1
Stock Purchase Agreement
Between
WellTech Eastern, Inc.,
and
William Gregory Wines
Dated as of September 16, 1997
18
Stock Purchase Agreement
This Stock Purchase Agreement (this AAgreement@) is entered into as of
September 16, 1997, by and between WellTech Eastern, Inc., a Delaware
corporation (ABuyer@), and William Gregory Wines (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, Landmark Fishing & Rental, Inc. (the ACompany@) is a corporation
duly organized and validly existing under the laws of the State of Oklahoma,
with its principal executive offices at 4009 Oklahoma Avenue, Woodward, Oklahoma
73801; and
Whereas, the Shareholder owns 500 shares (the ACompany Shares@) of common
stock, par value $1.00 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 agrees 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 $3,836,489.03 in cash by wire transfer of
immediately available funds, and the Cash Adjustment Payment (as defined in
Section 1.4 hereof), if any, in accordance with Section 1.4 hereof.
1.2. Payment of Certain Receivables. On the date hereof, the Shareholder
shall cause to be paid to the Company (i) $552,889.32, which represents the
total amount due and owing to the Company in respect of those receivables
represented by the line items on the 6/30 Balance Sheet (as defined in Section
2.1.6. hereof) designated as Accounts Receivable Stockholder, Notes Receivable
G. Wines and Notes Receivable Stockholders; (ii) $60,000.00, which represents
the total amount of principal due and owing by Stockholder to the Company on a
promissory note executed between Shareholder and Company after June 30, 1997;
(iii) $24,855.87, which represents the additional amount of principal that
Stockholder has borrowed from Company against the account designated as Notes
Receivable Stockholder on the 6/30 balance sheet between June 30, 1997, and the
date hereof; and (iv) $33,599.71, which represents the total accrued, but
unpaid, interest due from Stockholder to Company upon the above-referenced
obligations.
1.3. 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.
1.4 Adjustment of Purchase Price. Seller shall cause to be prepared and
delivered to the Buyer a balance sheet of the Company as of the date hereof (the
AFinal Balance Sheet@) within 60 days after the date hereof. Buyer and the
Shareholder shall jointly review the Final Balance Sheet, 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) the Final Net Current Value of the Company (defined
below) plus (B) $22,623.16, which represents the amount of funds expended by the
Company since June 30, 1997 for the purchase of capital equipment that the
parties hereto have agreed expands the capability of the Company=s business (the
ACapital Expenditure Amount@), exceeds the 6/30 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 Amount is less than the 6/30 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 A6/30 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 6/30 Balance Sheet
exceeds (ii) the ATotal Liabilities@ as recorded on the 6/30 Balance Sheet. The
$60,000.00 promissory note from Company to Shareholder shall be included on the
Final Balance Sheet as part of ATotal Current Assets@ with the designation ANote
Receivable-Greg Wines.@ Additionally, the amount of $24,855.87 should be
included as part of "Total Current Assets" with the designation "Note Receivable
Stockholder."
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
Oklahoma, 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 Texas, 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 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 charter 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 the Shareholder or their respective properties are bound.
2.1.3. Capitalization. The authorized capitalization of the Company
consists of 10,000 shares of Company Common Stock, of which, as of the date
hereof, 500 shares were issued and outstanding and held beneficially and of
record by the Shareholder. In addition to the 10,000 shares of Common Stock,
Landmark=s authorized capitalization includes 10,000 shares of preferred-voting
stock, $1.00 par value. These shares have never been issued. 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. Except as above indicated, 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 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 either the Company.
2.1.5. No Subsidiaries. Except as specified in Schedule 2.1.5 hereto, 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 (the A6/30 Balance Sheet@) and related
statement of income, copies of which are attached hereto as Schedule 2.1.6
(collectively, the A6/30 Financial Statements@), as at and for the 12 months
ended June 30, 1997 (the ABalance Sheet Date@). The 6/30 Financial Statements
are complete in all respects. The 6/30 Financial Statements present fairly the
financial condition of the Company as at the dates and for the periods
indicated. The 6/30 Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. The
accounts receivable reflected in the 6/30 Balance Sheet, or which have been
thereafter acquired by the Company, have been collected or are collectible at
the aggregate recorded amounts thereof less applicable reserves, which reserves
are adequate. The inventories of the Company reflected in the 6/30 Balance
Sheet, or which have thereafter been acquired by it, consist of items of a
quality usable and salable in the normal course of the Company=s business.
2.1.7. Liabilities. Except as disclosed on Schedule 2.1.7 hereto, the
Company does not have any liabilities or obligations, either accrued, absolute
or contingent, nor does the Shareholder have any knowledge of any potential
liabilities or obligations, other than those (i) reflected or reserved against
in the 6/30 Balance Sheet or (ii) incurred in the ordinary course of business
since the Balance Sheet Date that would not 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 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 Inventory. All equipment, machinery,
transportation equipment, 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 and all inventory items or groups of inventory items owned by the
Company, excluding raw materials and work in process, which raw materials and
work in process are valued on the 6/30 Balance Sheet, together with the amount
of any Encumbrances thereon;
2.1.8.3. Account and Note Receivables. All accounts and notes receivable of
the Company, together with (i) aging schedules by invoice date and due date,
(ii) the amounts provided for as an allowance for bad debts, (iii) the identity
and location of any asset in which the Company holds a security interest to
secure payment of the underlying indebtedness, and (iv) a description of the
nature and amount of any Encumbrances on such accounts and notes receivable;
2.1.8.4. Payables. All accounts payable of the Company, together with an
appropriate aging schedule.
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, including leases under which the Company
is lessor or lessee, 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 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. Certain 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), trade names, 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 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
except those maintained in the 6/30 Balance Sheet;
2.1.8.17. Leases. All leases to which the Company is a party; and
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.
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:
2.1.10.1. Financial Change. Any adverse change in the financial condition,
backlog, operations, assets, liabilities or business of the Company;
2.1.10.2. Property Damage. Any 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 Adverse Changes. Any other 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
Oklahoma, Texas and Kansas; 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 6/30
Balance Sheet is adequate, in accordance with generally accepted accounting
principles, 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. Except 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 authorities 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 6/30 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
6/30 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. 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. 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. 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 the best
of the Shareholder=s knowledge, all such assets conform to all applicable laws
governing their use. No notice of any violation of any law, statute, ordinance,
or regulation relating to any such assets has been received by the Company or
the Shareholder, except such as have been fully complied with.
2.1.14. Contracts. 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. The Company is not, and to the knowledge of any 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 could reasonably be expected to have an adverse effect on the Company. The
Shareholder has not received any information which would cause the Shareholder
to conclude that any customer of the Company will (or is likely 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. 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. None of the Required Permits have
been, or to the knowledge of the Shareholder, is threatened to be, revoked,
canceled, suspended or modified.
2.1.16. Litigation. 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 to which the Company is a party or, to the
knowledge of the Shareholder, might become a party or 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, pending or, to the knowledge of the Shareholder, threatened.
2.1.17. Environmental Compliance.
2.1.17.1. Environmental Conditions. Except as noted in Phase I
Environmental Site Assessment prepared contemporaneously with closing by
Advantage Environmental Service, Inc., 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 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. The Company, and to the knowledge of the
Shareholder, no 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;
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. 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. 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. Except as identified in Schedule
2.1.8., the Company does not currently sponsor, maintain or contribute to, and
has not at any time sponsored, maintained or contributed to any Employee Plan
(as defined in Section 2.1.8.7. hereof) or any other employee benefit plan which
is or was subject to any of the provisions of the Employee Retirement Income
Security Act 1974, as amended ("ERISA"), in which any of its employees are or
were participants (whether or not on an active or frozen basis). Each Employee
Plan set forth in Schedule 2.1.8. hereto complies currently, and has complied in
the past, in form and operation, with the applicable provisions of ERISA, the
Code and other applicable laws including, without limitation, all qualification
and reporting and disclosure requirements. Also, with respect to each Employee
Plan the company has not engaged in any prohibited transaction or any violation
of its fiduciary duties to such plan. All contributions required to be made to
each Employee Plan under the terms of such Employee Plan, ERISA or other
applicable law have been timely made and there are no delinquent contributions
as of the Closing Date. None of the Employee Plans (i) is a Amultiemployer plan@
(as defined in Section 3(37) of ERISA), (ii) is a defined benefit pension plan
subject to Title IV of ERISA, (iii) is a Avoluntary employees= beneficiary
association@ within the meaning of the Code Section 501(c)(9), (iv) provides for
medical or other insurance benefits to current or future retired employees or
former employees of the Company (other than as required for group health plan
continuation coverage under Code Section 4980B (ACOBRA@) or applicable state
law), or (v) obligates the Company to pay benefits solely as a result of a
change in control of the Company. During the six years preceding the Closing
Date, (i) no under-funded pension plan subject to Section 412 of the Code has
been transferred out of the Company and (ii) the Company has not participated in
or contributed to, or had an obligation to contribute to, any multiemployer plan
(as defined in ERISA Section 3(37)) and has no withdrawal liability with respect
to any multiemployer plan. There are no claims or lawsuits which have been
asserted, instituted or threatened against any Employee Plan by any fiduciary or
participant of such plan, except routine claims for benefits thereunder. The
Company has no collective bargaining agreements with any labor union or other
representative of employees. The Company has not engaged in any unfair labor
practices. The Company has no pending or threatened dispute with any of its
existing or former employees.
2.1.20. Investigations; Litigation. 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, to the knowledge of the
Shareholder, 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. 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 6/30 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. No Untrue Statements. The Company and the Shareholder have 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 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 is required to be made or obtained by 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 his
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.
2.2. Representations and Warranties of Buyer. Buyer represents and warrants
to the Shareholder as follows
2.2.1. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, 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.
2.2.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Buyer, and this
Agreement is a valid and binding obligation of Buyer enforceable (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 Buyer will not conflict
with or result in a violation or breach of any term or provision of, or
constitute a default under (a) the Certificate of Incorporation or Bylaws of
Buyer or (b) any obligation, indenture, mortgage, deed of trust, lease, contract
or other agreement to which Buyer or any of its property is bound.
2.2.3. Consents and Approvals. No consent, approval or authorization of, or
filing of a registration with, any governmental or regulatory authority, or any
other person or entity is required to be made or obtained by Buyer in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
2.2.4. Finder=s Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Buyer and its counsel
directly with the Company and the Shareholder and his counsel, without the
intervention by any other person as the result of any act of Buyer in such a
manner as to give rise to any valid claim against any of the parties hereto for
any brokerage commission, finder=s fee or any similar payments.
2.2.5. Buyer=s Assumption of Company Liabilities. Buyer hereby agrees and
promises to assume any and all obligations and liabilities that are reflected on
Schedules 2.1.8.4. and 2.1.8.14., said obligations and liabilities being
reflected on the 6/30 balance sheet. Buyer agrees, under the terms and
procedures provided for under Article 4 of the Agreement to indemnify and hold
harmless the Shareholder against and with respect to any and all guaranties,
obligations, liabilities, sums due or damages (as defined in Section 4.1.
hereof) that may arise from or out of the liabilities reflected on Schedules
2.1.8.4. and 2.1.8.14. Buyer further agrees to provide Shareholder with a
release from the creditors, or their respective assigns, identified on Schedule
2.1.8.14. within 30 days hereof.
ARTICLE 3
Additional Agreements
3.1. Noncompetition Agreement. The Shareholder hereby agrees to certain
restrictions with respect to his conduct of business after the date hereof
pursuant to the terms and provisions of that certain Noncompetition Agreement of
even date herewith by and between the Company and the Shareholder executed and
delivered in connection herewith.
3.2. Facility Lease. After the date hereof, the Shareholder hereby agrees
to lease to the Company its current Facility in Woodward, Oklahoma pursuant to
the terms and provisions of that certain Lease Agreement of even date herewith
by and between the Company and the Shareholder executed and delivered in
connection herewith.
3.3. Employment Agreement. After the date hereof , the Shareholder shall be
employed by the Company pursuant to the terms and provisions of that certain
Employment Agreement of even date herewith by and between the Company and the
Shareholder executed and delivered in connection herewith.
3.4. 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 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@) 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
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.
4.2. Indemnification by Buyer. In addition to any other remedies available
to the Shareholder under this Agreement, or at law or in equity, Buyer shall
indemnify, defend and hold harmless the Shareholder against and with respect to
any and all Damages that Shareholder shall incur or suffer, which arise, result
from or relate to 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.
4.3. 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. Subject to
the following, 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. The
indemnified party is obligated to specify the basis of any determination that
counsel selected by the indemnifying party is unsatisfactory before the
indemnifying party shall be liable for attorney fees of counsel selected by the
indemnified party. The basis must be reasonable and well grounded before the
indemnifying party shall be liable for the expenses of counsel selected 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 without
the consent of such indemnifying party, which consent shall not be unreasonably
withheld or delayed, unless the indemnifying party has refused to provide a
defense against such claim or action. Likewise, no indemnified party shall
consent to entry of judgment or enter into any settlement of such claim where
the indemnifying party has refused to provide a defense against such claim or
action until the indemnified party has given the indemnifying party notice of
the terms of the judgment or settlement and an opportunity to continue with a
defense if the judgment or settlement is unsatisfactory.
ARTICLE 5
Miscellaneous
5.1. Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements made by the parties hereto
shall survive indefinitely without limitation, notwithstanding any investigation
made by or on behalf of any of the parties hereto. 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
indefinitely despite any investigation made by any party hereto or on its
behalf.
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 the Shareholder
Addressed to: With a copy to:
William Gregory Wines Cody B. Hodgden, Esq.
72 Possum Point Hodgden & Hallren
Possum Kingdom Lake P. O. Box 529
Grayford, Texas 76449 Woodward, Oklahoma 73802
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 Oklahoma.
IN WITNESS WHEREOF, the Shareholder has executed this Agreement and Buyer
has caused this Agreement to be signed in its corporate names by its duly
authorized representative, all as of the day and year first above written.
WELLTECH EASTERN, INC.
By:
_________________________________________
Name:
______________________________________
Title:
_______________________________________
SHAREHOLDER
_________________________________________
William Gregory Wines