AGREEMENT FOR PURCHASE AND SALE
This Agreement for Purchase and Sale (the "Agreement"), is made and entered
as of October 9, 1997, by and between Black Warrior Wireline Corp., a Delaware
corporation ("Black Warrior"), 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 $2,900,000 7% Convertible Promissory Note,
substantially in the form attached hereto as Exhibit A (the "Note"). For
purposes of this Agreement, the term "Seller" is defined to mean Black Warrior
and the Active Subsidiary (defined in Section 2.8 below).
WHEREAS, Seller and Purchaser are parties to that certain agreement in
principal relating to the transaction, which agreement was executed by Seller
and Purchaser on September 10, 1997, setting forth the agreement of the parties
regarding the major terms of the transaction, which the parties desire to
further formalize and record by this Agreement.
WHEREAS, Seller desires to issue and sell to Purchaser, and Purchaser
desires to purchase and accept from Seller, the Note in the form of Exhibit A,
on the terms and subject to the conditions set forth herein.
WHEREAS, the obligations of Seller under the Note are secured by that
certain Borrower Security Agreement dated as of June 5, 1997, between Seller and
Purchaser, which is hereby amended and modified pursuant to that certain
Amendment and Ratification of Borrower Security Agreement substantially in the
form attached hereto as Exhibit B-1 (the "Amendment of Borrower Security
Agreement"), by that certain Subsidiary Security Agreement (herein so called)
dated as of June 5, 1997, between the subsidiaries of Black Warrior and
Purchaser, which is hereby amended and modified pursuant to that certain
Amendment and Ratification of Subsidiary Security Agreement, substantially in
the form attached hereto as Exhibit B-2 (the "Amendment of Subsidiary Security
Agreement"), and are guaranteed by that certain Subsidiary Guaranty dated as of
June 5, 1997, by the subsidiaries of Black Warrior in favor of Purchaser, which
is amended and modified pursuant to that certain Amendment and Ratification of
Subsidiary Guaranty substantially in the form attached hereto as Exhibit B-3
(the "Amendment of Subsidiary Guaranty").
WHEREAS, Seller and Purchaser desire to make certain representations,
warranties and agreements in connection with the purchase and sale of the Note
contemplated hereby.
WHEREAS, Seller desires to sell to Purchaser warrants ("Warrants") to
purchase 725,000 shares 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 form of Warrants attached hereto as Exhibit C.
WHEREAS, Seller desires to grant to Purchaser certain registration rights
in respect of the shares of Seller's Common Stock that may be acquired on
conversion of the 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 dated as of June 5, 1997, as amended and modified
by that certain Amendment No. 1 to Registration Rights Agreement substantially
in the form attached hereto as Exhibit D (the "Amendment to Registration Rights
Agreement").
WHEREAS, this Agreement, the Note, the Amendment to Security Agreement, the
Amendment to Subsidiary Security Agreement, the Amendment to Subsidiary
Guaranty, the Warrants, and the Amendment to Registration Rights Agreement are
collectively referred to herein as the "Transaction Documents".
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 Note and the Warrants. Subject to the terms of
this Agreement, Seller agrees to and does hereby issue, sell and deliver the
Note and the Warrants to Purchaser at the Closing (as defined herein), and
Purchaser agrees to and does hereby purchase and accept the Note and the
Warrants from Seller.
1.2 Consideration for Purchase of the Note. Subject to the terms of this
Agreement, Purchaser hereby agrees to pay to Seller, by check or wire transfer
to the account of Seller, $2,900,000, as the consideration for the purchase of
the Note (the "Note Consideration"). It is the intention of the parties that the
Note Consideration shall be advanced in multiple advances, with $2,900,000 being
paid at the time of the closing of Seller's acquisition of Diamondback
Directional, Inc. Interest under the Note 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 Black Warrior, $36,250 (or $0.05 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 Origination Fee. Seller agrees to pay Purchaser at Closing a one-time
origination fee in the amount of $36,250 (the "Origination Fee") for the payment
of the Note Consideration.
1.5 Subordination to Future Financing. Purchaser agrees to enter into
subordination agreements with senior secured lenders that provide financing to
Seller in an amount not to exceed $4,500,000 with respect to a term loan and
$3,000,000 with respect to a revolving credit facility (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).
2
1.6 Future Financings. If Seller, at any time so long as the 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 from 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
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.
1.7 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.
3
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 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 10-K") for the fiscal year ended
December 31, 1996, together with all amendments thereto, Seller's quarterly
report on Form 10-Q for the fiscal quarters ended March 31, 1997 and June 30,
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 required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4
(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 June 30, 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. Black Warrior has authorized capital stock of
12,500,000 shares of Common Stock of which, as of the date hereof, there are
2,250,216 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, Black Warrior has reserved for issuance (i) an
aggregate of 653,750 shares of Common Stock issuable on issuance of stock
options to employees, officers, directors and other persons and (ii) an
aggregate of 1,202,750 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) and (ii),
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 Black
Warrior or contracts, commitments, understandings or arrangements by which Black
Warrior 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
Warrants 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 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. There are 151 shares of capital stock of Active
Subsidiary issued and outstanding, all of which has been pledged to Purchaser.
5
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 10-Q for the fiscal quarter ended June 30, 1997, or
(b) incurred in the ordinary course of business since June 30, 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 (iv) 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;
(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.
6
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, 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.
7
2.18 Transactions with Affiliates and Stockholders. Except as set forth on
Schedule 2.18, no stockholder, officer, director 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 to (i)
fund Seller's acquisition of the assets of Diamondback Directional, Inc., a
Texas corporation (the "Acquisition"); and (ii) pay attorneys' fees and
transactional costs in connection with this Agreement and all agreements
contemplated hereby, as well as pursuant to that certain Agreement for Purchase
and Sale dated June 5, 1997. 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.
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 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.
8
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.
3.3 Conversion of Note; Registration of Securities. The parties hereto
recognize and acknowledge that Purchaser previously purchased from Seller that
certain $2,000,000 9% Convertible Promissory Note dated June 5, 1997 (the
"Original Convertible Note"). Purchaser hereby covenants and agrees to promptly
convert the Original Convertible Note pursuant to its terms, but only if and
when (i) Seller has filed, within 60 days of the date hereof, a registration
statement covering the shares of Common Stock issuable upon (a) conversion of
the Original Convertible Note, (b) exercise of the Warrants dated as of June 5,
1997, to purchase 546,000 and 120,000 shares of Common stock, respectively, (c)
conversion of the Note and (d) exercise of the Warrants and (ii) such
registration statement has been declared effective by the Securities and
Exchange Commission.
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 Note and the Warrants (the "Closing")
will take place on a date agreed to by the parties (the "Closing Date"), at the
offices of Gardere Wynne 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 Acquisition
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:
9
4.3.1 copies, certified by the Secretary of State of Delaware as of May
27, 1997, of the charter of Black Warrior and all amendments thereto and a
certificate of an Officer of Black Warrior certifying that there have been no
amendments to such charter since May 27, 1997, and copies, certified by the
Secretary of Active Subsidiary as of the Closing Date, of the charter of Active
Subsidiary and all amendments thereto;
4.3.2 copies, certified by the Secretary of each of Black Warrior and
Active Subsidiary as of the Closing Date, of the bylaws of each of Black Warrior
and Active Subsidiary, respectively, and all amendments thereto;
4.3.3 copies, certified by a certificate of the Secretary of each of
Black Warrior and Active Subsidiary as of the Closing Date, of resolutions duly
adopted by the board of directors of each of Black Warrior and Active
Subsidiary, respectively, authorizing the execution and delivery by each of
Black Warrior and Active Subsidiary, respectively, of the Transaction Documents
and all other agreements attached hereto as Exhibits or contemplated herein, the
completion of the sale of the Note 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 Note and Warrants;
4.3.4 the Agreement;
4.3.5 the Note;
4.3.6 the Warrants;
4.3.7 the Amendment of Registration Rights Agreement;
4.3.8 the Amendment of Security Agreement;
4.3.9 the Amendment of Subsidiary Security Agreement;
4.3.10 the Amendment of Subsidiary Guaranty;
4.3.11 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, 2.7 and 2.8;
4.3.12 a certificate of an Officer of each of Black Warrior and Active
Subsidiary to the effect that the representations and warranties of each of
Black Warrior and Active Subsidiary, respectively, 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 each of Black Warrior and Active
Subsidiary shall have performed and complied with all covenants required by this
Agreement to be performed or complied with by each before the Closing Date; and
4.3.13 a letter in favor of Purchaser's lender, in the form of that
attached hereto as Exhibit F.
10
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: William L. Jenkins
(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,
provided, however, this Section 5.3 is not intended to supersede or replace that
certain Agreement for Purchase and Sale dated June 5, 1997 (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 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.
11
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 Note
except by the grant of a security interest to its lender or lenders. As between
Purchaser and its lender or lenders, the Note is 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 the Note shall be entitled to exercise all remedies to which it is
entitled by contract or by law, including (without limitation) transferring the
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.
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.
12
SELLER'S SIGNATURE PAGE
IN WITNESS WHEREOF, Seller has signed this Agreement as of the date first
written above.
BLACK WARRIOR WIRELINE CORP.
By:
William L. Jenkins, President
13
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:
Jay Brown, Vice President