EXHIBIT 10.42
PURCHASE AGREEMENT
This Purchase Agreement ("Purchase Agreement") dated July 11, 2005, by
XXXXX-XXXXXXXX ENERGY INC., a Delaware corporation ("AC"), MOUNTAIN COMPRESSED
AIR, INC., a Texas corporation and a subsidiary of AC ("MCA"; together with
Xxxxx-Xxxxxxxx Energy Inc., the "AC Parties") and M-I L.L.C., a Delaware limited
liability company ("M-I").
R E C I T A L S
The AC Parties desire to purchase all the issued and outstanding
limited liability company interests of M-I, and M-I desires to sell their
outstanding limited liability company interest in AirComp L.L.C., a Delaware
limited liability company ("Company") on the terms set forth in this Purchase
Agreement.
AGREEMENT
The parties therefore agree as follows:
1. DEFINITIONS
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"Encumbrance"--any charge, claim, interest, condition, equitable
interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"Representative"--with respect to a particular party, any director,
officer, employee, agent, consultant, advisor, or other representative
of such party, including legal counsel, accountants, and financial
advisors.
Capitalized terms used but not defined herein shall have the meaning
ascribed to them in the Business Venture Agreement between M-I and the AC
Parties dated June 27, 2003 ("Venture Agreement").
2. SALE AND TRANSFER OF PERCENTAGE INTEREST AND PROMISSORY NOTE OF
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COMPANY; CLOSING
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2.1 PURCHASE OF INTERESTS
Subject to the terms and conditions of this Purchase Agreement, M-I
will sell and transfer all their issued and outstanding Percentage Interest
constituting 45% of the Company's limited liability company interests ("M-I
Interest"), and the AC Parties will purchase the M-I Interest, free and clear of
all Encumbrances. In addition, the AC Parties will purchase all the right, title
and interest in and to that certain promissory note issued to M-I by the Company
dated June 27, 2003 in the original principal amount of $4,818,000, including
all accrued but unpaid interest thereon ("M-I Note").
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2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the M-I Interest and the
M-I Note will be $11,110,000.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Purchase
Agreement will take place at the offices of AC at 0000 Xxxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000 at 10:00 a.m. (local time) on or prior to July11, 2005, or
at such other time and place as the parties may agree.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) M-I will deliver to the AC Parties:
(i) certificates or assignments representing
the M-I Interest in the Company, duly endorsed (or
accompanied by duly executed stock powers) for
transfer to AC or any other documents AC may
reasonably request from M-I to transfer the M-I
Interest;
(ii) non-competition agreement in the form
of Exhibit 2.4(a)(iii), executed by M-I (the
"Non-Competition Agreement");
(iii) the written resignations of the M-I
Managers from the Management Committee of the
Company;
(iv) the original M-I Note duly endorsed by
M-I for transfer to AC; and
(v) a Subordination Agreement in the form of
Exhibit 2.4(a)(vi).
(b) AC Parties will deliver to M-I:
(i) the amount of $7,110,000 by wire
transfer to the account specified by M-I;
(ii) a promissory note of AC payable to M-I
in the aggregate principal amount of $4,000,000 in
the form of Exhibit 2.4(b)(ii) ("AC Note"); and
(iii) evidence from Xxxxx Fargo Bank Texas,
National Association ("Xxxxx Fargo") , in a form
reasonably satisfactory to M-I, indicating that Xxxxx
Fargo has released the Guaranty of M-I on the
Company's indebtedness to Xxxxx Fargo; and
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(iv) payment of any and all other
outstanding amounts due to M-I by the Company which
have arisen since June 27, 2003 in an amount of
$36,025.00.
2.5 TERMINATION OF VENTURE AGREEMENT
By execution of this Agreement, M-I and the AC Parties do hereby
terminate all obligations under the Venture Agreement between themselves
effective as of the time of Closing pursuant to this Purchase Agreement except
for Sections 8.1, 8.2, 8.3.1, 8.3.2, 8.3.3, 8.4, 8.5, 8.6, and 12.0 which will
survive pursuant to the terms of and for the periods stipulated in the Venture
Agreement.
2.6 AC NOTE CONVERSION
Apart from the current proposed public equity offering by AC
underwritten by Xxxxxx Xxxxxx & Co., in the event that AC files another
registration statement under the Securities Act of 1933, as amended, for a
public equity offering of AC common stock, AC will allow M-I to convert the AC
Note at the market price of such offering and "piggyback" onto the registration
statement a maximum of 700,000 shares of common stock.
3. REPRESENTATIONS AND WARRANTIES OF M-I
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M-I represents and warrants to the AC Parties as follows:
3.1 AUTHORITY; NO CONFLICT
This Purchase Agreement constitutes the legal, valid, and binding
obligation of M-I, enforceable against M-I in accordance with its terms, except
that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditor's rights generally, and (ii) general principles of
equity. M-I has the corporate power, authority, and capacity to execute and
deliver this Purchase Agreement and to perform its obligations under this
Purchase Agreement.
3.2 CAPITALIZATION
M-I is and will be on the date of this Purchase Agreement the record
and beneficial owner and holder of the M-I Interest free and clear of all
Encumbrances. To M-I's knowledge, no legend, restrictions or other reference to
any purported Encumbrance appears upon any certificate representing the M-I
Interest except the obligations of the parties under the Venture Agreement.
4. REPRESENTATION AND WARRANTIES OF AC PARTIES
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4.1 AUTHORITY; NO CONFLICT
This Purchase Agreement constitutes the legal, valid and binding
obligation of the AC Parties in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditor's rights generally, and (ii) general principles of equity. AC and MCA
have the absolute and unrestricted right, power, authority and capacity to
execute and deliver this Purchase Agreement, including the AC Note, and to
perform their obligations under this Purchase Agreement, including the AC Note.
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5. INDEMNIFICATION
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5.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY M-I
M-I will indemnify and hold harmless the AC Parties and their
respective Representatives, stockholders, controlling persons and affiliates
("AC Indemnified Persons") for, and will pay to the AC Indemnified Persons the
amount of any loss, liability, claim, damage, action, suit, proceedings, costs
and expenses (including reasonable costs of investigation and defense and
reasonable attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages") arising directly or indirectly from or in connection
with any breach of any representation or warranty made by M-I in this Purchase
Agreement. Notwithstanding the foregoing or anything to the contrary contained
in this Purchase Agreement, the maximum liability M-I shall have to the AC
Indemnified Persons shall be no more than the Purchase Price, in the aggregate.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY AC PARTIES
AC Parties will indemnify and hold harmless M-I and their respective
Representatives, stockholders, controlling persons and affiliates (the "M-I
Indemnified Persons") for, and will pay to the M-I Indemnified Persons the
amount of any Damages arising directly or indirectly from or in connection with
(a) any breach of any representation or warranty made by AC Parties in this
Purchase Agreement, or (b) the ownership, use or possession of the M-I Interest
after the date hereof, or the conduct of the business of the Company occurring
as of the Closing and for all times thereafter. Notwithstanding the foregoing or
anything to the contrary contained in this Purchase Agreement, the maximum
liability the AC Parties shall have to the M-I Indemnified Persons for a breach
of a representation or warranty shall be not more than the amount of Purchase
Price, in the aggregate. However, AC Parties shall be fully and unconditionally
responsible for and shall indemnify the M-I Indemnified Persons without limit
for any acts or omissions relating to or arising from the ownership, use or
possession of the M-I Interest after the date hereof.
5.3 TIME LIMITATIONS
Both Parties' liability for indemnification or otherwise with respect
to any representation or warranty shall survive the execution of this Purchase
Agreement.
6. GENERAL PROVISIONS
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6.1 EXPENSES
Each party to this Purchase Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Purchase Agreement and including all fees and expenses of agents,
representatives, counsel, and accountants.
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6.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Purchase Agreement or the contemplated transactions set forth herein will be
issued, if at all, at such time and in such manner as M-I and AC agree.
6.3 FURTHER COOPERATION
From and after the Closing, AC Parties shall provide M-I and its
Representatives with reasonable access to the books and records of the Company
for any reasonable purpose, including but not limited to (i) preparation of tax
returns, (ii) defense of any claim that has been served upon M-I for which it is
responsible hereunder, (iii) and any such other documents, notes, memoranda,
tapes, etc. of the Company (hereinafter collectively referred to as the
"Records") pertaining to or related to the period prior to Closing. Furthermore,
AC Parties agree that unless otherwise consented to in writing by M-I, AC
Parties shall not for a period of three (3) years following the Closing,
destroy, alter or otherwise dispose of (or allow the destruction, alteration or
disposal of) any of the Records, except for accounting and tax records which
shall be retained for a period of ten (10) years.
6.4 NOTICES
All notices, consents, waivers, and other communications under this
Purchase Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
M-I: M-I L.L.C.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., General Counsel
X. Xxxxx Xxxxxxx
Xxxxx W. E. Xxxxxxx
Facsimile No.: (000) 000-0000
AC Parties: Xxxxx-Xxxxxxxx Energy Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxxx, Chairman
and Chief Executive Officer
Xxxxxxxx X. Pound III, General Counsel
Facsimile No.: (000) 000-0000
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6.5 ENTIRE AGREEMENT AND MODIFICATION
This Purchase Agreement supersedes all prior agreements between the
parties with respect to its subject matter and constitutes a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Purchase Agreement may not be amended except
by a written agreement executed by the party to be charged with the amendment.
6.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Purchase
Agreement without the prior consent of the other parties. Subject to the
preceding sentence, this Purchase Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this Purchase Agreement will
be construed to give any person other than the parties to this Purchase
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Purchase Agreement or any provision of this Purchase Agreement. This
Purchase Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Purchase Agreement and their successors
and assigns.
6.7 SEVERABILITY
If any provision of this Purchase Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Purchase Agreement will remain in full force and effect. Any provision of
this Purchase Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.
6.8 GOVERNING LAW
This Purchase Agreement will be governed by the laws of the State of
Texas without regard to conflicts of laws principles.
6.9 COUNTERPARTS
This Purchase Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Purchase Agreement
and all of which, when taken together, will be deemed to constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Purchase Agreement as of the date first written above.
XXXXX-XXXXXXXX ENERGY INC.,
A DELAWARE CORPORATION
/s/ Xxxxxxxx X. Pound III
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Xxxxxxxx X. Pound III
General Counsel and Secretary
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MOUNTAIN COMPRESSED AIR, INC.,
A TEXAS CORPORATION
/s/ Xxxxxxxx X. Pound III
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Xxxxxxxx X. Pound III
Vice President and Secretary
M-I L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
/s/ W. Xxxxx Xxxxxxx
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W. Xxxxx Xxxxxxx
Vice President, Chief Financial Officer and
Treasurer
