
to Section 1.05 hereof); and
(d) All demands, assessments, judgments, costs, and
expenses (including reasonable legal fees and other
expenses of litigation, both at the trial and
appellate level) arising from or in connection with
any action, suit,
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 10
11
proceeding, or claim incident to any of the matters
indemnified in subparts (a)-(c) of this Section 4.02.
4.03 INDEMNIFICATION BY PURCHASER. Subject to the limitations of
Section 4.01, Purchaser agrees to indemnify, hold harmless, and defend Seller
after the Closing Date against and in respect of any of the following matters
which may be asserted or established:
(a) Any and all damages, losses, expenses, or
deficiencies resulting from any breach of the
warranties, representations and covenants of
Purchaser contained in this Agreement or in any
schedule hereto;
(b) Any and all liabilities, damages, losses, or expenses
incurred or paid by Seller as a result of the
nonpayment of taxes with respect to the Assets or the
Business attributable to periods after the Closing
Date or any transfer taxes attributable to this
transaction as specified in Section 5.05;
(c) Any and all damages, losses, expenses, liabilities,
or deficiencies incurred or paid by Seller as a
result of a claim of any kind arising from the
ownership or operation of the Assets or the Business
by Purchaser after the Closing Date; and
(d) All demands, assessments, judgments, costs, and
expenses (including reasonable legal fees and other
expenses of litigation, both at the trial and
appellate level) arising from or in connection with
any action, suit, proceeding, or claim incident to
any of the foregoing.
ARTICLE V
OTHER AGREEMENTS
5.01 CONTINUING OPERATION OF BUSINESS. Seller hereby agrees, on and
after the date of this Agreement and until the Closing hereunder (except upon
the prior written consent of Purchaser and except as otherwise contemplated in
this Agreement or the exhibits or schedules hereto):
(a) To operate the Business in the ordinary and regular
course and not to engage in any transaction or
activity or enter into any agreement or make any
commitment except in the ordinary and regular course
of business or enter into any material agreement or
make any material commitment;
(b) To operate the Business in the same manner as
heretofore conducted, and not to institute any new
methods of processing, purchase, sale, lease,
management, accounting, or operation;
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 11
12
(c) Except as otherwise specifically provided in Section
5.12, to maintain and repair the Assets, at Seller's
sole cost and expense, in the same manner as Seller
has heretofore maintained and repaired the same;
(d) To maintain all leases, easements, rights-of-way,
permits, Contracts, and other rights necessary for
the operation of the Assets in full force and effect;
(e) To use its best efforts to preserve the business
organization of the Business and to preserve its
relationship with customers, suppliers, and others
having business relations with it;
(f) Not to make any sale or distribution of, or grant any
other interest in, the Assets, except for the sale of
inventory in the ordinary course of business;
(g) Not to grant any increase in the compensation of the
employees of Seller, whether now or hereafter
payable; provided that in no event is anything in
this Agreement to be construed that Purchaser has
agreed to assume any of the Seller's obligations,
contractual or otherwise, with respect to any of the
Seller's employees;
(h) To maintain in full force and effect all existing
policies of liability, casualty, and other insurance
presently maintained by Seller with respect to the
Assets and the Business, including, without
limitation, the policies described on attached
SCHEDULE 5.01(H).
5.02 PURCHASER'S CONTINUING INSPECTION RIGHTS. Seller agrees that,
pending Closing, it will (a) provide or cause to be provided to Purchaser, or
its representatives, during normal business hours or otherwise, if necessary,
full access to all of its properties, assets, books, agreements, commitments and
records; (b) furnish Purchaser and its representatives with such information
concerning any of its operations and affairs as they may reasonably request; and
(c) furnish to Purchaser true copies of all financial and operating statements
of Seller.
5.03 EXCLUSIVE DEALING. During the period from the date of this
Agreement through the Closing Date, Seller shall not, directly or indirectly,
encourage, initiate, or engage in discussions or negotiations with, or provide
any information to, or enter into any agreement to sell the Assets with, any
person, firm, company, or other entity, other than Purchaser.
5.04 EMPLOYEES. Except as may be specifically provided in this
Agreement, Purchaser shall assume no liability for any agreements, arrangements,
commitments, policies, or understandings of any kind relating to employment,
compensation, or benefits for present or former employees of Seller prior to the
Closing Date, including, but not limited to, severance pay, retirement benefits,
accrued vacation pay, or benefits or medical claims incurred before the Closing
Date. Without limiting the foregoing, Seller shall bear the full cost and
expense of any severance expenses
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 12
13
and benefits which result from the termination of any employees of the Business
not hired by Purchaser or otherwise retained in Seller's employ. To the extent
Purchaser may elect to employ any current employees of Seller upon Closing, each
employee so employed by Purchaser upon Closing shall be eligible for
participation in Purchaser's current employee benefit programs with full credit
for length of service prior to Closing with the Company. Seller acknowledges and
agrees that the decision to hire any current employees of Seller is solely in
the discretion of Purchaser and that Purchaser has no obligation of any kind to
employ any of the existing employees of Seller following Closing.
5.05 EXPENSES. Except as otherwise provided herein, each party hereto
shall pay its own expenses and costs incurred in connection with the negotiation
and consummation of this Agreement and the transaction contemplated hereby.
Purchaser shall pay all federal, state, and local sales, documentary and other
transfer taxes, if any, due as a result of the purchase, sale, or transfer of
the Assets.
5.06 BROKERS. Each of the parties represents and warrants that it has
dealt with no broker or finder in connection with the transaction contemplated
by this Agreement, and insofar as it knows, no broker or other person is
entitled to any commission or finder's fee in connection with this transaction.
Each of the parties shall be solely responsible for any brokerage commissions or
finder's fees arising from this transaction based upon arrangements made by or
on behalf of such party and agrees to indemnify and hold the other party
harmless from any claims or liabilities (including reasonable attorneys' fees
and court costs) with respect thereto.
5.07 LOSS. If, before the Closing Date, the Assets are destroyed, or if
there has been damage to the Assets which would cost in excess of $250,000 to
repair or replace, and such repair or replacement shall not have been completed
by the Closing Date to Purchaser's reasonable satisfaction, then Purchaser, at
its option, may either (a) proceed to Closing, in which event Seller shall
assign to Purchaser at Closing all insurance proceeds payable with respect to
such loss and Purchaser shall receive a credit at Closing against the Purchase
Price for any remaining sums necessary to effectuate such repairs (including,
without limitation, applicable deductibles) or (b) terminate this Agreement, in
which event the Break-Up Fee shall be immediately refunded to Purchaser and,
except as otherwise expressly provided in this Agreement, neither party shall
have any further rights or obligations hereunder. If, before the Closing Date,
there has been damage to the Assets which would cost $250,000 or less to repair
or replace, and such repair or replacement shall not have been completed by the
Closing Date to Purchaser's reasonable satisfaction, then the parties shall
remain obligated to close this transaction, but Purchaser shall be entitled to
an assignment at Closing of all insurance proceeds payable with respect to such
loss and shall additionally receive a credit at Closing against the Purchase
Price in an amount to be agreed upon by Purchaser and Seller for any remaining
sums necessary to effectuate such repairs (including, without limitation,
applicable deductibles). If Purchaser and Seller are unable to agree upon the
remaining sum necessary to effectuate repairs, they shall refer such
determination to Superior Auctioneers of San Antonio, Texas, or other mutually
acceptable equipment appraiser, whose decision shall be final, binding, and
conclusive as to and upon all concerned.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 13
14
5.08 ASSIGNMENT OF CONTRACTS. At least five (5) days prior to the
Closing Date, Seller shall provide a written listing and copies of all then
operative or effective Contracts to Purchaser. At or prior to Closing, Purchaser
shall notify Seller of those Contracts, if any, which Purchaser desires to
assume at Closing. If Purchaser does not issue such notification, Purchaser
shall be deemed to desire to assume all of the Contracts listed and provided by
Seller on its notification to Purchaser. Seller will use its best efforts to
procure any necessary consents for the assignment of all Contracts which
Purchaser desires to assume at the Closing. The failure of Seller,
notwithstanding such efforts, to secure any required consent to the assignment
of such Contracts shall not be a condition to Closing or a breach by Seller
hereunder.
5.09 POST-CLOSING OPERATIONS BY SELLER. Purchaser acknowledges that
Seller will continue to operate its business following Closing for the limited
purposes of collecting accounts receivable and other obligations owed to it and
discharging any liabilities it might have. Following Closing, Seller may
continue to utilize the name "Trinity Services" in connection with the above-
specified activities and the winding up of its business and affairs, but for no
other purposes without the prior written consent of Purchaser. Any checks or
other payments received by Seller or Purchaser which are in payment of
receivables or other obligations owed to Seller shall be the property of Seller.
Any checks or other payments received by Seller or Purchaser which are in
payment of receivables or other obligations owed to Purchaser shall be the
property of Purchaser. Purchaser and Seller each agrees to remit any such
payments which are received by either of them and which are the property of the
other party to the other party promptly upon receipt of the same. Purchaser
further agrees that Seller may furnish notice to its vendors, suppliers, and
customers advising of the sale of the Assets to Purchaser and requesting such
vendors, suppliers, and customers to make payment of any obligations owed to
Seller directly to Seller following Closing, provided that Seller shall obtain
Purchaser's approval of its proposed form(s) of notification prior to any
mailing or other delivery of the same.
5.10 INVESTMENT REPRESENTATIONS BY SELLERS. In connection with any
exercise of its rights under the Warrant and as matters which shall survive
Closing hereunder without time limitation, Seller expressly represents,
warrants, acknowledges, and agrees to and with Purchaser that:
(a) any stock acquired by Seller pursuant to the Warrant
(the "Stock") may not have been registered under the
Securities Act of 1933 or any other state securities
laws (collectively, the "Securities Acts") because
Purchaser may or will issue the Stock in reliance
upon this Section 5.10 and the exemptions from the
registration requirements of the Securities Acts
providing for issuance of securities not involving a
public offering;
(b) Seller will acquire any Stock for Seller's own
account, for investment, and not with a view to the
resale or distribution thereof;
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 14
15
(c) Seller will not transfer, sell or offer for sale any
portion of the Stock unless there is an effective
registration or other qualification relating thereto
under the Securities Act of 1933 and under any
applicable state securities laws or unless the holder
of the Stock delivers to Purchaser an opinion of
counsel, satisfactory to Purchaser, that such
registration or other qualification under such Act
and applicable state securities laws is not required
in connection with such transfer, offer or sale;
(d) Purchaser is under no obligation to register the
Stock or to assist Seller in complying with any
exemption from registration under the Acts if Seller
should at a later date wish to dispose of the Stock;
(e) Prior to entering into this Agreement, Seller has
made an investigation of Purchaser and its business
and has obtained or had made available to Seller all
information with respect thereto which Seller needed
to make an informed decision to structure the
transactions contemplated hereby as provided in this
Agreement;
(f) Seller possesses adequate experience and
sophistication as investors for the evaluation of the
merits and risks of investment in the Stock; and
(g) Seller is an "accredited investor," as defined in
Regulation D as promulgated under the Securities Act
of 1933, as amended, (the "1933 Act").
5.11 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, UPON CLOSING HEREUNDER, PURCHASER ACCEPTS THE ASSETS IN THEIR "AS IS,
WHERE IS" CONDITION, WITH ALL FAULTS, AND WITHOUT REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO CONDITION, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES.
5.12 REIMBURSEMENT FOR CERTAIN CAPITAL EXPENDITURES. If this
transaction closes, Purchaser shall reimburse Seller at the Closing for the
out-of-pocket expenses incurred by Seller during negotiation of this transaction
which are specifically listed on attached SCHEDULE 5.12, together with any other
out-of-pocket expenses of a capital nature which are pre-approved by Purchaser
in writing and which may be incurred by Seller between the date hereof and the
Closing Date to increase the number of active well servicing units in the
Business from the number active as of the date of this Agreement or upon
maintenance or repairs of a capital nature incident to the refurbishing of any
of Seller's existing well servicing units.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 15
16
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 TERMINATION AND ABANDONMENT. This Agreement may be terminated and
the purchase and sale of the Assets abandoned at any time prior to the Closing:
(a) by mutual agreement of Seller and the Purchaser;
(b) by Purchaser, if the conditions set forth in Section
7.02 and the deliveries required by Section 7.04
shall not have been complied with and performed in
any material respect and such noncompliance or
nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or
eliminated) on or before the Closing Date; and
(c) by Seller, if the conditions set forth in Section
7.03 and the deliveries required by Section 7.05 have
not been complied with and performed in any material
respect and such noncompliance or nonperformance
shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) on or before
the Closing Date.
6.02 RIGHTS AND OBLIGATIONS ON TERMINATION.
(a) If Purchaser fails or refuses to satisfy the conditions
set forth in Section 7.03(a) and (b) hereof and if Seller has timely satisfied
all the conditions to Purchaser's obligation to close hereunder and is not in
default hereunder, Seller, as its exclusive remedy therefor, shall be entitled
to receive the Break-Up Fee and any Extension Fees (as defined in Section 7.01)
as liquidated damages and not a penalty for Purchaser's breach hereof.
(b) If Seller fails or refuses to satisfy the conditions set
forth in Section 7.02(a) and (b) hereof and if Purchaser has timely satisfied
all the conditions to Seller's obligation to close hereunder and is not in
default hereunder, Purchaser shall be entitled to have the Break-Up Fee and any
Extension Fees refunded and, in addition, shall have the right to either (i)
bring claims for actual damages against the Seller for breaches of
representations, warranties, covenants, or agreements made in this Agreement or
in any instrument or document executed in connection herewith, subject to the
limitations of Section 4.01 hereof, or (ii) seek enforcement of this Agreement
at law or equity, including, without limitation, an action for specific
performance of the terms of this Agreement by Seller.
(c) Any provisions of this Agreement to the contrary
notwithstanding, if Purchaser exercises its right of termination due to
non-satisfaction of the condition set forth in Section 7.02(g) relating to
successful completion of the Sierra IPO, Seller shall be entitled to receive any
Extension Fees and, in addition, to be reimbursed from the Break-up Fee for all
fees and expenses incurred by Seller in connection with this transaction up to a
maximum of $20,000.00.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 16
17
(d) Under no circumstances shall any party ever be entitled to
recover exemplary or punitive damages in any action for the construction or
enforcement of this Agreement or otherwise arising hereunder.
ARTICLE VII
THE CLOSING
7.01 TIME, DATE AND PLACE OF CLOSING. Closing ("xxx Xxxxxxx") of the
transaction contemplated hereby shall take place (a) at the offices of Purchaser
at 406 N. Big Spring in Midland, Texas, contemporaneously with or within thirty
(30) days following any successful completion through a national stock exchange
of an initial public offering of equity in Purchaser (the "Sierra IPO"), but in
no event later than February 28, 2000, said date to be at the unilateral
selection of Purchaser with at least ten (10) days advance notice to Seller, or
(b) at such other time and place as the parties may hereafter mutually agree in
writing. Notwithstanding the foregoing, Purchaser may unilaterally on one or
more occasions extend the Closing Date for up to four additional months from the
last day of February 2000 through the last day of June 2000 by depositing an
extension payment in the amount of $25,000 per month with the Escrow Agent on or
before the end of the calendar month for which such extension is desired (e.g.
on or before February 28, 2000 for an extension through March 31, 2000). As used
in this Agreement, "Extension Fees" shall mean and refer to each such $25,000
extension payment, together with all interest accruing thereon while held by the
Escrow Agent. If the sale contemplated hereby is closed pursuant to the terms of
this Agreement, the Extension Fees shall be paid to Seller at the Closing as
additional consideration for the sale of the Assets to Purchaser. The Extension
Fees shall otherwise be applied, remitted, or paid as elsewhere provided in this
Agreement and the Escrow Agreement. As used herein, "Closing Date" shall mean
and refer to the date upon which Closing is to occur under this Agreement, as
determined in accordance with the foregoing provisions of this Section 7.01.
7.02 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of
Purchaser to close under this Agreement is subject to the fulfillment prior to
or at the Closing Date of each of the following conditions, any one or more of
which may be waived by Purchaser:
(a) The representations, warranties and covenants of
Seller contained herein or otherwise delivered
pursuant hereto shall be true in all material
respects as of the date when made, shall be deemed to
be made again at and as of the Closing Date, and
shall be true at and as of the Closing Date;
(b) Seller shall have performed and complied with all
agreements and conditions required by this Agreement
to be performed or complied with by Seller prior to
or at the Closing Date;
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 17
18
(c) No material adverse change in the Business or in the
Assets shall have occurred between the date hereof
and the Closing Date;
(d) No federal, state, or local governmental unit,
agency, body or authority with competent jurisdiction
over the subject matter shall have given official
written notice of its intention to institute
proceedings to prohibit the transaction contemplated
by this Agreement, or which would interfere with the
use of the Assets or the operation of the Business;
(e) No judgment, order, or decree shall have been
rendered by any governmental authority and no action
shall have been instituted or threatened by any
person which has the effect of enjoining or which
seeks to enjoin the consummation of the transaction
contemplated by this Agreement;
(f) All deliveries pursuant to Section 7.04 shall have
been made and shall be reasonably acceptable to
Purchaser; and
(g) Purchaser shall have successfully consummated and
completed the Sierra IPO.
7.03 CONDITIONS TO OBLIGATIONS OF SELLER. The obligation of Seller to
close under this Agreement is subject to the fulfillment prior to or at the
Closing Date of each of the following conditions, any one or more of which may
be waived by the Seller:
(a) The representations, warranties, and covenants of
Purchaser contained herein or otherwise delivered
pursuant hereto shall be true as of the date when
made, shall be deemed to be made again at and as of
the Closing Date, and shall be true at and as of the
Closing Date;
(b) Purchaser shall have performed and complied with all
agreements and conditions required by this Agreement
to be performed or complied with by Purchaser prior
to or at the Closing Date;
(c) No federal, state, or local governmental unit,
agency, body, or authority with competent
jurisdiction over the subject matter shall have given
official written notice of its intention to institute
proceedings to prohibit the transaction contemplated
by this Agreement, or which would interfere with the
use of the Assets or the operation of the Business;
and
(d) No judgment, order, or decree shall have been
rendered by any governmental authority and no action
shall have been instituted or threatened by any
person which has the effect of enjoining or which
seeks to enjoin the consummation of the transaction
contemplated by this Agreement.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 18
19
7.04 DELIVERIES BY SELLER AT THE CLOSING. At the Closing, Seller shall
execute, acknowledge, and/or deliver, as appropriate, to Purchaser the
following:
(a) The certificate of Seller confirming the truth and
accuracy of all representations and warranties of
Seller under this Agreement as of the Closing Date
and the performance by Seller of all material
obligations required to be performed by Seller under
this Agreement at or prior to Closing;
(b) Evidence that all consents necessary in connection
with this transaction have been obtained (which shall
consist of the original copies of all consents
required to be obtained in writing and a certificate
from Seller stating that all other consents have been
obtained);
(c) Evidence that all liens or encumbrances of any kind
on the Assets shall have been released and/or a
termination statement shall have been filed as of the
Closing Date;
(d) An assignment and xxxx of sale substantially
identical in form and substance to that attached
hereto as EXHIBIT H (the "Assignment and Xxxx of
Sale"), conveying all of the Assets other than any
Contracts which Purchaser has not elected to assume
pursuant to this Agreement or for which Seller has
been unable to obtain requisite consents to
assignment from applicable third parties;
(e) All titles and other registration documents necessary
to transfer title to the rigs, motor vehicles, and
other tangible personalty shown on attached EXHIBIT B
to Purchaser;
(f) A non-competition agreement that is substantially
identical in form and substance to that attached
hereto as EXHIBIT I (the "Non-Competition
Agreement");
(g) At the option of Purchaser, a lease that is
substantially identical in form and substance to that
attached hereto as EXHIBIT J, duly executed by the
fee owner(s) of such property (the "Yard Lease"),
together with a Phase I environmental assessment
covering the leased premises that is reasonably
satisfactory to Purchaser.
7.05 DELIVERIES BY PURCHASER AT THE CLOSING. At the Closing, Purchaser
shall execute, acknowledge, and/or deliver, as appropriate, to Seller the
following:
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 19
20
(a) The certificate of Purchaser confirming the truth and
accuracy of all representations and warranties of
Purchaser under this Agreement as of the Closing Date
and the performance by Purchaser of all material
obligations required to be performed by Purchaser
under this Agreement at or prior to Closing;
(b) Appropriate evidence of the authority of Purchaser to
enter into and perform its obligations under this
Agreement and of each signatory officer to act on
behalf of Purchaser in connection therewith;
(c) The Purchase Price in immediately available funds;
(d) The Note;
(e) The Security Agreement
(f) The Warrant;
(g) The Assignment and Xxxx of Sale;
(h) The Non-Competition Agreement; and
(i) At the option of Purchaser, the Yard Lease.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 FURTHER ASSURANCES; FURTHER COOPERATION. The parties to this
Agreement shall undertake to perform their obligations under this Agreement, to
satisfy all conditions, and to cause the transaction contemplated by this
Agreement to be carried out in accordance with the terms of this Agreement. Upon
the execution of this Agreement and thereafter, each party shall do such things
as may be reasonably requested by the other party hereto in order more
effectively to consummate or document the transaction contemplated by this
Agreement. Seller agrees to cooperate reasonably with Purchaser in connection
with Purchaser's application for the transfer, renewal or issuance of any
permits, licenses, approvals, or other authorizations or to satisfy any
regulatory requirements involving the transfer of the Business to Purchaser.
8.02 NOTICES. Any notice or communication required or permitted
hereunder shall be given in writing, shall refer specifically to the section of
this Agreement under which it is given or to which it is applicable, and shall
be sent by (a) personal delivery, (b) expedited delivery service with proof of
delivery, (c) United States mail, postage prepaid, registered or certified mail,
or (d)
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 20
21
telecopy (provided that such telecopy is confirmed by expedited delivery service
or by mail in the manner previously described) addressed as follows:
If to Seller: Xxxxxxx X. Xxxxxx
P. O. Xxx 000
Xxxxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy: X. X. Xxxxxx, Xx.
Porter, Rogers, Xxxxxxx & Xxxxxx
000 X. Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Purchaser: Sierra Well Service, Inc.
000 X. Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy: Xxxxxxx X. Xxxx, Xx.
Xxxx & Xxxx, L.L.P.
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address or to the attention of such other persons as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of telecopy upon receipt.
8.03 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
8.04 CAPTIONS; DEFINITIONS. The titles or captions of articles,
sections, and subsections contained in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit, extend, or
describe the scope of this Agreement or the intent of any provision
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 21
22
hereof. The parties agree to all definitions in the statement of parties to this
Agreement and in the other introductory language to this Agreement.
8.05 CONTROLLING LAW; AMENDMENT; WAIVER; REMEDIES CUMULATIVE. This
Agreement shall be construed and enforced in accordance with the laws of the
State of Texas. This Agreement may not be altered or amended except in writing
signed by Purchaser and Seller. The failure of any party hereto at any time to
require performance of any provisions hereof shall in no manner affect the right
to enforce the same. Except as set forth in Section 4.01, no waiver by any party
hereto of any condition, or of the breach of any term, provision, warranty,
representation, agreement, or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach or a waiver of
any other condition or of the breach of any other term, provision, warranty,
representation, agreement, or covenant herein contained.
8.06 POST CLOSING ACCESS. Seller and the Purchaser shall have
reasonable access to all books and records of the Business, and the parties
hereto shall furnish to each other any information or copies of any document
which may be relevant in connection with any tax matter requiring such
information and shall provide such other assistance in this connection as the
parties reasonably request, at no cost to the party to which the request is
made. Without limiting the foregoing, Seller further agrees that, upon request
by Purchaser following Closing, it will execute and deliver to Purchaser or its
accountants such audit response letters and further confirmations as Purchaser
or its accountants may reasonably require for purposes of verification of the
accuracy, validity, and completeness of all financial and other information
provided or made available by Seller in connection with the transactions
contemplated by this Agreement, provided, however, that the recourse of Seller
under any such letters or confirmations shall be limited to accord with the
limitations of recourse upon Seller under this Agreement.
8.07 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto with respect to the transaction contemplated and
supersedes all prior negotiations, understandings, and agreements, both written
and oral, among the parties with respect thereto.
8.08 NO PRESUMPTION. Neither this Agreement nor any other agreement
between the parties nor any uncertainty or ambiguity herein or therein shall be
construed or resolved using any presumption against any party hereto or thereto,
whether under any rule of construction or otherwise. On the contrary, this
Agreement and the other agreements between the parties have been reviewed by the
parties and their counsel and, in the case of any ambiguity or uncertainty,
shall be construed according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
8.09 COUNTERPARTS. This Agreement may be executed by each party upon a
separate copy, and in such case one counterpart of this Agreement shall consist
of enough of such copies to reflect the signatures of all of the parties to this
Agreement. This Agreement shall become effective when one or more counterparts
have been signed by each of the parties to this Agreement and delivered
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 22
23
to each of the other parties to this Agreement. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement or the terms of this
Agreement to produce or account for more than one of such counterparts.
[THIS SPACE INTENTIONALLY LEFT BLANK]
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 23
24
DULY EXECUTED by the parties hereto as of the day and year first above
written.
SELLER:
/s/ XXXXXXX X. XXXXXX
-----------------------------------
XXXXXXX X. XXXXXX d/b/a TRINITY
SERVICES
PURCHASER:
SIERRA WELL SERVICE, INC.
By: /s/ XXXXXXX XXXXX
--------------------------------
Printed Name: XXXXXXX XXXXX
----------------------
Title: Vice President
-----------------------------
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A EXCLUDED PERSONAL ITEMS
EXHIBIT B THE TANGIBLE PERSONALTY
EXHIBIT C THE CONTRACTS
EXHIBIT D THE NOTE
EXHIBIT E THE SECURITY AGREEMENT
EXHIBIT F THE ESCROW AGREEMENT
EXHIBIT G THE WARRANT
EXHIBIT H THE ASSIGNMENT AND XXXX OF SALE
EXHIBIT I THE NON-COMPETITION AGREEMENT
EXHIBIT J THE YARD LEASE
SCHEDULE 1.02 ALLOCATION OF PURCHASE PRICE
SCHEDULE 5.01(h) EXISTING INSURANCE POLICIES
SCHEDULE 5.12 REIMBURSABLE EXPENSES
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT PAGE 24
25
EXHIBIT D
SECURED PROMISSORY NOTE
$250,000.00 Kingsville, Texas ____________, 2000
FOR VALUE RECEIVED, the undersigned, SIERRA WELL SERVICE, INC., a
Delaware corporation ("Maker"), promises to pay to the order of XXXXXXX X.
XXXXXX d/b/a TRINITY SERVICES ("Payee"), at P. O. Xxx 000, Xxxxxxxxxx, Xxxxx
00000, the principal sum of TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00), together with interest on the unpaid principal balance from day
to day outstanding prior to default or maturity at a floating per annum rate
which shall from quarter to quarter be equal to the lesser of (i) the Prime Rate
(hereinafter defined) in effect hereunder (the "Established Rate") (calculated
on the basis of actual days elapsed in a year consisting of 365 or 366 days, as
appropriate) or (ii) the Maximum Rate (hereinafter defined) (calculated on the
basis of actual days elapsed in a year consisting of 365 or 366 days, as
appropriate). The interest rate on this Note shall initially be determined as of
the first Friday most immediately preceding the date of this Note that is a
business day (the "Initial Determination Date") and shall thereafter be
redetermined quarterly until maturity based upon the Prime Rate in effect as of
the first Friday most immediately preceding each ensuing calendar quarter from
the date hereof that is a business day (each such date being hereinafter
referred to as a "Redetermination Date"). Each change in the rate of interest
charged hereunder shall, subject to the terms hereof, become effective, without
notice to Maker, upon the applicable quarterly adjustment date (as opposed to
the Redetermination Date). If at any time and from time to time the Established
Rate exceeds the Maximum Rate, thereby causing the interest payable to be
limited to the Maximum Rate, then any subsequent reduction in the Established
Rate shall not reduce the rate of interest hereunder below the Maximum Rate
until the total amount of interest accrued hereon equals the amount of interest
that would have accrued if the Established Rate had at all times been in effect.
All past due principal of and accrued interest on this Note shall bear interest
at the Maximum Rate.
As used herein, "Prime Rate" shall mean the floating rate of interest
denominated and published as such by the Wall Street Journal on the Initial
Determination Date and thereafter on each applicable Redetermination Date.
As used herein, "Maximum Rate" shall mean the maximum non-usurious rate
of interest that at any time, or from time to time, may be contracted for,
taken, reserved, charged, or received under applicable law on the indebtedness
evidenced by this Note, after taking into account, to the extent required by
applicable law, any and all relevant payments, charges, or other amounts under
this Note and all instruments securing payment of this Note. To the extent that
Chapter 303 of the Texas Finance Code, as amended, is relevant for purposes of
determining the Maximum Rate, Payee hereby notifies Maker that the applicable
rate ceiling shall be the "applicable interest rate ceiling" from time to time
in effect, as limited by Section 303.009 of the Texas Finance Code, as amended;
provided, however, that to the extent permitted by applicable law, Payee
reserves the right to change the applicable rate ceiling from time to time by
further notice to Maker; and, provided further, that the Maximum Rate shall not
be limited to the applicable interest rate ceiling under Chapter 303 if federal
laws or other state laws now or hereafter in effect and applicable to this Note
(and the interest contracted for, charged and collected hereunder) shall permit
a higher rate of interest.
The principal of this Note is due and payable fifteen (15) months from
the date hereof. Interest on this note is due and payable monthly as it accrues,
commencing on the first day of the first month following the month of Closing
under the Asset Purchase Agreement (hereinafter defined) and continuing on the
first day of each month thereafter until the entire principal balance and all
accrued and unpaid interest on this note have
26
been paid in full. This Note may be prepaid in whole or in part without penalty.
Partial prepayments shall be applied first to any accrued and unpaid interest
and the balance remaining, if any, to principal.
This Note is secured by that certain Security Agreement of even date
herewith, between Maker, as Debtor, and Payee, as Secured Party, covering all of
the collateral therein described.
It is understood and agreed that in the event of default in the payment
of this Note or any installment hereof, principal or interest, and if such
default shall continue unremedied for more than ten (10) days following written
notice thereof from Payee to Maker, or in the event of any default (other than
non-payment of this Note) in any instrument securing payment of this Note and if
such default shall continue unremedied for more than thirty (30) days following
written notice thereof from Payee to Maker, the entire principal balance of and
all accrued and unpaid interest on this Note shall at once become due and
payable without notice, at the option of Payee. Failure by Payee to exercise
this option on any one or more occasions shall not constitute a waiver of the
right to exercise such option in the event of subsequent default.
Except as otherwise herein expressly provided, the makers, signers,
sureties, and endorsers of this Note jointly and severally waive demand,
presentment, notice of dishonor, notice of intent to demand or accelerate
payment hereof, diligence in collecting, grace, notice, and protest, and agree
to one or more extensions for any period or periods of time and partial
payments, before or after maturity, without prejudice to Payee; and if this Note
shall be collected by legal proceedings or through probate or bankruptcy court,
or shall be placed in the hands of an attorney for collection after default or
maturity, Maker agrees to pay all costs of collection, including reasonable
attorney's fees.
All agreements between Maker and Payee, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that under
no contingency, whether by reason or demand for payment or acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged, or
received by Payee exceed the Maximum Rate. If, for any circumstance whatsoever,
interest would otherwise be payable to Payee in excess of the Maximum Rate, the
interest payable to Payee hereunder shall be reduced to the Maximum Rate; and if
for any circumstance Payee shall ever receive anything of value deemed interest
by applicable law in excess of the Maximum Rate, then an amount equal to any
such excess shall be applied to the reduction of the principal hereof and not
the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal hereof, such excess shall be refunded to Maker. All
interest paid or agreed to be paid to Payee shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full period until payment in full of the principal (including the period of any
renewal or extension hereof) so that the interest hereon for such full period
shall not exceed the Maximum Rate.
This Note is in all respects subject to that certain Asset Purchase
Agreement (the "Asset Purchase Agreement") dated as of February 10, 2000,
between Payee, as Seller, and Maker, as Purchaser.
This Note shall be governed by and construed in accordance with the
laws of the State of Texas.
SIERRA WELL SERVICE, INC.
By:
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
27
EXHIBIT G
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
(COLLECTIVELY, THE "ACTS") AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT PURSUANT TO THE ACTS OR
IN RELIANCE ON EXEMPTIONS THEREFROM.
WARRANT CERTIFICATE
Number of Warrants:__________ Warrant No. _____
This Warrant Certificate ("Warrant Certificate") certifies that, for
value received,
XXXXXXX X. XXXXXX
is the registered holder of the number of Warrants (the "Warrants") set forth
above. Each Warrant entitles the holder thereof, at any time or from time to
time on or before the Expiration Date, to purchase from the Company one fully
paid and nonassessable share of Common Stock at the Exercise Price, subject to
adjustment as provided herein.
As used in this Warrant Certificate, the following terms shall have the
following respective meanings:
"Asset Purchase Agreement" means that certain Asset Purchase Agreement
dated as of February 10, 2000, between Xxxxxxx X. Xxxxxx d/b/a Trinity Services,
as Seller, and the Company, as Purchaser.
"Common Stock" means the common stock, no par value per share, of the
Company, or such other class of securities as shall then represent the common
equity of the Company.
"Company" means Sierra Well Service, Inc., a Delaware corporation.
"Exercise Price," subject in all circumstances to adjustment in
accordance with Section 3, means $______ per share.
"Expiration Date" means 5:00 p.m., New York City Time, on the day which
is the later of (i) eighteen (18) months following the date of any Sierra IPO
(as defined in the Asset Purchase Agreement) or (ii) one (1) year following
retirement in full of the indebtedness evidenced by the Note (as defined in the
Asset Purchase Agreement).
"Issuance Date" means _____________________, 2000.
28
1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised in whole or
in part by presentation and surrender at the office of the Company specified
herein of (i) this Warrant Certificate with the Election To Exercise, attached
hereto as Exhibit A, duly completed and executed, and (ii) payment of the
Exercise Price, by bank draft or cashier's check, for the number of Warrants
being exercised. If the holder of this Warrant Certificate at any time exercises
less than all the Warrants, the Company shall issue to such holder a Warrant
Certificate identical in form to this Warrant Certificate, but evidencing a
number of Warrants equal to the number of Warrants originally represented by
this Warrant Certificate less the number of Warrants previously exercised.
Likewise, upon the presentation and surrender of this Warrant Certificate at the
office of the Company and at the request of the holder, the Company will, at the
option of the holder, issue to the holder in substitution for this Warrant
Certificate one or more warrant certificates in identical form and for an
aggregate number of Warrants equal to the number of Warrants evidenced by this
Warrant Certificate.
(b) To the extent that the Warrants have not been exercised at
or prior to the Expiration Date, such Warrants shall expire and the rights of
the holder shall become void and of no effect.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced hereby have not
been registered under the Securities Act of 1933, as amended, or under any state
securities law (collectively, the "Acts"), in reliance on exemptions from the
registration provisions thereof. The holder hereof acknowledges that the
Warrants may not be directly or indirectly sold, transferred or otherwise
disposed of in violation of the provisions of the Acts. Any purported sale,
transfer or other disposition of the Warrants in violation of this provision
shall be void and the Company shall not be required to recognize the same.
Compliance with this provision is the responsibility of the holder. The Company
shall deem and treat the registered holder of this Warrant Certificate as the
true and lawful owner of the Warrants for all purposes, any claims of another
person to the contrary notwithstanding.
3. ANTIDILUTION ADJUSTMENTS. The shares of Common Stock purchasable on
exercise of the Warrants are shares of Common Stock as constituted as of the
Issuance Date. The number and kind of securities purchasable upon the exercise
of the Warrants, and the Exercise Price, shall be subject to adjustment from
time to time upon the happening of certain events, as follows:
(a) Mergers, Consolidations and Reclassifications. In case of
any reclassification or change of outstanding securities issuable upon exercise
of the Warrants at any time after the Issuance Date (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination to which subsection 3(b) applies),
or in case of any consolidation or merger of the Company with or into another
entity or other person (other than a merger with another entity or other person
in which the Company is the surviving corporation and which does not result in
any reclassification or change in the securities issuable upon exercise of this
Warrant), the holder of the Warrants shall have, and the Company, or such
successor corporation or other entity, shall covenant in the constituent
documents effecting any of the foregoing transactions that such holder does
have, the right to obtain upon the exercise of the Warrants, in lieu of each
share of Common Stock, other securities, money or other property
29
theretofor issuable upon exercise of a Warrant, the kind and amount of shares of
stock, other securities, money or other property receivable upon such
reclassification, change, consolidation or merger by a holder of the shares of
Common Stock, other securities, money or other property issuable upon exercise
of a Warrant if the Warrants had been exercised immediately prior to such
reclassification, change, consolidation or merger. The constituent documents
effecting any such reclassification, change, consolidation or merger shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this subsection 3(a). The provisions
of this subsection 3(a) shall similarly apply to successive reclassifications,
changes, consolidations or mergers.
(b) Subdivision and Combinations. If the Company, at any time
after the issuance Date, shall subdivide its shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and the number of shares of Common
Stock purchasable upon exercise of the Warrants shall be proportionately
increased, as at the effective date of such subdivision, or if the Company shall
take a record of holders of its Common Stock for such purpose, as at such record
date, whichever is earlier. If the Company, at any time after the Issuance Date,
shall combine its shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of shares of Common Stock purchasable
upon exercise of the Warrants shall be proportionately reduced, as at the
effective date of such combination, or if the Company shall take a record of
holders of its Common Stock for purposes of such combination, as at such record
date, whichever is earlier.
(c) Dividends and Distributions. If the Company at any time
after the Issuance Date shall declare a dividend on its Common Stock payable in
stock or other securities of the Company or of any other corporation or other
entity, or in property or otherwise than in cash, to the holders of its Common
Stock, the holder of a Warrant shall, without additional cost, be entitled to
receive upon any exercise of a Warrant, in addition to the Common Stock to which
such holder would otherwise be entitled upon such exercise, the number of shares
of stock or other securities or property which such holder would have been
entitled to receive if he had been a holder immediately prior to the record date
for such dividend (or, if no record date shall have been established, the
payment date for such dividend) of the number of shares of Common Stock
purchasable on exercise of such Warrant immediately prior to such record date or
payment date, as the case may be.
(d) Items Constituting Common Stock. For the purposes of this
Section 3, the term "shares of Common Stock" shall mean shares of (i) the class
of stock designated as the Common Stock at the date hereof or (ii) any other
class of stock resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. If at any time, because of an
adjustment pursuant to subsection (a), the Warrants shall entitle the holders to
purchase any securities other than shares of Common Stock, thereafter the number
of such other securities so purchasable upon exercise of each Warrant and the
Exercise Price of such securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 3.
30
(e) Calculation of Exercise Price. The Exercise Price in
effect from time to time shall be calculated to four decimal places and rounded
to the nearest thousandth.
4. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the number of
shares of Common Stock is required to be adjusted as provided in Section 3, the
Company shall forthwith compute the adjusted Exercise Price or the number of
shares of Common Stock issuable and shall prepare and mail to the holder hereof
a certificate setting forth such adjusted Exercise Price or such number of
shares of Common Stock, showing in reasonable detail the facts upon which the
adjustment is based.
5. NOTICES TO WARRANT HOLDERS. In the event:
(a) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
of the conveyance or sale of all or substantially all of the assets of the
Company, or of any reclassification or change of the Common Stock or other
securities issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock (or other securities issuable upon the exercise
of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
any class or series of capital stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be sent to the holder hereof, at least 30 days
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, a written notice stating (x)
the date for the determination of the holders of record of shares of Common
Stock (or other securities issuable upon the exercise of the Warrants) entitled
to receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock
(or other securities issuable upon the exercise of the Warrants), or (z) the
date on which any of the events specified in subsections (a)-(e) is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock (or other securities issuable upon
the exercise of the Warrants) shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon any such event. Failure
to give such notice or any defect therein shall not affect the legality or
validity of any such event, or the vote upon any such action.
6. REPORTS TO WARRANT HOLDERS. The Company will cause to be delivered,
by first class mail, postage prepaid, to the holder at such holder's address
appearing hereon, or such other address
31
as the holder shall specify, a copy of any reports delivered by the Company to
the holders of Common Stock.
8. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) Until the Expiration Date, the Company shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock (and other securities),
for the purpose of enabling it to satisfy any obligation to issue shares of
Common Stock (and other securities) upon the exercise of the Warrants, the
number of shares of Common Stock (and other securities) issuable upon the
exercise of such Warrants.
(b) The Company shall pay all expenses, taxes (other
than stock transfer taxes or charges) and other charges payable in connection
with the preparation, issuance and delivery of new warrant certificates on
transfer of the Warrants.
(c) All Common Stock (and other securities) which may
be issued upon exercise of the Warrants shall upon issuance be validly issued,
fully paid, non-assessable and free from all preemptive rights and all taxes,
liens and charges with respect to the issuance thereof, and will not be subject
to any restrictions on voting or transfer thereof except as set forth in any
stockholders agreement.
(d) All original issue taxes payable in respect of
the issuance of shares of Common Stock to the registered holder hereof upon the
exercise of the Warrants shall be borne by the Company; provided, that the
Company shall not be required to pay any tax or charge imposed in connection
with any transfer involved in the issuance of any certificate representing
shares of Common Stock (and other securities) in any name other than that of the
registered holder hereof, and in such case the Company shall not be required to
issue or deliver any certificate representing shares of Common Stock (and other
securities) until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or charge is due.
8. NO RIGHTS AS STOCKHOLDER. The holder of the Warrants shall not, by
virtue of holding such Warrants, be entitled to any rights of a stockholder of
the Company either at law or in equity, and the rights of the holder of the
Warrants are limited to those expressed herein.
9. NOTICES. All notices provided for hereunder shall be in writing and
may be given by registered or certified mail, return receipt requested, telex,
telegram, telecopier, air courier guaranteeing overnight delivery of personal
delivery, if to the holder at the following address:
Xxxxxxx X. Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxx 00000
Telephone:
------------------
Facsimile:
------------------
and, if to the Company:
32
Sierra Well Service, Inc.
000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopier (000) 000-0000
10. GOVERNING LAW. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
principles of conflict of laws.
11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES. Upon
receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate, then, in the absence of notice to the Company that such Warrant
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and deliver, in exchange for or in lieu of the lost, stolen, destroyed
or mutilated Warrant Certificate, a substitute Warrant Certificate of the same
tenor and evidencing a like number of Warrants.
12. ASSET PURCHASE AGREEMENT. This Warrant Certificate and the
obligations of the Company hereunder are issued and incurred pursuant to, and
are in all respects subject to, the Asset Purchase Agreement, the terms of which
are incorporated herein by reference for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed this ___________day of ____________________, 2000, by the
undersigned, thereunto duly authorized.
SIERRA WELL SERVICE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
