EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
FIRST SEISMIC CORPORATION
AND
XXXXX LIVING TRUST
------------------
MARCH 30, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I--DEFINITIONS
ARTICLE II--PURCHASE AND SALE; CLOSING
2.01 TRANSFER OF STOCK............................................... 1
2.02 PURCHASE PRICE.................................................. 1
2.04 CLOSING......................................................... 2
2.05 DELIVERIES AT CLOSING........................................... 2
2.06 CONDITIONS TO CLOSING........................................... 2
ARTICLE III---REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
3.01 GOOD TITLE...................................................... 2
3.02 AUTHORIZATION AND VALIDITY OF AGREEMENT......................... 2
3.03 ORGANIZATION.................................................... 3
3.04 QUALIFICATION................................................... 3
3.05 CONSENTS; ABSENCE OF CONFLICTS.................................. 3
3.06 CAPITALIZATION OF THE COMPANY; TRANSFER OF SHARES............... 3
3.07 EQUITY INVESTMENTS AND AFFILIATES............................... 4
3.08 ABSENCE OF CHANGES.............................................. 4
3.09 ASSETS.......................................................... 5
3.10 PERMITS......................................................... 5
3.11 CONTRACTS....................................................... 5
3.12 BROKERS' FEES................................................... 5
3.13 FINANCIAL STATEMENTS............................................ 6
3.14 LEGAL COMPLIANCE................................................ 6
3.15 TAXES........................................................... 6
3.16 EMPLOYEES; EMPLOYEE RELATIONS................................... 7
3.17 EMPLOYEE BENEFIT MATTERS........................................ 7
3.18 BOOKS AND RECORDS............................................... 7
3.19 CERTAIN PAYMENTS................................................ 7
ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF BUYER
4.01 ORGANIZATION.................................................... 8
4.02 QUALIFICATION................................................... 8
4.03 AUTHORITY AND VALIDITY OF AGREEMENT............................. 8
ARTICLE V--ADDITIONAL AGREEMENTS
5.01 SHAREHOLDER APPROVAL............................................ 8
-ii-
ARTICLE VI--INDEMNIFICATION
6.01 BY SHAREHOLDER.................................................. 9
6.02 BY BUYER........................................................ 9
6.03 DEFENSE OF THIRD PARTY CLAIMS................................... 9
ARTICLE VII--MISCELLANEOUS
7.01 AMENDMENT....................................................... 10
7.02 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES..................... 10
7.03 ASSIGNMENT...................................................... 10
7.04 NOTICES......................................................... 11
7.05 EXPENSES........................................................ 11
7.06 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES......... 11
7.07 GOVERNING LAW................................................... 11
7.08 SEVERABILITY.................................................... 11
7.09 COUNTERPARTS.................................................... 12
7.10 HEADINGS........................................................ 12
7.11 FORUM........................................................... 12
7.12 FURTHER ASSURANCES.............................................. 12
EXHIBITS:
Exhibit A -- Defined Terms
-iii-
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and entered into
as of this 30th day of March, 1999 by and between First Seismic Corporation,
a Delaware corporation ("Buyer"), and The Xxxxx Living Trust, the sole
shareholder (the "Shareholder") of Fortesa Corporation, a Texas corporation
(the "Company").
WHEREAS, the Shareholder is the sole record and beneficial owner of all
of the issued and outstanding shares of capital stock of the Company; and
WHEREAS, pursuant to the terms and subject to the conditions set forth
in this Agreement, the Shareholder desires to sell all of the issued and
outstanding shares (the "Shares") of Common Stock, par value $1.00 per share,
of the Company owned by the Shareholder, and Buyer desires to acquire all of
the issued and outstanding Shares;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement but not defined in the body
hereof shall have the meanings ascribed to them in Exhibit A.
ARTICLE II
PURCHASE AND SALE; CLOSING
2.01 TRANSFER OF STOCK. Upon the terms and subject to the conditions
of this Agreement, Buyer agrees to purchase from the Shareholder 1,000 issued
and outstanding Shares for the consideration set forth in Section 2.02 (the
"Purchase Price"), and the Shareholder agrees to sell to Buyer 1,000 Shares
in exchange for the Purchase Price.
2.02 PURCHASE PRICE. At the Closing, as defined herein, Buyer shall
issue to the Shareholder 50,000 shares of the Buyer's Series A convertible
preferred stock (the "Preferred Shares") and 8,055 shares of the Buyer's
Common Stock ("First Seismic Common").
Exhibit A -- Page 4
2.03 ASSET VALUATION. Prior to each of March 31, 2001, March 31, 2002,
and March 31, 2003 (each a "Valuation Date" and collectively the "Valuation
Dates") Buyer shall cause to be performed a PV10 valuation of the Company's
Assets in compliance with the Securities Exchange Act of 1934, as amended, to
determine the value of the Assets as of the December 31 preceding such
Valuation Date (the "Asset Value"); PROVIDED that the Asset Value shall be
net of all direct costs paid by Buyer for development or improvement of the
Assets. Upon receipt of the results of such valuation, the Buyer shall
calculate the increase in value of the Assets (the "Attributable Value") from
the closing of this Agreement by subtracting $[175,000] from the Asset
Value.
2.04 CLOSING. The closing (the "Closing") shall take place at the
offices of First Seismic Corporation, 0000 Xxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx, at 10:00 a.m., Houston time, on March 31, 1999, or at such other date,
place and time as the parties hereto may agree in writing (the "Closing
Date").
2.05 DELIVERIES AT CLOSING. At the Closing (a) the Shareholder will
deliver to Buyer a certificate, registered in the name of the Buyer,
representing the number of Shares specified in Section 2.01 of this
Agreement; (b) Buyer will deliver to the Shareholder certificates, registered
in the name of the Shareholder, representing the number of Preferred Shares
specified in Section 2.02 of this Agreement and the number of shares of First
Stock specified in Section 2.01 of this Agreement; and (c) the parties shall
take all other actions and execute such other documents, certificates, and
instruments reasonably required by the other party in order to consummate the
transaction contemplated hereunder.
2.06 CONDITIONS TO CLOSING. The obligations of the parties to this
Agreement are subject to each of the following conditions:
(a) The Note Purchase Agreement entered into between First
Seismic Corporation ("First") and its 6% note holders and the Warrant
Agreement entered into between First and certain of its $0.50 warrant holders
shall have closed simultaneously with this Agreement.
(b) The representations and warranties contained in Article III
and Article IV shall be true and correct when made and shall be true and
correct as of the Closing Date as if made on the Closing Date.
Exhibit A -- Page 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
The Shareholder represents and warrants to Buyer that:
3.01 GOOD TITLE. The Shareholder is the sole record and beneficial
owner of, and has good and valid title to, the number of shares of the
Company set forth in Section 2.01 of this Agreement, free and clear of all
Liens. Upon Closing of the transaction contemplated hereunder, Buyer shall
be the owner of, and have good and valid title to, all of the issued and
outstanding Shares of the Company, free and clear of all Liens.
3.02 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Shareholder has the
full power, legal right, capacity and authority to enter into, execute and
deliver this Agreement and any other Transaction Documents to which it is a
party and to carry out and perform its obligations hereunder and thereunder.
This Agreement and any other Transaction Documents to which it is a party
constitutes a valid and binding obligation of the Shareholder, enforceable
against the Shareholder in accordance with its terms, except as the
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar law now or hereafter in effect relating to or
affecting creditors' rights generally, or subject to the limitations imposed
by general rules of equity (regardless of whether such enforceability is
considered at law or in equity) (collectively "Creditors' Rights").
3.03 ORGANIZATION. The Company is a duly organized corporation under
the laws of its jurisdiction of incorporation and is validly existing and in
good standing under the laws of such jurisdiction. The Company has furnished
complete and correct copies of its charter and bylaws or the equivalent
organizational documents in each case as amended or restated to the date
hereof and the Company is not in violation of such charter or bylaws.
3.04 QUALIFICATION. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the Business as now conducted or the character of the property
owned or leased by it makes such qualification necessary, which jurisdictions
are listed on Schedule 3.04. The Company has all requisite corporate power
and authority to own its properties and assets and to carry on its Business
as it currently conducts.
Exhibit A -- Page 6
3.05 CONSENTS; ABSENCE OF CONFLICTS. Neither the execution and
delivery of this Agreement or the other Transaction Documents by the
Shareholder nor the consummation of the transactions contemplated hereby and
thereby will (a) violate or breach the terms of, cause a default under,
conflict with, cancel, require any notice or consent or give rise to any
preferential purchase or similar right under (i) any applicable Law, (ii) the
Company's charter or bylaws or (iii) any contract to which the Company is a
party or by which it, or any of its properties, is bound; (b) result in the
creation or imposition of any Lien on any of the Shares or the Assets; (c)
result in the cancellation, forfeiture, revocation, suspension or
modification of any existing consent, approval, authorization, license,
permit, certificate or order of any Governmental Authority that adversely
affects such entity; or (d) with the passage of time or the giving of notice
or the taking of any action of any third party have any of the effects set
forth in clause (a), (b) or (c) of this Section 3.05.
3.06 CAPITALIZATION OF THE COMPANY; TRANSFER OF SHARES.
(a) The authorized capital stock of the Company consists of
10,000 shares of Common Stock, par value $1.00 per share, of which 1000
shares are issued and outstanding. All of the issued and outstanding shares
of Common Stock of the Company have been duly authorized, are validly issued,
are fully paid and non-assessable and were not issued in violation of any
preemptive rights of any Person. All of the shares of Common Stock of the
Company are held beneficially and of record by the Shareholder, and will be
free and clear of all Liens at or before the Closing.
(b) There are no Contracts (including, without limitation,
options, warrants, calls and preemptive rights) obligating the Shareholder or
the Company (i) to issue, sell, pledge, dispose of or encumber any shares of
any class of capital stock of the Company, or any securities convertible,
exercisable or exchangeable into any class of capital stock of the Company,
(ii) to redeem, purchase or acquire in any manner any class of capital stock
of the Company or any securities that are convertible, exercisable or
exchangeable into any shares of any class of capital stock of the Company or
(iii) to make any dividend or distribution of any kind with respect to the
capital stock of the Company.
(c) There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights affecting the capital
stock of the Company. There are no voting trusts, proxies, or other
shareholder or similar agreements or understandings with respect to the
voting of the Common Stock of the Company.
(d) Upon delivery of the certificates or other documentation
reasonably acceptable to Buyer evidencing the Shares, together with any other
documents reasonably requested by Buyer, the Shareholder at Closing will
transfer valid title thereto to Buyer, free of any Lien.
Exhibit A -- Page 7
3.07 EQUITY INVESTMENTS AND AFFILIATES. The Company does not own,
directly or indirectly, any equity interest, or any security convertible,
exercisable or exchangeable into any equity interest, in any Person other
than the Buyer. The Company is not a party to, or bound by, any Contract
that would require Buyer to make a capital contribution to any Person.
Fortesa acts as a fiduciary holder of certain senior debt and equity of the
Buyer, which securities shall be eliminated or placed in the Treasury of
Buyer upon closing.
3.08 ABSENCE OF CHANGES. Except as set forth on Schedule 3.08, since
June 30 1998:
(a) there has not been any Material Adverse Effect on the Company;
(b) there has been no declaration or payment of any dividend on,
or any other distribution with respect to, the securities of the Company;
(c) there has been no borrowing of funds or agreement to borrow
funds by the Company;
(d) the Company has not entered into any employment, consulting,
severance or indemnification agreement with any of its employees;
(e) there has been no payment by the Company to any director,
officer, shareholder, partner or employee, or any Affiliate of the foregoing
(whether as a loan or otherwise) except regular compensation and usual
benefits payments consistent with past practices;
(f) the Company has not entered into any Contract with any
director, officer, shareholder or employee or any Affiliate of the foregoing;
(g) there has been no purchase, sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other disposition,
of any Assets of the Company;
(h) there has not been any contingent liability incurred by the
Company as a guarantor or otherwise with respect to the obligations of others or
any cancellation of any material debt or claim owing to or waiver of any
material right of the Company;
(i) there has not been any Lien placed on any of the Assets of
the Company that remain in existence on the date hereof;
(j) there is no lawsuit is pending or threatened against the
Company; and
(k) there is no Contract to do any of the foregoing.
Exhibit A -- Page 8
3.09 ASSETS. Schedule 3.09 lists all Assets owned by the Company (the
"Scheduled Assets"). The Scheduled Assets are not encumbered by any Lien.
All material licenses, permits, authorizations, and approvals required by any
Governmental Authority having jurisdiction over the Scheduled Assets, have
been issued for the Company's use of each of the Scheduled Assets and all
such certificates, licenses, permits, authorizations and approvals have been
paid for and are in full force and effect. The Shareholder and the Company
have received no notice of any pending or threatened condemnation, eminent
domain or similar proceeding or special assessment affecting any of the
Scheduled Assets, nor has the Shareholder or the Company received
notification that any such proceeding or assessment is contemplated.
3.10 PERMITS. Schedule 3.10 lists all permits, licenses, certificates,
authorizations and approvals granted by any Governmental Authority (each, a
"Permit") and used or held by the Company in connection with the ownership
and operation of the Business (the "Scheduled Permits"). The Scheduled
Permits constitute all Permits necessary for the continued ownership, use and
operation of the Business of the Company. The Scheduled Permits are valid
and in full force and effect and no Scheduled Permit is in default, and no
condition exists that with notice or lapse of time or both would constitute a
default, under the Scheduled Permits. All fees and other payments due and
owing in connection with the Scheduled Permits have been paid in full and in
a timely manner so as to prevent any lapse or revocation thereof.
3.11 CONTRACTS. Schedule 3.11 identifies each of the Contracts to
which the Company is a party or by which it or its properties are bound
(each, a "Material Contract"). True and complete copies (including all
amendments) of each Material Contract have been made available to Buyer.
With respect to each Material Contract: (i) the Material Contract is the
legal, valid obligation of the Company and any other Person that is a party
thereto, binding and enforceable against the Company and any other Person
that is a party thereto, in accordance with its terms, subject to Creditors'
Rights; (ii) the Material Contract has not been terminated, and neither the
Company nor any other Person is in material breach or default thereunder, nor
has any event occurred that with notice or lapse of time, or both, would
constitute a material breach or default, or permit termination, modification
in any manner adverse to the Company or acceleration thereunder; and (iii) no
party has asserted nor has (except by operation of law) any right to offset,
discount or otherwise xxxxx any amount owing under the Material Contract
except as expressly set forth in such Material Contract.
3.12 BROKERS' FEES. Neither the Company nor the Shareholders has any
liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which Buyer (including the Company after the Closing) could become liable or
obligated other than those listed on Schedule 3.12.
Exhibit A -- Page 9
3.13 FINANCIAL STATEMENTS. The Company has delivered to Buyer true and
complete copies of the following un-audited financial statements
(collectively, the "Financial Statements"): the balance sheet of the Company
as of December 31, 1998, and the related statements of income, cash flow and
retained earnings for the fiscal years then ended (including the notes
thereto). Except as disclosed in the Financial Statements, the Company has
no liabilities or obligations (whether accrued, absolute, contingent or
otherwise). The Financial Statements present fairly the financial position
of the Company and the results of its operations and changes in cash flow as
of the dates and for the periods indicated therein and have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby. As of the date of this Agreement, the Company has no Debt
other than as listed in Schedule 3.08(c).
3.14 LEGAL COMPLIANCE. Except as otherwise disclosed in Schedule 3.14,
the Company is in compliance in all material respects with all applicable Law.
3.15 TAXES.
(a) Except as set forth in Schedule 3.15(a), (i) all returns
(including, without limitation, income, franchise, corporation, capital
gains, VAT, sales and use, unemployment compensation, excise, severance,
property, gross receipts, profits, payroll and withholding tax returns and
information returns) and reports (all such returns and reports herein
referred to collectively as the "Tax Returns" or singularly as a "Tax
Return") of or relating to any foreign, federal, state or local tax,
assessment, impost, duty, levy or charge of any nature whatsoever (all,
together with any penalties, additions to tax, fines and interest thereon, or
related thereto, herein referred to collectively as "Taxes" or singularly as
a "Tax") which are required to be filed on or before the Closing Date by or
with respect to the Company have been or will be duly and timely filed or the
filing due date thereof has been or will be timely extended, (ii) all Tax
Items required to be included in each such Tax Return have been so included
and all information provided in each such Tax Return is true, correct and
complete, (iii) all Taxes which are or have become due with respect to the
period covered by each such Tax Return have been paid or accrued, and (iv)
all withholding Tax and Tax deposit requirements imposed on or with respect
to the Company or its employees for any and all periods or portions thereof
ending on or prior to the Closing Date have been or will be paid or accrued
by the Company.
(b) There is no claim against the Company for any Taxes, and no
assessment, deficiency or adjustment has been asserted, proposed or
threatened with respect to any Tax Return of or with respect to the Company,
other than those disclosed (and to which are attached true and complete
copies of all audit or similar reports) in Schedule 3.15(b). None of the
property of the Company is subject to any Lien for any Tax except Liens for
current Taxes not yet due.
(c) None of the Tax Returns of or with respect to the Company for
which the statute of limitations is open are currently under audit by the
applicable governmental or jurisdictional authority, nor have the
Shareholders received written notice by any such governmental or
jurisdictional authority of any intent to audit such Tax Returns.
Exhibit A -- Page 10
(d) Except as set forth in Schedule 3.15(d), there is not in
force any extension of time with respect to the due date for the filing of
any Tax Return of or with respect to the Company or any waiver or agreement
for any extension of time for the assessment or payment of any Tax of or with
respect to the Company.
(e) Schedule 3.15(e) contains a list of all countries, states and
jurisdictions to which any Tax may be payable by the Company.
3.16 EMPLOYEES; EMPLOYEE RELATIONS.
Schedule 3.16(a) identifies for the Company the following:
(i) the name and current weekly salary (or rate of pay) of each
of its employees now payable to each of its salaried employees;
(ii) any increase to become effective after the date of this
Agreement in the total compensation or rate of total compensation
(including, without limitation, normal bonus, profit-sharing, pension
benefits and other compensation) payable to each such person;
(iii) the name of each director and officer of such entity
(including the title of any officer).
3.17 EMPLOYEE BENEFIT MATTERS.
(a) The Company is not a party to any agreement, nor has the
Company established any policy or practice, requiring it to make a payment or
provide any other form of compensation or benefit to any person performing
services for the Company upon termination of such services which would not be
payable or provided in the absence of the consummation of the transactions
contemplated by this Agreement.
(b) The Company has furnished to Buyer true, correct and complete
copies of the form of each employment agreement to which the Company is a
party and a list of each employee who is a party to each such form of
agreement that includes the compensation level of such employee pursuant to
such agreement and the termination date of such agreement.
3.18 BOOKS AND RECORDS. All books and records relating to the
ownership and operation of the Business and of the Company are located at the
premises of the Business to which such books and records primarily relate,
have been maintained substantially in accordance with applicable Law,
comprise all of the books and records relating to the ownership of the
Company and the operation of the Business.
3.19 CERTAIN PAYMENTS. Neither the Company nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company has made any direct or indirect unlawful payment to any foreign or
domestic governmental official or employee, violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977 or made any
illegal bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
Exhibit A -- Page 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Shareholder as follows:
4.01 ORGANIZATION. Buyer is a corporation duly organized under the
laws of the State of Delaware and is validly existing and in good standing
under the laws of such jurisdiction. Buyer is registered to do business in
the State of Texas.
4.02 QUALIFICATION. Buyer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the Business as now conducted or the character of the property
owned or leased by it makes such qualification necessary. Buyer has all
requisite corporate power and authority to own its properties and assets and
to carry on the Business as it currently conducts.
4.03 AUTHORITY AND VALIDITY OF AGREEMENT. Upon approval of the Buyer's
stockholders of an increase in the authorized number of shares of Common
Stock and reservation of such shares by the Buyer's Directors of a sufficient
number to convert the Preferred Shares and the Earned Shares into shares of
Common Stock. Buyer will have all requisite corporate power and authority to
enter into, execute and deliver this Agreement and any other Transaction
Documents to which such entity is a party and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and
the other Transaction Documents to which Buyer is a party and the performance
of such entity's obligations contemplated hereby and thereby have been duly
and validly approved by all corporate action, if any, necessary on behalf of
such entity. This Agreement and each of the Transaction Documents to which
Buyer is a party constitutes the legal, valid and binding obligations of such
entity, enforceable against it in accordance with their terms, subject to
Creditors' Rights. All other documents required hereunder to be executed and
delivered by Buyer at the Closing have been duly authorized, executed and
delivered by such entity and constitute the legal, valid and binding
obligations of such entity, enforceable against it in accordance with their
terms, subject to the Creditors' Rights.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 SHAREHOLDER APPROVAL. Prior to the next stockholder meeting of
Buyer, the Board of Directors of Buyer shall recommend to Buyer's
stockholders that they approve an increase in the number of authorized shares
of First Stock by a sufficient number to permit the conversion of the
Preferred Shares and the Earned Shares to Common Stock and shall thereafter
use its reasonable best efforts to effect such increase.
Exhibit A -- Page 12
ARTICLE VI
INDEMNIFICATION
6.01 BY SHAREHOLDER. Subject to the terms and conditions of this
Article VI, the Shareholder hereby agrees to indemnify, defend and hold
harmless Buyer and their respective directors, officers, employees,
consultants, Affiliates and controlling persons (hereinafter, including the
Company after the Closing, collectively, the "Buyer Indemnified Parties"),
but only to the extent of the value of the Assets (which indemnity shall be
payable in First Seismic Series A Preferred Stock or in First Seismic Common
Stock at the option of the Shareholder) from and against all Claims (as
defined below) asserted against, imposed upon or incurred by Buyer or any
Buyer Indemnified Party, directly or indirectly, by reason of, arising out
of, or resulting from (a) the inaccuracy or breach of any representation or
warranty of the Shareholder contained in or made pursuant to this Agreement;
and (b) the breach of any covenant or agreement of the Shareholders contained
in or made pursuant to this Agreement. As used in this Article VI, the term
"Claim" shall include (i) all debts, liabilities and obligations; (ii) all
losses, damages, reasonable costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter)
penalties, court costs and reasonable legal, accounting, consultant and/or
engineering fees and expenses; and (iii) all demands, Claims, actions, costs
of investigation, causes of action, proceedings, arbitrations, judgments,
settlements and assessments, whether or not ultimately determined to be valid.
6.02 BY BUYER. Subject to the terms and conditions of this Article VI,
Buyer hereby agrees to indemnify, defend and hold harmless the Shareholder
from and against all Claims (as defined below) asserted against, imposed upon
or incurred by the Shareholder Indemnified Party by reason of, arising out
of, or resulting from (a) the inaccuracy or breach of any representation or
warranty of Buyer contained in or made pursuant to this Agreement; and (b)
the breach of any covenant or agreement of Buyer contained in or made
pursuant to this Agreement.
6.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the Shareholder
to indemnify the Buyer under this Article VI with respect to Claims under
Section 6.01 and the obligation of Buyer to indemnify the Shareholder under
this Article VI with respect to Claims under Section 6.02 relating to or
arising from third parties (a "Third Party Claim") shall be subject to the
terms and conditions set forth below. As used in this Section 6.03, Buyer
and Shareholder are each referred to as an "Indemnified Party."
(a) NOTICE AND DEFENSE. The Indemnified Party will give the
party obligated to indemnify the Indemnified Party under this Article VI
(referred to in this Section as the "Indemnifying Party") prompt written
notice of any such Third Party Claim, and the Indemnifying Party may
undertake the defense thereof by representatives chosen by the Indemnifying
Party upon written notice to the Indemnified Party provided within 20 days of
receiving notice of such Third Party Claim (or sooner if the nature of the
Third Party Claim so requires and an extension cannot be obtained with
minimal expense or cost). Failure of the Indemnified Party to give such
notice shall not affect the indemnification obligations under this Article
VI, except to the extent the Indemnifying Party's defense of a Third Party
Claim is materially prejudiced thereby. The Indemnified Party shall make
available to the Indemnifying Party or its representatives all records and
other materials required by the Indemnifying Party and in the possession or
under the control of the Indemnified Party for the use
Exhibit A -- Page 13
of the Indemnifying Party and its representatives in defending any such claim,
and shall in other respects give reasonable cooperation in such defense. If
notice or consent is required to be given or obtained under this Section 6.03
to or from the Shareholder, then notice will be sent to or consent will be
requested from the Shareholder at the address for the Shareholder set forth
on the signature page; if notice or consent is required to be given or
obtained under this Section 6.03 to or from Buyer, then notice will be sent
to or consent will be requested from Buyer at the address for Buyer set forth
on the signature page.
(b) FAILURE TO DEFEND. If the Indemnifying Party, within 20 days
after notice of any such Third Party Claim (or sooner if the nature of any
Third Party Claim so requires), fails to undertake the defense of such Third
Party Claim actively and in good faith, then the Indemnified Party will have
the right to undertake the defense, compromise or settlement of such Third
Party Claim, or consent to the entry of a judgment with respect thereto.
(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this Article VI to
the contrary notwithstanding, (i) if there is a reasonable probability that
the Third Party Claim may materially adversely affect the Indemnified Party
other than as a result of money damages and such Third Party Claim is
reasonably likely to result in money payments in an aggregate amount of less
than $2,500, the Indemnified Party shall have the right to defend, compromise
or settle such Third Party Claim (provided that the Indemnified Party shall
not settle such Third Party Claim or consent to any judgment without first
obtaining the written consent of the Indemnifying Party, which shall not be
unreasonably withheld), and (ii) the Indemnifying Party shall not without the
written consent of the Indemnified Party, settle or compromise any Third
Party Claim or consent to the entry of any judgment that does not include as
an unconditional term thereof the giving by the claimant or the plaintiff to
the Indemnified Party of an unconditional release from all liability in
respect of such Third Party Claim.
ARTICLE VII
MISCELLANEOUS
7.01 AMENDMENT. This Agreement may not be amended or supplemented at
any time, except by an instrument in writing signed on behalf of each party
hereto. The waiver by any party hereto of any condition or of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any other condition or subsequent breach.
7.02 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Schedules, Annexes and Exhibits hereto) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
oral and written, among the parties or any of them, with respect to the
subject matter hereof. Neither this Agreement nor any of the Transaction
Documents delivered in connection with this Agreement confers upon any person
not a party hereto any rights or remedies hereunder.
Exhibit A -- Page 14
7.03 ASSIGNMENT. This Agreement shall inure to the benefit of and will
be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Except as set forth in
this Agreement, this Agreement shall not be assignable by any party hereto
without the consent of the other parties hereto.
7.04 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and (i) delivered in person or by courier, (ii) sent by
telecopy or facsimile transmission, or (iii) mailed, certified first class
mail, postage prepaid, return receipt requested, to the appropriate party at
the following addresses:
if to the Shareholder:
XXXXX LIVING TRUST
c/o Xxxx X. Xxxxx, Trustee
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
fax: (000) 000-0000
If to the Buyer:
FIRST SEISMIC Corporation
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
attn: the Board of Directors
fax: (000) 000-0000
or to such other address as the parties set forth above shall have furnished
to the other parties set forth above by notice given in accordance with this
Section 7.04. Such notices shall be effective (i) if delivered in person or
by courier, upon actual receipt by the intended recipient, (ii) if sent by
telecopy or facsimile transmission, when the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee, or (iii) if mailed, upon the earlier of five days after deposit in
the mail and the date of delivery as shown by the return receipt therefor.
7.05 EXPENSES. The party incurring such expenses shall pay all costs
and expenses incurred by the Shareholders or by Buyer in connection with this
Agreement and the transactions contemplated hereby.
7.06 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES. All
representations and warranties contained herein or pursuant to this Agreement
shall survive the Closing.
7.07 GOVERNING LAW. THE CONSTRUCTION, INTERPRETATION, AND VALIDITY OF
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAW OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF.
Exhibit A -- Page 15
7.08 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated so long as the economic
or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term, provision, covenant or restriction is invalid, void or unenforceable,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
7.09 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
7.10 HEADINGS. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
7.11 FORUM. BUYER AND THE SHAREHOLDER, FOR THEMSELVES, THEIR
SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS LOCATED IN TEXAS AND AGREE AND CONSENT THAT
SERVICE OF PROCESS MAY BE MADE UPON ANY OF THEM IN ANY LEGAL PROCEEDING
ARISING EXCLUSIVELY OUT OF OR IN CONNECTION WITH THIS AGREEMENT BY SERVICE OF
PROCESS AS PROVIDED BY TEXAS LAW, (B) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY LITIGATION ARISING EXCLUSIVELY OUT OF OR IN
CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS LOCATED IN TEXAS, (C)
FOR SUCH PURPOSES IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS WITH RESPECT TO ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO SUCH PARTY AND ITS
COUNSEL AT THEIR ADDRESSES SET FORTH HEREIN, AND (E) IRREVOCABLY AGREES THAT
ANY LEGAL PROCEEDING AGAINST THE COMPANY, BUYER OR THE SHAREHOLDER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS OBLIGATIONS HEREUNDER
SHALL, BE BROUGHT IN THE COURTS OF TEXAS.
Exhibit A -- Page 16
7.12 FURTHER ASSURANCES. Buyer and the Shareholder each agree that
they will, upon request of the other at any time after the Closing Date and
without further consideration, execute and deliver such other documents and
instruments and take such other action as may reasonably be requested to
carry out more effectively the purpose and intent of this Agreement.
IN WITNESS WHEREOF, Buyer and the Shareholder have each executed or
caused this Agreement to be executed on its behalf by its officer, thereunto
duly authorized, as applicable, all as of the date first above written.
FIRST SEISMIC CORPORATION
ATTEST:
/s/ Xxxxxx X. Xxxxx
------------------------------
By Xxxxxx X. Xxxxx, Chairman
/s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx, III, Secretary
XXXXX LIVING TRUST:
/s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx, Trustee
Exhibit A -- Page 17
EXHIBIT A
DEFINED TERMS
"Affiliate" means with respect to any Person, any Person which, directly
or indirectly, controls, is controlled by, or is under a common control with,
such Person. The term "control" (including the terms "controlled by" and
"under common control with") as used in this definition means the possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise. With respect to any natural person,
the term "Affiliate" shall also mean (1) the spouse and children (including
those by adoption) of such Person; and any trust whose primary beneficiary is
such Person, such Person's spouse and/or one or more members of such Person's
lineal descendants, (2) the legal representative or guardian of such Person
or of any such immediate family member in the event such Person or any such
immediate family member becomes mentally incompetent and (3) any Person
controlled by or under the common control with any one or more of such Person
and the Persons described in clauses (1) or (2) preceding.
"Assets" means those assets owned by the Company specified on schedule
3.09.
"Business" means the business and operations as are currently being
performed by the Company.
"Claim" means any and all claims, causes of action, demands, lawsuits,
suits, proceedings, governmental investigations or audits and administrative
orders.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, agreement, option, right to acquire,
preferential purchase right, preemptive right, warrant, indenture, debenture,
note, bond, loan, loan agreement, collective bargaining agreement, lease,
mortgage, franchise, license, purchase order, bid, commitment, letter of
credit, guaranty, surety or any other legally binding arrangement, whether
oral or written.
"control" (including the terms "controlled," "controlled by" and "under
common control with") shall mean the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise;
"Debt" means, without duplication, (i) all indebtedness of the Company
for borrowed money, (ii) all obligations of the Company evidenced by bonds,
notes, debentures or other similar instruments, (iii) all obligations of the
Company as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases, (iv) all Debt of the type described in
clauses (i) through (iii) above secured by any Lien on property of the
Company.
"Governmental Authority" means any governmental, quasi-governmental,
state, county, city or other political subdivision of the United States or
any other country, or any agency, court or instrumentality, foreign or
domestic, or statutory or regulatory body thereof.
Exhibit A -- Page 18
"Law" means any law, statute, code, ordinance, order, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate, license,
authorization, or other directional requirement (including, without
limitation, any of the foregoing that relates to environmental standards or
controls, energy regulations and occupational, safety and health standards or
controls including those arising under Environmental Laws) of any
Governmental Authority.
"Lien" means any lien, pledge, condemnation award, claim, restriction,
charge, preferential purchase right, security interest, mortgage or
encumbrance of any nature whatsoever.
"Material Adverse Effect" means, in relation to any Person, any material
and adverse effect on the assets, liabilities, financial condition, business,
operations, affairs or prospects, taken as a whole, of the Person referred to.
"Ordinary Course of Business" means, when used in reference to any
Person, the ordinary course of business consistent with past customs and
practices of such Person.
"Person" means any natural person, firm, partnership, association,
corporation, limited liability company, company, trust, entity, public body
or government.
"Tax" or "Taxes" shall mean any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local or
foreign taxing authority or agency, including, without limitation, (i)
income, franchise, profits, gross receipts, minimum, alternative minimum,
estimated, ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment compensation,
utility, severance, excise, stamp, windfall profits, transfer and gains
taxes, (ii) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (iii) interest, penalties and additions to tax
imposed with respect thereto.
"Tax Item" means all items of income, gain, loss, deduction and credit
and other tax items.
"Third-Party Claim" means a third-party claim asserted against an
Indemnified Party by a Person.
"Transaction Documents" means this Agreement and all agreements,
conveyances, documents, instruments and certificates delivered at the Closing
pursuant to this Agreement.
SCHEDULE 3.08(c)
$75,000 was borrowed in the quarter ending March 31, 1999 by the Company from
Shareholder for the purpose of Company providing operating financing to Buyer
via the `forward sale' by Buyer to Company of certain license rights
("Forward Sale Debt"), 100% of the principal of which is outstanding as of
Closing. Shareholder has the right to convert $50,000 of the principal of the
Forward Sale Debt into payment for warrants exercised by Shareholder under
the terms of the 6% Note Purchase Agreement between Shareholder and Buyer
dated as of even date herewith.
Exhibit A -- Page 19
SCHEDULE 3.09 -- ASSETS
SENEGAL PROPERTY: Fortesa has an interest in the THIES Onshore Block of the
Republic of Senegal, as defined in the 28th of December 1998 Offer to the
FIRST SEISMIC 6% Noteholders. This interest is a 1/8 carried interest, with a
1/8 back-in at cash payout with XXXXXX Oil & Gas, and partnered with
Petrosen. In addition, Fortesa has a 2% NPI with Xxxxxx in the shallow water
offshore blocks, to the extent that Xxxxxx earns a profit in their
concessions in the shallow water areas.
EAST TEXAS PROPERTY: Fortesa has acreage in the Gallatin prospect in
Cherokee County.
SCHEDULE 3.16
(i) Xxxxx Xxxxxxx, President; $7,500 per month cash compensation, plus
other compensation in the form of benefits, profit-sharing, and stock rights.
(ii) None.
(iii) Xxxxxx X. Xxxxx CEO, and Director
Xxxxxx X. Xxxxx, III Secretary
Xxxxx Xxxxxxx President
Exhibit A -- Page 20
