Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, is made and entered into as of February
2, 1999, by and among CLX Energy, Inc. (the "Company"), a Colorado
corporation, and James L. Burkhart, Trustee of the James L. Burkhart Living
Trust ("JLB").
RECITALS
A. Company proposes to issue and sell to the Purchaser, for a total
purchase price of Two Hundred Seventy-Five Thousand and no/100 Dollars
($275,000), such number of shares (the "Shares") of $0.01 par value Common
Stock of Company as will represent fifty-five percent (55%) of all issued and
outstanding Common Stock of Company; and
B. The Purchaser desires to purchase the Shares in accordance with the
terms and provisions of this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in reliance on the representations and warranties of each
party to the other, and in consideration of the covenants and agreements of
the parties set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, unless the context
requires a different meaning, the following terms have the meanings indicated:
1.1.1. "Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
1.1.2. "Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
1.1.3. "Agreement" means this Stock Purchase Agreement and the
Exhibits and Disclosure Schedule hereto, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
1.1.4. "Best Efforts" means the taking of all commercially
reasonable steps to cause or prevent any event or condition which would have
been taken in similar circumstances by a reasonably prudent business person
engaged in a similar business for the advancement or protection of his own
economic interest in light of the consequences of failure to cause or prevent
the occurrence of such event or condition.
1.1.5. "JLB" means James L. Burkhart, Trustee of the James L.
Burkhart Living Trust.
1.1.6. "Capital Stock" means any and all shares, interests,
participation or other equivalents (however designated) representing ownership
(whether direct, indirect or contingent) of Company, including without
limitation the Common Stock and any other class of capital stock of Company.
1.1.7. "Closing" means the execution and delivery of this
Agreement and all agreements and documents contemplated or required by this
Agreement to be executed or delivered contemporaneously herewith, the delivery
of $275,000 by the Purchaser to Company in immediately available funds and the
consummation of the transactions contemplated hereby, including the issuance
and sale of the Common Stock hereunder.
1.1.8. "Closing Date" means the date on which the Closing is
consummated.
1.1.9. "Commission" means the Securities and Exchange Commission
or any similar agency having jurisdiction to enforce the Act.
1.1.10. "Company" means CLX Energy, Inc., a Colorado corporation.
1.1.11. "Common Stock" means the Common Stock of Company, with a
par value of $0.01 per share.
1.1.12. "Disclosure Schedule" means the document attached hereto
containing certain exceptions from, and disclosures relating to, the
representations and warranties of Company set forth in Article III hereof,
which is hereby incorporated by reference and made a part hereof.
1.1.13. "Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
1.1.14. "Purchaser" means JLB.
1.1.15. "Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission
promulgated thereunder.
1.1.16. "Shares" means the 5,773,973 shares of Common Stock of the
Company, par value $0.01 per share, to be issued and sold by the Company to
the Purchaser hereunder.
1.1.17. "State" means each of the states of the United States, the
District of Columbia, the Commonwealth of Puerto Rico and other possessions
and territories of the United States.
1.1.18. "State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
ARTICLE II
ISSUANCE AND PURCHASE OF STOCK
Section 2.1. Issuance, Purchase and Sale of the Shares. In exchange
for the payment by the Purchaser to Company of the aggregate amount of Two
Hundred Seventy-Five Thousand and no/100 Dollars ($275,000), Company agrees to
issue and sell the Shares to the Purchaser, and the Purchaser agrees to
purchase the Shares from Company on the Closing Date.
Section 2.2. Payment. Payment for the Shares shall be made by the wire
transfer of $275,000 of immediately available funds by the Purchaser to
Company at Closing.
Section 2.3. Closing. The Closing shall occur at 10:00 a.m., local
time, on February 2, 1999, at the offices of Company or at such other time and
place to which the parties may agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Company. Company
represents and warrants to each Purchaser as follows:
3.1.1. Organization, Standing, etc. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado. Company is qualified and in good standing as a foreign
corporation in each State where the character of its operations or its
properties make such qualification necessary. Company has furnished the
Purchaser with true, correct and complete copies of its Certificate of
Incorporation and Bylaws.
3.1.2. Power and Authority. Company has all requisite corporate
power and authority to own its assets and to carry on its business as
presently conducted. Company has all requisite corporate power and authority
(a) to execute, deliver and perform its obligations under this Agreement, (b)
to issue the Shares, and (c) to execute, deliver and perform its obligations
under all other agreements and instruments executed and delivered by Company
pursuant to or in connection with this Agreement.
3.1.3. Execution and Enforceability. This Agreement has been duly
and validly executed and delivered by Company and constitutes the valid and
binding agreement of Company enforceable in accordance with its terms (except
as enforceability may be limited by bankruptcy, insolvency, reorganization and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and that the remedy of specific performance and
injunctive relief and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and except as rights to indemnity and
contribution hereunder may be limited by federal or State securities laws).
3.1.4. Capitalization. The authorized Capital Stock of Company
will consist of, on the Closing Date, (a) 50,000,000 shares of Common Stock,
par value $0.01 per share, of which 10,498,132 shares (including the Shares)
will be issued and outstanding at Closing and (b) 2,000,000 shares of Series A
Preferred Stock, par value $0.01 per share, none of which will be issued or
outstanding at Closing. All of the issued and outstanding shares of Common
Stock of Company are validly issued and fully paid and nonassessable. Except
as set forth in Section 3.1.4 of the Disclosure Schedule, there are no
outstanding subscriptions, options, warrants, preemptive or other rights,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued Capital Stock or other securities of
Company, or otherwise obligating Company to issue any securities. Upon
issuance pursuant to this Agreement, the Shares shall be validly issued, fully
paid and non-assessable. Except as set forth in Section 3.1.4 of the
Disclosure Schedule, there are no existing or contemplated voting trusts or
other agreements or understandings with respect to the voting of the Capital
Stock of Company to which Company is a party or of which Company has
knowledge. Upon issuance of the Shares pursuant to this Agreement, the
holders of the Shares, taken as a whole, will hold fifty-five percent (55%) of
the total number of shares of Common Stock outstanding (after taking into
account all options, warrants, etc., as if the same had been exercised or
otherwise converted to Common Stock, other than such options described in
Section 3.1.4 of the Disclosure Schedule as will survive the Closing) and will
be entitled to elect, at the next stockholders' meeting, the entire Board of
Directors of Company.
3.1.5. Subsidiaries. Except as set forth in Section 3.1.5 of the
Disclosure Schedule, Company has no subsidiaries or Affiliates and does not
otherwise own or control, directly or indirectly, any equity interest in any
Person.
3.1.6. Financial Statements. Set forth in Section 3.1.6 of the
Disclosure Schedule are the following financial statements of Company: A
Balance Sheet as of September 30, 1998 and Statements of Income for the fiscal
year ended September 30, 1998. All such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied and are complete and correct in all material respects.
The balance sheets present fairly the financial position of Company as of the
respective dates thereof, and the statements of income included therein
present fairly the results of operations of Company for the periods covered
thereby. Since September 30, 1998, (a) there has been no material adverse
change in the financial condition or business of Company and (b) Company has
not incurred any material obligation or liability other than those incurred in
the ordinary course of business of Company.
3.1.7. Conflicting Agreements and Other Matters. The execution,
delivery and performance by Company of this Agreement, all other agreements
and instruments to be executed and delivered by Company pursuant hereto or in
connection herewith and compliance by Company with the terms and provisions
hereof and thereof do not and will not (a) violate, in any material respect,
any provision of any material law, rule or regulation, order, writ, judgment,
injunction, statute, decree, determination or award having applicability to
Company or its assets; (b) conflict with or result in a breach of or
constitute a default under any provision of the Certificate of Incorporation
or Bylaws of Company; (c) require any consent, approval or notice under
(except as previously obtained or made) or result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture or loan or credit agreement, license, or any other agreement or
instrument or obligation to which Company is a party or by which Company is
bound; or (d) result in, or require the creation or imposition of, any lien
upon or with respect to any of the properties now owned by Company, except
such liens as would not have a material adverse effect on the financial
condition, properties, assets, business or prospects of Company.
3.1.8. Litigation, Proceedings. Except as set forth in Section
3.1.8 of the Disclosure Schedule, there is no action, suit, proceeding or, to
the knowledge of Company, investigation pending or, to the knowledge of
Company, threatened against or affecting Company or any of its officers,
directors, assets or properties, before or by any court, governmental body or
regulatory agency or authority (federal, State, local or foreign) and, to the
knowledge of Company, there is no valid basis for any such action, suit,
proceeding or investigation.
3.1.9. Defaults. Company is not (a) in violation of its
Certificate of Incorporation or Bylaws or (b) in default under or in violation
of any note, bond, mortgage, indenture or loan or credit agreement, license or
any other material agreement or instrument or obligation to which Company is a
party or by which Company or any of its properties, is bound, or any order,
writ, judgment, injunction, statute or decree of any court, arbitrator or
governmental body or regulatory agency or authority (federal, State, local or
foreign) arising out of any action, suit or proceeding under any statute or
other law, and Company has not violated any statute, rule or regulation of any
governmental or regulatory agency or authority.
3.1.10. Governmental Consents, etc. Except as have been or prior
to the Closing Date will be obtained or made, (or, to the extent not required
to be obtained or made prior to the Closing Date, which will be made at or
prior to the time so required), no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental body or regulatory agency or
authority or any securities exchange or any other person is required in
connection with (a) the offer, issuance, sale or delivery of the Shares, or
(b) the execution, delivery or performance by Company of this Agreement.
Except as provided in the Act and other federal and State securities laws,
Company is not subject to any federal or State statute or regulation limiting
the ability of Company to issue the Shares.
3.1.11. ERISA. Except as set forth in Section 3.1.11 of the
Disclosure Schedule, Company is not a party to, or sponsor of, any "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended.
3.1.12. Taxes. All tax returns required by law to be filed by
Company in any jurisdiction have been timely filed and, after all amendments
thereto, if any, are accurate and complete in all material respects. All
taxes (including payroll taxes), assessments, fees and other charges due or
claimed to be due from Company which are due and payable have been paid, other
than those being contested in good faith, those for which adequate reserves
have been provided or those currently payable without penalty or interest.
Company knows of no material proposed additional tax assessments against it.
3.1.13. Absence of Patents and Trademarks. Company owns no
patents, trademarks, service marks, trade names, copyrights, licenses or other
similar rights.
3.1.14. Employees. Except as set forth in Section 3.1.14 of the
Disclosure Schedule, to Company's knowledge, no director, officer or employee
of Company is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency that would conflict with
such Person's obligation to use his Best Efforts to promote the interest of
Company or that would conflict with Company's business as now conducted. To
Company's knowledge, no director, officer or employee of Company is in
violation of any term of any employment contract, patent disclosure agreement
or other contract or agreement relating to the relationship of such Person
with Company or any other party because of the nature of the business
conducted or to be conducted by Company. Except as set forth in Section
3.1.14 of the Disclosure Schedule, during the ten (10) year period preceding
the Closing Date, none of the directors, officers or employees of Company (a)
has been convicted in a criminal proceeding (or is the subject of a presently
pending criminal proceeding) other than traffic violations and other minor
offenses, or (b) had a petition under any bankruptcy law filed by or against
him, or by or against any business or property in which he was an officer,
director or partner. Company is not a party to any collective bargaining
agreements.
3.1.15. Public Reports and Registration. Company has made all
filings (collectively the "Public Reports") with the Commission that it has
been required to make under the Act and the Securities Exchange Act. Each of
the Public Reports (a) has been prepared in compliance with the Act and the
Securities Exchange Act in all material respects and (b) is true and correct
in all material respects.
3.1.16. No Conflict of Interest. Except as may be set forth in
this Agreement or in Section 3.1.16 of the Disclosure Schedule or in any
agreement entered into pursuant hereto, (a) Company is not indebted, directly
or indirectly, to any of its officers, directors or shareholders or to their
respective spouses or children, in any amount whatsoever; (b) none of such
officers, directors or shareholders, or any members of their immediate
families, are indebted to Company or have any direct or indirect ownership
interest in any Person with which Company is affiliated or with which Company
has a business relationship, or any Person which competes with Company except
the ownership of stock in publicly traded companies which may compete with
Company; (c) no officer, director or shareholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with Company; and (d) Company is not a guarantor or indemnitor of any
indebtedness of any Person.
3.1.17. Minute Books. The minute book of Company contains a
complete record of all meetings of the directors and shareholders of Company
since the date of its incorporation. Such minute book has been made available
for inspection to the Purchaser. All actions taken by Company requiring
action by the Board of Directors or shareholders of Company have been duly
authorized or ratified as necessary and are evidenced in the minute books of
Company as so made available for the aforesaid inspection.
3.1.18. Broker's or Finder's Fees. No agent, broker, firm or other
person acting on behalf of Company is, or will be entitled to any commission
or any broker's, finder's or similar fee from the Purchaser or Company in
connection with the transactions contemplated hereby.
3.1.19. Assets. Company has good and marketable title, determined
in accord with standard and customary practice in the oil and gas industry, to
its properties and assets as reflected in the financial statements set forth
in Section 3.1.6 of the Disclosure Schedule, including the real and personal
property included within the term "Fixed Assets" as listed on such financial
statements.
3.1.20. Insurance. Company has insurance coverage for the real and
personal property included in the term "Fixed Assets," as such term is used on
the financial statements attached as part of Section 3.1.6 of the Disclosure
Schedule, from companies licensed to do business in the states in which such
property is located, insuring such property against loss or damage by fire,
flood or other risks usually insured against under an extended coverage
endorsement, in such amounts (including deductibles) as are usual and
customary in Company's industry.
3.1.21. Environmental Hazards. Except as provided in Section
3.1.21 of the Disclosure Schedule, Company does not use, generate,
manufacture, produce, store, release, discharge or dispose of any "Hazardous
Substance," as hereinafter defined, in violation of any "Environmental Laws,"
as hereinafter defined. For purposes of this Section 3.1.21, the term
"Environmental Laws" means any federal or state statute or regulation
pertaining to health or environmental conditions, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") as
amended, 42 U.S.C. Section 9601, et seq. and the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C Section 6901, et seq. For purposes of
this Section 3.1.20, the term "Hazardous Substance" means those substances
included within the definitions of "hazardous substance" or "hazardous waste"
as defined in CERCLA or RCRA.
3.1.22. Oil and Gas Properties. Set forth in Section 3.1.22 of
the Disclosure Schedule is a list of all oil and gas properties (the "Oil and
Gas Properties") owned by Company. Except as otherwise specifically set forth
in Section 3.1.22 of the Disclosure Schedule:
(a) By virtue of the interests of Company in the Oil and Gas
Properties, Company's pro rata share of the costs and expenses of
drilling, developing and operating the Oil and Gas Properties,
and each of them, is, as of the date hereof and, will be
hereafter, through the plugging, abandonment and salvage of the
wells located thereon, not in excess of the respective
percentages specified in Section 3.1.22 of the Disclosure
Schedule as the "Working Interests" in respect of each such Oil
and Gas Property; Company's pro rata share of oil, gas and other
hydrocarbons produced, saved and sold from or in respect of each
of the Oil and Gas Properties is, as of the date hereof and, will
be hereafter, through the plugging, abandonment and salvage of
the wells located thereon, at least equal to the percentages
shown in Section 3.1.22 of the Disclosure Schedule as the "Net
Revenue Interests," in respect of each such Oil and Gas Property;
and Company is currently receiving from the purchaser of all oil,
gas and other hydrocarbons produced from the Oil and Gas
Properties or attributable thereto, payment for such production,
free of bond or other special indemnity.
(b) Company's ownership in the Oil and Gas Properties and the
production therefrom, as stated in Section 3.1.22 of the
Disclosure Schedule, is not subject to reduction by reason of any
production payment, carried interest, reversionary interest, gas
balancing agreement, advance payment agreement or other similar
contract, agreement or arrangement.
(c) Company is not obligated, by virtue of any prepayment
arrangement under any contract for the sale of hydrocarbons
containing a "take-or-pay" or similar provision, or by virtue of
any production payment, gas balancing agreement or any other
arrangement or by virtue of production in the excess of rates
allowed by any regulatory agency, to deliver hydrocarbons or
other minerals produced from the Oil and Gas Properties or
attributable thereto at some future time without then or
thereafter receiving full payment therefor.
(d) No call upon, option to purchase, preferential right to
purchase or a similar right exists with respect to the Oil and
Gas Properties or the production therefrom.
(e) The production from the Oil and Gas Properties is not in
excess of production permitted by applicable proration laws or
other laws, rules, regulations or orders.
(f) All leases, assignments and conveyances of leases
including in the Oil and Gas Properties are in full force and
effect, are embodied in valid written documents covering the
entire estates which they purport to cover and contain no express
provisions which require the drilling of additional wells or
other material development operations in order to earn or
continue to hold all or any part of the Oil and Gas Properties;
and all royalties, rentals and payments due under such leases
have been properly and timely paid and all conditions necessary
to keep such leases in full force have been fully performed as of
the date hereof and will be fully performed until Closing.
(g) At and as of the Closing, Company shall be legally
entitled to market all hydrocarbons produced from the Oil and Gas
Properties upon prices and other terms no less favorable than
those by which Company marketed such production on the last sale
day immediately preceding the Closing Date.
(h) All of the wells in which Company has an interest by
virtue of its ownership in the Oil and Gas Properties have been
drilled and completed within the boundaries of such Oil and Gas
Property or within the limits otherwise permitted by contract,
pooling or unit agreement and by law; and all drilling and
completion of the wells included in each Oil and Gas Property and
all development and operations on such Oil and Gas Property have
been conducted in compliance with all applicable laws,
ordinances, rules, regulations and permits, and judgments, orders
and decrees. No such well is subject to penalties on allowables
after the date hereof because of any overproduction or any other
violation of applicable laws, rules, regulations or permits or
judgments, orders or decrees which would prevent such well from
being entitled to its full legal and regular allowable from and
after the date hereof.
(i) All personal property and fixtures constituting a part
of, or used in connection with, the Oil and Gas Properties have
been maintained in all material respects in a state of repair so
as to be adequate for normal operations and are in all material
respects in good working order.
3.1.23. Compliance With Laws. The business of Company has been and
is being conducted in compliance with all laws, regulations, ordinances,
orders, judgments and/or decrees relating to Company or to the ownership or
operation of Company's business. Company has not received any written notice
which has not been resolved that Company's business has not been or is not now
being so conducted. Company is not charged or, to the best knowledge of
Company, threatened with or under investigation with respect to, any violation
of any applicable law, regulation, ordinance, order, judgment or decree
relating to any aspect of the business of Company.
Section 3.2. Representations and Warranties of Purchaser. The Purchaser
represents and warrants to Company as follows:
3.2.1. Investment. The Shares to be acquired by the Purchaser
pursuant to this Agreement are being acquired for the Purchaser's own account
for investment purposes and not for or with a view to the distribution or
resale thereof (except in compliance with the Act and any comparable State
act). The Purchaser acknowledges that the Shares have not been registered
under the Act or the securities laws of any State.
3.2.2. Accredited Investor. The Purchaser (a) is an "accredited
investor" as defined in Rule 501(a) promulgated by the Commission pursuant to
the Act, and (b) by reason of the Purchaser's business and financial
experience, and the business and financial experience of those persons
retained by the Purchaser to advise the Purchaser together with such advisors,
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment, and the Purchaser is able to bear the economic risk of
such investment and, at the present time, is able to afford a complete loss of
such investment.
3.2.3. Power and Authority. The Purchaser has all requisite power
and authority to execute, deliver and perform the Purchaser's obligations
under this Agreement, and this Agreement has been duly and validly executed
and delivered by the Purchaser, and constitutes the valid and binding
agreement of the Purchaser enforceable in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, reorganization and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and that the remedy of specific performance and
injunctive relief and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and except as rights to indemnity and
contribution hereunder may be limited by federal or State securities laws).
3.2.4. Broker's or Finder's Fees. No agent, broker, firm or other
person acting on behalf of any Purchaser is, or will be entitled to any
commission or any broker's, finder's or similar fee from the Purchaser or
Company in connection with the transactions contemplated hereby.
ARTICLE IV
COVENANTS PENDING CLOSING
Section 4.1. Conduct of Business. Company hereby covenants and promises
to the Purchaser the following:
4.1.1. During the period from the date of this Agreement to the
Closing, Company will conduct its business according to its ordinary and usual
course and consistent with past practice, and will use its Best Efforts to
preserve intact its business organization, to keep available the services of
its officers and employees and to maintain satisfactory relationships with
lessors, licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it. Without limiting
the generality of the foregoing, and except as otherwise provided in this
Agreement, prior to the Closing, Company will not, without the prior written
consent of the Purchaser:
(a) amend its Certificate of Organization;
(b) authorize for issuance, issue, sell or deliver (whether
through the issuance or granting of additional options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any securities convertible into shares of
stock of any class;
(c) split, combine or reclassify any stock, or redeem or
otherwise acquire any shares of stock (other than outstanding
Series A Preferred Stock which will be converted to Common Stock
at Closing);
(d) create, incur or assume any debt (other than debt created,
incurred or assumed in the ordinary course of its business,
consistent with past practice; create, incur or assume any long-
term debt (including capitalized lease obligations), or short-
term debt except trade payables incurred in the ordinary course
of business and consistent with past practice; assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations
of any other Person; or make any loans, advances or capital
contributions to, or investments in, any other person or entity,
other than short-term investments in financial instruments in the
ordinary course of business and consistent with past practice;
(e) increase in any manner the compensation of any of its direc-
tors, officers or employees; commit itself to any additional
pension, profit-sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit
plan, agreement or arrangement, or to any employment or
consulting agreement with or for the benefit of any person, or
amend any of such plans or any of such agreements in existence on
the date hereof;
(f) sell, transfer, mortgage, or otherwise dispose of or
encumber any interest in real property or Oil and Gas Property;
(g) except in the ordinary course of business and consistent
with past practice or pursuant to contractual obligations
existing on the date hereof, sell, transfer, mortgage, or
otherwise dispose of or encumber any personal property; pay,
discharge or satisfy claims, liabilities or obligations
(absolute, accrued, contingent or otherwise); or cancel any
debts or waive any claims or rights;
(h) make any capital expenditure or commitment except in the
ordinary course of business consistent with past practices and in
any event not more than $5,000 (unless any such proposed capital
expenditure has been disclosed in writing to the Purchaser and
the Purchaser consents thereto in writing);
(i) enter into any other agreements, commitments or contracts
which, individually or in the aggregate, are material to Company,
except agreements, commitments or contracts in the ordinary
course of business, consistent with past practice, or otherwise
make any material change in the conduct of the business or opera-
tions of Company;
(j) approve or recommend to its stockholders, or undertake,
either as the surviving, disappearing or acquiring corporation,
any other merger, consolidation, assets acquisition or
disposition or tender offer or other takeover transaction;
(k) make any distribution with respect to the stock; or
(l) agree, whether in writing or otherwise, to do any of the
foregoing.
4.1.2. Company will afford the Purchaser and the Purchaser's
representatives access, during normal business hours, to all of its business,
operations, properties, books, files and records and will cooperate in the
Purchaser's examination thereof.
Section 4.2. Notification of Material Events. Each party shall promptly
notify the other in writing of the occurrence of any event which will or could
reasonably be expected to result in such party's failure to satisfy any of the
representations, warranties, covenants, or conditions specified in this
Agreement.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1. Conditions Precedent to Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Shares to be issued at the Closing
is, at the option of the Purchaser, subject to the satisfaction or waiver of
the following conditions:
5.1.1. Company shall deliver to the Purchaser the following:
(a) Certificates for the Shares to be purchased by the Purchaser.
(b) A certification of the Secretary of Company, as to (i) the
names of all officers and directors of Company, and indicating the offices
held by all such officers and the signatures of all such officers executing
this Agreement on behalf of Company and (ii) resolutions of the Board of
Directors of Company authorizing the entry by Company into this Agreement and
the performance by Company of its obligations hereunder.
5.1.2. All of the representations and warranties of Company contained
in this Agreement shall be true and correct as of the date hereof and shall be
deemed to have been made again at Closing and shall then be true and correct.
5.1.3. Each of the covenants and other obligations of Company to be
performed by Company on or before Closing pursuant to the terms hereof shall
have been duly performed and complied with in all material respects.
5.1.4. All consents, approvals and authorizations which, in the opinion
of the Purchaser, are required in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein shall have been obtained (whether from governmental
authorities or other persons) and shall be in form and substance satisfactory
to the Purchaser.
5.1.5. There shall have been no material adverse change in the
business, financial condition or results of operations of Company from that
reflected in the financial statements set forth in Section 3.1.6 of the
Disclosure Schedule.
5.1.6. Except as set forth in Section 3.1.8 of the Disclosure Schedule,
no claim, action, suit or proceeding shall be pending or threatened against
any of the parties hereto which, if adversely determined, might prevent or
hinder consummation of the transactions contemplated by this Agreement, result
in a payment of substantial damages as a result of such transactions or
otherwise impair the benefits contemplated hereby.
Section 5.2. Conditions Precedent to Obligations of Company. The
obligation of Company to issue and sell the Shares pursuant to this Agreement
is, at the option of Company, subject to the satisfaction or waiver of the
following conditions:
5.2.1. Payment by the Purchaser of the sum of $275,000 shall have been
made.
5.2.2. All consents, approvals and authorizations which, in the opinion
of Company, are required in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein shall have been obtained (whether from governmental
authorities or other persons) and shall be in form and substance satisfactory
to Company.
5.2.3. Except as set forth in Section 3.1.8 of the Disclosure Schedule,
no claim, action, suit or proceeding shall be pending or threatened against
any of the parties hereto which, if adversely determined, might prevent or
hinder consummation of the transactions contemplated by this Agreement, result
in a payment of substantial damages as a result of such transactions or
otherwise impair the benefits contemplated hereby.
ARTICLE VI
REGISTRATION
Section 6.1. Demand Registration. At any time after December 31, 1999,
the Purchaser shall have the right to demand, by written notice to Company,
registration of the Shares. Company shall not be required to effect
registration on more than one (1) occasion pursuant to the terms of this
Section 6.1.
Section 6.2. Obligations of Company. Upon receipt of any demand to
register the Shares, as set forth in Section 6.1 above, Company shall, as
expeditiously as reasonably possible:
6.2.1. Prepare and file with the Commission a registration statement
including all exhibits and financial statements required by the Commission to
be filed therewith, and use its Best Efforts to cause such registration
statement to become effective (and stay effective for such period of time as
Company and the Purchaser determines is reasonable) under the securities laws
of various States
6.2.2. Use its Best Efforts to cause the securities covered by the
applicable registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Purchaser to consummate the disposition of the Shares; and
6.2.3. Enter into such customary agreements (including a purchase
agreement or underwriting agreement) and take all such other actions as the
Purchaser may reasonably request in order to expedite or facilitate the
registration and disposition of the Shares.
ARTICLE VII
SPECIAL PROVISIONS
Section 7.1. Purchaser Loans. From and after the Closing Date until
the date which is three (3) years thereafter, the Purchaser agrees to loan to
Company (on terms no less favorable than that which would be otherwise
available to Company), or guaranty Company debt for, up to $300,000 for oil
and gas property acquisitions. Any such loans or guaranties shall be secured
by such amount of Common Stock of Company as will cause the Purchaser, after
the foreclosure thereof, to own 77.5% of the total issued and outstanding
Common Stock of Company.
Section 7.2. Independent Activities of Purchaser. Company acknowledges
that the Purchaser is affiliated with ongoing endeavors (including, without
limitation, BRG Petroleum Corporation) in the oil and gas business, some of
which may be in competition with Company. Neither this Agreement nor the fact
that the Purchaser is a Company stockholder, officer and/or director shall
prevent the Purchaser from engaging in any such other activities or permit
Company or any of its stockholders to participate in any such activities, and
as a material part of the consideration for this Agreement, Company hereby
waives, relinquishes and renounces any such right or claim.
ARTICLE VIII
FEES AND EXPENSES
Section 8.1. Expenses. Each party hereto will pay its own counsel fees
incurred in connection with the preparation of this Agreement and all related
documents, as well as future amendments or modifications thereto.
Notwithstanding the foregoing, Company will pay, and agrees to bear -
(a) any and all expenses associated with the issuance and
delivery of the Shares; and
(b) the Purchaser' counsel's fees.
ARTICLE IX
INDEMNITY
Section 9.1. Company Indemnity. Company agrees and covenants to hold
harmless and indemnify the Purchaser and any Affiliates thereof, including any
director, officer, employee, agent, investment adviser, or controlling person
of any of the foregoing and their legal counsel (collectively, the "Purchaser
Indemnitees"), from and against any losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and expenses of investigation)
incurred by such Person arising out of or based upon (a) any untrue statement
of any material fact made by Company contained in this Agreement or any
document provided by Company in connection herewith or with the sale of the
Shares, (b) arising out of or based upon the omission by Company to state
herein or therein a material fact required to be stated or necessary to make
the statements herein or therein, in light of the circumstances under which
they were made, not misleading, (c) any breach by Company of any of Company's
representations, warranties, covenants or agreements contained in this
Agreement or in any other agreement, certificate, instrument or document
delivered pursuant hereto; provided, however, that Company shall not be liable
under this paragraph for any amounts paid in settlement of claims without its
consent, which consent shall not be unreasonably withheld, or to any Purchaser
Indemnitee to the extent that it is finally judicially determined that such
losses, claims, damages or liabilities arose out of the negligence or willful
misconduct of the Purchaser Indemnitee or out of the material breach by the
Purchaser Indemnitee of any representation or warranty made by the Purchaser
Indemnitee in Article III of this Agreement. Company also agrees that the
indemnification, contribution and reimbursement commitments set forth in this
Article IX shall apply whether or not the Purchaser Indemnitees are formal
parties to any such lawsuit, claim or other proceeding. Company further
agrees promptly upon demand by the Purchaser Indemnitees to reimburse the
Purchaser Indemnitees for any legal and other expenses as they are incurred in
connection with investigating, preparing to defend or defending any lawsuits,
claims or other proceedings or investigations arising in any manner out of or
in connection with any matter as to which Company is liable to the Purchaser
Indemnitees under the indemnities set forth above.
Section 9.2. Purchaser Indemnity. The Purchaser agrees and covenants
to hold harmless and indemnify Company, including any director, officer,
employee, agent, investment advisor, or controlling person of any of the
foregoing and their legal counsel (collectively, the "Company Indemnitees"),
from and against any out-of-pocket losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and expenses of investigation)
incurred and actually paid by such Person arising out of or based upon (a) any
untrue statement of any material fact made by the Purchaser contained in this
Agreement or any document provided by the Purchaser in connection herewith or
with the purchase of the Shares, (b) arising out of or based upon the omission
or the Purchaser to state herein or therein a material fact required to be
stated or necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading or (c) any breach by
the Purchaser of any of the Purchaser's representations, warranties, covenants
or agreements contained in this Agreement or in any other agreement,
certificate, instrument or document delivered pursuant hereto; provided,
however, that the Purchaser shall not be liable under this paragraph for any
amounts paid in settlement of claims without their consent, which consent
shall not be unreasonably withheld, or to any Company Indemnitee to the extent
that it is finally judicially determined that such losses, claims, damages or
liabilities arose out of the negligence or willful misconduct of such Company
Indemnity or out of the material breach by such Company Indemnitee of any
representation or warranty made by such Company Indemnitee in Article III of
this Agreement. The Purchaser also agrees that the indemnification,
contribution and reimbursement commitment set forth in this Article IX shall
apply whether or not Company Indemnitees are a formal party to any such
lawsuit, claim or other proceeding. The Purchaser further agrees promptly
upon demand by Company Indemnitees to reimburse Company Indemnitees for any
legal or other expenses as they are incurred in connection with investigating,
preparing to defend or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with any manner
as to which the Purchaser is liable to Company Indemnitees under the
indemnities set forth above.
Section 9.3. Procedure. Promptly after receipt by any Company Indemnitee
or Purchaser Indemnitee (collectively an "Indemnitee") under this Article IX
of notice of the commencement of any action, proceeding or investigation or
threat thereof, such Indemnitee will, if a claim in respect thereof is to be
made against any party hereunder, notify such indemnifying party in writing of
the commencement thereof. In case any such action shall be brought against
such Indemnitee and it shall notify such indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it desires, shall assume the defense thereof,
with counsel reasonably satisfactory to the Indemnitee, and, after notice from
such indemnifying party to the Indemnitee of its election so to assume the
defense thereof, such indemnifying party shall not be liable to the Indemnitee
under these indemnification provisions for any legal expenses of other counsel
in connection with the defense thereof other than reasonable costs of
investigation and monitoring the progress of such action. The Indemnitee
shall cooperate fully with such indemnifying party and its counsel in
conducting any such proceeding or in defending any such claim.
ARTICLE X
MISCELLANEOUS
Section 10.1. Confidentiality. Except for (a) necessary disclosure to
such party's partners and their respective directors, officers, employees,
counsel, accountants, bankers and other agents and (b) any disclosure as
required by applicable law, each party shall keep the provisions of this
Agreement and all information provided in connection herewith, confidential
both prior and subsequent to the Closing Date.
Section 10.2. No Waiver; Modifications in Writing. No failure or delay
on the part of any party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. Any remedies provided
for herein are cumulative and are not exclusive of any other remedies that may
be available at law or in equity or otherwise. No waiver of or consent to any
departure from any provision of this Agreement or any agreement referred to
herein shall be effective unless signed in writing by the party entitled to
the benefit of such provisions, provided that notice of any such waiver shall
be given to each party hereto as set forth below, and any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which made or given. Except as otherwise provided herein, no
amendment, modification or termination of any provision of this Agreement
shall be effective unless signed in writing by each of the parties hereto.
Section 10.3. Notices. All notices, requests, demands or other
communications pursuant to this Agreement shall be in writing, and shall be
deemed to have been duly given if delivered personally or sent by registered
or certified mail, postage prepaid, to the parties as follows:
If to Company: CLX Energy, Inc.
518 17th Street, Suite 745
Denver, Colorado 80202-4130
Attn: Mr. E. J. Henderson
If to JLB: James L. Burkhart, Trustee
4904 Lakeridge Drive
Lubbock, Texas 79424
or to such other addresses as may have been furnished in writing by such party
to the other parties to this Agreement in accordance with this paragraph.
Section 10.4. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Agreement.
Section 10.5. Binding Effect; Assignment. Except as expressly provided
in this Agreement, this Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement, and
their respective permitted successors and assigns. This Agreement shall be
binding upon Company and the Purchaser, and their permitted successors and
assigns. The Purchaser reserves the right to assign the Purchaser's rights
and obligations hereunder, in whole or in part, to any Person(s), provided
such Person(s) is/are able to make, and does confirm in writing to Company,
the representations and warranties set forth in Section 3.2 hereof.
Section 10.6. Entire Agreement. This Agreement, together with the
Schedules and Exhibits hereto and the agreements, documents and instruments
referred to herein, are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto with respect to the subject
matter contained herein and therein. There are no understandings, agreements,
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto and the agreements, documents and instruments referred to herein,
supersede all prior agreements and understandings between the parties with
respect to the subject matter hereof and thereof.
Section 10.7. Indemnity Agreement. So long as any Purchaser holds any
Capital Stock, Company agrees that the only indemnity required of the
Purchaser in the event that any certificate representing such Capital Stock is
mutilated, lost, destroyed or wrongfully taken and application is made
pursuant to the provisions of this Agreement for the execution and delivery of
a new certificate, in lieu thereof, shall be an indemnity agreement from the
Purchaser, in form and substance reasonably satisfactory to Company, and that
no bond shall be required.
Section 10.8. Governing Law. This Agreement shall be construed in
accordance with, and the rights and duties of the parties hereto shall be
governed by, the laws of the State of Colorado.
Section 10.9. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 10.10. Attorneys' Fees. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or for the
breach of the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees from the other party, which
fees may be set by the court in the trial of such action or may be enforced in
a separate action brought for that purpose, and which fees shall be in
addition to any other relief which may be awarded.
Section 10.11. Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against either party hereto.
Section 10.12. Further Assurances. From time to time, at the request of
any party hereto and without further consideration, the other party or parties
hereto shall execute and deliver to such requesting party such instruments and
documents and take such other action (but without incurring any material
financial obligation) as such requesting party may reasonably request in order
to consummate more fully and effectively the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date first above written.
CLX ENERGY, INC.
By /s/ E.J. Henderson
_____________________________
E. J. Henderson, President
JAMES L. BURKHART LIVING TRUST
By /s/ James L. Burkhart
________________________________
James L. Burkhart, Trustee