Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
JUNE 6, 1997
BLACK WARRIOR WIRELINE CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-18754 11-2904094
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3748 HIGHWAY 45 NORTH, COLUMBUS, MISSISSIPPI 39701
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(Address of principal executive offices)
Registrant's telephone number, including area code: (601) 329-1047
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
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PWS Acquisition. On June 6, 1997, pursuant to an agreement entered into
on that date, the Company acquired all of the issued and outstanding capital
stock of Production Well Services, Inc., a Mississippi corporation ("PWS"). PWS
is engaged in the wireline and oil and gas well services business in the south
Mississippi area. The capital stock was acquired from Vernon E. Tew,Jr., Mark R.
Roberts, E.J. Wooten, Chester H. Whatley and William A. Tew, for an aggregate
purchase price of $586,000 which included cash of approximately $46,000 held by
PWS at the closing, less any liabilities in excess of $112,500, and 133,333
shares of the Company's Common Stock which are to be issued on January 1, 1998.
PWS receivables at the closing of the transaction were retained by the sellers.
PWS's operating assets include, among other items, four wireline trucks and
related equipment. All of the trucks and other equipment are believed by the
Company to be in good operating condition.
In conjunction with the transaction, Mark Roberts and Vernon Tew
entered into three-year employment agreements with PWS which provide for monthly
salaries of $4,000, plus an initial bonus of $20,000.
The cash portion of the purchase price for PWS was paid out of the
proceeds of borrowings from St. James Capital Partners, L.P. completed
concurrently with the PWS acquisition. See Item 5. Other Events.
Petro-Log Acquisition. On June 9, 1997, pursuant to an agreement
entered into on that date, the Company acquired effective June 1, 1997, all of
the issued and outstanding capital stock of Petro-Log, Incorporated, a Wyoming
corporation ("Petro-Log"). Petro-Log is engaged in the wireline and oil and gas
well services business in Wyoming, Montana and South Dakota. The capital stock
was acquired from John L. Morton, Theodore W. Morton and John D. Morton for an
aggregate consideration of $2,137,500, all of which was paid in cash at the
closing. Assets of Petro-Log excluded from the transaction included, among other
items, cash and cash equivalents, real estate and accounts receivable. All the
liabilities of Petro-Log outstanding at the closing time are to be paid by the
selling stockholders. Petro-Log's operating assets include, among other items,
seventeen wireline trucks operated out of three district offices in Casper,
Riverton and Powell, Wyoming. All of the trucks and other equipment are believed
by the Company to be in good operating condition.
The purchase price for Petro-Log was paid out of the proceeds of
borrowings from St. James Capital Partners, L.P. See Item 5. Other Events.
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Item 5. Other Events.
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The acquisitions of PWS and Petro-Log were financed with the proceeds
of borrowings from St. James Capital Partners, L.P. ("St. James"). Pursuant to
an Agreement for Purchase and Sale dated June 6, 1997 (the "Agreement") between
the Company and St. James, the Company agreed to issue and sell and St. James
agreed to purchase the Company's promissory notes aggregating $5,000,000. Of
such amount, $2,000,000 is represented by the Company's 9% Convertible
Promissory Note due June 6, 2002, and $3,000,000 is represented by the Company's
10% Bridge Loan Note due September 4, 1997, subject to extension of the maturity
date to October 4, 1997. The $2,000,000 note is convertible into shares of the
Company's Common Stock at an initial conversion price of $2.75 per share,
increasing one year after issuance to $3.25 per share and further increasing two
years after issuance to $3.75 per share, subject to anti-dilution adjustment for
certain issuances of securities by the Company at prices per share of Common
Stock less than the conversion price then in effect. Payment of principal and
interest on both of the notes is collateralized by substantially all the assets
of the Company. The Company is seeking to refinance the bridge note with the
proceeds of a senior secured loan not yet obtained. St. James has agreed to
subordinate the indebtedness owing to it to up to $4,000,000 of indebtedness of
the Company to a senior lender out of which, if borrowed prior to its maturity
date, the Bridge Note must be paid, and up to $2,000,000 of working capital
financing. St. James was also issued warrants to purchase an aggregate of
666,000 shares of Common Stock at an initial exercise price of $2.75 per share,
increasing one year after issuance to $3.25 per share and further increasing two
years after issuance to $3.75 per share, subject to anti-dilution adjustment for
certain issuances of securities by the Company at prices per share of Common
Stock less than the exercise price then in effect. The maturity of the Bridge
Note can be extended to October 4, 1997 upon issuance of warrants containing the
same terms to purchase an additional 20,000 shares of Common Stock. The shares
issuable on conversion of the note and exercise of the warrants have demand and
piggy-back registration rights under the Securities Act of 1933. The Company
agreed that one person designated by St. James would be nominated for election
to the Company's Board of Directors. The Agreement grants St. James certain
preferential rights to provide future financing to the Company, subject to
certain exceptions. The notes contain various affirmative and negative
covenants, including a prohibition against the Company consolidating, merging or
entering into a share exchange with another person, with certain exceptions,
without the consent of St. James. Events of default under the notes include,
among other events, a default under the other St. James note, a breach of the
Company's covenants, representations and warranties under the Agreement, subject
to certain exceptions, any person or group of
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persons acquiring 40% or more of the voting power of the Company's outstanding
shares who was not the owner thereof as of June 6, 1997, a merger of the Company
with another person, its dissolution or liquidation or a sale of all or
substantially all its assets, and certain events of bankruptcy. In the event of
a default under either note, St. James could seek to foreclose against the
collateral for the notes.
Of the $5,000,000 proceeds from the sale of the notes, $2,000,000 was
advanced concurrently with the acquisition of PWS and $3,000,000 was advanced
concurrently with the acquisition of Petro-Log. In addition to providing the
funds to complete the PWS and Petro-Log acquisitions, the proceeds will be used
to purchase and improve equipment, including the purchase of four additional
wireline trucks, and for working capital.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statements of business acquired.
Financial statements of PWS are not required.
It is impracticable for the Company to provide the required
financial statements for Petro-Log at the time this Current Report on Form 8-K
is filed. Such financial statements will be filed as soon as practicable, but
not later than 60 days after the date this Current Report on Form 8-K is
required to be filed.
(b) Pro forma financial information.
Pro-forma financial statements reflecting the PWS acquisition
are not required.
It is impracticable for the Company to provide the required
pro forma financial information for Petro-Log at the time this Current Report on
Form 8-K is filed. Such pro forma information will be filed as soon as
practicable, but not later than 60 days after the date this Current Report on
Form 8-K is required to be filed.
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(c) Exhibits
(1) Purchase and Sale Agreement dated June 6, 1997 between Black
Warrior Wireline Corp. and Vernon E. Tew, Jr., Mark R. Roberts, E.J. Wooten,
Chester Whatley and William A. Tew.
(2) Purchase and Sale Agreement dated June 9, 1997 between Black
Warrior Wireline Corp. and John L. Morton, Theodore W. Morton, and John D.
Morton.
(3) Agreement for Purchase and Sale dated June 6, 1997 between Black
Warrior Wireline Corp. and St. James Capital Partners, L.P.
(4) $2,000,000 Convertible Promissory Note dated June 6, 1997 issued to
St. James Capital Partners, L.P.
(5) $3,000,000 Bridge Loan Promissory Note dated June 6, 1997 issued to
St. James Capital Partners, L.P.
(6) Warrant dated June 6, 1997 to purchase 546,000 shares of Common
Stock issued to St. James Capital Partners, L.P.(1)
(7) Warrant dated June 6, 1997 to purchase 120,000 shares of Common
Stock issued to St. James Capital Partners, L.P.(1)
(8) Registration Rights Agreement between Black Warrior Wireline Corp.
and St. James Capital Partners, L.P. dated June 6, 1997.
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(1) To be filed by amendment.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Black Warrior Wireline Corp.
Dated: June 20, 1997 By: /s/ William L. Jenkins
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William L. Jenkins, President
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EXHIBIT 1
PURCHASE AND SALE AGREEMENT
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Agreement made and entered the 6th day of June, 1997, but effective as
of the 1st day of June, 1997, (the "Effective Date") between and among BLACK
WARRIOR WIRELINE CORP, a Delaware corporation with its principal place of
business at 3748 Highway 45, North, Columbus, Mississippi (hereinafter referred
to as "Purchaser") and VERNON E. TEW, JR., MARK R. ROBERTS, E. J. WOOTEN,
CHESTER H. WHATLEY and WILLIAM A. TEW (hereinafter referred to as "Sellers") who
are the sole shareholders of PRODUCTION WELL SERVICES, INC., a Mississippi
corporation (hereinafter referred to as the "Corporation").
WHEREAS, Purchaser and Sellers are the parties to that certain Letter
of Intent dated January 28, 1997, relating to the acquisition by Purchaser of
all stock in the Corporation;
WHEREAS, the parties desire to amend and further record their agreement
and provide for the closing thereof.
NOW, THEREFORE, the parties agree as follows:
I. Sale of Stock
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Subject to the terms and conditions set forth below, and to the payment
of the Purchase Price set forth in paragraph 2 herein, the receipt and
sufficiency of which is hereby acknowledged, Purchaser agrees to buy and Sellers
agree to sell and convey clear and merchantable title to Purchaser of all of the
outstanding stock of Production Well Services, Inc., a Mississippi corporation
(hereinafter referred to as the "Corporation"), free and clear of all liens and
encumbrances, upon the terms and conditions set forth below. Sellers warrant
that they hold all of the outstanding stock of the Corporation, 240 shares of
common stock.
II. Purchase Price
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The Purchase Price for the stock to be purchased hereunder shall be
allocated among the Sellers in proportion to their respective holdings of the
outstanding stock of the Corporation. There shall be three (3) components of the
Purchase Price for the stock to be purchased hereunder. The Purchase Price paid
to Sellers shall be an amount computed according to the components indicated
below in Section 2.1, 2.2 and 2.3.
2.1 A sum payable in cash at Closing, equal to (1) $540,000, (2) plus
the sum of all cash and cash equivalents of the Corporation on hand immediately
prior to Closing, (3) plus the profit of the Corporation for the period June 1
through June 6, 1997, after deducting all taxes and deducting any receipts for
work done June 1 through June 6, 1997, which have been collected by the
Corporation prior to Closing and are thus included within the cash and cash
equivalents referred to in Section 2.1(2), above, (which profits shall be
calculated by the parties and paid by June 30, 1997) and (4) less an amount of
cash or equivalents equal to the amount of debts and liabilities of the
Corporation immediately prior to Closing that are in excess of $112,500. It is
specifically agreed by and between the Parties hereto that the sum and amount
described in this Section 2.1 fairly represents the value of all assets of the
Corporation (the "Operating Assets") other than the receivables, which are
addressed in Section 2.3, said Operating Assets to include all of the business
assets of the Corporation which Purchaser expects to use in its continued
operation, including, but not limited to:
(a) The trade name Production Well Services, Inc., and PWS,
and all related trade names, trademarks, emblems and descriptions related
thereto;
(b) All of the trucks, equipment, inventory, customer lists,
books and records, office equipment, shop machinery, testing tools, intellectual
properties and rights thereto, whether or not patented or patentable, other
vehicles and related assets, including, but not limited to, those assets
described on Exhibit 2.1(b), attached hereto and made a part hereof, together
with all other assets used in the operation of Production Well Services, Inc.
2.2 On January 1, 1998 Purchaser shall deliver to Sellers 133,333
shares of stock of the Corporation, which Sellers and Purchaser agree has a
value of $400,000 based on a bid price of $3.00 per share on the Closing Date.
It is the intent of the parties that this portion of the purchase price shall be
treated as an installment sale under the Internal Revenue Code (the "Code") and
Purchaser specifically agrees that it shall not file an election under Section
338 of the Code with respect to this transaction. The Stock shall not be
registered under the Securities Act of 1933 (the "1933 Act") or the securities
laws of any state or other jurisdiction. The Shareholders understand that the
shares may only be disposed of pursuant to an effective registration statement
filed under the 1933 Act or pursuant to an exemption from the registration
requirements of the 1933 Act and applicable securities laws of other
jurisdictions.
2.3 The sum and amount of the actual Net Receivables of the Corporation
for all work done prior to Closing, when and as collected by the Corporation
following Closing. As used herein the term "Net Receivables" shall mean the
gross amount collected by the Corporation for receivables accrued as of Closing,
less: any third party cost of collection, such as attorneys fees, collection
agency fees, etc. It is the intent that: income tax on the Net Receivables has
been accrued
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as a part of liabilities shown on the Closing Financial Statement; Purchaser is
buying stock; the parties understand that Sellers will receive capital gains
treatment on this component of the sales price; provided that all parties also
acknowledge that if the Internal Revenue Service or state tax authorities should
assert that other than capital gains treatment applies, no adjustment to the
purchase price will be made.
2.3.1 Exhibit 2.3.1 lists and describes all receivables of the
Corporation for work done prior to Closing. It is specifically agreed by and
between the parties hereto that the Net Receivables to be paid to Sellers
pursuant to Section 2.3 shall come from this list.
2.3.2 On a monthly basis, Purchaser shall provide a summary of
the Net Receivables collected during the preceding month and shall pay over such
Net Receivables to Sellers.
2.3.3 As the Closing Financial Exhibit described in Article
III shall include an income tax accrual attributable to the Net Receivables, and
as said accrual increases the liabilities of the Corporation, thereby lowering
the cash payment at Closing in Section 2.1, it is specifically agreed among the
Parties that in the event that any of the Net Receivables are uncollected as of
December 26, 1997, Purchaser shall pay Sellers by December 31, 1997, cash in an
amount equal to the tax accrual attributable to said Net Receivables that were
uncollected as of December 26, 1997. Should said Receivables thereafter be
collected, Purchaser shall retain all amounts collected.
III. Closing Financial Conditions and Exhibit
---------------------------------------------
A Closing Financial Exhibit shall be prepared by Marcus J. Martin,
accountant for the Corporation, of Laurel, Mississippi. The Closing Financial
Exhibit shall reflect the liabilities of the Corporation as of the Closing Date,
including but not limited to, an accrual for income taxes for all periods prior
to Closing. The accrual for income taxes for all periods prior to Closing shall
include an accrual for income taxes attributable to the Net Receivables
described in Section 2.3, above.
3.1 Closing of this transaction is subject to the Corporation meeting
the following financial conditions:
3.1.1 After the reduction of the component of the Purchase
Price described in Section 2.1.4 above, the Corporation shall have debts and
liabilities totalling not more than $112,500.
3.1.2 Expendable inventory of the Corporation on hand as of
the Closing Date shall have a minimum value equal to the inventory scheduled on
Exhibit 3.1.2 hereof. Compliance
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with this requirement shall be verified by representatives of Purchaser and
Sellers immediately prior to Closing.
3.1.3 The Closing Financial Exhibit shall accrue all
liabilities of the company as of the Closing Date, including liability for
income taxes for all periods prior to Closing, including the period from and
after January 1, 1997.
3.1.4 Accounts payable of the Corporation shall be reflected
in the Closing Financial Exhibit. Cash shall be retained, and not paid to
Sellers pursuant to Section 2.1 hereof, in an amount equal to the excess of all
accounts payable and all other liabilities of the Corporation as of Closing in
excess of $112,500.
3.2 In addition to, and without in any way limiting, the warranties and
representations of Sellers granted in Article IV hereof, Sellers do hereby
jointly and severally warrant that the Closing Financial Exhibit provided for in
Section 3.1 hereof is true and correct. Sellers hereby indemnify and hold
Purchaser harmless from any and all liabilities of the Corporation existing as
of the Closing Date that are in excess of the liabilities reflected on the
Closing Financial Exhibit. Without in any way limiting the foregoing warranty,
or the warranties and representations granted in Article IV hereof, there shall
be a reconciliation and restatement of the liabilities of the Corporation made
in December, 1997, Purchaser and the Corporation shall furnish Sellers with a
statement as to excess liabilities, and Sellers shall reimburse the Corporation
for such excess liabilities, if any.
IV. Warranties and Representations of Sellers
---------------------------------------------
Sellers do hereby, jointly and severally, give the following warranties
to Purchaser, which warranties shall survive Closing:
4.1 The shares of stock in the Corporation and all assets of the
Corporation are free and clear of all liens and encumbrances except as to the
$112,500 debt referred to in Article 2 hereof.
4.2 Production Well Services, Inc., and the business that it operates
is now, and shall be at Closing, in compliance with all applicable laws and
regulations, including without limitation licensing and environmental laws.
4.3 The financial records and descriptive information relating to the
operation of Production Well Services, Inc., previously furnished to Purchasers,
including, without limitation, the tax returns, financial statements, income
statements and customer lists, as well as the Closing Financial Exhibit, are
true and correct.
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4.4 The operating assets of Production Well Services, Inc., are in good
and workable condition, ordinary wear and tear excepted.
4.5 Production Well Services, Inc., is a corporation, duly organized,
validly existing and in good standing under the laws of Mississippi, and is duly
qualified to do business and in good standing in all states in which its
ownership or leasing of property or the conduct of its business requires it to
be so qualified. All of the outstanding capital stock of Production Well
Services, Inc., is validly issued, fully paid and non-assessable. All of such
stock is owned by Sellers free and clear of any liens. No agreements have been
entered into regarding such stock and, without limiting the foregoing, there is
no buy-sell agreement or other agreement pursuant to which any party has a
preferential right to purchase such stock. Without limiting the generality of
the foregoing, the Corporation has no obligation to issue any stock to any
person.
4.6 Sellers' execution, delivery or performance of this agreement,
including without limitation the execution and completion of any agreement
contemplated hereby, will not violate or conflict with any provision of the
Corporation's Certificate of Incorporation, Bylaws or other corporate documents,
nor will it violate or constitute an event of default, or permit acceleration of
any obligations, pursuant to any agreement, including, without limitation, debt
agreements, to which the Sellers or the Corporation are a party.
4.7 The Corporation is not party to any contracts calling for the
Corporation to either provide or acquire goods or services. Without limiting the
generality of the foregoing, there has been no contract or quotation,
arrangement or understanding for the future sale of services by the Corporation
which extends beyond thirty (30) days.
4.8 Other than the Employment Agreements called for in Article IX
hereof, the Corporation is not a party to any labor contracts of any kind,
including, without limitation, collective bargaining agreements. There are no
compensation plans, pension, and retirement plans, bonus and saving plans,
vacation or sick leave plans or policies, or disability plans to which the
Corporation is a party. The Corporation maintains group heath insurance coverage
on 7 of its employees.
4.9 The Corporation has filed all tax returns and filings which the
Corporation is required to file with the appropriate government agencies, and
the information set forth in tax returns is true, correct and complete. Without
limiting the generality of the foregoing, the 1996 Income Tax Returns (for U.S.
and all required States) have been filed and is correct.
4.10 There is no litigation, pending or threatened, against the
Corporation.
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4.11 Since the inspection of the Corporation's Operating Assets and
inventory mutually conducted by Sellers and Purchaser in January, 1997, such
assets have been only used in the ordinary course of business, and no such
assets have been sold, conveyed, loaned or returned for credit.
V. Debts, Liabilities
---------------------
5.1 The Corporation shall be responsible for and shall pay only the
debts and liabilities reflected on the Closing Financial Exhibit, together with
those debts and liabilities incurred in operation of the business subsequent to
5:00 p.m. on the Closing Date, none of which shall be the responsibility of
Sellers. While this transaction is effective, for accounting purposes, on June
1, 1997, Sellers warrant that the debts and liabilities of the Corporation, as
of the Closing Date, are as shown on the Closing Financial Exhibit.
5.2 Purchaser shall not assume or become liable to Sellers, or to any
other person, firm, corporation or entity, for any liabilities or obligations of
Sellers, whether accrued, absolute, contingent or otherwise. Sellers hereby
indemnify the Purchaser and the Corporation from all liabilities and obligations
arising from operation of the Corporation prior to 5:00 p.m. on the Closing
Date, other than those reflected on the Closing Financial Exhibit, including,
without limitation, any indebtedness for borrowed money, any liability for
taxes, any liability for goods or services purchased, sold or rendered, or any
suit or claim seeking recovery for injury to persons or property resulting from
any product or service heretofore sold or rendered by the Corporation, plus
reasonable attorney fees; provided that such indemnity shall be secondary to any
and all insurance available, including but not limited to insurance purchased by
the Corporation prior to Closing and insurance purchased by the Corporation or
Purchaser subsequent to Closing. Purchaser agrees to indemnify Sellers from and
against any and all claims, damages, losses, charges, liability and expenses,
including reasonable attorney fees, imposed upon the Sellers but arising out of
or resulting from Purchaser's operation of the Corporation from and after 5:00
p.m. on the Closing Date; provided that such indemnity shall be secondary to any
and all insurance available, including but not limited to insurance purchased by
the Corporation prior to Closing and insurance purchased by the Corporation or
Purchaser subsequent to Closing.
VI. Closing
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Closing shall occur on June 6, 1997, Central time (the "Closing Date").
At Closing:
6.1 Sellers shall deliver to Purchaser the following:
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(i) the original stock certificates covering all of the
outstanding stock of the Corporation, fully endorsed
to Purchaser, together with an assignment separate
from certificate covering all outstanding stock.
(ii) Certificates of title to all rolling stock.
(iii) appropriate corporate authorization by the
Shareholders and Board of Directors of Production
Well Services, Inc., approving and authorizing this
Agreement and all matters contemplated hereby;
(iv) the Employment Agreements described in Section IX
hereof, fully executed by Sellers; and
(v) such other documents and agreements as are reasonably
required, in the opinion of Purchaser's counsel, to
complete the transaction contemplated hereby.
6.2 At Closing, Purchaser shall deliver to Sellers the following:
(i) The Purchase Price;
(ii) Execution of the Employment Agreements referred to in
Section IX;
(iii) such other documents and agreements as are, in the
opinion of counsel for Sellers, reasonably required
to complete the transaction contemplated hereby.
VII. Conditions to Closing
--------------------------
This Agreement and the Closing thereof is subject to the following
conditions:
7.1 All representations and warranties made by the Sellers shall be
true and correct as of the Closing Date;
7.2 Sellers shall furnish a certificate of good standing for Production
Well Services, Inc., in the State of Mississippi.
7.3 Sellers shall furnish a Phase I Environmental Report covering the
Corporation's facilities in Laurel, Mississippi, showing same to be free of
environmental hazards.
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7.4 Sellers shall furnish the complete results, including copies of a
Form UCC-11 Search for financing statements relating to the Corporation and all
of its assets, showing no liens other than those reflected on the Closing
Financial Exhibit.
VIII. Access to Information
---------------------------
8.1 Prior to Closing. Prior to Closing, Purchaser shall have full and
complete access to the Operating Assets, along with all offices and facilities
of the Corporation and to the Corporation' books and records for the purpose of
reviewing same in connection with the transaction contemplated hereby. Should
the transaction contemplated hereby not close for any reason whatsoever,
Purchaser agrees to maintain the confidentiality of all information gathered
during its evaluation of the Corporation' business and the Corporation' assets,
unless Purchaser is legally obligated to disclose any such information.
8.2 Continued Access to Records. Purchaser shall preserve for a period
of three (3) years after the date of Closing the financial or other records and
documents pertaining to the business and will grant Sellers such right of
reasonable access to such records as may be needed by Sellers with respect to
any matters pertaining thereto. When requested by Sellers, Purchaser shall
provide, at Seller' expense, originals or copies of specified documents.
IX. Employment and Non-Competition Agreements
---------------------------------------------
At or prior to Closing, the Corporation and Mark Roberts, and the
Corporation and Vernon E. Tew, Jr., shall enter into Employment Agreements
substantially in the form of Exhibit 9 attached hereto and made a part hereof,
calling for their continued employment by the Corporation, which Employment
Agreements shall include a non-competition agreement, prohibiting competition in
the states of Mississippi and Alabama, which area is deemed reasonable by the
parties considering the prior business of Production Well Services, Inc., and
the business of Purchaser.
X. No Assignment
----------------
Neither this Agreement, nor any right, interest or obligation
hereunder, may be assigned by either of the parties hereto without the prior
written consent of the other party(s), except that Purchaser may assign this
Agreement, in whole or in part, to its subsidiary Boone Wireline Co., Inc.,
provided that no such assignment shall relieve Purchaser of any obligations
created hereunder.
XI. Multiple 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 and the same agreement, binding
on both the parties notwithstanding that both
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parties have not signed the same counterpart.
XII. Modifications
------------------
This Agreement contains the entire agreement between the parties, and
there shall be no waiver, modification or change of the terms of this Agreement
without the written approval of the parties hereto.
XIII. Captions
--------------
The titles of the Articles and Paragraphs and the captions of this
Agreement have been assigned thereto for convenience and reference only and in
no way define, describe, extend, or limit, nor be construed as limiting,
defining or affecting the substantive terms, scope or intent of this Agreement.
XIV. Entire Agreement, Integration, Amendment
---------------------------------------------
This Agreement, together with the accompanying Exhibits attached
hereto, constitutes the entire agreement among the parties hereto, as a complete
and final integration thereof. All understandings and agreement heretofore had
between and among the parties with respect to the subject matter of this
Agreement are merged into this Agreement, which alone fully and completely
expresses their understandings, and this Agreement supersedes all prior
memoranda, correspondence, conversations and negotiations.
There have been and are no agreements, representations or warranties
between the parties other than those set forth or provided herein.
No representation or warranty made by any party which is not contained
in this Agreement or expressly referred to herein has been relied on by any
party in entering into this Agreement.
XV. Notices
-----------
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given and delivered
upon personal delivery or, if mailed, upon depositing such notice in the United
States mail, with first class postage prepaid, and
(i) If to the Purchaser, to:
Black Warrior Wireline Corp
3748 Highway 45, N
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Post Office Box 9188
Columbus, Mississippi 39705
Attn: William L. Jenkins
(ii) If to the Sellers, to:
c/o Mark R. Roberts
PO Box 61
Mize, MS 39116
Any party may change the address to which notices are to be delivered to such
party, by notice given in accordance with this subparagraph to the other party.
XVI. Governing Law
------------------
The laws of the State of Mississippi shall govern the validity,
construction, and interpretation of this Agreement.
XVII. Miscellaneous
-------------------
17.1 Gender, Number. All personal pronouns used in this Agreement shall
include all genders, whether used in the masculine, feminine, or neuter gender.
Singular nouns and pronouns shall include the plural, as may be appropriate, and
vice versa.
17.2 Severability. All of the terms, provisions, and conditions of this
Agreement shall be deemed to be severable in nature. If, for any reason, the
provisions hereof are held to be invalid or unenforceable to any extent, to the
extent that such provisions are valid and enforceable, a court of competent
jurisdiction shall construe and interpret this Agreement to provide for maximum
validity and enforceability of this Agreement.
17.3 Successors. This Agreement shall bind the parties and their heirs,
successors, assigns, next of kin, and personal representatives.
17.4 Construction. This Agreement shall be construed in its entirety
according to its plain meaning and shall not be construed against the party who
provided or drafted it.
17.5 Party. The terms party and parties refer to the parties to this
Agreement, unless otherwise stated.
-16-
17.6 Subdivision. References to paragraphs, subparagraphs, and like
subdivisions are references to such subdivisions of this Agreement, unless
otherwise stated.
17.7 Hereof. Terms such as "hereof", "hereto", "hereunder", "herein",
and the like refer to the entire Agreement and not only to the subdivision in
which such terms appear.
XVIII. Warranties and Representations of Purchaser
--------------------------------------------------
18.1 Purchaser acknowledges that it has inspected the operating assets
of the Corporation and will accept possession of such assets without any
warranties or representations as to the condition by the Corporation. In other
words,in purchasing the stock of the Corporation, Purchaser is accepting such
operating assets "as-is, where-is".
18.2 Purchaser is a corporation validly existing and in good standing
under the laws of the State of Delaware and is qualified to transact business in
the State of Mississippi. Purchaser has all requisite corporation power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.
18.3 The execution, delivery and performance of this Agreement have
been duly authorized by Purchaser's Board of Directors, which constitutes all
necessary corporate action on the part of Purchaser for such due authorization.
This Agreement has been duly executed and delivered by Purchaser and constitutes
and valid and legally binding obligation of Purchaser. The execution, delivery
and performance of this Agreement by Purchaser in accordance with its terms will
not conflict with or result in any violation or default under any provision of
the Certificate of Incorporation or Bylaws of Purchaser, or of any mortgage,
lease, agreement, instrument, permit, franchise, license, judgment, order,
decree, law rule or regulation applicable to Purchaser. Except as otherwise
contemplated by this Agreement, no consent, approval, order or authorization of
or registration, declaration or filing with, any governmental authority is
required on the part of Purchaser in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
-17-
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
effective on the day and date first above written.
PURCHASER:
WITNESS: BLACK WARRIOR WIRELINE CORP.
- ------------------------------------- BY: /s/ William L. Jenkins, President
SELLERS:
WITNESS:
/s/ Vernon E. Tew, Jr.
WITNESS:
- ------------------------------------- /s/ Mark R. Roberts
WITNESS:
- ------------------------------------- /s/ E.J. Wooten
WITNESS:
- ------------------------------------- /s/ Chester H. Whatley
WITNESS:
- ------------------------------------- /s/ William A. Tew
WILLIAM A. TEW
-18-
EXHIBIT 2
PURCHASE AND SALE AGREEMENT
---------------------------
Agreement made and entered the 9th day of June, 1997, between and among
BLACK WARRIOR WIRELINE CORP, a Delaware corporation with its principal place of
business at 3748 Highway 45, North, Columbus, Mississippi (hereinafter referred
to as "Purchaser") and JOHN L. MORTON, THEODORE W. MORTON and JOHN D. MORTON
(hereinafter referred to as "Sellers") who are the sole shareholders of
PETRO-LOG, INCORPORATED, a Wyoming corporation (hereinafter referred to as the
"Corporation").
WHEREAS, Purchaser and Sellers are the parties to that certain Letter
of Intent dated March 26, 1997, relating to the acquisition by Purchaser of all
stock in the Corporation;
WHEREAS, the parties desire to amend and further record their agreement
and provide for the closing thereof.
NOW, THEREFORE, the parties agree as follows:
I. Sale of Stock
----------------
Subject to the terms and conditions set forth below, and to the payment
of the Purchase Price set forth in paragraph 2 herein, the receipt and
sufficiency of which is hereby acknowledged, Purchaser agrees to buy and Sellers
agree to sell and convey clear and merchantable title to Purchaser of all of the
outstanding stock of Petro-Log, Inc., a Wyoming corporation (hereinafter
referred to as the "Corporation"), free and clear of all liens and encumbrances,
upon the terms and conditions set forth below. Sellers warrant that they hold
all of the outstanding stock of the Corporation, 40 shares of common stock.
II. Purchase Price
------------------
The Purchase Price for the stock to be purchased shall be the sum of
$2,137,500, payable in cash at Closing, for all assets of the corporation (the
"Operating Assets") the Operating Assets to include all of the business assets
of the Corporation which Purchaser expects to use in its continued operation,
including, but not limited to:
(a) The trade name Petro-Log, Incorporated, and Petro-Log, and
all related trade names, trademarks, emblems and descriptions related thereto;
(b) All of the assets of the Corporation used or useful in the
Wireline business, whether or not in currently useable condition, including
Wireline Trucks, Perforating Trucks, Grease Injection/Mast/Crane Trucks; Tool
Trucks; Tool Trailers; Forklifts; Pressure Control Equipment; Logging
Electronics and Tools; Gun Inventory; Perforating Lines; Related Equipment; Shop
Equipment; Neutron Sources; and radioactive materials including calibration
sources; intellectual properties and rights thereto, whether or not patented or
patentable, including the assets described on Exhibit 2(b), attached hereto and
made a part hereof, except for those assets specifically described in Section
III below.
(c) To the extent not covered by Section II (b), above, all of
the remaining assets of the Corporation used or useful in the Wireline business,
other than those assets excepted in this Section II (c) and those assets
specifically described in Section III below, including:
(i) the well logs, but not including the five file
cabinets at Casper containing the well logs;
(ii) the contents of the wireline building and shop
located at 320 North Crescent, Casper, Wyoming, plus all cable, wireline, tools,
fittings, line, pipe, and other materials, whether in currently useable
condition or not, stored around said building and shop which are used or useful
in the wireline business, but not including the tools listed on Exhibit II (c)
(ii) hereto;
(iii) all of the equipment used or useful in the
Wireline business and currently stored in the fenced area behind the building
and shop located at 372 North Crescent, Casper, Wyoming, whether in currently
useable condition or not, including but not limited to: Wireline trucks and any
parts therefore, mast truck(s), wireline tools, fittings, line, and spools.
(iv) the contents of the wireline building, shop and
yard currently occupied by the Corporation, located at Riverton, Wyoming;
(v) the contents of the wireline building, shop and
yard currently occupied by the Corporation, located at Evanston, Wyoming;
(vi) the contents of the wireline building, shop and
yard currently occupied by the Corporation, located at Powell, Wyoming;
(vi) the Books, as that term is defined in Article IX
hereof, provided that the issues of possession, access to and copying of the
Books shall be subject to the provisions of Article IX hereof;
(vii) any wireline trucks and equipment of any kind
or character owned by the Corporation located at a place other than described
above, such as a repair shop, on a jobsite, on loan, etc; and
(viii) the phone numbers (307) 234-2433, (307)
234-2599, (800) 524-4562, together with the phone numbers used at the Powell,
Riverton and Evanston locations of the Corporation. Additionally, during the
transition period the fax number (307) 265-5299 shall be shared by Purchaser and
Seller, following which time Purchaser shall obtain a new fax number.
(ix) the indoor explosives magazines located in the
Powell, Riverton, Evanston and Casper locations. Seller will retain all outdoor
explosives magazines
As additional consideration, Purchaser at the time of closing shall pay
the entire fee of Superior Auctioneers and Marketing, Inc.
III. Pre-Closing Distributions to Sellers
-----------------------------------------
Immediately prior to Closing, the Corporation shall distribute certain
items to Sellers, as follows:
3.1 All cash and cash equivalents, other than those amounts retained as
needed to satisfy the requirements of Article 4 hereof.
3.2 All real estate.
3.3 All receivables accrued prior to Closing.
3.4 All accounts payable accrued prior to Closing.
3.5 The explosives inventory of the Corporation.
3.6 The tools listed on Exhibit II (c) (ii) hereto.
3.7 Certain miscellaneous assets of the Corporation, not described as
being included in this sale in Article II hereof, and not used or useful in the
wireline business, including the office equipment located in the building and
shop located at 372 North Crescent, Casper, Wyoming, and the antique vehicles.
From and after Closing, Purchaser will execute, acknowledge and deliver
such further conveyances, transfers, releases and acquittals as may be necessary
or appropriate to convey to Sellers the assets described in Sections 3.1 through
3.7, above.
IV. Closing Financial Conditions and Exhibit
--------------------------------------------
A Closing Financial Exhibit shall be prepared by Porter, Muirhead,
Cornia & Howard, accountants for the Corporation, of Casper, Wyoming. The
Closing Financial Exhibit shall reflect the liabilities of the Corporation as of
the Closing Date, including but not limited to, an accrual for income taxes for
all periods prior to Closing. The Closing Financial Exhibit shall also state the
amount of cash that shall remain in the Corporation to satisfy obligations of
the Corporation in excess of $ 0 , this amount of cash to be determined by
mutual agreement of the Purchaser and the Sellers prior to Closing.
4.1 Closing of this transaction is subject to the Corporation meeting
the following financial conditions:
4.1.1 Except as mutually agreed in the Closing Financial
Exhibit, the Corporation shall have debts totalling not more than $ 0 , except
for the income tax liabilities as provided for in Section 4.1.3.
4.1.2 Expendable inventory of the Corporation on hand as of
the Closing Date shall have a minimum value equal to the inventory scheduled on
Exhibit 4.1.2 hereof. Compliance with this requirement shall be verified by
representatives of Purchaser, notifying Sellers immediately prior to Closing.
4.1.3 The Closing Financial Exhibit shall accrue all
liabilities of the company as of the Closing Date, including liability for
income taxes for all periods prior to Closing, including the period from and
after April 1, 1997. Cash in an amount equal to the accrued income tax liability
shall be retained by the Corporation and not distributed to Sellers pursuant to
Article 3 hereof.
4.1.4 The Corporation, immediately prior to Closing, will pay
all accrued vacation, salary and job bonus benefits to its employees effective
through the close of business on the date of Closing. It is agreed and
understood the Corporation's existing business checking account and existing
signature authorization shall survive the date of Closing to allow clearing of
outstanding checks, including, but not limited to, payroll taxes, Federal and
State.
4.2 In addition to, and without in any way limiting, the warranties and
representations of Sellers granted in Article V hereof, Sellers do hereby
jointly and severally warrant that the Closing Financial Exhibit provided for in
Section 4.1 hereof is true and correct. Sellers hereby indemnify and hold
Purchaser harmless from any and all liabilities of the Corporation existing as
of the Closing Date that are in excess of the liabilities reflected on the
Closing Financial Exhibit. Without in any way limiting the foregoing warranty,
or the warranties and representations granted in Article V hereof, there shall
be a reconciliation and restatement of the liabilities of the Corporation made
in December, 1997. Purchaser and the Corporation shall furnish Sellers with
a statement as to excess liabilities, and Sellers shall reimburse the
Corporation for such excess liabilities, if any.
V. Warranties and Representations of Sellers
--------------------------------------------
Sellers do hereby, jointly and severally, give the following warranties
to Purchaser, which warranties shall survive Closing:
5.1 The shares of stock in the Corporation and all assets of the
Corporation are free and clear of all liens and encumbrances.
5.2 Petro-Log, Inc., and the business that it operates is now, and
shall be at Closing, in compliance with all applicable laws and regulations,
including without limitation licensing and environmental laws.
5.3 The financial records and descriptive information relating to the
operation of Petro-Log, Inc., previously furnished to Purchasers, including,
without limitation, the tax returns, financial statements, income statements and
customer lists, as well as the Closing Financial Exhibit, are true and correct.
5.4 The operating assets of Petro-Log, Inc., are in good and workable
condition, ordinary wear and tear excepted.
5.5 Petro-Log, Inc., is a corporation, duly organized, validly existing
and in good standing under the laws of Wyoming, and is duly qualified to do
business and in good standing in all states in which its ownership or leasing of
property or the conduct of its business requires it to be so qualified. All of
the outstanding capital stock of Petro-Log, Inc., is validly issued, fully paid
and non-assessable. All of such stock is owned by Sellers free and clear of any
liens. No agreements have been entered into regarding such stock and, without
limiting the foregoing, there is no buy-sell agreement or other agreement
pursuant to which any party has a preferential right to purchase such stock.
Without limiting the generality of the foregoing, the Corporation has no
obligation to issue any stock to any person.
5.6 Sellers' execution, delivery or performance of this agreement,
including without limitation the execution and completion of any agreement
contemplated hereby, will not violate or conflict with any provision of the
Corporation's Certificate of Incorporation, Bylaws or other corporate documents,
nor will it violate or constitute an event of default, or permit acceleration of
any obligations, pursuant to any agreement, including, without limitation, debt
agreements, to which the Sellers or the Corporation are a party.
5.7 The Corporation is not party to any contracts calling for the
Corporation to either provide or acquire goods or services. Without limiting the
generality of the foreoing, there has
been no contract or quotation, arrangement or understanding for the future sale
of services by the Corporation which extends beyond thirty (30) days, except for
the outstanding quotes and proposals scheduled on Exhibit 5.7, hereto.
5.8 Other than the Employment Agreements called for in Article X
hereof, the Corporation is not a party to any labor contracts of any kind,
including, without limitation, collective bargaining agreements. There are no
compensation plans, pension, and retirement plans, bonus and saving plans,
vacation or sick leave plans or policies (except as disclosed on Exhibit 5.8
hereto), or disability plans to which the Corporation is a party. The accrued
vacation for each employee is scheduled on Exhibit 5.8 hereto. The Corporation
maintains group heath insurance coverage on none of its employees.
5.9 The Corporation has filed all tax returns and filings which the
Corporation is required to file with the appropriate government agencies, and
the information set forth in tax returns is true, correct and complete. Without
limiting the generality of the foregoing, the 1996 Income Tax Returns (for U.S.
and all required States) have been filed and is correct.
5.10 There is no litigation, pending or threatened, against the
Corporation.
5.11 Since the inspection of the Corporation's Operating Assets as
listed on Exhibit 2(b) and inventory mutually conducted by Sellers and Purchaser
in March, 1997, such assets have been only used in the ordinary course of
business, and no such assets have been sold, conveyed, loaned or returned for
credit.
5.12 The 1985 Freightliner Wireline Unit stored at the airport, Truck
number PLT-4, shall be in good working order. This unit shall be considered in
good working order if White-Freightliner agrees to honor the warranty, or, if
the warranty is not honored, then Sellers shall take such steps as are necessary
to put the unit in good working order.
VI. Debts, Liabilities
----------------------
6.1 Prior to Closing, Sellers shall pay all of the debts and
liabilities incurred in connection with operation of the Corporation prior to
12:00 midnight on the Closing Date, except the liability for current-year income
taxes, to the extent provided in Section 4.1.3 hereof. The Corporation shall be
responsible for and shall pay only the debts and liabilities reflected on the
Closing Financial Exhibit, together with those debts and liabilities incurred in
operation of the business subsequent to 12:00 midnight on the Closing Date, none
of which shall be the responsibility of Sellers.
6.2 Purchaser shall not assume or become liable to Sellers, or to any
other person, firm, corporation or entity, for any liabilities or obligations of
Sellers, whether accrued, absolute, contingent or otherwise. Sellers hereby
indemnify the Purchaser from all liabilities and
obligations arising from operation of the Corporation prior to 12:00 midnight on
the Closing Date, other than those reflected on the Closing Financial Exhibit,
including, without limitation, any indebtedness for borrowed money, any
liability for taxes (other than deferred income taxes), any liability for goods
or services purchased, sold or rendered, or any suit or claim seeking recovery
for injury to persons or property resulting from any product or service
heretofore sold or rendered by the Corporation, plus reasonable attorney fees;
provided that such indemnity shall be secondary to any and all insurance
available, including but not limited to insurance purchased by the Corporation
prior to Closing and insurance purchased by the Corporation or Purchaser
subsequent to Closing. The indemnities of this Section 6.2 shall cover, but not
be limited to (i) all environmental liabilities associated with the operation of
the Corporation prior to Closing, including without limitation the operations at
the Corporation's facilities located at Casper, Evanston, Powell and Riverton,
Wyoming, (ii) all environmental liabilities associated with the operation of the
Corporation at Powell, Wyoming from Closing until delivery of the Phase I
Environmental Survey called for in Section 8.3.3, hereof, and (ii) all
environmental liabilities associated with the operation of the Corporation at
320 North Crescent, Casper, Wyoming from and after Closing.
6.3 Purchaser agrees to indemnify Sellers from and against any and all
claims, damages, losses, charges, liability and expenses, including reasonable
attorney fees, imposed upon the Sellers but arising out of or resulting from
Purchaser's operation of the Corporation from and after 12:00 midnight on the
Closing Date; provided that such indemnity shall be secondary to any and all
insurance available, including but not limited to insurance purchased by the
Corporation prior to Closing and insurance purchased by the Corporation or
Purchaser subsequent to Closing.
6.4 Sellers shall be responsible for insurance coverage and premium
payments for the existing Company's insurance policies including general
liability, vehicle, inland marine, property and casualty, umbrella, Wyoming
Workers Compensation, unemployment, etc., through the date of Closing. All
unearned premiums, refunds, credits and/or other equities under any or all such
policies shall be the sole property of Sellers and shall survive Closing.
Purchaser, at Closing or subsequent thereto, will endorse and/or execute all
documents as may be necessary or appropriate to perfect Seller's right to
collect such credits, refunds and/or equities.
VII. Closing
------------
Closing shall occur on June 9, 1997, effective at midnight Mountain
time (the "Closing Date"). At Closing:
7.1 Sellers shall deliver to Purchaser the following:
(i) the original stock certificates covering all of the
outstanding stock of the Corporation, fully endorsed
to Purchaser, together with an assignment separate
from certificate covering all outstanding stock.
(ii) Certificates of title to all rolling stock.
(iii) appropriate corporate authorization by the
Shareholders and Board of Directors of Petro-Log,
Inc., approving and authorizing this Agreement and
all matters contemplated hereby;
(iv) the Employment Agreements described in Section 10
hereof, fully executed by Sellers; and
(v) A lease to the Corporation, covering the facility
located at Riverton, Wyoming, a temporary lease on
the facilities located at Casper and Evanston,
Wyoming.
(vi) such other documents and agreements as are reasonably
required, in the opinion of Purchaser's counsel, to
complete the transaction contemplated hereby.
7.2 At Closing, Purchaser shall deliver to Sellers the following:
(i) The Purchase Price by Wire Transfer to Hilltop
National Bank, Casper, Wyoming.
(ii) Execution of the Employment Agreements referred to in
Section 10;
(iii) Execution of the leases and sublease described in
Section 7.1 (v), above.
(iv) such other documents and agreements as are, in the
opinion of counsel for Sellers, reasonably required
to complete the transaction contemplated hereby.
VIII. Conditions to Closing
---------------------------
This Agreement and the Closing thereof is subject to the following
conditions:
8.1 All representations and warranties made by the Sellers shall be
true and correct as of the Closing Date;
8.2 Sellers shall furnish a certificate of good standing for Petro-Log,
Inc., in the State of Wyoming.
8.3 Sellers shall furnish a Phase I Environmental Report covering the
Corporation's facilities in Casper, Evanston, Powell and Riverton, Wyoming, and
Dickenson, North Dakota, showing same to be free of environmental hazards.
8.3.1 The cost of a Phase I Environmental Survey for the
facilities at Riverton will be paid for by Sellers. This survey has been
completed, and discloses several recommended remediation matters, which Sellers
shall complete at their expense following closing.
8.3.2 The cost of a Phase I Environmental Survey for the
facilities at Casper, Dickenson and Evanston will be shared equally by Seller
and Purchaser. These surveys will be completed within thirty (30) days of the
date of Closing.
8.3.3 It is anticipated that the landlord of the facility at
Powell will pay for the Phase I Environmental Survey for this location, but if
not, this survey shall be paid for by Sellers. This survey will be completed
within 30 days following closing.
8.4 Sellers shall furnish the complete results, including copies of a
Form UCC-11 Search for financing statements relating to the Corporation and all
of its assets, showing no liens other than those reflected on the Closing
Financial Exhibit.
IX. Access to Information
-------------------------
9.1 Prior to Closing. Prior to Closing, Purchaser shall have full and
complete access to the Operating Assets, along with all offices and facilities
of the Corporation and to the Corporation' books and records for the purpose of
reviewing same in connection with the transaction contemplated hereby. Should
the transaction contemplated hereby not close for any reason whatsoever,
Purchaser agrees to maintain the confidentiality of all information gathered
during its evaluation of the Corporation' business and the Corporation' assets,
unless Purchaser is legally obligated to disclose any such information.
9.2 Continued Access to Records.
--- ----------------------------
9.2.1 At Closing and for five years thereafter. From and after
closing the corporate, financial and other records and documents of the
Corporation prior to closing, not otherwise provided for herein (the "Books")
shall be freely available during normal business hours of 8:00 am to 5:00 pm
local time for inspection, use and copying (including offsite copying) by
Sellers and Purchaser. Physical possession, storage and copying of such books
and records shall be as described in subsections (i) through (iii) below.
(i) The Corporate Records, such as the Articles of
Incorporation, Bylaws, Shares, Share Records, and Minutes of all kind shall be
in the possession and storage of
Purchaser. Purchaser shall make a copy of same and deliver same to John L.
Morton, for Sellers, within 21 days following closing.
(ii) the business records of all kinds, financial,
bookkeeping and accounting records of the Corporation shall be maintained in the
possession and storage of Sellers for a period of five years following closing,
at which time same shall be tendered to Purchaser for delivery to Purchaser.
Sellers shall make a copy of the records described on Exhibit 9.2.1 (ii) and
deliver same to Purchaser, such copying to be completed within 45 days following
closing, provided that Sellers shall more quickly copy and deliver selected
records as requested by Purchaser. Sellers shall, from time to time in the
future, execute and deliver to the accountants for the Corporation such
instructions and consents as are required for Purchaser to obtain access to any
records of such accountants relating to the Corporation.
9.3 Continued Assurances. Purchaser and Seller will do, execute,
acknowledge and deliver, all and every such further acts, conveyances, transfer
orders, notices, releases and acquittances and such other instruments as may be
necessary or appropriate to assure to Purchasers and Sellers, their successors
and assigns, more fully all of the respective properties, rights, titles and
interests, estates, remedies, powers and privileges by this agreement granted,
bargained, sold, conveyed, assigned, transferred, set over and delivered, or
otherwise vested in Purchasers and/or Sellers or intended to be so.
X. Employment and Non-Competition Agreements
--------------------------------------------
10.1 At or prior to Closing, the Corporation and Ted Morton shall enter
into an Employment Agreement calling for his continued employment by the
Corporation, which Employment Agreement shall include a non-competition
agreement, prohibiting competition in the Rocky Mountain Oil and Gas Region of
the United States, including the States of Wyoming, South Dakota, Colorado,
North Dakota, Montana and Utah, which area is deemed reasonable by the parties
considering the prior business of Petro-Log, Inc.
10.2 From closing and for three (3) years thereafter, John L. Morton
and John D. Morton agree that they will not directly or indirectly become
employed by or associated with, in any capacity, any other person, firm or
corporation which operates a wireline business in the general business area of
the Corporation, which is agreed by the parties to be the Rocky Mountain Oil and
Gas Region of the United States, including the States of Wyoming, South Dakota,
Colorado, North Dakota, Montana and Utah.
It is agreed by the parties hereto that, in the event of any breach of
the non-competition provisions of Section 10.2 hereof, legal remedies available
to the Purchaser and the Corporation would be inadequate. Therefore, in the
event of such breach, the Purchaser and/or the Corporation are specifically
authorized to apply to a court of competent jurisdiction to enjoin any violation
of such provision.
XI. No Assignment
-----------------
Neither this Agreement, nor any right, interest or obligation
hereunder, may be assigned by either of the parties hereto without the prior
written consent of the other party(s), except that Purchaser may assign this
Agreement, in whole or in part, to its subsidiary Boone Wireline Co., Inc.,
provided that no such assignment shall relieve Purchaser of any obligations
created hereunder. The Corporation will be assigning assets not being
transferred to Purchaser under the terms of this agreement such as, for example,
the explosives inventory (to Chemfrac, Inc, a corporation owned by Sellers),
real estate and other assets (to M3 Industries, a partnership owned by Sellers).
These assignments are specifically approved by Purchaser.
XII. Multiple 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 and the same agreement, binding
on both the parties notwithstanding that both parties have not signed the same
counterpart.
XIII. Modifications
-------------------
This Agreement contains the entire agreement between the parties, and
there shall be no waiver, modification or change of the terms of this Agreement
without the written approval of the parties hereto.
XIV. Captions
-------------
The titles of the Articles and Paragraphs and the captions of this
Agreement have been assigned thereto for convenience and reference only and in
no way define, describe, extend, or limit, nor be construed as limiting,
defining or affecting the substantive terms, scope or intent of this Agreement.
XV. Entire Agreement, Integration, Amendment
--------------------------------------------
This Agreement, together with the accompanying Exhibits attached
hereto, constitutes the entire agreement among the parties hereto, as a complete
and final integration thereof. All understandings and agreement heretofore had
between and among the parties with respect to the subject matter of this
Agreement are merged into this Agreement, which alone fully and completely
expresses their understandings, and this Agreement supersedes all prior
memoranda, correspondence, conversations and negotiations.
There have been and are no agreements, representations or warranties
between the parties other than those set forth or provided herein.
No representation or warranty made by any party which is not contained
in this Agreement or expressly referred to herein has been relied on by any
party in entering into this Agreement.
XVI. Notices
------------
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given and delivered
upon personal delivery or, if mailed, upon depositing such notice in the United
States mail, with first class postage prepaid, and
(i) If to the Purchaser, to:
Black Warrior Wireline Corp
3748 Highway 45, N
Post Office Box 9188
Columbus, Mississippi 39705
Attn: William L. Jenkins
(ii) If to the Sellers, to:
Mr. John L. Morton
Post Office Box 535
Casper, Wyoming 82602
Any party may change the address to which notices are to be delivered to such
party, by notice given in accordance with this subparagraph to the other party.
XVII. Governing Law
-------------------
The laws of the State of Mississippi shall govern the validity,
construction, and interpretation of this Agreement.
XVIII. Miscellaneous
--------------------
18.1 Gender, Number. All personal pronouns used in this Agreement shall
include all genders, whether used in the masculine, feminine, or neuter gender.
Singular nouns and pronouns shall include the plural, as may be appropriate, and
vice versa.
18.2 Severability. All of the terms, provisions, and conditions of this
Agreement shall be deemed to be severable in nature. If, for any reason, the
provisions hereof are held to be invalid or unenforceable to any extent, to the
extent that such provisions are valid and enforceable, a court of competent
jurisdiction shall construe and interpret this Agreement to provide for maximum
validity and enforceability of this Agreement.
18.3 Successors. This Agreement shall bind the parties and their heirs,
successors, assigns, next of kin, and personal representatives.
18.4 Construction. This Agreement shall be construed in its entirety
according to its plain meaning and shall not be construed against the party who
provided or drafted it.
18.5 Party. The terms party and parties refer to the parties to this
Agreement, unless otherwise stated.
18.6 Subdivision. References to paragraphs, subparagraphs, and like
subdivisions are references to such subdivisions of this Agreement, unless
otherwise stated.
18.7 Hereof. Terms such as "hereof", "hereto", "hereunder", "herein",
and the like refer to the entire Agreement and not only to the subdivision in
which such terms appear.
8.8 Certain Transitional Matters. For up to 120 days following closing
the Corporation shall lease from Sellers the Wireline Building and Shop located
at 320 North Crescent, Casper Wyoming, together with the right to continue to
use the following at the building located at 372 North Crescent: the fenced
yard, that portion of the office used for administrative purposes associated
with the wireline business, and the existing telephone system. In the event
Donna Morton choses to stop working as administrative person for Petro-Log, then
the sharing of the office and telephone system will need specific approval in
writing by Sellers, provided that Sellers will give reasonable notice if they
desire to discontinue the sharing arrangement.
XIX. Agreement to Purchase Explosive Inventory
----------------------------------------------
In its continued Petro-Log operations, Purchaser will acquire
explosives from the old Petro-Log inventory which it deems useable. The price
shall be seventy-five percent (75%) of "GOEX" April 1, 1997, published prices.
The inventory shall be acquired as needed by Purchaser in its continued
Petro-Log operations. Within 30 days following closing Purchaser shall determine
the stock of inventory it desires to maintain at the Powell, Evanston and
Riverton locations, pay Sellers for the stock retained by Purchaser, and return
the balance to Sellers. Sellers and Purchaser shall develop a suitable system
for inventory control and accounting at Casper. If, three (3) years after
Closing, any inventory deemed useable by Purchaser remains, Purchaser will buy
the remaining useable inventory at fifty percent (50%) of "GOEX" April 1, 1997,
prices. Sellers retain the right to sell product from the explosives inventory
to third parties until the end of the three (3) year period.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
effective on the day and date first above written.
PURCHASER:
WITNESS: BLACK WARRIOR WIRELINE CORP.
- ---------------------------------- BY: /s/ William L. Jenkins, President
WITNESS: SELLERS:
- ---------------------------------- /s/ John L. Morton
WITNESS:
- ---------------------------------- /s/ Theodore W.Morton
WITNESS:
- ---------------------------------- /s/ John D. Morton
EXHIBIT 3
AGREEMENT FOR PURCHASE AND SALE
This Agreement for Purchase and Sale (the "Agreement"), is made and
entered into on June 5, 1997, by and between Black Warrior Wireline Corp., a
Delaware corporation ("Seller"), and St. James Capital Partners, L.P., a
Delaware limited partnership ("Purchaser"), and sets forth the terms and
conditions of the sale and purchase of a $2,000,000 9% Convertible Promissory
Note, substantially inn the form attached hereto as Exhibit A-1 (the
"Convertible Note") and a $3,000,000 10% Bridge Loan, substantially in the form
attached hereto as Exhibit A-2 (the "Bridge Loan Note") (collectively, the
Convertible Note and the Bridge Loan Note are referred to as the "Notes"). For
purposes of this Agreement, the term "Seller" is defined to mean Black Warrior
Wireline Corp. and its Active Subsidiary (defined in Section 2.8 below).
WHEREAS, Seller desires to issue and sell to Purchaser, and Purchaser
desires to purchase and accept from Seller, the Notes in the form of Exhibits
A-1 and A-2, on the terms and subject to the conditions set forth herein. The
obligations of Seller under the Notes are secured by that certain Borrower
Security Agreement dated as of the date hereof, between Seller and Purchaser,
substantially in the form attached hereto as Exhibit B-1 (the "Security
Agreement"), by those certain Subsidiary Security Agreements (herein so called)
dated as of the date hereof, between the subsidiaries and Purchaser,
substantially in the form attached hereto as Exhibit B-2, and are guaranteed by
those certain Subsidiary Guaranties (herein so called) dated as of the date
hereof, by the subsidiaries of Seller in favor of Purchaser, substantially in
the form attached hereto as Exhibit B-3.
WHEREAS, Seller and Purchaser desire to make certain representations,
warranties and agreements in connection with the purchase and sale of the Notes
contemplated hereby.
WHEREAS, Seller desires to sell to Purchaser two warrants
(collectively, the "Warrants") to purchase 546,000 shares and 120,000 shares,
respectively, of Seller's Common Stock, par value $0.0005 per share (the "Common
Stock"), which Warrants shall have the terms and be subject to the conditions
set forth in the forms of Warrants attached hereto as Exhibit C-1 and C-2.
WHEREAS, Seller desires to grant to Purchaser certain registration
rights in respect to the shares of Seller's Common Stock that may be acquired on
conversion of the Convertible Note and on the exercise of the Warrants, which
registration rights shall have the terms and be subject to the conditions set
forth in the Registration Rights Agreement attached hereto as Exhibit D (the
"Registration Rights Agreement");
WHEREAS, to ensure that Purchaser has one representative on the Board
of Directors of Seller, certain shareholders of Seller agree to vote their
shares of stock in favor of such representative in accordance with the Voting
Agreement substantially in the form of Exhibit E attached hereto (the "Voting
Agreement"). This Agreement, the Notes, the Security Agreement, the Subsidiary
Security Agreements, the Subsidiary Guaranties, the Warrants, and the
Registration Rights Agreement are collectively referred to herein as the
"Transaction Documents".
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NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of the Notes and the Warrants. Subject to the
terms of this Agreement, Seller agrees to and does hereby issue, sell and
deliver the Notes and the Warrants to Purchaser at the Closing (as defined
herein), and Purchaser agrees to and does hereby purchase and accept the Notes
and the Warrants from Seller.
1.2 Consideration for Purchase of the Notes. Subject to the terms of
this Agreement, Purchaser hereby agrees to pay to Seller, by check or wire
transfer to the account of Seller, $5,000,000, as the consideration for the
purchase of the Notes (the "Note Consideration"). It is the intention of the
parties that the Note Consideration shall be advanced in multiple advances, with
$2,000,000 being paid at the time of the closing of Seller's acquisition of
Production Well Services, Inc. and $3,000,000 being paid at the time of the
closing of Seller's acquisition of Petro-Log, Inc. Interest under the Notes
shall accrue on amounts actually advanced.
1.3 Consideration for Purchase of the Warrants. Subject to the terms of
this Agreement, Purchaser hereby agrees to pay to Seller at Closing, by check or
wire transfer to the account of Seller, $33,300 (or $.05 per share subject to
the Warrants) as the consideration for the purchase of the Warrants (the
"Warrant Consideration;" the Note Consideration and the Warrant Consideration
are collectively referred to herein as the "Consideration").
1.4 Option to Extend Bridge Loan Note. The Bridge Loan Note will
provide that, at the option of Seller, Seller may extend the term of the Bridge
Loan Note an additional 30 days in consideration of issuance by Seller to
Purchaser of new warrants to purchase an additional 20,000 shares of Seller's
Common Stock containing terms identical to the Warrants.
1.5 Origination Fee. Seller agrees to pay Purchaser at Closing a
one-time origination fee in the amount of $35,000 (the "Origination Fee") for
the payment of the Note Consideration.
34
1.6 Subordination to Future Financing. Purchaser agrees to enter into
subordination agreements with (i) a senior secured lender that provides
financing to Seller in an amount not to exceed $4,000,000 and (ii) a senior
secured lender that provides working capital financing to Seller in an amount
not to exceed $2,000,000 (in this section, the "Senior Lenders"), pursuant to
which Purchaser would subordinate its security interests and rights to the
indebtedness and security interests of the Senior Lenders. Such subordination
agreements shall be on terms and conditions acceptable to all parties (including
Purchaser, which agrees to negotiate in good faith with respect to the
subordination agreement) at the time they are entered into. Such subordination
agreements shall not obligate Purchaser to "stand still" for a period of time
longer than 120 days after a default by Seller in its obligations to the Senior
Lender(s).
1.7 Future Financings. If Seller, at any time so long as the
Convertible Note is outstanding, intends to issue or sell any shares of capital
stock, debt securities or securities convertible into, exchangeable for or
exercisable for shares of capital stock or debt securities (a "Financing"),
Seller shall give Purchaser written notice (the "Offer") of its intent to engage
in a Financing, specifying its basic terms and conditions. If Purchaser gives
notice to Seller, specifying Purchaser's basic terms and conditions, of its
intent to provide Financing on a basis materially similar to the proposal set
forth in the Offer within five (5) business days after receipt of the Offer (a
"Financing Notice"), then Seller shall be obligated to consummate the Financing
only with Purchaser and Purchaser shall be obligated to provide the financing at
the time committed by the third party whose commitment gave rise to the Offer.
If Purchaser does not within five (5) business days after receipt of the Offer
give to Seller a Financing Notice, Purchaser shall be deemed to have
waived its rights to provide the Financing under this Section, and Seller may
thereafter obtain such Financing from a third party or parties if such third
party Financing is on the same basic terms and conditions as those set forth in
the Offer. Any proposed Financing on terms materially different than those basic
terms and conditions in the Offer deemed waived by Purchaser shall require a new
Offer and compliance by Seller with the provisions of this Section.
Notwithstanding the foregoing, Seller shall not be required to comply with this
Section in connection with: (i) the issuance and sale of Common Stock or
convertible securities in connection with any employee stock option plan,
arrangement or agreement now or hereafter in effect; (ii) the issuance of
capital stock of Seller upon exercise of the Warrants or otherwise issued to
Purchaser or its assigns; (iii) the issuance of capital stock upon exercise of
any stock purchase warrant or option (other than
35
the options referred to in clause (i) above) or other convertible security
outstanding on the date hereof or hereafter issued; (iv) a public offering of
securities; (v) any loan from a regular commercial lending source; or (vi) any
securities issued with the favorable vote of Purchaser's designee as a director
of the Seller.
1.8 Other Permitted Debt. Seller shall be permitted to incur
indebtedness for borrowed money for the purchase or financing of equipment in
the ordinary course of business, in an amount not to exceed $2,500,000.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that each of the following
statements (i) are true and correct on the date hereof and (ii) will be true and
correct in all material respects on the date each advance of the Note
Consideration is made:
2.1 Organization, Standing and Qualification. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Seller is licensed and qualified to do business as a
foreign corporation in each jurisdiction in which the character of Seller's
properties, owned or leased, or the nature of its activities makes such
qualification or license necessary.
2.2 Authority; No Defaults. Seller has all requisite corporate power
and authority to enter into the Transaction Documents and to consummate the
transactions contemplated thereby. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of Seller.
The Transaction Documents have been executed and delivered by Seller and
constitute the valid and binding obligation of Seller, enforceable in accordance
with their terms, subject to bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). The execution and delivery of the Transaction Documents do
not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict
36
with or result in a breach of or the acceleration of any obligation under, or
constitute a default or event of default (or event which, with notice or lapse
of time or both, would constitute a default or event of default) under, any
provision of any charter, bylaw, indenture, mortgage, lien, lease, agreement,
contract, instrument, order, judgment, decree, ordinance or regulation, or any
restriction to which any property of Seller is subject or by which Seller is
bound, the effect of which would be materially adverse to Seller. Seller is not,
nor does Seller have knowledge that it is alleged to be, in material violation
or default of any applicable law, statute, order, rule or regulation promulgated
or judgment entered by any court, administrative agency or commission or other
governmental agency or instrumentality, domestic or foreign (a "Governmental
Entity"), relating to or affecting the operation, conduct or ownership of the
property or business of Seller.
2.3 Approvals. There is no legal impediment to the execution and
delivery of the Transaction Documents by Seller or to the consummation of the
transactions contemplated thereby, and no filing or registration with, or
authorization, consent or approval of, a Governmental Entity, shareholders or
any other third party is necessary for the consummation by Seller of the
transactions contemplated thereby.
2.4 Charter and Bylaws. Seller has furnished to Purchaser true and
complete copies of its charter and bylaws, each as amended to date and as
presently in effect.
2.5 SEC Documents. (a) Seller has made all filings with the Securities
and Exchange Commission ("SEC") that it has been required to make under the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") since December 31, 1994.
Seller has provided to Purchaser true, complete and correct copies of Seller's
annual report on Form 10-K ("Seller's Form 10K") for the fiscal year ended
December 31, 1996, together with all amendments thereto, Seller's quarterly
report on Form 10-Q for the fiscal quarter ended March 31, 1997, together with
all amendments thereto, and any and all filings with the SEC made by Seller
(including all requested exhibits to such filings) since the filing of said Form
10-K (all such documents that have been filed with the SEC, as amended, are
referred to as the "Seller SEC Documents"). As of their respective dates, and
except as amended, Seller SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and none of Seller SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact
37
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) The financial statements of Seller included in Seller SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q) and fairly present (subject, in
the case of the unaudited statements, to normal recurring audit adjustments) the
consolidated financial position of Seller as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended. Since March 31, 1997, (i) there have been no material adverse changes in
Seller's business, operations or financial condition and (ii) Seller's
operations have been conducted in the ordinary course of business except as
disclosed in writing to Purchaser.
2.6 Litigation. Except as set forth on Schedule 2.6, as of the date of
this Agreement, there is no suit, action, proceeding or investigation pending
or, to the best knowledge of Seller, threatened against or affecting Seller, nor
is there any outstanding judgment, order, writ, injunction or decree against
Seller, which judgment would have a material adverse effect on Seller. Seller is
not subject to any court order, writ, injunction, decree, settlement agreement
or judgment that contains or orders any on-going obligations, whether
prohibitory or mandatory in nature, the performance of which would have a
material adverse effect on Seller.
2.7 Capitalization. Seller has authorized capital stock of 50,000,000
shares of Common Stock of which, as of the date hereof, there are 2,185,216
shares issued and outstanding. All of the issued and outstanding shares of
Common Stock were duly and validly issued and are fully paid and non-assessable.
None of the outstanding shares of Common Stock has been issued in violation of
any preemptive rights of the current or past stockholders of Seller. As of the
date hereof, Seller has reserved for issuance (i) an aggregate of 972,333 shares
of Common Stock issuable on issuance of stock options to employees, officers,
directors and other persons and (ii) an aggregate of 303,750 shares of Common
Stock issuable on exercise outstanding warrants, options, or of convertible
securities other than those listed in (i) above. Except as set forth on Schedule
2.7 or described above in (i),
38
(ii) and (iii), there are no outstanding options, warrants or rights to
subscribe for, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of Seller or contracts, commitments, understandings or arrangements by
which Seller is or may be obligated to issue additional shares of its capital
stock or options, warrants, or rights to purchase or acquire any additional
shares of its capital stock. All of the Common Stock issued on the exercise of
the Warrant will be fully paid, non-assessable and free and clear of any
Encumbrances. As used in this Agreement, the term "Encumbrance" means and
includes (i) any security interest, mortgage, deed of trust, lien, charge,
pledge, proxy, adverse claim, equity, power of attorney, or restriction of any
kind, including but not limited to, any restriction or servitude on the use,
transfer, receipt of income, or other exercise of any attributes of ownership,
and (ii) any Uniform Commercial Code financing statement or other public filing,
notice or record that by its terms purports to evidence or notify interested
parties of any of the matters referred to in clause (i) that has not been
terminated or released by another proper public filing, notice or record.
2.8 Subsidiaries. Schedule 2.8 sets forth the only active subsidiary of
Seller, including state or country of organization and address of its principal
executive offices ("Active Subsidiary"). For purposes of this Agreement and the
other agreements contemplated hereby, the Active Subsidiary is the only
"subsidiary" of Seller. Schedule 2.8 also discloses four inactive corporations
and/or limited partnerships owned by Seller (the ("Inactive Organizations"), all
four of which are at this time inactive, defunct, and have no value. No
representation, warranty, financial standard or other provision of this
Agreement, or any agreement contemplated hereby, shall be deemed violated by
virtue of the fact that any of the Inactive Organizations do not meet said
representation, warranty, financial standard or other provision. However, if any
Inactive Organization begins to conduct any business (other than activities to
"wind down" such organization) such Inactive Organization shall be considered an
Active Subsidiary (and cease to be an Inactive Organization) from that point
forward. The Active Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, has
all requisite corporate power and authority to own, to lease or to operate its
properties and to carry on its business as it is now being conducted and is duly
qualified or licensed to do business in each jurisdiction in which the character
of its properties, owned or leased, or the nature of its activities makes such
qualification or license necessary, unless the failure to be so licensed or
qualified would
39
not have a material, adverse effect on Seller. Except as set forth in Schedule
2.8, all outstanding shares of capital stock of the Active Subsidiary were duly
and validly issued and are fully paid, nonassessable and owned by Seller or a
subsidiary of Seller, free and clear of all Encumbrances. There are no options,
warrants or other rights, agreements or commitments (including preemptive
rights) obligating Seller or the Active Subsidiary to issue, to sell or to
transfer any shares of capital stock or other securities of the Active
Subsidiary.
2.9 Liabilities. Except as set forth in Schedule 2.9, Seller has no
liabilities or obligations, either accrued, absolute, contingent, or otherwise
that have a material adverse effect on the value or business of Seller, and
Seller has no knowledge of any potential liability that it reasonably believes
would likely result in a material adverse effect on the value or business of
Seller, other than those (a) reflected or reserved against in the balance sheets
reported on Seller's Form 10K or (b) incurred in the ordinary course of business
since March 31, 1997.
2.10 Licenses, Permits, Authorizations, Etc. Seller holds all
approvals, authorizations, consents, licenses, orders, franchises, rights,
registrations and permits of any type required to operate its business as
presently conducted. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
revocation, cancellation, suspension or modification of any such approval,
authorization, consent license, order, franchise, right, registration or permit.
2.11 Title to Assets; Encumbrances. Except as set forth in Schedule
2.11:
(a) Seller has good and indefeasible title to its assets,
whether real, personal or intangible, free and clear of all
Encumbrances except (i) liens for current taxes and assessments not yet
due or being contested in good faith by appropriate proceedings, (ii)
mechanic's liens arising under the operation of law for actions
contested in good faith or for which payment arrangements have been
made, (iii) liens granted or incurred by Seller in the ordinary course
of its business or financing of equipment, office space, furniture and
computers in the ordinary course of its business, and easements, rights
of way, encroachments or other restrictions or matters affecting title
which do not prevent the assets from being used for the purpose for
which they are currently being used;
40
(b) There are no parties in possession of any of the assets of
Seller other than personal property held by third parties in the
reasonable and ordinary course of business. Seller enjoys full, free
and exclusive use and quiet enjoyment of its assets and its rights
pertaining thereto. Seller enjoys peaceful and undisturbed possession
under all leases under which it is a lessee, and all such leases are
legal, valid and binding obligations of Seller, enforceable against
Seller in accordance with its terms.
2.12 Taxes and Returns. Seller has filed all required tax returns and
reports. Seller has paid all taxes, assessments and governmental charges and
penalties which it has incurred, except such as are being or may be contested in
good faith by appropriate proceedings. Seller is not delinquent in the payment
of any tax, assessment or governmental charge. No deficiencies for any taxes
have been proposed, asserted, or assessed against Seller, and no requests for
waivers of the time to assess any such tax are pending. For the purposes of this
Agreement, the term "tax" (including, with correlative meaning, the terms
"taxes" and "taxable") shall include all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts.
2.13 Insurance. Each policy of property, fire and casualty, product
liability, worker's compensation, professional liability and title insurance and
other forms of insurance (except group, health and life policies) and each bond
issued or posted by any person with respect to any operations or other
activities of Seller is, to the knowledge of Seller, the legal, valid and
binding obligation of the insurer or bond issuer, enforceable in accordance with
its terms, and is in an amount and provides for coverage as is customary in the
ordinary business practices of Seller's industry.
2.14 Patents, Trademarks, Etc. Seller has no patents, trademarks,
service marks, works of authorship, tradenames, brandnames or copyrights. Seller
is not using, and does not have any plan to manufacture, use or sell anything
which would violate or infringe on any patent or proprietary right (of which
Seller is aware) of any other person, firm or corporation or which would require
a license under any such patent or proprietary right.
Seller has not received any communications alleging that Seller has violated or,
by conducting its business as proposed, would violate any of the patents,
trademarks, service marks, tradenames,
41
copyrights, works of authorship or trade secrets or other proprietary rights in
processes of any other person or entity.
2.15 Material Contracts and Obligations. Attached hereto as Schedule
2.15 is a list of all material agreements of any nature to which Seller is a
party or by which it or any of its properties is bound, including without
limitation, the Master Service Agreement with the ten top customers (based on
dollar volume) of Seller, all employment and consulting agreements, loan
agreements, leases, purchase contracts, employee benefit, bonus, pension, stock
option, stock purchase and similar plans and arrangements, and distributor and
sales representative agreements. True and complete copies of such written
agreements have been provided to Purchaser. All such agreements and contracts
are valid, binding and in full force and effect. Seller is not in default on any
of the agreements listed on Schedule 2.15.
2.16 Compliance. Except as set forth on Schedule 2.16 Seller has
complied in all material respects with all laws, and is not in violation of any
charter or other corporate restrictions or any law, ordinance, requirement,
regulation, judgment, injunction, award, decree, or other order applicable to
its business. There is no term or provision of any mortgage, indenture,
contract, agreement or instrument to which Seller is a party or by which it is
bound, any provision of any state or federal judgment, decree, order,
injunction, writ, statute, rule or regulation applicable to or binding upon
Seller, which materially adversely affects or, in the future is reasonably
likely to affect materially and adversely the business, prospects, condition,
affairs or operations of Seller or any of its properties or assets. To the
knowledge of Seller, no employee of Seller is in violation of any term of any
employment contract, patent or other proprietary information disclosure
agreement or any other contract or agreement relating to the employment of such
employee with Seller.
2.17 Employees. Seller has obtained employment agreements, some of
which contain nondisclosure and assignment of invention provisions and
non-competition provisions, with Seller from some employees and consultants of
Seller whose employment responsibility requires access to confidential and
proprietary information of Seller, in a form satisfactory to Purchaser. Seller
has complied in all material respects with all applicable and material state and
federal laws respecting employment and employment practices, terms and
conditions of employment, wages and hours and other laws related to employment,
and there are no arrears in the payment of wages, or social security taxes.
2.18 Transactions with Affiliates and Stockholders. Except as set forth
on Schedule 2.18, no stockholder, officer, director
42
or employee of Seller, nor any "affiliate" or "associate" of such persons (as
such terms are defined in the rules and regulations promulgated under the
Securities Act), is presently a party to any transaction with Seller, including
without limitation, any contract, agreement or other arrangement providing for
the employment of, furnishing of services by, rental of real or personal
property from or otherwise requiring payments to, any such person or entity.
2.19 Use of Proceeds. Seller will not use the Consideration, except as
set forth on Schedule 2.19 hereof. Without limiting the foregoing, Seller
intends to use the Consideration to (i) fund Seller's acquisition of the assets
of Petro-Log, Inc. ("Petro-Log") and Production Well Services, Inc. ("PWS")
(collectively, the "Acquisitions"); and (ii)(A) acquire new trucks, tools,
computer equipment and other equipment for equipping said trucks, office
equipment and such other equipment and facilities as are needed to modernize and
update the fleet of Seller, the Active Subsidiary, Petro-Log and PWS; (B) pay
attorneys fees and transactional costs in connection with this Agreement and all
agreements contemplated hereby; and (C) pay off the debt to TrustMark Bank,
Columbus and Jackson, Mississippi in an amount not to exceed $200,000; provided,
however, that the proceeds to be used as described in this item (ii) shall not
exceed the limits set forth on Schedule 2.19 hereof. Seller shall not use the
Consideration for any other purpose without the prior consent of Purchaser.
2.20 Books and Records. The minute books of Seller furnished to counsel
to Purchaser for review contain complete and accurate records of all meetings
and other corporate actions of its stockholders and its Board of Directors and
committees thereof. The stock ledger and stock transfer records of Seller
furnished by Liberty Transfer Company to counsel to Purchaser for review is
complete and reflects all issuances, transfers of which Seller is aware,
repurchases and cancellations of shares of capital stock of Seller.
2.21 Stockholder Agreements. Except as set forth in Schedule 2.21 or as
contemplated by this Agreement, there are no agreements, written or oral, which
are (i) between Seller and any holder of its capital stock, or (ii) to the
knowledge of Seller, among any persons holding five percent (5%) or more of
Seller's capital stock, relating to the acquisition, disposition or voting of
the capital stock of Seller.
43
2.22 ERISA. Except as disclosed on Schedule 2.22, seller has no
employee benefit plans subject to the Employment Retirement Income Security Act
of 1974.
2.23 Accounts Receivable. All accounts receivable of Seller (including
those reflected on the Balance Sheet or acquired on or prior to the Closing
Date) arose in the ordinary and usual course of business of Seller, represent
valid obligations due to Seller and have been collected or are, to Seller's best
knowledge, collectible in the ordinary and usual course of business of Seller in
the aggregate recorded amounts thereof in accordance with their terms less in
the case of accounts receivable reflected in the Financial Statements, all
allowance for doubtful accounts marked therein, and in the case of accounts
receivable thereafter, all allowances for doubtful accounts consistent with past
practices of Seller.
2.24 Hazardous Wastes and Substances. Neither the operations of Seller
nor the use of its assets violates any applicable federal, state or local law,
statute, ordinance, rule, regulation, memorandum of understanding, order or
notice requirement pertaining to the collection, transportation, storage,
treatment, discharge, release or disposal of hazardous or non-hazardous waste or
substances, including without limitation (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C, ss.ss.9601 et seq.),
as amended from time to time on or before the Closing Date ("CERCLA")
(including, without limitation, as amended pursuant to the Superfund Amendments
and Reauthorization Act of 1986), and such regulations promulgated under CERCLA
on or before the Closing Date, (ii) the Resources Conservation and Recovery Act
of 1976 (42 U.S C. ss.ss.6901 et seq.), as amended from time to time ("RCRA") on
or before the Closing Date, and such regulations promulgated under RCRA, (iii)
any applicable federal, state or local laws or regulations relating to the
environment in effect on the Closing Date (collectively, the "Applicable
Environmental Laws"). Except as disclosed on Schedule 2.24, none of the
operations of Seller has ever been conducted nor have any of its assets been
used in such a manner as to constitute a violation of any of the Applicable
Environmental Laws. No notice has been served on Seller by any person or
Governmental Entity regarding any existing, pending or threatened investigation
or inquiry related to violations under any Applicable Environmental Law, or
regarding any claims for corrective action, remedial obligations or contribution
for removal costs or damages under any Applicable Environmental Law, or
regarding the designation of Seller or any of its affiliates as a potentially
responsible party for any facility under the Applicable Environmental Laws, nor
does any fact or circumstance
44
exist which, if disclosed publicly, would be reasonably likely to result in the
service on Seller of any such notice. There has been no action taken, or omitted
to be taken by Seller which has caused, or would be reasonably likely to cause,
a "release" of any "hazardous substance" at any "facility," without limitation,
within the meaning of such terms as defined in the Applicable Environmental
Laws.
2.25 Disclosures. Neither this Agreement nor any Exhibit or Schedule
hereto, nor any certificate or other instrument furnished to Purchaser or its
counsel by Seller in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which they were made, not misleading.
ARTICLE III
COVENANTS
3.1 New Subsidiaries. Seller agrees that (i) any Inactive Organization
which becomes an Active Subsidiary after the execution of this Agreement and
(ii) any other entity of which Seller obtains control (directly or indirectly)
of more than 50% of the outstanding voting stock or equity interests shall
execute a written agreement to be bound by that certain Subsidiary Security
Agreements, dated as of even date herewith, before the events set forth in (i)
or (ii) above have occurred.
3.2 Additional Security Interests. Seller agrees that if any Inactive
Organization begins to conduct any business Seller shall pledge all of its
interest in such Inactive Organization to secure the Notes by (i) executing a
security agreement substantially in the form of that certain Borrower Security
Agreement, dated as of even date herewith and (ii) delivering all certificates
representing the shares of stock being pledged, before such Inactive
Organization commences doing business.
ARTICLE IV
THE CLOSING
4.1 Time and Place. Subject to the provisions of Section 1.2 herein,
the closing of the purchase and sale of the Notes and the Warrant (the
"Closing") will take place on a date agreed to by the parties (the "Closing
Date"), at the offices of Gardere Wynne
45
Sewell & Riggs, L.L.P., unless another time and place are agreed to by the
parties.
4.2 Conditions to the Obligation of Seller. The obligation of Seller to
effect the Closing is subject to Purchaser delivering, or causing to be
delivered, to Seller at the Closing the Consideration.
4.3 Conditions to the Obligation of Purchaser. The obligation of
Purchaser to effect the Closing is subject to satisfactory completion of the
Acquisitions and payment by Seller of the Origination Fee. The obligation of
Purchaser is further subject to Seller delivering, or causing to be delivered,
to Purchaser at the Closing the following documents:
4.3.1 copies, certified by the Secretary of State, of the
charter of Seller and all amendments thereto;
4.3.2 copies, certified by the Secretary of Seller as of the
Closing Date, of the bylaws of Seller and all amendments thereto;
4.3.3 copies, certified by a certificate of the Secretary of
Seller as of the Closing Date, of resolutions duly adopted by the board of
directors of Seller, authorizing the execution and delivery by Seller of the
Transaction Documents and all other agreements attached hereto as Exhibits or
contemplated herein, the completion of the sale of the Notes and Warrants and
the taking of all such other corporate action as shall have been required as a
condition to, or in connection with, the sale of the Notes and Warrants;
4.3.4 the Agreement;
4.3.5 the Notes;
4.3.6 the Warrants;
4.3.7 the Registration Rights Agreement;
4.3.8 the Security Agreement;
4.3.9 the Voting Agreement;
4.3.10 Subsidiary Security Agreements;
4.3.11 Subsidiary Guaranties;
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4.3.12 an opinion of William S. Clarke, P.A., counsel to
Seller, in form and substance acceptable to Purchaser and addressing the matters
set forth in Sections 2.1, 2.2, 2.3 and 2.7;
4.3.13 a certificate of an Officer of Seller to the effect
that the representations and warranties of Seller herein contained shall be true
as of and at the Closing Date with the same effect as though made at such date,
except as affected by transactions permitted or contemplated by this Agreement;
and further to the effect that Seller shall have performed and complied with all
covenants required by this Agreement to be performed or complied with by it
before the Closing Date; and
4.3.14 a letter in favor of Purchaser's lender, in the form of
that attached hereto as Exhibit F.
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ARTICLE V
GENERAL PROVISIONS
5.1 Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained in this Agreement shall
survive the Closing.
5.2 Notices. All notices or other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person, transmitted by telecopier (with
receipt confirmed) or mailed by registered or certified first class mail,
postage prepaid, return receipt requested to the parties hereto at the address
set forth below (as the same may be changed from time to time by notice
similarly given) or the last known business or residence address of such other
person as may be designated by either party hereto in writing.
(a) If to Seller:
Black Warrior Wireline Corp.
3748 Highway #45 North
Columbus, Mississippi 39701
Attn: __________________
(b) If to Purchaser:
St. James Capital Partners, L.P.
c/o St. James Capital Corp.
1980 Post Oak Boulevard, Suite 2030
Houston, Texas 77056
Attn: John L. Thompson
5.3 Miscellaneous. This Agreement (i) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof, (ii) shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and is not intended to confer
upon any other person any rights or remedies hereunder, (iii) shall be governed
in all respects, including validity, interpretation and effect, by the laws of
the State of Delaware and (iv) may be executed in two or more counterparts which
together shall constitute a single agreement.
5.4 Publicity. Seller and Purchaser promptly shall advise and cooperate
with the other prior to issuing, or permitting any of its directors, officers,
employees or agents to issue, any
48
press release with respect to this Agreement or the transactions contemplated
hereby. Notwithstanding the foregoing, without the prior consent of Purchaser,
neither Seller nor any of its directors, officers, employees or agents shall
issue any press release which includes the name of Purchaser or any of
Purchaser's affiliates.
5.5 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other party.
5.6 Schedules. All statements contained in any exhibit, schedule,
appendix, certificate or other instrument delivered by or on behalf of the
parties hereto, or in connection with the transactions contemplated hereby, are
an integral part of this Agreement and shall be deemed representations and
warranties hereunder.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which constitutes an original execution and, in the
aggregate, constitute a single document.
5.8 Expense Reimbursement. Seller will reimburse to Purchaser, within
10 days after Purchaser's presentation of an invoice therefor, all of
Purchaser's direct costs relating to the negotiation, documentation and closing
of the transactions contemplated by this Agreement, including without limitation
the direct fees and expenses of counsel for Purchaser.
5.9 Restrictions on Transfer. (a) Purchaser shall not transfer the
Notes except by the grant of a security interest to its lender or lenders. As
between Purchaser and its lender or lenders, the Notes are transferrable in the
same manner and with the same effect as in the case of a negotiable instrument
payable to a specified person. Any lender to which Holder grants a security
interest in this Note shall be entitled to exercise all remedies to which it is
entitled by contract or by law, including (without limitation) transferring this
Note into its own name or into the name of any purchaser at any sale undertaken
in connection with enforcement by such lender of its remedies.
(b) Purchaser shall not transfer the Warrants or any new
warrants described in Section 1.4 of this Agreement except to the partners of
Purchaser.
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5.10 Expenses of Dispute Resolution. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement or any of the
other Transaction Documents, the prevailing party shall be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which it may be entitled.
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SELLER'S SIGNATURE PAGE
IN WITNESS WHEREOF, Seller has signed this Agreement as of the date
first written above.
BLACK WARRIOR WIRELINE CORP.
/s/ William L. Jenkins, President
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PURCHASER'S SIGNATURE PAGE
IN WITNESS WHEREOF, Purchaser has signed this Agreement as of the date first
written above.
ST. JAMES CAPITAL PARTNERS, L.P.
By: St. James Capital Corp., its
General Partner
By: /s/ John L. Thompson, President
EXHIBIT 4
THE SECURITIES REPRESENTED BY THIS NOTE AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY OTHER APPLICABLE SECURITIES LAWS AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.
THIS NOTE MAY BE SUBORDINATE TO CERTAIN INDEBTEDNESS OF BLACK WARRIOR WIRELINE
CORP. AS AND TO THE EXTENT SET FORTH IN THAT CERTAIN AGREEMENT FOR PURCHASE AND
SALE DATED JUNE 5, 1997 BETWEEN BLACK WARRIOR WIRELINE CORP. AND ST. JAMES
CAPITAL PARTNERS, L.P.
BLACK WARRIOR WIRELINE CORP.
$2,000,000 CONVERTIBLE PROMISSORY NOTE
$2,000,000 Houston, Texas June 5, 1997
BLACK WARRIOR WIRELINE CORP., a Delaware corporation (hereinafter
called the "Company," which term includes any directly or indirectly controlled
subsidiaries or successor
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entities), for value received, hereby promises to pay to St. James Capital
Partners, L.P., a Delaware limited partnership (hereinafter called "Holder"), or
its registered assigns, the principal sum of Two Million Dollars ($2,000,000),
together with interest on the amount of such principal sum from time to time
outstanding, payable in accordance with the terms set forth below. It is the
intention of the parties that the principal sums of this Note and the Bridge
Loan Note (as defined below) shall be advanced in multiple Advances (as defined
below). No Advance shall be made under this Note if an Event of Default (as
defined below) exists or would exist but for the passage of time. Interest under
the Notes shall accrue on amounts actually advanced.
THE OBLIGATIONS OF THE COMPANY CONTAINED IN THIS NOTE ARE SECURED BY A
SECURITY AGREEMENT BETWEEN THE COMPANY AND THE HOLDER DATED AS OF THE DATE
HEREOF (THE "SECURITY AGREEMENT"). THE OBLIGATIONS OF THE COMPANY CONTAINED IN
THIS NOTE ARE FURTHER SUBJECT TO THE TERMS OF A SUBSIDIARY SECURITY AGREEMENT
(HEREIN SO CALLED) BETWEEN THE SUBSIDIARIES OF THE COMPANY AND THE HOLDER, AND A
SUBSIDIARY GUARANTY (HEREIN SO CALLED ) BY EACH OF THE SUBSIDIARIES OF THE
COMPANY IN FAVOR OF THE HOLDER, BOTH DATED AS OF THE DATE HEREOF.
ARTICLE I
DEFINITIONS
1.1 Definitions. For all purposes of this Note, except as otherwise
expressly provided or unless the context otherwise requires: (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular; (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as promulgated from time to time by the
Association of Independent Certified Public Accountants; and (c) the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Note as a whole and not to any particular Article, Section or other
subdivision.
"Advance" means a disbursement of proceeds of this Note or the Bridge
Loan Note.
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"Board of Directors" means the board of directors of the Company as
elected from time to time or any duly authorized committee of that board.
"Bridge Loan Note" means the $3,000,000 10% Bridge Loan Promissory Note
of the Company to Holder dated the date hereof.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Houston, Texas are
authorized or obligated by law or executive order to be closed.
"Common Stock" means shares of common stock, par value $0.0005 per
share, of the Company.
"Conversion Price" means the price per share determined in accordance
with Articles IV and V (as adjusted in accordance with the terms of this Note)
at which shares of Common Stock shall be delivered to Holder upon conversion of
this Note.
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
"Event of Default" has the meaning specified in Section 3.1.
"Indebtedness" of any Person means all indebtedness of such Person,
whether outstanding on the date of this Note or hereafter created, incurred,
assumed or guaranteed, (a) for the principal of and premium, if any, and
interest on all debts of the Person whether outstanding on the date of this Note
or thereafter created (i) for money borrowed by such Person (including
capitalized lease obligations), (ii) for money borrowed by others (including
capitalized lease obligations) and guaranteed, directly or indirectly, by such
Person, or (iii) constituting purchase money indebtedness, or indebtedness
secured by property at the time of the acquisition of such property by such
Person, for the payment of which the Person is directly or contingently liable;
(b) for all accrued obligations of the Person in respect of any contract,
agreement or instrument imposing an obligation upon the Person to pay over
funds; (c) for all trade debt of the Person; and (d) for all deferrals,
renewals, extensions and refundings of, and amendments, modifications and
supplements to, any of the indebtedness referred to in (a), (b) or (c) above.
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"Maturity Date", when used with respect to this Note, means June 5,
2002 (or such earlier date upon which the Note becomes due and payable under
Section 3.2).
"Note" means this 9% Convertible Promissory Note, as hereafter amended,
modified, substituted or replaced.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, estate,
other entity, unincorporated organization or government or any agency or
political subdivision thereof.
"Subsidiary" means a corporation or other entity more than 50% of the
outstanding voting stock of which, or more than 50% of the equity interest in
which, is owned, directly or indirectly, by the Company or by one or more other
Subsidiary of the Company, or by any combination of the Company and one or more
other Subsidiaries, provided, however, that the following shall not be deemed
Subsidiaries for purposes of this Note: Black Warrior International, Inc.; Black
Warrior International (Bermuda), Ltd.; Black Warrior Oil and Gas, Inc.; and
Black Warrior Syria, Ltd. (collectively, the "Inactive Organizations"). However,
if any Inactive Organization begins to conduct any business (other than
activities to "wind down" such organization), such Inactive Organization shall
be considered a Subsidiary under this Agreement from that point forward. For
purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
ARTICLE II
PAYMENTS
2.1 Interest. From the date of this Note through the Maturity Date,
interest shall accrue hereunder on the unpaid outstanding principal sum of this
Note at a rate equal to nine percent (9%) per annum calculated on the basis of a
360-day year. All past due amounts of principal and interest shall bear interest
at fifteen percent (15%) per annum calculated on the basis of a 360-day year
until paid.
2.2 Payment of Principal and Interest. The principal and unpaid
interest of this Note shall be due and payable in full on the Maturity Date. At
any time, the Holder may, at its option and
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in lieu of cash, elect to be paid all accrued and unpaid interest owed to Holder
by the Company in the form of Common Stock, based on a price per share equal to
the Conversion Price (the "Price Per Share"). The amount of all accrued and
unpaid interest on the Maturity Date shall be divided by the Price Per Share
into a whole number of shares of Common Stock, with the remainder, if any, being
paid in cash.
2.3 Prepayments. Subject to Holder's right to convert, at any time
before the Maturity Date, the Company may prepay this Note, in whole or in part,
without penalty or discount, upon five days' prior written notice given to
Holder pursuant to Section 7.6. All payments made under this Note shall be
applied first to accrued interest, and the balance, if any, to principal;
provided, however, that interest shall accrue on any remaining principal balance
and shall be payable at the rate provided above.
2.4 Manner of Payment. Cash payments of principal and interest on this
Note will be made by delivery of checks to Holder at its address as set forth in
this Note or wire transfers pursuant to instructions from Holder. If the date
upon which the payment of principal and interest is required to be made pursuant
to this Note occurs other than on a Business Day, then such payment of principal
and interest shall be made on the next occurring Business Day following said
payment date and shall include interest through said next occurring Business
Day.
2.5 Security; Guaranty. This Note is secured by the collateral defined
in the Security Agreement and by the collateral defined in the Subsidiary
Security Agreement. This Note and the obligations hereunder and under the
Security Agreement and the Subsidiary Security Agreement are guaranteed by the
Subsidiaries of the Company pursuant to the Subsidiary Guaranty.
ARTICLE III
REMEDIES
3.1 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment or mandatory
prepayment of the principal or interest on this Note, or in the payment
or a mandatory prepayment of the principal or interest of the Bridge
Loan Note, when such principal or interest becomes due and payable and
such default remains uncured for a period of five days; or
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(b) the Company or any Subsidiary defaults in the performance
of any covenant made by the Company, and such default remains uncured
for a period of 45 days in any of (i) that certain Agreement of
Purchase and Sale dated of even date herewith, by and between the
Company and Holder (the "Purchase Agreement"), (ii) the Common Stock
Purchase Warrants issued by the Company to Holder as of the date hereof
(the "Warrants"); (iii) that certain Registration Rights Agreement
dated of even date herewith, by and between the Company and the Holder,
pursuant to which the Company grants to the Holder certain registration
rights in respect of the shares of Common Stock that may be issued
under the Note and upon exercise of the Warrants (the "Registration
Rights Agreement"); (iv) the Security Agreement; (v) the Bridge Loan
Note; (vi) the Subsidiary Security Agreement; (vii) the Subsidiary
Guaranty; or (viii) this Note (other than a default in the performance
of a covenant specifically addressed elsewhere in this Section 3.1)
provided that a default in the performance of any covenant in Sections
8(a), 8(c), 8(d), 8(e), 8(f), 8(h), 8(i), 8(j), 8(k), 8(l), 8(m) or
8(n) of the Security Agreement or Section 6.1 of this Note shall be an
event of Default immediately upon occurrence; or
(c) any representation or warranty made by the Company or any
Subsidiary in the Purchase Agreements, the Warrants, the Registration
Rights Agreement, the Bridge Loan Note, the Subsidiary Security
Agreement, the Subsidiary Guaranty, or this Note or in any certificate
furnished by the Company in connection with the consummation of the
transaction contemplated thereby or hereby, is untrue in any material
respect as of the date of making thereof and such default remains
uncured for a period of 45 days; or
(d) the Company or any Subsidiary defaults in the payment when
due (whether by lapse of time, by declaration, by call for redemption
or otherwise) of the principal of or interest on any Indebtedness of
the Company or such Subsidiary (other than the Indebtedness evidenced
by this Note) having an aggregate principal amount in excess of
$100,000 or on any Indebtedness of the Company to any of its
Stockholders and such default remains uncured for a period of 45 days;
or
(e) a court of competent jurisdiction enters a judgment or
judgments against the Company or any Subsidiary, or any property or
assets of the Company or any Subsidiary,
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for the payment of money aggregating $100,000 or more in excess of
applicable insurance coverage (other than the judgment disclosed on
Schedule 3.1(e) hereto) and such default remains uncured for a period
of 45 days; or
(f) a court of competent jurisdiction enters (i) a decree or
order for relief in respect of the Company or any Subsidiary in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or (ii) a
decree or order adjudging the Company or any Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of the Company or any Subsidiary under any applicable federal or state
law, or appointing a custodian, receiver,liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Subsidiary
or of any substantial part of the property of the Company or any
Subsidiary or ordering the winding up or liquidation of the affairs of
the Company or any Subsidiary and any such decree or order of relief or
any such other decree or order remains unstayed for a period of 90 days
from its date of entry; or
(g) the Company or any Subsidiary commences a voluntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the Company or
any Subsidiary files a petition, answer or consent seeking
reorganization or relief under any applicable federal or state law, or
the Company or any Subsidiary makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts
generally as they become due; or
(h) any person or group (within the meaning of Section 13(d)
of the Securities Exchange Act of 1934) becomes the beneficial owner of
40% or more of the total voting power of the Company and was not the
beneficial owner of 40% or more of the total voting power of the
Company as of the date of this Agreement; provided that the foregoing
shall not include any person or group who or which acquires Warrants
(as that term is defined in that certain Agreement for Purchase and
Sale dated June 5, 1997 between the Company and Holder [the "Purchase
Agreement"]) or shares of the Company's Common Stock issuable upon
exercise of Warrants or upon conversion of this Note; and further
provided that such default has not
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been cured or waived within ninety (90) days following such change of
beneficial ownership.
(i) the Company or any Subsidiary (1) merges or consolidates
with or into any other Person (unless the Company or any of its
Subsidiaries is the surviving or acquiring party); (2) dissolves or
liquidates; or (3) sells all or any substantial portion of its assets
(unless the purchaser is a Subsidiary of the Company).
3.2 Acceleration of Maturity. This Note and all accrued interest shall
automatically become immediately due and payable if an Event of Default
described in Sections 3.1(f), 3.1(g) or 3.1(i) occurs and, this Note shall, at
the option of the Holder in its sole discretion, become immediately due and
payable if any other Event of Default occurs, and in every such case the Holder
of the Note may declare the principal and interest on the Note to be due and
payable immediately.
ARTICLE IV
CONVERSION OF NOTE
Subject to and upon compliance with the provisions of this Article, at
the option of Holder, all or any part of this Note may be converted at any time,
at the principal amount hereof together with accrued and unpaid interest
thereon, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common Stock. The Conversion
Price shall initially be $2.75 per share. The Conversion Price shall increase to
$3.25 per share on the first year anniversary of the execution of this Note. The
Conversion Price shall increase to $3.75 per share on the second year
anniversary of the execution of this Note and shall remain at this price from
that date forward. Notwithstanding anything else to the contrary set forth
herein, the Holder shall have the right to convert this Note pursuant to the
terms set forth herein at any time, including the 30 Business Days following (i)
the Maturity Date or (ii) any prepayment pursuant to Section 2.3 hereof. If
Holder elects to convert this Note after a prepayment has been made pursuant to
Section 2.3, then Holder shall return all or such portion of the funds paid to
Holder as to which Holder has elected to convert.
ARTICLE V
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ADJUSTMENT OF CONVERSION PRICE
5.1 Anti-Dilution Provisions. The Conversion Price shall be subject to
adjustment from time to time as hereinafter provided. Upon each adjustment of
the Conversion Price, the holder of this Note shall thereafter be entitled to
purchase, at the Conversion Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Conversion Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Conversion Price resulting from such adjustment.
5.2 Adjustment of Conversion Price Upon Issuance of Common Stock.
5.2.1 (A) If and whenever after the date hereof the Company
shall issue or sell any Common Stock for no consideration or for a
consideration per share less than the Conversion Price then, forthwith,
upon such issue or sale, the Conversion Price shall be reduced (but not
increased, except as otherwise specifically provided in Section 5.2.2),
to the price (calculated to the nearest one-ten thousandth of a cent)
determined by dividing (x) an amount equal to the sum of (i) the
aggregate number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the then existing Conversion
Price plus (ii) the consideration received by the Company upon such
issue or sale by (y) the aggregate number of shares of Common Stock
outstanding immediately after such issue or sale.
(B) Notwithstanding the provisions of this Section 5.2, no
adjustment shall be made in the Conversion Price in the event that the
Company issues, in one or more transactions, (i) Common Stock upon
exercise of any options issued to officers, directors or employees of
the Company pursuant to a stock option plan or an employment, severance
or consulting agreement as now or hereafter in effect, in each case
approved by the Board of Directors (provided that the aggregate number
of shares of Common Stock which may be issuable, including options
issued prior to the date hereof, under all such employee plans and
agreements shall at no time exceed the number of such shares of Common
Stock outstanding on the date hereof on a fully diluted basis that are
issuable under currently effective employee plans and agreements);
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(ii) Common Stock upon exercise of this Note or any other warrant
issued pursuant to the terms of the Purchase Agreement; (iii) Common
Stock upon exercise of any stock purchase warrant or option (other than
the options referred to in clause (i) above) or other convertible
security outstanding on the date hereof; or (iv) Common Stock issued as
consideration in acquisitions. In addition, for purposes of calculating
any adjustment of the Conversion Price as provided in this Section 5.2,
all of the shares of Common Stock issuable pursuant to any of the
foregoing shall be assumed to be outstanding prior to the event causing
such adjustment to be made.
5.2.2 For purposes of this Section 5.2, the following shall be
applicable
(A) Issuance of Rights or Options. In case at any time after
the date hereof the Company shall in any manner grant (whether directly
or by assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being herein
called "Convertible Securities") (other than warrants, options or
convertible securities issued as consideration for or assumed in
conjunction with an acquisition or to officers, directors, or employees
of the acquired entity in conjunction therewith), whether or not such
rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon the exercise
of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total amount, if
any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
exercise of such rights or options, or plus, in the case of such rights
or options that relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such rights or options) shall
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be less than the Conversion Price in effect as of the date of granting
such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options
and to have been issued for such price per share, with the effect on
the Conversion Price specified in Section 5.2.1 hereof. Except as
provided in Section 5.2.2 hereof, no further adjustment of the
Conversion Price shall be made upon the actual issuance of such Common
Stock or of such Convertible Securities upon exercise of such rights or
options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(B) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase pace
provided for in any right or option referred to in Section 5.2.2 above,
the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in Section 5.2.2(A)
hereof, or the rate at which any Convertible Securities referred to in
Section 5.2.2(A) hereof, are convertible into or exchangeable for
Common Stock shall change (other than under or by reason of provisions
designed to protect against dilution), the Conversion Price then in
effect hereunder shall forthwith be readjusted (increased or decreased,
as the case may be) to the Conversion Price that would have been in
effect at such time had such rights, options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the expiration of any such option
or right referred to in Section 5.2.2(A) hereof, or on the termination
of any such right to convert or exchange any such Convertible
Securities referred to in Section 5.2.2(A) hereof, the Conversion Price
then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Conversion Price that would have
been in effect at the time of such expiration or termination had such
right, option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been
granted, issued or sold, and the Common Stock issuable thereunder shall
no longer be deemed to be outstanding. If the purchase price provided
for in Section 5.2.2(A) hereof or the rate at which
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any Convertible Securities referred to in Section 5.2.2(A) hereof are
convertible into or exchangeable for Common Stock shall be reduced at
any time under or by reason of provisions with respect thereto designed
to protect against dilution, then in case of the delivery of Common
Stock upon the exercise of any such right or option or upon conversion
or exchange of any such Convertible Securities, the Conversion Price
then in effect hereunder shall, if not already adjusted, forthwith be
adjusted to such amount as would have obtained had such right, option
or Convertible Securities never been issued as to such Common Stock and
had adjustments been made upon the issuance of the Common Stock
delivered as aforesaid, but only if as a result of such adjustment the
Conversion Price then in effect hereunder is thereby reduced.
(C) Consideration for Stock. In case at any time Common Stock
or Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration therefor shall be deemed to be the amount
received by the Company therefor. In case at any time any Common Stock,
Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value
of such consideration, as determined reasonably and in good faith by
the Board of Directors of the Company. In ease at any time any Common
Stock, Convertible Securities or any rights or options to purchase any
Common Stock or Convertible Securities shall be issued in connection
with any merger or consolidation in which the Company is the surviving
corporation, the amount of consideration received therefor shall be
deemed to be the fair value, as determined reasonably and in good faith
by the Board of Directors of the Company, of such portion of the assets
and business of the nonsurviving corporation as such Board of Directors
may determine to be attributable to such Common Stock, Convertible
Securities, rights or options as the case may be. In case at any time
any rights or options to purchase any shares of Common Stock or
Convertible Securities shall be issued in connection with the issuance
and sale of other securities of the Company, together consisting of one
integral transaction in which no consideration is allocated to such
rights or options by the parties, such rights or
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options shall be deemed to have been issued without consideration.
(D) Record Date. In the ease the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common Stock
or Convertible Securities, or (ii) to subscribe for or purchase Common
Stock or Convertible Securities, then such record date shall be deemed
to be the date of the issuance or sale of the Common Stock or
Convertible Securities deemed to have been issued or sold as a result
of the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the ease may be.
(E) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned directly
by the Company in treasury, and the disposition of any such shares
shall be considered an issuance or sale of Common Stock for the purpose
of this Section 5.2.
5.3 Stock Dividends. In case the Company shall declare a dividend or
make any other distribution upon any shares of the Company, payable in Common
Stock or Convertible Securities, any Common Stock or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
5.4 Stock Splits and Reverse Splits. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of Shares into
which this Note may be converted immediately prior to such subdivision shall be
proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock shall at any time be combined into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased and the number of Shares into which this Note
may be converted immediately prior to such combination shall be proportionately
reduced. Except as provided in this Section 5.4 no adjustment in the Conversion
Price and no change in the number of Shares shall be made under this Article V
as a result of or by reason of any such subdivision or combination.
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5.5 Reorganizations and Asset Sales. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected h such a way that holders of Common Stock shall
be entitled to receive capital stock, securities or assets with respect to or in
exchange for their shares, then the following provisions shall apply:
5.5.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition
(except as otherwise provided below in Section 5.5.3), lawful and adequate
provisions shall be made whereby the holder of this Note shall thereafter have
the right to purchase and receive upon the terms and conditions specified in
this Note and in lieu of the shares immediately theretofore receivable upon the
exercise of the rights represented hereby, such shares of capital stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
shares immediately theretofore so receivable had such reorganization,
reclassification, consolidation, merger, share exchange or sale not taken place,
and in any such case appropriate provision reasonably satisfactory to such
holder shall be made with respect to the rights and interests of such holder to
the end that the provisions hereof (including, without limitation, provisions
for adjustments of the Conversion Price and of the number of shares receivable
upon the exercise) shall thereafter be applicable, as nearly as possible, in
relation to any shares of capital stock, securities or assets thereafter
deliverable upon the exercise of this Note.
5.5.2 In the event of a merger, share exchange or
consolidation of the Company with or into another Person as a result of which a
number of shares of common stock or its equivalent of the successor Person
greater or lesser than the number of shares of Common Stock outstanding
immediately prior to such merger, share exchange or consolidation are issuable
to holders of Common Stock, then the Conversion Price in effect immediately
prior to such merger, share exchange or consolidation shall be adjusted in the
same manner as though there were a subdivision or combination of the outstanding
shares of Common Stock.
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5.5.3 The Company shall not effect any such consolidation,
merger, share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the Holder hereof at the
last address of such Holder appearing on the books of the Company the obligation
to deliver to such Holder such shares of capital stock, securities or assets as,
in accordance with the foregoing provisions, such Holder may be entitled to
receive, and all other liabilities and obligations of the Company hereunder.
Upon written request by the Holder hereof, such Successor Person will issue a
new Note revised to reflect the modifications in this Note effected pursuant to
this Section 5.5.
5.5.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sate, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the conversion of
this Note either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.
5.6 Adjustment for Asset Distribution. If the Company declares a
dividend or other distribution payable to all holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Conversion Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such
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dividend or distribution is made and shall be effective as of the date as of
which a record is taken for purpose of such dividend or distribution or, if a
record is not taken, the date as of which holders of record of Common Stock
entitled to such dividend or distribution are determined.
5.7 De Minimis Adjustments. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon conversion of the Note and no adjustment in the Conversion
Price shall be required unless such adjustment would require an increase or
decrease of at least $.01 in the Conversion Price; provided, however, that any
adjustments which by reason of this Section 5.7 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest full share or nearest one
hundredth of a dollar, as applicable.
5.8 Notice of Adjustment. Whenever the Conversion Price or the number
of Shares issuable upon the conversion of the Note shall be adjusted as herein
provided, or the rights of the holder hereof shall change by reason of other
events specified herein, the Company shall compute the adjusted Conversion Price
and the adjusted number of Shares in accordance with the provisions hereof and
shall prepare an Officer's Certificate setting forth the adjusted Conversion
Price and the adjusted number of Shares issuable upon the conversion of this
Note or specifying the other shares of stock, securities or assets receivable as
a result of such change in rights, and showing in reasonable detail the facts
and calculations upon which such adjustments or other changes are based. The
Company shall cause to be mailed to the Holder hereof copies of such Officer's
Certificate together with a notice stating that the Conversion Price and the
number of Shares purchasable upon conversion of this Note have been adjusted and
setting forth the adjusted Conversion Price and the adjusted number of Shares
purchasable upon conversion of this Note.
5.9 Notifications to Holders. In case at any time the Company proposes:
(i) to declare any dividend upon its Common Stock
payable in capital stock or make any special dividend or other
distribution (other than cash dividends) to the holders of its
Common Stock;
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(ii) to offer for subscription pro rata to all of the
holders of its Common Stock any additional shares of capital
stock of any class or other rights;
(iii) to effect any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation, merger or share exchange of the Company with
another Person, or sale, transfer or other disposition of all
or substantially all of its assets; or
(iv) to effect a voluntary or involuntary
dissolution, liquidation or winding up of the Company,
then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days (but not more than 90 days) prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days
(but not more than 90 days) prior written notice of the date when the same shall
take place. Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock, as the case may be, for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
as the case may be.
5.10 Company to Prevent Dilution. If any event or condition occurs as
to which other provisions of this Article are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
this Note evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Note, then the Company shall make such
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adjustments in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such exercise and purchase
rights as aforesaid, and any adjustments necessary with respect to the
Conversion Price and the number of shares purchasable hereunder so as to
preserve the rights of the holder hereunder. In no event shall any such
adjustment have the effect of increasing the Conversion Price as otherwise
determined pursuant to this Article except in the event of a combination of
shares of the type contemplated in Section 5.4 hereof, and then in no event to
an amount greater than the Conversion Price as adjusted pursuant to Section 5.4
hereof.
ARTICLE VI
COVENANTS
The Company covenants and agrees that, so long as this Note is
outstanding:
6.1 Payment of Principal and Accrued Interest. The Company will duly
and punctually pay or cause to be paid the principal sum of this Note, together
with interest accrued thereon from the date hereof to the date of payment, in
accordance with the terms hereof.
6.2 Corporate Existence. The Company will, and will cause each
Subsidiary to, do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Company or a Subsidiary shall not be
required to preserve any such right or franchise if it shall reasonably
determine that the preservation thereof is no longer desirable in the conduct of
its business.
6.3 Taxes; Claims; etc. The Company will, and will cause each
Subsidiary to, promptly pay and discharge all lawful taxes, assessments, and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any of its properties, real, personal, or mixed, before the same shall
become in default, as well as all lawful claims for labor, materials, and
supplies or otherwise which, if unpaid, might become a lien or charge upon such
properties or any part thereof, and which lien or charges will have a material
adverse effect on the business of the Company; provided, however, that neither
the Company nor any Subsidiary shall be required to pay or cause to be paid any
such
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tax, assessment, charge, levy, or claim prior to institution of foreclosure
proceedings if the validity thereof shall concurrently be contested in good
faith by appropriate proceedings and if the Company shall have established
reserves deemed by the Company adequate with respect to such tax, assessment,
charge, levy, or claim.
6.4 Maintenance of Existence and Properties. The Company will, and will
cause each Subsidiary to, keep its material properties in good repair, working
order, and condition, ordinary wear and tear excepted, so that the business
carried on may be properly conducted at all times in accordance with prudent
business management.
6.5 SEC Reports. The Company will deliver to the Holder within 20 days
after it files them with the SEC, copies of its annual and quarterly reports and
of the information, documents, and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company is required or elects to file with the SEC pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934. The Company will timely comply
with its reporting and filing obligations under the applicable federal
securities laws.
6.6 Notice of Defaults. The Company will promptly notify the Holder in
writing of the occurrence of (i) any Event of Default under this Note, and (ii)
any event of default (or if any event of default would result upon any payment
with respect to this Note) with respect to any Indebtedness as such event of
default is defined therein or in the instrument under which it is outstanding,
permitting holders to accelerate the maturity of such Indebtedness.
6.7 Compliance with Laws. The Company will promptly comply with all
laws, ordinances and governmental rules and regulations to which it is subject,
the violation of which would materially and adversely affect the Company.
6.8 Amendments to Charter. The Company will not amend or modify its
charter without the prior written consent of Holder.
6.9 Mergers and Acquisitions. Without the consent of the Holder, the
Company or any Subsidiary will not dissolve, liquidate, consolidate, merge or
enter into a share exchange with or sell or transfer all or a substantial
portion of its assets to any Person. Notwithstanding the provisions of this
Section 6.9,
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Holder hereby agrees that any merger of Petro-Log, Inc. or Production Well
Services, Inc. into Boone Wireline Co., Inc. or the Company is specifically
permitted under this Note.
6.10 Election of Director. The Company will use its best efforts to
cause the election, at all shareholders meetings called for the purpose of
electing directors of the Company or in any other action taken to elect such
directors, of one person designated by Holder as a nominee (the "Designated
Director"). If a vacant directorship arises due to the resignation or disability
of the Designated Director, or if the Designated Director is removed for any
reason, the Company will use its best efforts to cause the appointment of
another person designated by Holder to replace the Designated Director.
ARTICLE VII
MISCELLANEOUS
7.1 Consent to Amendments. This Note may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if and only if the Company shall obtain the
written consent to such amendment, action or omission to act from the holders of
a majority of the aggregate principal amount of this Note.
7.2 Benefits of Note; No Impairment of Rights of Holder of Senior
Indebtedness. Nothing in this Note, express or implied, shall give to any
Person, other than the Company, Holder, and their successors any benefit or any
legal or equitable right, remedy or claim under or in respect of this Note.
7.3 Successors and Assigns. All covenants and agreements in this Note
contained by or on behalf of the Company and the Holder shall bind and inure to
the benefit of the respective successors and assigns of the Company and the
Holder.
7.4 Restrictions on Transfer. Holder shall not transfer this Note
except (by the grant of a security interest) to its lender or lenders. As
between Holder and its lender or lenders, this Note is transferable in the same
manner and with the same effect as in the case of a negotiable instrument
payable to a specified person. Any lender to which Holder grants a security
interest in this Note shall be entitled to exercise all remedies to which it is
entitled by contract or by law, including (without
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limitation) transferring this Note into its own name or into the name of any
purchaser at any sale undertaken in connection with enforcement by such lender
of its remedies.
7.5 Notice; Address of Parties. Except as otherwise provided, all
communications to the Company or Holder provided for herein or with reference to
this Note shall be deemed to have been sufficiently given or served for all
purposes on the third business day after being sent as certified or registered
mail, postage and charges prepaid, to the following addresses: if to the
Company: Black Warrior Wireline Corp., 3748 Highway #45 North, Columbus,
Mississippi 39701, or at any other address designated by the Company in writing
to Holder; if to Holder: St. James Capital Partners, L.P., _St. James Capital
Corp., 1980 Post Oak Boulevard, Suite 2030, Houston, Texas 77056, Attn: John L.
Thompson, or at any other address designated by Holder to the Company in
writing.
7.6 Separability Clause. In case any provision in this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions in such jurisdiction shall not in
any way be affected or impaired thereby; provided, however, such construction
does not destroy the essence of the bargain provided for hereunder.
7.7 Governing Law. This Note shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware (without regard to
principles of choice of law).
7.8 Usury. It is the intention of the parties hereto to conform
strictly to the applicable laws of the State of Delaware and the United States
of America, and judicial or administrative interpretations or determinations
thereof regarding the contracting for, charging and receiving of interest for
the use, forbearance, and detention of money (hereinafter referred to in this
Section 7.9 as "Applicable Law"). The Holder shall have no right to claim, to
charge or to receive any interest in excess of the maximum rate of interest, if
any, permitted to be charged on that portion of the amount representing
principal which is outstanding and unpaid from time to time by Applicable Law.
Determination of the rate of interest for the purpose of determining whether
this Note is usurious under Applicable Law shall be made by amortizing,
prorating, allocating and spreading in equal parts during the period of the
actual time of this Note, all interest or other sums deemed to be interest
(hereinafter referred to in this Section 7.9 as "Interest") at any time
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contracted for, charged or received from the Company in connection with this
Note. Any Interest contracted for, charged or received in excess of the maximum
rate allowed by Applicable Law shall be deemed a result of a mathematical error
and a mistake. If this Note is paid in part prior to the end of the full stated
term of this Note and the Interest received for the actual period of existence
of this Note exceeds the maximum rate allowed by Applicable Law, Holder shall
credit the amount of the excess against any amount owing under this Note or, if
this Note has been paid in full, or in the event that it has been accelerated
prior to maturity, Holder shall refund to the Company the amount of such excess,
and shall not be subject to any of the penalties provided by Applicable Law for
contracting for, charging or receiving Interest in excess of the maximum rate
allowed by Applicable Law. Any such excess which is unpaid shall be canceled.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on the date first above written.
BLACK WARRIOR WIRELINE CORP.
By: /s/ William L. Jenkins,President
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EXHIBIT 5
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.
THIS NOTE MAY BE SUBORDINATE TO CERTAIN INDEBTEDNESS OF BLACK WARRIOR WIRELINE
CORP. AS AND TO THE EXTENT SET FORTH IN THAT CERTAIN AGREEMENT FOR PURCHASE AND
SALE DATED JUNE 5, 1997 BETWEEN BLACK WARRIOR WIRELINE CORP. AND ST. JAMES
CAPITAL PARTNERS, L.P.
BLACK WARRIOR WIRELINE CORP.
$3,000,000 BRIDGE LOAN PROMISSORY NOTE
$3,000,000 Houston, Texas June 5, 1997
Black Warrior Wireline Corp., Inc., a Delaware corporation (hereinafter
called the "Company," which term includes any directly or indirectly controlled
subsidiaries or successor entities), for value received, hereby promises to pay
to St. James Capital Partners, L.P., a Delaware limited partnership (hereinafter
called "Holder"), or its registered assigns, the principal sum of Three Million
Dollars ($3,000,000), together with accrued interest on the amount of such
principal sum, payable in accordance with the terms set forth below. It is the
intention of the parties that the principal sums of this Note and the
Convertible Note (as defined below) shall be advanced in multiple Advances (as
defined below). No Advance shall be made under this Note if an Event of Default
(as defined below) exists or would exist but for the passage of time. Interest
under the Notes shall accrue on amounts actually advanced.
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THE OBLIGATIONS OF THE COMPANY CONTAINED IN THIS NOTE ARE SUBJECT TO
THE TERMS OF A BORROWER SECURITY AGREEMENT BETWEEN THE COMPANY AND THE HOLDER
DATED AS OF THE DATE HEREOF (THE "SECURITY AGREEMENT"). THE OBLIGATIONS OF THE
COMPANY CONTAINED IN THIS NOTE ARE FURTHER SUBJECT TO THE TERMS OF A SUBSIDIARY
SECURITY AGREEMENT (HEREIN SO CALLED) BETWEEN THE SUBSIDIARIES OF THE COMPANY
AND THE HOLDER, AND A SUBSIDIARY GUARANTY (HEREIN SO CALLED) BY EACH OF THE
SUBSIDIARIES OF THE COMPANY IN FAVOR OF THE HOLDER, BOTH DATED AS OF THE DATE
HEREOF.
ARTICLE I
Definitions
I.1 For all purposes of this Note, except as otherwise expressly
provided or unless the context otherwise requires: (i) the terms defined in this
Article have the meanings assigned to them in this Article and include the
plural as well as the singular; (ii) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles as promulgated from time to time by the Association of
Independent Certified Public Accountants; and (iii) the words "herein" and
"hereof" and other words of similar import refer to this Note as a whole and not
to any particular Article, Section or other subdivision.
"Advance" means a disbursement of proceeds of this Note or the
Convertible Note.
"Board of Directors" means the board of directors of the Company as
elected from time to time or any duly authorized committee of that board.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Houston, Texas are
authorized or obligated by law or executive order to be closed.
"Common Stock" means shares of common stock, par value $0.0005 per
share, of the Company.
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"Convertible Note" means the $2,000,000 9% Convertible Promissory Note
of the Company to Holder dated the date hereof.
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
"Event of Default" has the meaning specified in Section 3.1.
"Indebtedness" of any Person means all indebtedness of such Person,
whether outstanding on the date of this Note or hereafter created, incurred,
assumed or guaranteed, (i) for the principal of, premium on and interest on all
debts of the Person whether outstanding on the date of this Note or thereafter
created for money borrowed by such Person (including capitalized lease
obligations), money borrowed by others (including capitalized lease obligations)
and guaranteed, directly or indirectly, by such Person, or purchase money
indebtedness, or indebtedness secured by property ("Purchase Money
Indebtedness") at the time of the acquisition of such property by such Person,
for the payment of which the Person is directly or contingently liable; (ii) for
all accrued obligations of the Person in respect of any contract, agreement or
instrument imposing an obligation upon the Person to pay over funds; (iii) for
all trade debt of the Person; and (iv) for all deferrals, renewals, extensions
and refundings of, and amendments, modifications and supplements to, any of the
indebtedness referred to in (i), (ii) or (iii) above.
"Maturity Date", when used with respect to the Note means the earlier
of (i) the funding of Outside Financing or (ii) September 3, 1997 (or such
earlier date upon which the Note becomes due and payable) subject to extension
by Company to October 3, 1997 upon issuance by the Company to Holder of warrants
to purchase 20,000 shares of Common Stock of the Company (which warrants shall
be in addition to the warrants issued by the Company to Holder on the date of
this Note). Such additional warrants shall be issued and delivered to the Holder
on or before September 3, 1997, and if they are not delivered on or before such
date, then the "Maturity Date" shall be September 3, 1997.
"Note" means this Bridge Loan Promissory Note in the original principal
amount of $3,000,000.
"Outside Financing" shall be defined as (i) any transaction where the
Company hereafter sells or transfers its equity or debt securities for cash
whether in public or private offerings and
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(ii) any financing from a bank or other entity made to the Company or any
Subsidiary (including any financing to which Holder subordinates pursuant to
Section 1.6 of the Agreement for Purchase and Sale between Holder and the
Company, dated June 5, 1997). The term shall not include purchase money
financing of items of equipment which is limited to the purchase price of
equipment bought in the ordinary course of the Company's business.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, estate,
other entity, unincorporated organization or government or any agency or
political subdivision thereof.
"SEC" means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933.
"Subsidiary" means a corporation or other entity in which more than 50%
of the outstanding voting stock or equity interests is owned or controlled,
directly or indirectly, by the Company or any combination of the Company and one
or more other Subsidiaries, provided, however, that the following shall not be
deemed Subsidiaries for purposes of this Note: Black Warrior International,
Inc.; Black Warrior International (Bermuda), Ltd.; Black Warrior Oil and Gas,
Inc.; and Black Warrior Syria, Ltd. (collectively, the "Inactive
Organizations"). However, if any Inactive Organization begins to conduct any
business (other than activities to "wind down" such organization), such Inactive
Organization shall be considered a Subsidiary under this Agreement from that
point forward. For the purposes of this definition, "voting stock" means stock
or other interests which ordinarily has voting power for the election of
directors, and equity interests means the right to receive the profits of the
entity, when disbursed, or the assets of the entity upon liquidation or
dissolution.
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ARTICLE II
Payments
II.1 Interest. From the date of this Note through the Maturity Date,
interest shall accrue hereunder on the unpaid outstanding principal sum of this
Note at a rate equal to ten percent (10%) per annum calculated on the basis of a
360-day year until paid. All past due amounts of principal and interest shall
bear interest at a rate equal to fifteen percent (15%) per annum calculated on
the basis of a 360-day year until paid.
II.2 Payment of Principal and Interest. Subject to Section 2.4 hereof,
the principal and unpaid interest of this Note shall be due and payable in full
on the Maturity Date.
II.3 Prepayments. At any time before the Maturity Date, the Company may
prepay all or any part of this Note in whole or in part, without penalty or
discount, upon five days' prior written notice given to Holder pursuant to
Section 5.6; provided that this Note shall be mandatorily prepaid upon the
closing of an Outside Financing, such prepayment to be in an amount equal to the
net proceeds received by the Company or any Subsidiary from such Outside
Financing but not to exceed the then outstanding principal and accrued and
unpaid interest on this Note. All payments made under this Note shall be applied
first to accrued interest, and the balance, if any, to principal; provided,
however, that interest shall accrue under any remaining principal balance and
shall be payable at the rate provided above.
II.4 Manner of Payment upon Maturity. At maturity, payment of principal
and interest on this Note will be made by delivery of checks to Holder at its
address as set forth in this Note or wire transfers pursuant to instructions
from Holder. If the date upon which the payment of principal and interest is
required to be made pursuant to this Note occurs other than on a Business Day,
then such payment of principal and interest shall be made on the next occurring
Business Day following said payment date and shall include interest through said
next occurring Business Day.
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II.5 Security; Guaranty. This Note is secured by the collateral defined
in the Security Agreement and by the collateral defined in the Subsidiary
Security Agreement. This Note and the obligations hereunder and under the
Security Agreement and the Subsidiary Security Agreement are guaranteed by the
Subsidiaries of the Company pursuant to the Subsidiary Guaranty.
ARTICLE III
Remedies
III.1 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment or a mandatory
prepayment of the principal or interest of this Note, or in the payment or a
prepayment of the principal or interest of the Convertible Note, when such
principal or interest becomes due and payable; or
(b) the Company or any Subsidiary defaults in the performance
of any covenant made by the Company, and such default remains uncured for a
period of 45 days, in (i) the Agreement of Purchase and Sale by and between the
Company and the Holder dated as of the date hereof (the "Purchase Agreement"),
(ii) the Common Stock Purchase Warrants issued by the Company to the Holder as
of the date hereof (the "Warrants"); (iii) the Registration Rights Agreement
dated as of the date hereof by and between the Company and the Holder (the
"Registration Rights Agreement"); (iv) the Voting Agreement dated as of the date
hereof by and among the Company, certain of its stockholders, and Holder, (v)
the Security Agreement; (vi) this Note; (vii) the Convertible Note; (viii) the
Subsidiary Security Agreement; or (ix) the Subsidiary Guaranty; provided that a
default in the performance of any covenant in Sections 8(a), 8(c), 8(d), 8(e),
8(f), 8(h), 8(i), 8(j), 8(k), 8(l), 8(m) or 8(n) of the Security Agreement or
Section 4.1 of this Note shall be an event of Default immediately upon
occurrence; or
(c) any representation or warranty made by the Company or any
Subsidiary in the Purchase Agreement, the Warrants, the Registration Rights
Agreement, this Note, the Convertible Note, the Subsidiary Security Agreement,
the Subsidiary Guaranty or in any certificate furnished by the Company in
connection with the
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consummation of the transaction contemplated thereby, is untrue in any material
respect as of the date of making thereof and such default remains uncured for a
period of 45 days; or
(d) the Company or any Subsidiary defaults in the payment when
due (whether by lapse of time, by declaration, by call for redemption or
otherwise) of the principal of or interest on any Indebtedness of the Company
(other than the Indebtedness evidenced by the Note or good-faith disputes with
trade creditors) having an aggregate principal amount in excess of $100,000 or
on any Indebtedness of the Company to any of its stockholders and such default
remains uncured for a period of 45 days; or
(e) a court of competent jurisdiction enters a judgment or
judgments against the Company or any Subsidiary or any property or assets of the
Company or any Subsidiary for the payment of money aggregating $100,000 or more
in excess of applicable insurance coverage (other than the judgment disclosed on
Schedule 3.1(e) hereto) and such default remains uncured for a period of 45
days; or
(f) a court of competent jurisdiction enters (i) a decree or
order for relief in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company or any Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal
or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any Subsidiary
or of any substantial part of the property of the Company or any Subsidiary or
ordering the winding up or liquidation of the affairs of the Company or any
Subsidiary and any such decree or order of relief or any such other decree or
order remains unstayed for a period of 90 days from its date of entry; or
(g) the Company or any Subsidiary: (i) commences a voluntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or any other case or proceeding to be
adjudicated a bankrupt or insolvent; (ii) files a petition, answer or consent
seeking reorganization or similar relief under any applicable federal or
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state law; (iii) makes an assignment for the benefit of creditors; or (iv)
admits in writing its inability to pay its debts generally as they become due;
or
(h) any person or group (within the meaning of Section 13(d)
of the Securities Exchange Act of 1934) becomes the beneficial owner of 40% or
more of the total voting power of the Company and was not the beneficial owner
of 40% or more of the total voting power of the Company as of the date of this
Agreement; provided that the foregoing shall not include any person or group who
or which acquires Warrants (as that term is defined in that certain Agreement
for Purchase and Sale dated June 5, 1997 between the Company and Holder [the
"Purchase Agreement"]) or shares of the Company's Common Stock issuable upon
exercise of Warrants or upon conversion of the Convertible Note; and further
provided that such default has not been cured or waived within ninety (90) days
following such change of beneficial ownership.
(i) the Company or any Subsidiary (i) merges or consolidates
with or into any other Person, unless the Company is the surviving or acquiring
party; or (ii) dissolves or liquidates; or (iii) sells all or any substantial
portion of its assets.
III.2 Acceleration of Maturity. This Note and all accrued interest
shall (i) automatically become immediately due and payable if an Event of
Default described in Section 3.1(f), 3.1(g) or 3.1(i) occurs, and (ii) become
immediately due and payable at the option of the Holder in its sole discretion
if any other Event of Default occurs.
ARTICLE IV
Covenants
The Company covenants and agrees that, so long as this Note is
outstanding:
IV.1 Payment of Principal and Accrued Interest. The Company will duly
and punctually pay or cause to be paid the principal sum of this Note, together
with interest accrued thereon from the date hereof to the date of payment, in
accordance with the terms hereof.
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IV.2 Corporate Existence. The Company will, and will cause each
Subsidiary to, do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Company or a Subsidiary shall not be
required to preserve any such right or franchise if it shall reasonably
determine that the preservation thereof is no longer desirable in the conduct of
its business.
IV.3 Taxes; Claims; etc. The Company will, and will cause each
Subsidiary to, promptly pay and discharge all lawful taxes, assessments, and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any of its properties, real, personal, or mixed, before the same shall
become in default, as well as all lawful claims for labor, materials, and
supplies or otherwise which, if unpaid, might become a lien or charge upon such
properties or any part thereof, and which lien or charges will have a material
adverse effect on the business of the Company; provided, however, that neither
the Company nor any Subsidiary shall be required to pay or cause to be paid any
such tax, assessment, charge, levy, or claim prior to institution of foreclosure
proceedings if the validity thereof shall concurrently be contested in good
faith by appropriate proceedings and if the Company shall have established
reserves deemed by the Company adequate with respect to such tax, assessment,
charge, levy, or claim.
IV.4 Maintenance of Existence and Properties. The Company will, and
will cause each Subsidiary to, keep its material properties in good repair,
working order, and condition, ordinary wear and tear excepted, so that the
business carried on may be properly conducted at all times in accordance with
prudent business management.
IV.5 SEC Reports. The Company will deliver to the Holder within 20 days
after it files them with the SEC, copies of its annual and quarterly reports and
of the information, documents, and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company is required or elects to file with the SEC pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934. The Company will timely comply
with its reporting and filing obligations under the applicable federal
securities laws.
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IV.6 Notice of Defaults. The Company will promptly notify the Holder in
writing of the occurrence of (i) any Event of Default under this Note, and (ii)
any event of default (or if any event of default would result upon any payment
with respect to this Note) with respect to any Indebtedness as such event of
default is defined therein or in the instrument under which it is outstanding,
permitting holders to accelerate the maturity of such Indebtedness.
IV.7 Mergers and Acquisitions. Without the consent of the Holder, the
Company or any Subsidiary will not dissolve, liquidate, consolidate, merge or
enter into a share exchange with or sell or transfer all or a substantial
portion of its assets to any Person. Notwithstanding the provisions of this
Section 4.7, Holder hereby agrees that any merger of Petro-Log, Inc. or
Production Well Services, Inc. into Boone Wireline Co., Inc. or the Company is
specifically permitted under this Note.
IV.8 Compliance with Laws. The Company will promptly comply with all
laws, ordinances and governmental rules and egulations to which it is subject.
ARTICLE V
Miscellaneous
V.1 Consent to Amendments. This Note may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if and only if the Company shall obtain the
written consent to such amendment, action or omission to act from the holders of
a majority of the aggregate principal amount of the Note.
V.2 Benefits of Note; No Impairment of Rights of Holder of Senior
Indebtedness. Nothing in this Note, express or implied, shall give to any
Person, other than the Company, Holder, and their successors any benefit or any
legal or equitable right, remedy or claim under or in respect of this Note.
V.3 Successors and Assigns. All covenants and agreements in this Note
contained by or on behalf of the Company and the Holder shall bind and inure to
the benefit of the respective successors and assigns of the Company and the
Holder.
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V.4 Restrictions on Transfer. Holder shall not transfer this Note
except (by the grant of a security interest) to its lender or lenders. As
between Holder and its lender or lenders, this Note is transferable in the same
manner and with the same effect as in the case of a negotiable instrument
payable to a specified person. Any lender to which Holder grants a security
interest in this Note shall be entitled to exercise all remedies to which it is
entitled by contract or by law, including (without limitation) transferring this
Note into its own name or into the name of any purchaser at any sale undertaken
in connection with enforcement by such lender of its remedies.
V.5 Notice; Address of Parties. Except as otherwise provided, all
communications to the Company or Holder provided for herein or with reference to
this Note shall be deemed to have been sufficiently given or served for all
purposes on the third business day after being sent as certified or registered
mail, postage and charges prepaid, to the following addresses: if to the
Company: Black Warrior Wireline Corp., 3748 Highway #45 North, Columbus,
Mississippi 39701 or at any other address designated by the Company in writing
to Holder; if to Holder: St. James Capital Partners, L.P., St. James Capital
Corp., 1980 Post Oak Boulevard, Suite 2030, Houston, Texas 77056, Attn: John L.
Thompson, or at any other address designated by Holder to the Company in
writing.
V.6 Separability Clause. In case any provision in this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions in such jurisdiction shall not in
any way be affected or impaired thereby; provided, however, such construction
does not destroy the essence of the bargain provided for hereunder.
V.7 Governing Law. This Note shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware (without regard to
principles of choice of law).
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V.8 Usury. It is the intention of the parties hereto to conform
strictly to the applicable laws of the State of Delaware and the United States
of America, and judicial or administrative interpretations or determinations
thereof regarding the contracting for, charging and receiving of interest for
the use, forbearance, and detention of money (referred to as "Applicable Law").
The Holder shall have no right to claim, to charge or to receive any interest in
excess of the maximum rate of interest, if any, permitted to be charged on that
portion of the amount representing principal which is outstanding and unpaid
from time to time by Applicable Law. Determination of the rate of interest for
the purpose of determining whether this Note is usurious under Applicable Law
shall be made by amortizing, prorating, allocating and spreading in equal parts
during the period of the actual time of this Note, all interest or other sums
deemed to be interest (referred to in this Section as "Interest") at any time
contracted for, charged or received from the Company in connection with this
Note. Any Interest contracted for, charged or received in excess of the maximum
rate allowed by Applicable Law shall be deemed a result of a mathematical error
and a mistake. If this Note is paid in part prior to the end of the full stated
term of this Note and the Interest received for the actual period of existence
of this Note exceeds the maximum rate allowed by Applicable Law, Holder shall
credit the amount of the excess against any amount owing under this Note or, if
this Note has been paid in full, or in the event that it has been accelerated
prior to maturity, Holder shall refund to the Company the amount of such excess,
and shall not be subject to any of the penalties provided by Applicable Law for
contracting for, charging or receiving Interest in excess of the maximum rate
allowed by Applicable Law. Any such excess which is unpaid shall be canceled.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on the date first above written.
BLACK WARRIOR WIRELINE CORP.
By: /s/ William L. Jenkins, President
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Exhibit 8
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") is made June 5, 1997, by and between Black Warrior Wireline Corp., a
Delaware corporation (the "Company"), and St. James Capital Partners, L.P., a
Delaware limited partnership (the "Purchaser").
WHEREAS, on the date hereof, Purchaser loaned the Company money and in
consideration thereof acquired from the Company a 9% Promissory Note in the
original principal amount of $2,000,000 and a 10% Promissory Note in the
original principal amount of $3,000,000;
WHEREAS, on the date hereof, the Purchaser acquired from the Company
Common Stock Purchase Warrants (collectively, the "Warrants") which may be
exercised to initially acquire 546,000 shares and 120,000 shares, respectively,
of the Company's Common Stock, par value $.0005 per share ("Common Stock"),
subject to adjustment (the "Shares");
WHEREAS, the Company wishes to grant the Purchaser certain registration
rights in respect of the Shares, as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the meanings
set forth below:
I.1 "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
I.2 "Holder" shall mean Purchaser and any transferee of any Warrants or
holder of any Shares issued upon exercise of any Warrants.
I.3 "Registrable Securities" shall mean (i) the Shares; and (ii) any
Common Stock issued or issuable at any time or from time to time in respect of
the Shares upon a stock split, stock dividend, recapitalization or other similar
event involving the Company until such Common Stock
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is sold pursuant to a Registration Statement or the exemption from registration
under Rule 144(k) (or successor Rule) under the Securities Act is available with
respect to the Shares.
I.4 The terms "register", "registered", and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.
I.5 "Registration Expenses" shall mean all expenses, other than Selling
Expenses (as defined below), incurred by the Company in complying with this
Registration Rights Agreement, including, without limitation, all registration,
qualification and filing fees, exchange listing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
I.6 "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
I.7 "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Purchaser and, except as set forth above, all fees and disbursements of
counsel for the Purchaser.
I.8 "Underwritten Public Offering" shall mean a public offering in
which the Common Stock is offered and sold on a firm commitment basis through
one or more underwriters, all pursuant to an underwriting agreement between the
Company and such underwriters.
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ARTICLE II
Registration Rights
II.1 Demand Registration.
II.1.1 On demand of Purchaser, 1997, the Company shall file
with the Securities and Exchange Commission a shelf registration statement
covering the resale of the Shares on Form S-1, S-2, or S-3 (the "Registration
Statement") which shall remain effective for the lesser of: (i) 3 years, or (ii)
until such time as the Holder does not beneficially own any Registrable
Securities. The Company shall use its reasonable best efforts to cause such
Registration Statement to become effective as soon as practicable and to cause
the Shares to be qualified in such state jurisdictions as the Purchaser may
request.
II.1.2 Except as set forth herein, the Company shall take all
reasonable steps necessary to keep the Registration Statement current and
effective until all Shares have been distributed by the Purchaser including any
necessary refiling of additional registration statements.
II.1.3 The Company shall be entitled to require that the
parties refrain from effecting any public sales or distributions of the
Registrable Securities pursuant to a Registration Statement that has been
declared effective by the Commission or otherwise, if the board of directors of
the Company reasonably determines that such public sales or distributions would
interfere in any material respect with any transaction involving the Company
that the board of directors reasonably determines to be material to the Company.
The board of directors shall, as promptly as practicable, give the Purchaser
written notice of any such development. In the event of a request by the board
of directors of the Company that the Purchaser refrain from effecting any public
sales or distributions of the Registrable Securities, the Company shall be
required to lift such restrictions regarding effecting public sales or
distributions of the Registrable Securities as soon as reasonably practicable
after the board of directors shall reasonably determine public sales or
distributions by the Purchaser of the Registrable Securities shall not interfere
with such transaction, provided, that in no event shall any requirement that the
Purchasers refrain from effecting public sales or distributions in the
Registrable Securities extend for more than 90 days.
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II.2 Piggyback Registration.
II.2.1 Subject to the terms hereof, if: (i) at any time or
from time to time the Company or any shareholder of the Company shall determine
to register any of its securities (except for registration statements on Form
S-8 or relating to employee benefit plans or exchange offers), either for its
own account or the account of a security holder; and (ii) the Purchaser is the
beneficial owner of any Registrable Securities; the Company will promptly give
to the Purchaser written notice thereof no less than 10 days prior to the filing
of any registration statement; and include in such registration (and any related
qualification under blue sky laws or other compliance), and in the underwriting
involved therein, if any, such Registrable Securities as Purchaser may request
in a writing delivered to the Company within 5 days after Purchaser's receipt of
Company's written notice.
II.2.2 The Purchaser may participate in any number of
registrations until all of the Registrable Securities held by such Purchaser
have been distributed pursuant to a registration.
II.2.3 If any registration statement is an Underwritten Public
Offering, the right of the Purchaser to registration pursuant to this Section
shall be conditioned upon such Purchaser's participation in such reasonable
underwriting arrangements as the Company shall make regarding the offering, and
the inclusion of Registrable Securities in the underwriting shall be limited to
the extent provided herein. The Purchaser and all other shareholders proposing
to distribute their securities through such underwriting shall (together with
the Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section, if the managing underwriter
concludes in its reasonable judgment that the number of shares to be registered
for selling shareholders (including the Purchaser) would materially adversely
effect such offering, the number of Shares to be registered, together with the
number of shares of Common Stock or other securities held by other shareholders
proposed to be registered in such offering, shall be reduced on a pro rata basis
based on the number of Shares proposed to be sold by the Purchaser as compared
to the number of shares proposed to be sold by all shareholders. If the
Purchaser disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter, delivered not less than ten days before the effective date. The
Registrable Securities excluded by the managing underwriter or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 120 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
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II.2.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section prior to the
effectiveness of such registration whether or not the Purchaser has elected to
include securities in such registration.
II.3 Expenses of Registration. All Registration Expenses shall be borne
by the Company. Unless otherwise stated herein, all Selling Expenses relating to
securities registered on behalf of the Purchaser shall be borne by the
Purchaser.
II.4 Best Registration Rights. If, on or after the date of this
Registration Rights Agreement, the Company grants to any person with respect to
any security issued by the Company or any of its Subsidiaries registration
rights that provide for terms that are in any manner more favorable to the
holder of such registration rights than the terms granted to the Purchaser (or
if the Company amends or waives any provision of any Agreement providing
registration rights of others or takes any other action whatsoever to provide
for terms that are more favorable to other holders than the terms provided to
the Purchaser) then this Registration Rights Agreement shall immediately be
deemed amended to provide the Purchaser with any (or all) of such more favorable
terms as the Purchaser shall elect to include herein.
II.5 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the Purchaser advised in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof.
At its expense, the Company will:
II.5.1 Prepare and file with the Commission a registration
statement with respect to such securities and use its commercially reasonable
efforts to cause such registration statement to become and remain effective
until the distribution described in such registration statement has been
completed;
II.5.2 Furnish to each underwriter such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such underwriter
may reasonably request in order to facilitate the public sale of the shares by
such underwriter, and promptly furnish to each underwriter and the Purchaser
notice of any stop-order or similar notice issued by the Commission or any state
agency charged with the regulation of securities, and notice of any Nasdaq or
securities exchange listing.
II.5.3 Use its best efforts to cause the Shares to be listed
on the Nasdaq SmallCap Market and each Securities Exchange on which the Common
Stock is approved for listing.
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II.6 Indemnification.
II.6.1 To the extent permitted by law, the Company will
indemnify the Purchaser, each of its officers and directors and partners, and
each person controlling the Purchaser within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, to the extent such
expenses, claims, losses, damages or liabilities arise out of or are based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other similar
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse Purchaser, each of
its officers and directors and partners, and each person controlling Purchaser,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that the indemnity contained herein shall not apply
to amounts paid in settlement of any claim, loss, damage, liability or expense
if settlement is effected without the consent of the Company (which consent
shall not unreasonably be withheld); provided, further, that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by Purchaser, such
controlling person or such underwriter specifically for use therein.
Notwithstanding the foregoing, insofar as the foregoing indemnity relates to any
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement becomes effective or in the final prospectus filed with the Commission
pursuant to the applicable rules of the Commission or in any supplement or
addendum thereto, the indemnity agreement herein shall not inure to the benefit
of any underwriter if a copy of the final prospectus filed pursuant to such
rules, together with all supplements and addenda thereto, was not furnished to
the person or entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Securities Act.
II.6.2 To the extent permitted by law, the Purchaser will, if
securities held by the Purchaser are included in the securities as to which such
registration, qualification or compliance is
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being effected pursuant to terms hereof, indemnify the Company, each of its
directors and officers, each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of Section 15 of the Securities Act, and
each other person selling the Company's securities covered by such registration
statement, each of such person's officers and directors and each person
controlling such persons within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
Purchaser of any rule or regulation promulgated under the Securities Act
applicable to Purchaser and relating to action or inaction required of Purchaser
in connection with any such registration, qualification or compliance, and will
reimburse the Company, such other persons, such directors, officers, persons,
underwriters or control persons for any legal or other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Purchaser specifically for use therein;
provided, however, that the indemnity contained herein shall not apply to
amounts paid in settlement of any claim, loss, damage, liability or expense if
settlement is effected without the consent of such Purchaser (which consent
shall not be unreasonably withheld). Notwithstanding the foregoing, the
liability of such Purchaser under this subsection (b) shall be limited in an
amount equal to the net proceeds from the sale of the shares sold by Purchaser,
unless such liability arises out of or is based on willful conduct by Purchaser.
In addition, insofar as the foregoing indemnity relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in the preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
becomes effective or in the final prospectus filed pursuant to applicable rules
of the Commission or in any supplement or addendum thereto, the indemnity
agreement herein shall not inure to the benefit of the Company or any
underwriter if a copy of the final prospectus filed pursuant to such rules,
together with all supplements and addenda thereto, was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act.
II.6.3 Notwithstanding the foregoing paragraphs (a) and (b) of
this Section, each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the
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defense of such claim or litigation, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Agreement
unless the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action and provided further, that
the Indemnifying Party shall not assume the defense for matters as to which
there is a conflict of interest or as to which the Indemnifying Party is
asserting separate or different defenses, which defenses are inconsistent with
the defenses of the Indemnified Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement without the consent of each Indemnifying
Party.
II.6.4 If the indemnification provided for in this Section is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and all shareholders offering
securities in the offering (the "Selling Security Holders") on the other from
the offering of the Company's securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Selling
Security Holders on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Selling Security Holders on the other shall be
the net proceeds from the offering (before deducting expenses) received by the
Company on the one hand and the Selling Security Holders on the other. The
relative fault of the Company on the one hand and the Selling Security Holders
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Selling Security Holders and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Selling Security Holders agree that
it would not be just and equitable if contribution pursuant to this Section were
based solely upon the number of entities from whom contribution was requested or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section. The amount paid or payable by
an Indemnified Party as a result of the losses, claims, damages and liabilities
referred to above in this Section shall be deemed to include any legal or
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other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim, subject to the provisions
hereof. Notwithstanding the provisions of this Section, no Selling Security
Holder shall be required to contribute any amount or make any other payments
under this Agreement which in the aggregate exceed the proceeds received by such
Selling Security Holder. No person guilty of fraudulent misrepresentation
(within the meaning of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
II.7 Certain Information.
II.7.1 The Purchaser agrees, with respect to any Registrable
Securities included in any registration, to furnish to the Company such
information regarding Purchaser, the Registrable Securities and the distribution
proposed by the Purchaser as the Company may reasonably request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to herein.
II.7.2 The failure of the Purchaser to furnish the information
requested pursuant to this Section shall not affect the obligation of the
Company to the other Selling Security Holders who furnish such information
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the legality of the Registration Statement or
the underlying offering.
II.8 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of Restricted Securities (used herein as defined in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to use
its best lawful efforts to:
II.8.1 Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
II.8.2 File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at all times during which the Company is subject to such reporting
requirements); and
II.8.3 So long as the Purchaser owns any Restricted Securities
(as defined in Rule 144 promulgated under the Securities Act), to furnish to
Purchaser forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the
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Company is subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as the Purchaser may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Purchaser to
sell any such securities without registration.
II.9 Transferability. The rights conferred by this Agreement shall be
freely transferable to a recipient of Registrable Securities.
II.10 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Delaware.
II.11 Entire Agreement; Amendment. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject hereof. This Agreement, or any provision hereof, may be amended, waived,
discharged or terminated upon the written consent of the Company and the
Purchaser.
II.12 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
including Federal Express or similar courier service, addressed (a) if to the
Purchaser: St. James Capital Partners, L.P., _St. James Capital Corp., 5599 San
Felipe, Suite 301, Houston, Texas 77056, or at such other address as the
Purchaser shall have furnished to the Company in writing, or (b) if to the
Company: to Black Warrior Wireline Corp., 3748 Highway #45 North, Columbus,
Mississippi 39701, or at such other address as the Company shall have furnished
to the Purchaser. Each such notice or other communication shall for all purposes
of this Agreement be treated as effective upon receipt.
II.13 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
to this Agreement shall impair any such right, power or remedy of such party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party to this Agreement, shall be cumulative and not
alternative.
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II.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
II.15 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
II.16 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
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THE COMPANY'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Company has executed this agreement effective
upon the date first set forth above.
BLACK WARRIOR WIRELINE CORP.
By: /s/ William L. Jenkins, President
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THE PURCHASER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Purchaser has signed this Agreement as of the
date first written above.
ST. JAMES CAPITAL PARTNERS, L.P.
By: St. James Capital Corp., its General Partner
By: /s/ John L. Thompson, President
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