AGREEMENT FOR PURCHASE AND SALE
This Agreement for Purchase and Sale (the "Agreement"), is made and
entered as of January 23, 1998, by and between Black Warrior Wireline Corp., a
Delaware corporation ("Black Warrior"), and St. James Capital Partners, L.P., a
Delaware limited partnership, and its assigns or transferees pursuant to Section
5.5 ("Purchaser"), and sets forth the terms and conditions of the sale and
purchase of an 8% Convertible Promissory Note in the original principal amount
of up to $10,000,000, 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 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 (i) that
certain Borrower Security Agreement dated as of June 5, 1997, between Seller and
Purchaser, as amended on October 10, 1997, and which is amended and modified
pursuant to that certain Second Amendment and Ratification of Borrower Security
Agreement substantially in the form attached hereto as Exhibit B-1 (the "Second
Amendment of Borrower Security Agreement"), and (ii) that certain Subsidiary
Security Agreement (herein so called) dated as of June 5, 1997, between the
subsidiaries of Black Warrior and Purchaser, as amended on October 10, 1997, and
which is hereby amended and modified pursuant to that certain Second Amendment
and Ratification of Subsidiary Security Agreement, substantially in the form
attached hereto as Exhibit B-2 (the "Second 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, as
amended on October 10, 1997, and which is amended and modified pursuant to that
certain Second Amendment and Ratification of Subsidiary Guaranty substantially
in the form attached hereto as Exhibit B-3 (the "Second 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 20,000 shares of Seller's common stock, par value $0.0005 per share
(the "Common Stock"), for each $100,000 advanced by Purchaser to Black Warrior
pursuant to the Note, 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 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 on October 10, 1997, and as
amended and modified by that certain Amendment No. 2 to Registration Rights
Agreement substantially in the form attached hereto as Exhibit D (the "Amendment
No. 2 to Registration Rights Agreement").
WHEREAS, this Agreement, the Note, the Second Amendment to Security
Agreement, the Second Amendment to Subsidiary Security Agreement, the Second
Amendment to Subsidiary Guaranty, the Warrants, and the Amendment No. 2 to
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 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 Black Warrior, $10,000,000, 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
$1,000,000 being paid at the time of the execution of the Asset Purchase
Agreement (the "Phoenix Agreement") between Seller and Phoenix Drilling
Services, Inc., and an additional $1,000,000 being paid on March 1, 1998 if the
acquisition made the subject of the Phoenix Agreement has not been closed by
such date. 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, by check or wire
transfer to the account of Black Warrior, $100,000 (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"). It is the intention
of the parties that the Warrant Consideration shall be paid in multiple payments
with $10,000 being paid at Closing, and with $1,000 being paid for each
additional $100,000 advanced by Purchaser to Seller hereunder.
1.4 Origination Fee. Seller agrees to pay Purchaser at Closing a one-time
origination fee in the amount of $125,000 (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 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 60 days after a default by Seller in its obligations
to the Senior Lender(s).
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
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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 $7,500,000.
1.8 Future Advances. The Purchaser shall make additional advances of the
Note Consideration and Warrant Consideration upon delivery by the Seller of the
following:
(a) a written request for such advance at the address for the
Purchaser in Section 5.2 hereof, setting forth (i) the amount requested,
(ii) the account to which such advance is to be funded, (iii) the date
for which such advance is requested and (iv) the proposed use of the
proceeds of such advance, which shall be satisfactory to Purchaser in its
reasonable discretion;
(b) a certificate of an officer of Seller certifying that, as of
the date the advance is requested, no Event of Default hereunder has
occurred, that Seller is in compliance with all covenants herein and that
all of the representations and warranties set forth herein are true and
correct as of such date;
(c) a Warrant in favor of Seller, executed by Purchaser, for a
number of shares equal of Common Stock equal to 20,000 shares times the
multiple of $100,000 represented by the requested advance;
(d) such security documents respecting the assets of the Seller or
its Active Subsidiary as may be reasonably requested by Purchaser;
(e) such other documents, certificates, agreements or instruments
as may be reasonably requested by Purchaser in connection with any or all
of the foregoing; and
(f) payment by Seller of any and all expenses or other amount due
and owing to Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
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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. Each of Black Warrior and
the Active Subsidiary 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. Each of Black Warrior
and the Active Subsidiary is licensed and qualified to do business as a foreign
corporation 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.
2.2 Authority; No Defaults. Each of Black Warrior and the Active
Subsidiary 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
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December 31, 1996, together with all amendments thereto, Seller's
quarterly report on Form 10-Q for the fiscal quarters ended June 30, 1997
and September 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.
(b) The financial statements of Seller included in the 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 September 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 (a)
12,500,000 shares of Common Stock of which, as of the date hereof, there are
2,964,785 shares issued and outstanding, and (b) 2,500,000 shares of preferred
stock of which, as of the date hereof, there are no 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 760,000
shares of Common Stock issuable on issuance of stock options to employees,
officers, directors and other persons, and the Board of Directors of Black
Warrior has approved amendments to the plans in respect of such options to
increase the shares available thereunder to an aggregate of 1,260,000 shares of
Common Stock, subject to the approval of the shareholders of Black Warrior, and
(ii) an aggregate of 1,707,250 shares of Common Stock issuable on the exercise
of 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
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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.
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 September 30, 1997,
or (b) incurred in the ordinary course of business since September 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
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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.
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
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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 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 (a)
to fund acquisitions (all subject to the Purchaser's prior review and approval)
related to (i) the Phoenix Agreement and (ii) the proposed acquisition of, or of
assets from, Performance Drilling Specialists, Inc., a Colorado corporation,
Petro Wireline Services, a division of Nygren Investment Company, a New Mexico
limited partnership, and Tiger Cased Hole Services, Inc., a California
corporation, (b) to fund the 1998 company capital expenditure program and (c) to
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 and that certain Agreement
for Purchase and Sale dated October 10, 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
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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.
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
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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
Agreement dated as of June 5, 1997, as amended on October 10, 1997, and on the
date hereof, 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 June 5, 1997, as amended on October 10, 1997, and on the
date hereof 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 and that
certain $2,900,000 7% Convertible Promissory Note dated October 10, 1997
(together, the "Original Convertible Notes"). Purchaser hereby covenants and
agrees to promptly convert the Original Convertible Notes pursuant to its terms,
but only if and when (i) Seller has filed, no later than April 15, 1998, a
registration statement covering the shares of Common Stock issuable upon (a)
conversion of the Original Convertible Notes, (b) exercise of the Warrants dated
as of June 5, 1997, to purchase 546,000 and 120,000 shares of Common stock,
respectively, and the Warrants dated October 10, 1997, to purchase 725,000
Shares of Common Stock, (c) conversion of the Note and (d) exercise of the
Warrants and (ii) such registration statement has been declared effective by the
SEC.
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:
4.3.1 copies, certified by the Secretary of State of Delaware as of a
recent date, 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 such date, and copies, certified by the
Secretary of Active Subsidiary as of the Closing Date, of the charter of Active
Subsidiary and all amendments thereto;
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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 No. 2 to Registration Rights Agreement;
4.3.8 the Second Amendment of Security Agreement;
4.3.9 the Second Amendment of Subsidiary Security Agreement;
4.3.10 the Second 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.
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
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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 or that
certain Agreement for Purchase and Sale dated October 10, 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.
(a) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by Seller (whether by operation of law
or otherwise) without the prior written consent of the Purchaser.
(b) Purchaser may assign its rights and obligations hereunder, under
the Note, the Warrants or any other Transaction Document, to any other entity
that is an affiliate of either Purchaser or the general partner of Purchaser,
subject to the terms hereof and upon prior written notice to Seller. Each such
assignee (an "Assignee") shall execute an Assignment and Acceptance
substantially in the form of Exhibit E. Upon the execution of such Assignment
and Acceptance by such Assignee, (i) the Assignee shall be a "Purchaser"
hereunder and, to the extent provided in the Assignment and Acceptance, shall
have the rights and obligations of a Purchaser hereunder, and (ii) the assigning
Purchaser (an "Assignor") shall, to the extent provided in the Assignment and
Acceptance, be released from its obligations hereunder.
(c) An Assignor hereunder shall, if requested by the Assignee,
deliver the Note
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and Warrants in favor of such Assignor to the Seller, and the Seller shall issue
replacement Notes and Warrants in favor of the Assignor and the Assignee in the
amounts and for such shares as are indicated in the Assignment and Acceptance.
The replacement Warrants shall be issued for an exercise price per share equal
to the exercise price set forth in the Warrants to be delivered to Seller under
this Section 5.5(c).
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 Note except by the grant of a
security interest to its lender or lenders, or as provided by Section 5.5
hereof. 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.
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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.
By:
-----------------------------------
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:
-----------------------------------
John Thompson, President
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