Stock Purchase Agreement
between
WellTech Eastern, Inc.
and
Monty D. Elmore
Dated as of July 17, 1997
C:\WELLTECH\STOCKPUR\PATRICK
13
Stock Purchase Agreement
This Stock Purchase Agreement (this AAgreement@) is entered into as of July
17, 1997, by and among WellTech Eastern, Inc., a Delaware corporation (ABuyer@),
and Monty D. Elmore (the AShareholder@).
WITNESSETH:
Whereas, Buyer is a corporation duly organized and validly existing under
the laws of the State of Delaware, with its principal executive offices at Two
Tower Center, Tenth Floor, East Brunswick, New Jersey 08816; and
Whereas, Patrick Well Service, Inc. (the ACompany@) is a corporation duly
organized and validly existing under the laws of the State of Kansas, with its
principal executive offices at 2007 W. 7th Street, Liberal, Kansas; and
Whereas, the Shareholder owns 82 shares (the ACompany Shares@) of common
stock, par value $10 per share, of the Company (the ACompany Common Stock@),
which constitutes all of the issued and outstanding shares of capital stock of
the Company; and
Whereas, the Shareholder desires to sell to Buyer, and Buyer desires to
purchase from the Shareholder all of the issued and outstanding capital stock of
the Company.
Now, Therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1
Purchase and Sale
1.1. Purchase and Sale of the Company Shares. Subject to the terms and
conditions of this Agreement, on the date hereof, the Shareholder agree to sell
and convey to Buyer, free and clear of all Encumbrances (as defined in Section
2.1.8.1 hereof), and Buyer agrees to purchase and accept from the Shareholder,
all of the Company Shares. In consideration of the sale of the Company Shares,
Buyer shall pay to the Shareholder $7,000,000 in cash by wire transfer of
immediately available funds, and the Cash Adjustment Payment (as defined in
Section 1.3 hereof), if any, in accordance with Section 1.3 hereof.
1.2. Delivery of the Company Certificates. The Shareholder shall deliver to
Buyer on the date hereof duly and validly issued certificate(s) representing all
of the Company Shares, each such certificate having been duly endorsed in blank
and in good form for transfer or accompanied by stock powers duly executed in
blank, sufficient and in good form to properly transfer such shares to Buyer.
1.3. Adjustment of Purchase Price. Buyers shall cause to be prepared and
delivered to the Shareholder a balance sheet of the Company in accordance with
generally accepted accounting principles (except for use of accelerated
depreciation method) as of the date hereof (the AFinal Balance Sheet@) within
sixty (60) days after the date hereof . Buyer and the Shareholder shall jointly
review the Final Balance Sheet and such supplemental report, endeavor in good
faith to resolve all disagreements regarding the entries thereon and reach a
final determination thereof within 90 days from the date hereof. Within 10 days
of reaching such final determination, the following adjusting payments shall be
made:
(1) If the sum of (A) Final Net Current Value of the Company (defined
below) plus (B) (the ACapital Expenditure Allowance@), which is the amount of
approved capital equipment purchases since 3/31 shown on Schedule 2.1.3.,
exceeds the 3/31 Net Current Value of the Company (defined below) Buyer shall
pay to the Shareholder the amount of such excess (the ACash Adjustment
Payment@).
(2) If the sum of (A) the Final Net Current Value of the Company plus (B)
the Capital Expenditure Allowance, is less than the 3/31 Net Current Value of
the Company, the Shareholder shall pay to Buyer the amount of such difference.
The term AFinal Net Current Value of the Company@ means the dollar value of
the amount by which (i) the ATotal Current Assets@ plus the ATotal Other Assets@
as recorded on the Final Balance Sheet exceeds (ii) the ATotal Liabilities@ as
recorded on the Final Balance Sheet. The term A3/31 Net Current Value of the
Company@ means the dollar value of the amount by which (i) the ATotal Current
Assets@ plus the ATotal Other Assets@ as recorded on the 3/31 Balance Sheet (as
defined in Section 2.1.6 hereof) exceeds (ii) the ATotal Liabilities@ as
recorded on the 3/31 Balance Sheet.
ARTICLE 2
Representations and Warranties
2.1. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to Buyer as follows:
2.1.1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas, has full requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties owned or
the nature of the business conducted by it would make such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a material adverse effect on its financial condition, properties
or business.
2.1.2. Agreement Authorized and its Effect on Other Obligations. The
Shareholder is a resident of Kansas, above the age of 18 years, and has the
legal capacity and requisite power and authority to enter into, and perform his
or her obligations under this Agreement. This Agreement is a valid and binding
obligation of the Shareholder enforceable against each of the Shareholder
(subject to normal equitable principles) in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, debtor
relief or similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement by the Shareholder will
not conflict with or result in a violation or breach of any term or provision
of, nor constitute a default under (i) the Certificate of Incorporation or
Bylaws of the Company or (ii) any obligation, indenture, mortgage, deed of
trust, lease, contract or other agreement to which the Company or the
Shareholder is a party or by which the Company or any of the Shareholder or
their respective properties are bound.
2.1.3. Capitalization. The authorized capitalization of the Company
consists of 25,000 shares of Company Common Stock, of which, as of the date
hereof, 82 shares were issued and outstanding and held beneficially and of
record by the Shareholder. On the date hereof, the Company does not have any
outstanding options, warrants, calls or commitments of any character relating to
any of its authorized but unissued shares of capital stock. All issued and
outstanding shares of Company Common Stock are validly issued, fully paid and
non-assessable and are not subject to preemptive rights. None of the outstanding
shares of Company Common Stock is subject to any voting trusts, voting agreement
or other agreement or understanding with respect to the voting thereof, nor is
any proxy in existence with respect thereto.
2.1.4. Ownership of the Company Shares. The Shareholder holds good and
valid title to all of the Company Shares, free and clear of all Encumbrances.
The Shareholder possesses full authority and legal right to sell, transfer and
assign to Buyer the Company Shares, free and clear of all Encumbrances. Upon
transfer to Buyer by the Shareholder of the Company Shares, Buyer will own the
Company Shares free and clear of all Encumbrances. There are no claims pending
or, to the knowledge of the Shareholder, threatened, against the Company or any
of the Shareholder that concern or affect title to the Company Shares, or that
seek to compel the issuance of capital stock or other securities of the Company.
2.1.5. No Subsidiaries. There is no corporation, partnership, joint
venture, business trust or other legal entity in which the Company, either
directly or indirectly through one or more intermediaries, owns or holds
beneficial or record ownership of at least a majority of the outstanding voting
securities.
2.1.6. Financial Statements. The Company has delivered to Buyer copies of
the Company=s unaudited balance sheet, a copy of which is attached hereto as
Schedule 2.1.6 (the A3/31 Balance Sheet@), and related statements of income,
retained earnings and cash flow (collectively, the "3/31 Financial Statements")
as at and for the 3 months ended March 31, 1997 (the ABalance Sheet Date@). The
3/31 Financial Statements are complete in all material respects. The 3/31
Financial Statements presents fairly the financial condition of the Company as
at the dates and for the periods indicated. The 3/31 Financial Statements have
been prepared in accordance with generally accepted accounting principles
(except for use of accelerated depreciation method) applied on a consistent
basis. The accounts receivable reflected in the 3/31 Balance Sheet, or which
have been thereafter acquired by the Company, have been collected or are
believed to be collectible.
2.1.7. Liabilities. Except as disclosed on Schedule 2.1.7 hereto, the
Shareholder has no knowledge of any liabilities or obligations or potential
liabilities or obligations, other than those (i) reflected or reserved against
in the 3/31 Balance Sheet, or (ii) incurred in the ordinary course of business
since the Balance Sheet Date that would not materially adversely affect the
value and conduct of the business of the Company.
2.1.8. Additional Company Information. Attached as Schedule 2.1.8 hereto
are true, complete and correct lists to the best of Shareholder=s knowledge of
the following items:
2.1.8.1. Real Estate. All real property and structures thereon owned,
leased or subject to a contract of purchase and sale, or lease commitment, by
the Company, with a description of the nature and amount of any Encumbrances
(defined below) thereon. The term AEncumbrances@ means all liens, security
interests, pledges, mortgages, deed of trust, claims, rights of first refusal,
options, charges, restrictions or conditions to transfer or assignment,
liabilities, obligations, privileges, equities, easements, rights-of-way,
limitations, reservations, restrictions and other encumbrances of any kind or
nature;
2.1.8.2. Machinery, Equipment and Supplies. All rigs, carriers, rig
equipment, machinery, transportation equipment, supplies, tools, equipment,
furnishings, and fixtures owned, leased or subject to a contract of purchase and
sale, or lease commitment, by the Company with a description of the nature and
amount of any Encumbrances thereon;
2.1.8.3. Receivables. All accounts and notes receivable of the Company.
2.1.8.4. Payables. All accounts payable of the Company;
2.1.8.5. Insurance. All insurance policies or bonds currently maintained by
the Company, including title insurance policies, with respect to the Company,
including those covering the Company=s properties, rigs, machinery, equipment,
fixtures, employees and operations, as well as a listing of any premiums, audit
adjustments or retroactive adjustments due or pending on such policies or any
predecessor policies;
2.1.8.6. Contracts. All contracts which are to be performed in whole or in
part after the date hereof;
2.1.8.7. Employee Compensation Plans. All bonus, incentive compensation,
deferred compensation, profit-sharing, retirement, pension, welfare, group
insurance, death benefit, or other employee benefit or fringe benefit plans,
arrangements or trust agreements of the Company or any employee benefit plan
maintained by the Company (collectively, AEmployee Plans@), together with copies
of the most recent reports with respect to such Employee Plans, arrangements, or
trust agreements filed with any governmental agency and all Internal Revenue
Service determination letters and other correspondence from governmental
entities that have been received with respect to such plans, arrangements or
agreements.
2.1.8.8. Employee Lists and Salaries. The names and salary rates of all
present employees of the Company, and, to the extent existing on the date of
this Agreement, all arrangements with respect to any bonuses to be paid to them
from and after the date of this Agreement;
2.1.8.9. Bank Accounts. The name of each bank in which The Company has an
account and the names of all persons authorized to draw thereon;
2.1.8.10. Employee Agreements. Any collective bargaining agreements of the
Company with any labor union or other representative of employees, including
amendments, supplements, and written or oral understandings, and all employment
and consulting and severance agreements of the Company;
2.1.8.11. Intellectual Property. All patents, patent applications,
trademarks and service marks (including registrations and applications
therefor), copyrights and written know-how, trade secrets and all other similar
proprietary data and the goodwill associated therewith (collectively, the
AIntellectual Property@) used by the Company;
2.1.8.12. Trade Names. All trade names, assumed names and fictitious names
used or held by the Company, whether and where such names are registered and
where used;
2.1.8.13. Licenses and Permits. All permits, authorizations, certificates,
approvals, registrations, variances, waivers, exemptions, rights-of-way,
franchises, ordinances, licenses and other rights of every kind and character
(collectively, the APermits@) of the Company under which it conducts its
business.
2.1.8.14. Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements of the Company relating thereto or with respect to collateral
securing the same;
2.1.8.15. Guaranties. All indebtedness, liabilities and commitments of
others and as to which the Company is a guarantor, endorser, co-maker, surety,
or accommodation maker, or is contingently liable therefor (other than
indemnification provisions in master service agreements) and all letters of
credit, whether stand-by or documentary, issued by any third party;
2.1.8.16. Reserves and Accruals. All accounting reserves and accruals
maintained in the 3/31 Balance Sheet;
2.1.8.17. Leases. All leases to which the Company is a party;
2.1.8.18. Environment. All environmental permits, approvals,
certifications, licenses, registrations, orders and decrees applicable to
current operations conducted by the Company and all environmental audits,
assessments, investigations and reviews conducted by the Company within the last
five years or otherwise in the Company=s possession on any property owned,
leased or used by the Company.
2.1.9. No Defaults. The Company is not in default in any obligation or
covenant on its part to be performed under any obligation, lease, contract,
order, plan or other arrangement to the best of Shareholder=s knowledge.
2.1.10. Absence of Certain Changes and Events. Other than as a result of
the transactions contemplated by this Agreement, since the Balance Sheet Date,
there has not been to Shareholder=s knowledge:
2.1.10.1. Financial Change. Any material adverse change in the financial
condition, backlog, operations, assets, liabilities or business of the Company;
2.1.10.2. Property Damage. Any material damage, destruction, or loss to the
business or properties of the Company (whether or not covered by insurance);
2.1.10.3. Dividends. Any declaration, setting aside, or payment of any
dividend or other distribution in respect of the Company Common Stock, or any
direct or indirect redemption, purchase or any other acquisition by the Company
of any such stock;
2.1.10.4. Capitalization Change. Any change in the capital stock or in the
number of shares or classes of the Company=s authorized or outstanding capital
stock as described in Section 2.1.3 hereof;
2.1.10.5. Labor Disputes. Any labor or employment dispute of whatever
nature; or
2.1.10.6. Other Material Changes. Any other material event or condition
known to the Shareholder particularly pertaining to and adversely affecting the
operations, assets or business of the Company.
2.1.11. Taxes. All federal, state and local income, value added, sales,
use, franchise, gross revenue, turnover, excise, payroll, property, employment,
customs, duties and any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic and foreign, by the
Company for each period for which any such returns, reports, or estimates were
due (taking into account any extensions of time to file before the date hereof);
all such returns are true and correct; the Company has only done business in
Texas, Kansas, Oklahoma and Colorado; all taxes shown by such returns to be
payable and any other taxes due and payable have been paid other than those
being contested in good faith by the Company; and the tax provision reflected in
the 3/31 Balance Sheet is adequate, in accordance with generally accepted
accounting principles (except for use of accelerated depreciation method), to
cover liabilities of the Company at the date thereof for all taxes, including
any assessed interest, assessed penalties and additions to taxes of any
character whatsoever applicable to the Company or its assets or business. No
waiver of any statute of limitations executed by the Company with respect to any
income or other tax is in effect for any period. Other than as disclosed on
Schedule 2.1.11 hereto, the income tax returns of the Company have never been
examined by the Internal Revenue Service or the taxing authority of any other
jurisdiction. There are no tax liens on any assets of The Company except for
taxes not yet currently due. The Company is not subject to any tax-sharing or
allocation agreement. The Company is not, nor has it ever attempted to become a
Subchapter S-Corporation under the Internal Revenue Code of 1986, as amended.
The Company is not and never has been, a member of a consolidated group subject
to Treasury Regulation 1.1502-6 or any similar provision.
2.1.12. Intellectual Property. The Company owns or possesses licenses to
use all Intellectual Property that is either material to the business of the
Company or that is necessary for the rendering of any services rendered by the
Company and the use or sale of any equipment or products used or sold by the
Company, including all such Intellectual Property listed in Schedule 2.1.8
hereto (the ARequired Intellectual Property@). The Required Intellectual
Property is owned or licensed by the Company free and clear of any Encumbrance.
The Company has not granted to any other person any license to use any Required
Intellectual Property. The Company has not received any notice of infringement,
misappropriation, or conflict with, the Intellectual Property rights of others
in connection with the use by the Company of the Required Intellectual Property
or otherwise in connection with the Company=s operation of its business.
2.1.13. Title to and Condition of Assets. Except as disclosed on Schedule
2.1.13 hereto, the Company has good, indefeasible and marketable title to all
its properties, interests in properties and assets, real and personal, reflected
in the 3/31 Balance Sheet or in Schedule 2.1.8 hereto, free and clear of any
Encumbrance of any nature whatsoever, except (i) Encumbrances reflected in the
3/31 Balance Sheet or in Schedule 2.1.8 hereto, (ii) liens for current taxes not
yet due and payable, and (iii) such imperfections of title, easements and
Encumbrances, if any, as are not substantial in character, amount or extent and
do not and will not materially detract from the value, or interfere with the
present use, of the property subject thereto or affected thereby, or otherwise
materially impair business operations. To Shareholder=s knowledge, all leases
pursuant to which the Company leases (whether as lessee or lessor) any
substantial amount of real or personal property are in good standing, valid, and
effective; and there is not, under any such leases, any existing default or
event of default or event which with notice or lapse of time, or both, would
constitute a default by the Company and in respect to which the Company has not
taken adequate steps to prevent a default from occurring. To Shareholder=s
knowledge, the buildings and premises of the Company that are used in its
business are in good operating condition and repair, subject only to ordinary
wear and tear. To Shareholder=s knowledge, all rigs, rig equipment, machinery,
transportation equipment, tools and other major items of equipment of the
Company are in good operating condition and in a state of reasonable maintenance
and repair, ordinary wear and tear excepted, and are free from any known defects
except as may be repaired by routine maintenance and such minor defects as to
not substantially interfere with the continued use thereof in the conduct of
normal operations. To Shareholder=s knowledge, all such assets conform to all
applicable laws governing their use. To Shareholder=s knowledge, no notice of
any violation of any law, statute, ordinance, or regulation relating to any such
assets has been received by the Company or any of the Shareholder, except such
as have been fully complied with.
2.1.14. Contracts. To Shareholder=s knowledge, all contracts, leases, plans
or other arrangements to which the Company is a party, by which it is bound or
to which it or its assets are subject are in full force and effect, and
constitute valid and binding obligations of the Company. To the knowledge of the
Shareholder, no other party to any such contract, lease, plan or other
arrangement is, in default thereunder, and no event has occurred which (with or
without notice, lapse of time, or the happening of any other event) would
constitute a default thereunder. No contract has been entered into on terms
which Shareholder knows will have an adverse effect on the Company. The
Shareholder has no knowledge that any customer of the Company is going to cease
doing business with the Company (or its successors) as a result of the
consummation of the transactions contemplated hereby.
2.1.15. Licenses and Permits. To Shareholder=s knowledge, the Company
possesses all Permits necessary under law or otherwise for the Company to
conduct its business as now being conducted and to construct, own, operate,
maintain and use its assets in the manner in which they are now being
constructed, operated, maintained and used, including all such Permits listed in
Schedule 2.1.8 hereto (collectively, the ARequired Permits@); each of the
Required Permits and the Company=s rights with respect thereto is valid and
subsisting, in full force and effect, and enforceable by the Company subject to
administrative powers of regulatory agencies having jurisdiction; the Company is
in compliance in all respects with the terms of each of the Required Permits;
and none of the Required Permits have been, or to the knowledge the Shareholder,
is threatened to be, revoked, canceled, suspended or modified.
2.1.16. Litigation. To Shareholder=s knowledge, except as set forth in
Schedule 2.1.16 hereto, there is no suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation pending or
threatened to which the Company is a party which particularly affects the
Company or its assets, nor is any change in the zoning or building ordinances
directly affecting the real property or leasehold interests of the Company.
2.1.17. Environmental Compliance.
2.1.17.1. Environmental Conditions. There are no environmental conditions
or circumstances, including, without limitation, the presence or release of any
Substance of Environmental Concern, on any property presently or previously
owned, leased or operated by the Company, or on any property to which any
Substance of Environmental Concern or waste generated by the Company=s
operations or use of its assets were disposed of, which would have a result a
material adverse effect on the business or business prospects of the Company.
The term ASubstance of Environmental Concern@ means (a) any gasoline, petroleum
(including crude oil or any fraction thereof), petroleum product,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutant,
contaminant, radiation and any other substance of any kind, whether or not any
such substance is defined as toxic or hazardous under any Environmental Law (as
defined in Section 2.1.17.3 hereof), that is regulated pursuant to or could give
rise to liability under any Environmental Law;
2.1.17.2. Permits, etc. The Company has, and within the period of all
applicable statute of limitations has had, in full force and effect all
environmental Permits required to conduct its operations, and is, within the
period of all applicable statutes of limitations has been, operating in
compliance thereunder;
2.1.17.3. Compliance. The Company=s operations and use of its assets are,
and within the period of all applicable statutes of limitations, have been in
compliance with applicable Environmental Law. AEnvironmental Law@ as used herein
means any and all laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, and other legally enforceable requirements (including, without
limitation, common law) of the United States, or any State, local, municipal or
other governmental authority or quasi-governmental authority, regulating,
relating to, or imposing liability or standards of conduct concerning protection
of the environmental or of human health, or employee health and safety as from
time to time has been or is now in effect.
2.1.17.4. Environmental Claims. No notice has been received by the Company
or the Shareholder from any entity, governmental agency or individual regarding
any existing, pending or threatened investigation, inquiry, enforcement action.
litigation, or liability, including, without limitation any claim for remedial
obligations, response costs or contribution, relating to any Environmental Law;
2.1.17.5. Enforcement. Neither the Company nor any predecessor of the
Company or other party acting on behalf of the Company, has entered into or
agreed to any consent, decree, order, settlement or other agreement, nor is
subject to any judgment, decree, order or other agreement, in any judicial,
administrative, arbitral, or other forum, relating to compliance with or
liability under any Environmental Law;
2.1.17.6. Liabilities. The Company has not assumed or retained, by contract
or operation of law, any liabilities of any kind, fixed or contingent, known or
unknown, under any Environmental Law, other than master service agreements,
leases, or other contracts made available to Buyer.
2.1.17.7. Renewals. The Shareholder does not know of any reason the Company
(or its successors) would not be able to renew without material expense any of
the permits, licenses, or other authorizations required pursuant to any of the
Environmental Law to conduct and use any of the Company=s current or planned
operations; and
2.1.17.8. Asbestos and PCBs. To Shareholder=s knowledge, no material
amounts of friable asbestos currently exist on any property owned or operated by
the Company, nor do polychlorinated biphenyls exist in concentrations of 50
parts per million or more in electrical equipment owned or being used by the
Company in its operations or on its properties.
2.1.18. Compliance with Other Laws. To Shareholder=s knowledge, the Company
is not in violation of or in default with respect to, or in alleged violation of
or alleged default with respect to, the Occupational Safety and Health Act (29
U.S.C. ''651 et seq.) as amended, or any other applicable law or any applicable
rule, regulation, or any writ or decree of any court or any governmental
commission, board, bureau, agency, or instrumentality, or delinquent with
respect to any report required to be filed with any governmental commission,
board, bureau, agency or instrumentality.
2.1.19. Employee Plans and Labor Issues. To Shareholder's knowledge, all
Employee Plans (as defined in Section 2.1.8.7) covering active, former or
retired employees of the Company are listed on Schedule 2.1.8.7. Solely for
purposes of the representations in this Section 2.1.19, the term ACompany@ means
Patrick Well Service, Inc., as well as any other entity which is considered one
employer with Patrick Well Service, Inc., under Sections 414(b), (c), (m) and
(o) of the Internal Revenue Code of 1986, as amended (the ACode@). The Company
has made available to Buyer a copy of each Employee Plan, any related trust
agreement and annuity or insurance contract, and each plan=s most recent annual
report (Form 5500 series) filed with the Internal Revenue Service, if
applicable. The only Employee Plan that the Company maintains, or that the
Company or any predecessor thereto has ever maintained, that is intended to be
qualified under Section 401(a) of the Code is the Patrick Well Service, Inc.,
Profit Sharing Plan (the "Profit Sharing Plan") and, without limitation, no
pension plan or multiemployer plan subject to Title IV (Plan Termination
Insurance) of the Employee Retirement Income Security Act 1974, as amended
("ERISA") or the minimum funding requirements of Section 412 of the Code has
ever been maintained. Each Employee Plan has been maintained and administered,
in all material respects, in compliance with its terms and with the requirements
prescribed by any applicable statutes, orders, rules and regulations, including
the Code and ERISA, and (i) all required Forms 5500 for the Employee Plans have
been timely filed with the Internal Revenue Service or an extension of the
filing due date has been granted by the Internal Revenue Service; (ii) the
Profit Sharing Plan has received a current favorable determination letter from
the Internal Revenue Service to the effect that the Profit Sharing Plan is
qualified under Section 401(a) of the Code, and nothing has occurred since the
effective date of such determination letter to adversely affect, or cause the
appropriate governmental agency or authority to revoke, such qualification or
approval; (iii) there are no pending or anticipated claims against or otherwise
involving any of the Employee Plans, and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of Employee Plan
activities) has been brought against or with respect to any Employee Plan; (iv)
all contributions, reserves or premium payments required to be made to the
Employee Plans have either been made or properly accrued on the Company's
financial statements; (v) the Company does not have any obligations for retiree
health and life benefits under any Employee Plan, (vi) there are no restrictions
on the rights of the Company to amend or terminate any Employee Plan without
incurring any liability thereunder; and (vii) none of the Employee Plans provide
for additional or accelerated payments or benefits to employees or shareholders
of the Company upon a change of control or ownership of the Company.
The Company is not obligated to pay any severance or benefits to any
employee or former employee of the Company as the result of any change in the
ownership or control of the Company. The Company has not engaged in any unfair
labor practices which could reasonably be expected to result in an adverse
effect on its operations or assets. The Company does not have any dispute with
any of its existing or former employees. There are no labor disputes or, to the
knowledge of any of the Shareholder, any disputes threatened by current or
former employees of the Company. 2.1.20. Investigations; Litigation. To
Shareholder=s knowledge, no investigation or review by any governmental entity
with respect to the Company or any of the transactions contemplated by this
Agreement is pending or threatened, nor has any governmental entity indicated to
the Company an intention to conduct the same, and there is no action, suit or
proceeding pending or, to the knowledge of the Shareholder, threatened against
or affecting the Company at law or in equity, or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, that either individually or in the aggregate, does or is likely
to result in any material adverse change in the financial condition, properties
or business of the Company.
2.1.21. Absence of Certain Business Practices. To Shareholder=s knowledge,
neither the Company nor any officer, employee or agent of the Company, nor any
other person acting on its behalf, has, directly or indirectly, within the past
five years, given or agreed to give any gift or similar benefit to any customer,
supplier, government employee or other person who is or may be in a position to
help or hinder the business of the Company (or to assist the Company in
connection with any actual or proposed transaction) which (i) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company as
reflected in the 3/31 Financial Statements, or (iii) if not continued in the
future, might materially adversely effect the assets, business operations or
prospects of the Company or which might subject the Company to suit or penalty
in a private or governmental litigation or proceeding.
2.1.22. Copies of Documents - No Untrue Statements. The Shareholder has
made available to Buyer true, complete and correct copies of all contracts,
documents concerning all litigation and administrative proceedings, licenses,
permits, insurance policies, lists of suppliers and customers, and records
relating principally to the Company=s assets and business, and such information
covers all commitments and liabilities of the Company relating to its business
or the assets. This Agreement and the agreements and instruments to be entered
into in connection herewith do not include any untrue statement of a material
fact or omit to state any known material fact necessary to make the statements
made herein and therein not misleading in any material respect.
2.1.23. Consents and Approvals. No consent, approval or authorization of,
or filing or registration with, any governmental or regulatory authority, or any
other person or entity other than the Shareholder, is required to be made or
obtained by the Company or of the Shareholder in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
2.1.24. Finder=s Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Shareholder and
their counsel directly with Buyer and its counsel, without the intervention of
any other person in such manner as to give rise to any valid claim against any
of the parties hereto for a brokerage commission, finder=s fee or any similar
payments.
ARTICLE 3
Additional Agreements
3.1. Noncompetition. Except as otherwise consented to or approved in
writing by Buyer, the Shareholder agrees that for a period of 60 months from the
date hereof, such Shareholder will not, directly or indirectly, acting alone or
as a member of a partnership or as an officer, director, employee, consultant,
representative, holder of, or investor in as much as 5% of any security of any
class of any corporation or other business entity (i) engage in competition with
the well servicing business or businesses conducted by the Company, on the date
hereof, or in any service business the services of which are provided and
marketed by the Company, on the date hereof in any area of the state of the
United States, or any foreign country in which the Company, transacts business
on the date hereof; (ii) request any present customers or suppliers of the
Company to curtail or cancel their business with Buyer or any affiliate of
Buyer; (iii) disclose to any person, firm or corporation any trade, technical or
technological secrets of the Company, Buyer or any affiliate of Buyer or any
details of their organization or business affairs or (iv) induce or actively
attempt to influence any employee of the Company, Buyer or any affiliate of
Buyer to terminate his employment; provided, however, that the Shareholder shall
be able to buy, sell, build and overhaul well servicing rigs, and to work on any
rig on Shareholder's own production. Shareholder agrees that if either the
length of time or geographical area set forth in this Section 3.1 is deemed too
restrictive in any court proceeding, the court may reduce such restrictions to
those which it deems reasonable under the circumstances. The obligations
expressed in this Section 3.1 are in addition to any other obligations that the
Shareholder may have under the laws of the states in which he does business
requiring an employee of a business or a shareholder who sells his stock in a
corporation (including a disposition in a merger) to limit his activities so
that the goodwill and business relations of his employer and of the corporation
whose stock he has sold (and any successor corporation) will not be materially
impaired. The Shareholder further agrees and acknowledges that the Company,
Buyer and its affiliates do not have any adequate remedy at law for the breach
or threatened breach by such Shareholder of this covenant, and agree that the
Company, Buyer or any affiliate of Buyer may, in addition to the other remedies
which may be available to it hereunder, file a suit in equity to enjoin such
Shareholder from such breach or threatened breach. If any provisions of this
Section 3.1 are held to be invalid or against public policy, the remaining
provisions shall not be affected thereby. The Shareholder acknowledges that the
covenants set forth in this Section 3.1 are being executed and delivered by such
Shareholder in consideration of the covenants of Buyer contained in this
Agreement, and for other good and valuable consideration, receipt of which is
hereby acknowledged.
3.2. Release of Shareholder from Guaranty. Within 30 days, Buyers shall
obtain a complete release of the personal guaranty of Shareholder and his wife
from NationsBank, Liberal, Kansas, and indemnify Shareholder and his wife during
that period of time should the guaranty be invoked by NationsBank.
3.3. Further Assurances. From time to time, as and when requested by any
party hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effectuate the transactions contemplated hereby.
ARTICLE 4
Indemnification
4.1. Indemnification by and Remedies Against the Shareholder. In addition
to any other remedies available to Buyer under this Agreement, or at law or in
equity, the Shareholder shall indemnify, defend and hold harmless the Company,
Buyer and their affiliates and their respective officers, directors, employees,
agents and stockholders (collectively, the ABuyer Indemnified Parties@), against
and with respect to any and all claims, costs, damages, losses, expenses,
obligations, liabilities, recoveries, suits, causes of action and deficiencies,
including interest, penalties and reasonable fees and expenses of attorneys,
consultants and experts (collectively, the ADamages@) in excess of $150,000 in
the aggregate that the Buyer Indemnified Parties shall incur or suffer, which
arise, result from or relate to any breach by the Shareholder of (or the failure
of the Shareholder to perform) his respective representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or delivered to Buyer by the Shareholder
under this Agreement or provided, however, that the Shareholder shall not be
required to so indemnify, defend and hold harmless Buyer Indemnified Parties
against and with respect to any Damages incurred as a result of a breach by the
Shareholder of his representations and warranties in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or delivered to
Buyer by the Shareholder under this Agreement for which Buyer fails to provide
written notice of a claim for such Damages to the Shareholder on or before the
expiration of the survival period (as specified in Section 5.1 hereof) of the
specific representation or warranty alleged to have been breached.
4.2. Indemnification by and Remedies Against Buyer. In addition to any
other remedies available to the Shareholder under this Agreement or at law or in
equity, Buyer shall indemnify and hold harmless the Shareholder, his wife,
children, agents, representatives, attorneys, successors, heirs, executors and
administrators (collectively the AShareholder Indemnified Parties@) from any
Damages that the Shareholder Indemnified Parties shall incur or suffer, which
arise, result from or relate to (i) any breach of or failure by Buyer to perform
any of its representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or delivered to the Shareholder by or on behalf of Buyer under this Agreement or
(ii) the conduct of the Company=s business on or after the date hereof,
provided, however, that Buyer shall not be required to so indemnify, defend and
hold harmless the Shareholder Indemnified Parties as a result of a breach by
Buyer of any of its representations and warranties in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or delivered to the
Shareholder by Buyer under this Agreement for which the Shareholder fails to
provide written notice of the claim for such damages to Buyer on or before the
expiration of the survival period (as specified in Section 5.1 hereof) of the
specific representation or warranty alleged to have been breached.
4.2. Indemnification Procedure. In the event that any party hereto
discovers or otherwise becomes aware of an indemnification claim arising under
Section 4.1 or 4.2 of this Agreement, such indemnified party shall give written
notice to the indemnifying party, specifying such claim, and may thereafter
exercise any remedies available to such party under this Agreement; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of any obligations hereunder, to
the extent the indemnifying party is not materially prejudiced thereby. Further,
promptly after receipt by an indemnified party hereunder of written notice of
the commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to Section 4.1 or 4.2 hereof, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of any
obligations hereunder, to the extent the indemnifying party is not materially
prejudiced thereby. In case any such action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after such notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof unless the indemnifying party has failed to assume the defense
of such claim and to employ counsel reasonably satisfactory to such indemnified
person. An indemnifying party who elects not to assume the defense of a claim
shall not be liable for the fees and expenses of more than one counsel in any
single jurisdiction for all parties indemnified by such indemnifying party with
respect to such claim or with respect to claims separate but similar or related
in the same jurisdiction arising out of the same general allegations.
Notwithstanding any of the foregoing to the contrary, the indemnified party will
be entitled to select its own counsel and assume the defense of any action
brought against it if the indemnifying party fails to select counsel reasonably
satisfactory to the indemnified party, the expenses of such defense to be paid
by the indemnifying party. No indemnifying party shall consent to entry of any
judgment or enter into any settlement with respect to a claim without the
consent of the indemnified party, which consent shall not be unreasonably
withheld, or unless such judgment or settlement includes as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability with respect to such claim. No indemnified party
shall consent to entry of any judgment or enter into any settlement of any such
action, the defense of which has been assumed by an indemnifying party, without
the consent of such indemnifying party, which consent shall not be unreasonably
withheld or delayed.
ARTICLE 5
Miscellaneous
5.1. Survival of Representations, Warranties and Covenants. All
representations and warranties made by the parties hereto shall survive for a
period of 24 months from the date hereof, notwithstanding any investigation made
by or on behalf of any of the parties hereto; provided, however, that the
representations and warranties contained in Section 2.1.11 hereof shall survive
until the expiration of the applicable statute of limitations associated with
the taxes at issue. All statements contained in any certificate, schedule,
exhibit or other instrument delivered pursuant to this Agreement shall be deemed
to have been representations and warranties by the respective party or parties,
as the case may be, and shall also survive for a period of 24 months from the
date hereof despite any investigation made by any party hereto or on its behalf.
All covenants and agreements contained herein shall survive as provided herein.
5.2. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
5.3. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
5.4. Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested:
If to Buyer
Addressed to: With a copy to:
WellTech Eastern, Inc. Porter & Hedges, L.L.P.
Two Tower Center, Tenth Floor 700 Louisiana, 35th Floor
East Brunswick, New Jersey 08816 Houston, Texas 77210-4744
Attn: General Counsel Attn: Samuel N. Allen
Facsimile: (908) 247-5148 Facsimile: (713) 228-1331
If to Shareholder
Addressed to: With a copy to:
Monty D. Elmore Gene H. Sharp, Esq.
2133 Sierra Sharp, McQueen, McKinley, Dreiling, Morain & Tate, P.A.
Liberal, Kansas 67901 419 N. Kansas - P. O. Box 2619
Liberal, Kansas 67905-2619
Facsimile: (316) 624-9163
Rex A. Sharp, Esq.
Husch & Eppenberger
1200 Main Street, Suite 1700
Kansas City, Missouri 64105-2100
Facsimile: (816) 421-0596
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
5.5. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
5.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
5.7. 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, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
5.8. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Kansas.
IN WITNESS WHEREOF, the Shareholder has executed this Agreement and the
other parties hereto have caused this Agreement to be signed in their respective
corporate names by their respective duly authorized representatives, all as of
the day and year first above written.
WELLTECH EASTERN, INC.
By: _____________________
Name: Bill Bixler
Title: Vice President
SHAREHOLDER
________________________
Monty D. Elmore