C:\DOCUMENT\KENTSTAG.07
EXECUTION COPY
Stock Purchase Agreement
Between
WellTech Eastern, Inc.
and
Kenting Energy Services Inc.
Dated as of July 30, 1997
Stock Purchase Agreement
This Stock Purchase Agreement (this AAgreement@) is entered into as of July
30, 1997 by and between WellTech Eastern, Inc., a Delaware corporation
(ABuyer@), and Kenting Energy Services Inc., an Alberta corporation (the
AShareholder@).
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WITNESSETH :
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Whereas, Buyer is a corporation duly organized and validly existing under
the laws of the State of Delaware, with its principal executive offices at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; and
Whereas, Kenting Holdings (Argentina) S.A. (the ACompany@) is a corporation
duly organized and validly existing under the laws of the republic of Argentina,
with its principal executive offices at ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇ ▇, (▇▇▇▇) ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; and
Whereas, Kenting Drilling (Argentina) S.A. (the ACompany Subsidiary@) is a
subsidiary of the Company and is a corporation duly organized and validly
existing under the laws of the republic of Argentina, with its principal
executive offices at ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇ ▇, (▇▇▇▇) ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; and
Whereas, the Shareholder owns 15,300,000 shares (the ACompany Shares@) of
common stock, par value $1.00 per share, of the Company (ACompany Common
Stock@), which constitutes all of the issued and outstanding shares of capital
stock of the Company
Whereas, the Company owns 24,545,362 shares (the ACompany-Owned Subsidiary
Shares@) of common stock, par value $1.00 per share, of the Company Subsidiary
(ASubsidiary Common Stock@), and the Shareholder owns 37,386 shares (the
AShareholder-Owned Subsidiary Shares@) of Subsidiary Common Stock, which
constitutes all of the issued and outstanding shares of capital stock of the
Company Subsidiary; and
Whereas, the Shareholder desires to sell to Buyer, and Buyer desires to
purchase from the Shareholder all of the issued and outstanding capital stock of
the Company and all of the shares of capital stock of the Company Subsidiary
owned by the Shareholder.
Now, Therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
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C:\DOCUMENT\KENTSTAG.07
ARTICLE 1
ARTICLE 1 Purchase and SalePurchase and Sale
1.1. Purchase and Sale of the Company Shares. Subject to the terms and
conditions of this Agreement, on the date hereof, the Shareholder agrees to sell
and convey to Buyer, free and clear of all Encumbrances (defined below) and
Buyer agrees to purchase and accept from the Shareholder, all of the Company
Shares and all of the Shareholder-Owned Subsidiary Shares. In consideration of
the sale of the Company Shares and the Shareholder-Owned Subsidiary Shares,
Buyer shall pay to the Shareholder $9,575,000 in cash by wire transfer of
immediately available funds, and the Cash Adjustment Payment (as defined in
Section 1.3 hereof), if any, in accordance with Section 1.3 hereof. In addition,
on the date hereof Buyer shall pay to the Shareholder $525,000 in satisfaction
of all debts remaining due to the Shareholder or irs affiliates on the date
hereof. The term AEncumbrances@ means all liens, security interests, pledges,
mortgages, deed of trust, claims, rights of first refusal, options, charges,
restrictions or conditions to transfer or assignment, liabilities, obligations,
privileges, equities, easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind or nature.
1.2. Recording the Transfer of Shares. The parties hereto acknowledge that
the Company Shares are currently held of record as follows: 15,299,988 shares
(the AKID Company Shares@) by Kenting Drilling International, Inc., a
predecessor (by amalgamation) to the Shareholder (AKID@) and 12 shares (the
AKESL Company Shares@) by Kenting Energy Services Ltd, a predecessor (by
amalgamation) to the Shareholder (AKESL@). The parties hereto acknowledge that
the Shareholder-Owned Subsidiary Shares are currently held of record by KID. The
Shareholder represents and warrants to Buyer that it has validly acquired the
KID Company Shares, the ▇▇▇▇ Company Shares and the Shareholder-Owned Subsidiary
Shares by means of an amalgamation of various affiliated corporate entities and
a subsequent liquidation of the resulting entity without having such
acquisitions (the AShareholder Stock Acquisitions@) formally recorded in the
appropriate stock records of the Company and the Company Subsidiary. On the date
hereof, the Shareholder shall caused to be filed in the appropriate stock
records of the Company and the Company Subsidiary those transfer documents
necessary to properly record the Shareholder Stock Acquisitions in accordance
with Argentina law (the ADelinquent Filings@) and those transfer documents
necessary to properly record the transfer of the Company Shares and the
Shareholder-Owned Shares hereunder in accordance with Argentina law such that,
as a result of such filings, the Buyer (and its designees) will become the
record and beneficial owners of the Company Shares and the Shareholder-Owned
Subsidiary Shares.
1.3 Adjustment of Purchase Price. Buyer shall cause to be prepared and
delivered to the Shareholder a consolidated balance sheet of the Company as of
the date hereof (the AFinal Balance Sheet@) within sixty (60) days after the
date hereof, which balance sheet will be prepared in accordance with Canadian
generally accepted accounting principles, consistently applied in all respects
(which shall not include any reserve or accruals for employee termination
costs). Buyer and the Shareholder shall jointly review the Final Balance Sheet,
and endeavor in good faith to resolve all disagreements regarding the entries
thereon and reach a final determination thereof within 90 days from the date
hereof. In the event that the parties cannot agree on the entries to be placed
on the Final Balance Sheet, the dispute will be resolved by an independent
accounting firm mutually agreed to by the Shareholder and Buyer (such agreement
not to be unreasonably withheld or delayed) whose resolution shall be binding on
and enforceable against the parties hereto. Within 10 days of reaching such
final determination, the following adjusting payments shall be made:
(1) If the sum of (A) the Final Net Current Value of the Company (defined
below) plus (B) $100,056 (the ACapital Expenditure Amount@) exceeds the 4/30 Net
Current Value of the Company (defined below), Buyer shall pay to the Shareholder
the amount of such excess (the ACash Adjustment Payment@).
(2) If the sum of (A) the Final Net Current Value of the Company plus the
Capital Expenditure Amount is less than the 4/30 Net Current Value of the
Company, the Shareholder shall pay to Buyer the amount of such difference.
The term AFinal Net Current Value of the Company@ means the dollar value of
the amount by which (i) the ATotal Current Assets@ (excluding any prepaid job
costs relating to the assets referred to in Schedule 2.1.8 hereto (the AExcluded
Assets@) transferred from the Company to the Shareholder or an associated
company of the Shareholder in anticipation of the consummation of the
transactions contemplated hereby but including the book value of any
AInventories@ included in the Excluded Assets) plus the AOther Assets@ minus the
ADue from Kenting Group@ as recorded on the Final Balance Sheet exceeds (ii) the
ATotal Current Liabilities@ plus the A Term Debt@ plus the ADeferred Income
Taxes@ minus the ADue to Kenting Group@ as recorded on the Final Balance Sheet.
The term A4/30 Net Current Value of the Company@ means the dollar value of the
amount by which (i) the ATotal Current Assets@ (excluding any prepaid job costs
relating to the Excluded Assets but including the book value of any
AInventories@ included in the Excluded Assets) plus the AOther Assets@ minus the
ADue from Kenting Group@ as recorded on the 4/30 Balance Sheet (as defined in
Section 2.1.6 hereof) exceeds (ii) the ATotal Current Liabilities@ plus the
ATerm Debt@ plus the ADeferred Income Taxes@ minus the ADue to Kenting Group@ as
recorded on the 4/30 Balance Sheet.
ARTICLE 2
Representations and Warranties ARTICLE 2 Representations and Warranties
2.1. Representations and Warranties of the Shareholder.Representations and
Warranties of the Shareholder. The Shareholder represents and warrants to Buyer
as follows:
2.1.1. Organization and Standing.Organization and Standing. Each of the
Company, the Company Subsidiary and the Shareholder is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has full requisite corporate power and authority
to carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing and is authorized to do business
in all jurisdictions in which the character of the properties owned or the
nature of the business conducted by it would make such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have an adverse effect on its financial condition, properties or
business.
2.1.2. Agreement Authorized and its Effect on Other Obligations.Agreement
Authorized and its Effect on Other Obligations. The execution and delivery of
this Agreement have been authorized by all of necessary corporate action on the
part of the Shareholder, and the Shareholder has the legal capacity and
requisite power and authority to enter into, and perform its obligations under
this Agreement. This Agreement is a valid and binding obligation of the
Shareholder enforceable against the Shareholder (subject to normal equitable
principles) in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally. The execution,
delivery and performance of this Agreement by the Shareholder will not conflict
with or result in a violation or breach of any term or provision of, nor
constitute a default under (i) any of the organizational or other documents of
the Company or the Company Subsidiary or (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which the
Company, the Company Subsidiary or the Shareholder is a party or by which the
Company, the Company Subsidiary or the Shareholder or their respective
properties are bound.
2.1.3. Capitalization.Capitalization. The authorized capitalization of the
Company consists of 15,300,000 shares of Company Common Stock, of which, as of
the date hereof, 15,300,000 shares were issued and outstanding and, following
the recording of the Delinquent Filings, are held beneficially and of record by
the Shareholder. On the date hereof, the Company does not have any outstanding
options, warrants, calls or commitments of any character relating to any of its
authorized but unissued shares of capital stock. All issued and outstanding
shares of Company Common Stock are validly issued, fully paid and non-assessable
and are not subject to preemptive rights. None of the outstanding shares of
Company Common Stock is subject to any voting trusts, voting agreement or other
agreement or understanding with respect to the voting thereof, nor is any proxy
in existence with respect thereto. The authorized capitalization of the Company
Subsidiary consists of 24,582,748 shares of Subsidiary Common Stock, all of
which shares were issued and outstanding as of the date hereof, with 24,545,362
shares held beneficially and of record by the Company (following the recording
of the Delinquent Filings) and 37,386 shares held beneficially and of record by
the Shareholder (following the recording of the Delinquent Filings). On the date
hereof, the Company Subsidiary does not have any outstanding options, warrants,
calls or commitments of any character relating to any of its authorized but
unissued shares of capital stock. All issued and outstanding shares of
Subsidiary Common Stock are validly issued, fully paid and non-assessable and
are not subject to preemptive rights. None of the outstanding shares of
Subsidiary Common Stock is subject to any voting trusts, voting agreement or
other agreement or understanding with respect to the voting thereof, nor is any
proxy in existence with respect thereto.
2.1.4. Ownership of the Company Shares.Ownership of the Company Shares.
Following the recording of the Delinquent Filings, the Shareholder holds good
and valid title to all of the Company Shares and the Shareholder-Owned
Subsidiary Shares, free and clear of all Encumbrances. Following the recording
of the Delinquent Filings, the Shareholder possesses full authority and legal
right to sell, transfer and assign to Buyer the Company Shares and the
Shareholder-Owned Subsidiary Shares, free and clear of all Encumbrances. Upon
transfer to Buyer by the Shareholder of the Company Shares and the
Shareholder-Owned Subsidiary Shares, Buyer will own the Company Shares and the
Shareholder-Owned Subsidiary Shares free and clear of all Encumbrances. There
are no claims pending or, to the knowledge of the Shareholder, threatened,
against the Company or the Shareholder that concern or affect title to the
Company Shares or the Shareholder-Owned Subsidiary Shares, or that seek to
compel the issuance of capital stock or other securities of either the Company
or the Company Subsidiary.
2.1.5. No Subsidiaries2.1.5. No Subsidiaries. Other than the Company
Subsidiary, there is no corporation, partnership, joint venture, business trust
or other legal entity in which the Company, either directly or indirectly
through one or more intermediaries, owns or holds beneficial or record ownership
of at least a majority of the outstanding voting securities.
2.1.6. Financial ▇▇▇▇▇▇▇▇▇▇▇.▇.▇.▇▇▇▇▇▇▇▇▇ Statements. The Company has
delivered to Buyer copies of the unaudited consolidated balance sheet of the
Company and the Company Subsidiary (the A4/30 Balance Sheet@) and related
consolidated statements of income, copies of which are attached hereto as
Schedule 2.1.6 (collectively, the A4/30 Financial Statements@), as at and for
the four months ended April 30, 1997 (the ABalance Sheet Date@). The 4/30
Financial Statements are complete in all material respects. The 4/30 Financial
Statements presents fairly in all material respects the consolidated financial
condition of the Company as at the dates and for the periods indicated. The 4/30
Financial Statements have been prepared in accordance with Canadian generally
accepted accounting principles applied on a consistent basis.
2.1.7. Liabilities2.1.7.Liabilities. Except as provided in Schedule 2.1.7
hereto, to the knowledge of any of (i) the directors and officers of the
Company, (ii) the directors and officers of the Company Subsidiary, (iii) ▇▇▇▇
▇▇▇▇▇ and (iv) ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (collectively, the ACompany
Management@), neither the Company nor the Company Subsidiary has any liabilities
or obligations, either accrued, absolute or contingent, nor are any of the
foregoing persons aware of any potential liabilities or obligations (including,
without limitation, liabilities related to non-performance of contracts,
non-payment of taxes, infringement of the intellectual property rights of
others, violations of applicable laws, current or pending litigation,
environmental conditions or labor disputes) that could materially adversely
affect the value and conduct of the business of the Company and the Company
Subsidiary, taken as a whole, other than those required to be reflected or
properly reserved against in the 4/30 Balance Sheet and the Final Balance Sheet
(and which will be reflected in an accurate calculation of the 4/30 Net Current
Value of the Company and the Final Net Current Value of the Company). 2.1.8.
Absence of Certain Changes and Events2.1.8. Absence of Certain Changes and
Events. The Shareholder has caused the Company and the Company Subsidiary to
make those fixed asset transfers and those balance sheet adjustments referred to
in Schedule 2.1.8 hereto. To the knowledge of Company Management, other than the
transactions specified in Schedule 2.1.8 hereto, since the Balance Sheet Date,
there has not been any material reduction in the value of the fixed assets of
the Company or the Company Subsidiary or the occurrence of any other transaction
or event that could materially adversely affect the value and conduct of the
business of the Company and the Company Subsidiary, taken as a whole, other than
those that will be reflected in an accurate calculation of the Final Net Current
Value of the Company.
2.1.9. Title to and Condition of Assets2.1.9. Title to and Condition of
Assets. Except as disclosed on Schedule 2.1.9 hereto, the Company and the
Company Subsidiary have good title to all their assets reflected in the 4/30
Balance Sheet, including, without limitation, all of the Company-Owned
Subsidiary Shares, free and clear of any Encumbrance of any nature whatsoever,
except (i) Encumbrances reflected in the 4/30 Balance Sheet, (ii) liens for
current taxes not yet due and payable, and (iii) such imperfections of title,
easements and Encumbrances, if any, as are not substantial in character, amount,
or extent and do not and will not materially detract from the value, or
interfere with the present use, of the property subject thereto or affected
thereby, or otherwise materially impair business operations.
2.1.10. Consents and Approvals. All consents, approvals and authorizations
required to be made or obtained by the Company, the Company Subsidiary or the
Shareholder in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby have been
obtained.
2.1.11. Finder=s Fee2.1.11. Finder=s Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by the
Shareholder and its counsel directly with Buyer and its counsel, without the
intervention of any other person in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder=s fee
or any similar payments.
2.2. Representations and Warranties of Buyer2.2. Representations and
Warranties of Buyer. Buyer represents and warrants to the Shareholder as
follows:
2.2.1. Organization and Good Standing2.2.1. Organization and Good Standing.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has full requisite corporate power and
authority to carry on its business as it is currently conducted, and to own and
operate the properties currently owned and operated by it, and is duly qualified
or licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of the
properties owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have an adverse effect on its financial
condition, properties or business. 2.2.2. Agreement Authorized and its Effect on
Other Obligations2.2.2. Agreement Authorized and its Effect on Other
Obligations. The consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Buyer, and this Agreement is a valid and binding obligation of Buyer enforceable
(subject to normal equitable principles) in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, debtor
relief or similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement by Buyer will not conflict
with or result in a violation or breach of any term or provision of, or
constitute a default under (a) the Certificate of Incorporation or Bylaws of
Buyer or (b) any obligation, indenture, mortgage, deed of trust, lease, contract
or other agreement to which Buyer or any of its property is bound.
2.2.3. Consents and Approvals 2.2.3. Consents and Approvals. No consent,
approval or authorization of, or filing of a registration with, any governmental
or regulatory authority, or any other person or entity is required to be made or
obtained by Buyer in connection with the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
2.2.4. Finder=s Fee2.2.4. Finder=s Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by Buyer
and its counsel directly with the Company, the Company Subsidiary and the
Shareholder and its counsel, without the intervention by any other person as the
result of any act of Buyer in such a manner as to give rise to any valid claim
against any of the parties hereto for any brokerage commission, finder=s fee or
any similar payments.
ARTICLE 3
Additional Agreements ARTICLE 3 Additional Agreements 3.1.
Noncompetition.Noncompetition. Except as otherwise consented to or approved in
writing by Buyer, the Shareholder agrees that for a period of 42 months from the
date hereof, it will not (and will cause its affiliates not to), directly or
indirectly, acting alone or as a member of a partnership or as an officer,
director, employee, consultant, representative, holder of, or investor in as
much as 5% of any security of any class of any corporation or other business
entity (i) engage in any businesses involved in providing well servicing or
shallow/moderate depth drilling services within the country of Argentina; (ii)
request any present customers or suppliers of the Company or the Company
Subsidiary to curtail or cancel their business with the Company, the Company
Subsidiary, Buyer or any affiliate of Buyer; (iii) disclose to any person, firm
or corporation any trade, technical or technological secrets of the Company, the
Company Subsidiary, Buyer or any affiliate of Buyer or any details of their
organization or business affairs or (iv) induce or actively attempt to influence
any employee of the Company, the Company Subsidiary, Buyer or any affiliate of
Buyer to terminate his employment. The Shareholder agrees that if either the
length of time or geographical area set forth in this Section 3.1 is deemed too
restrictive in any court proceeding, the court may reduce such restrictions to
those which it deems reasonable under the circumstances. The obligations
expressed in this Section 3.1 are in addition to any other obligations that the
Shareholder may have under the laws of any jurisdiction in which they do
business requiring an employee of a business or a shareholder who sells his
stock in a corporation (including a disposition in a merger) to limit his
activities so that the goodwill and business relations of his employer and of
the corporation whose stock he has sold (and any successor corporation) will not
be materially impaired. Each of the Shareholder further agrees and acknowledges
that the Company, the Company Subsidiary, Buyer and its affiliates do not have
any adequate remedy at law for the breach or threatened breach by the
Shareholder of this covenant, and agree that the Company, the Company
Subsidiary, Buyer or any affiliate of Buyer may, in addition to the other
remedies which may be available to it hereunder, file a suit in equity to enjoin
the Shareholder from such breach or threatened breach. If any provisions of this
Section 3.1 are held to be invalid or against public policy, the remaining
provisions shall not be affected thereby. The Shareholder acknowledges that the
covenants set forth in this Section 3.1 are being executed and delivered by such
Shareholder in consideration of the covenants of Buyer contained in this
Agreement, and for other good and valuable consideration, receipt of which is
hereby acknowledged.
3.2. Employee Matters. From the date hereof, the Company and the Company
Subsidiary shall remain responsible for all costs associated with the
termination of any of their employees terminated after the date hereof;
provided, however, that the Shareholder shall be solely responsible for any and
all liabilities, costs and expenses associated with the termination of ▇▇▇▇
▇▇▇▇▇ by either the Company or the Company Subsidiary, regardless of whether he
is terminated before, on or after the date hereof (the AMeier Termination@).
3.3. Further Assurances. From time to time, as and when requested by any
party hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effectuate the transactions contemplated hereby. Without limiting the generality
of the foregoing, the Shareholder shall take those actions reasonably requested
by Buyer to (i) properly record the transfer of the Company Shares and the
Shareholder-Owned Subsidiary Shares in accordance with Section 1.2 hereof and
(ii) resolve the title exceptions described in Schedule 2.1.9 hereto.
ARTICLE 4
Indemnification ndemnification 4.1. Indemnification by the Shareholder4.1.
Indemnification by the Shareholder. In addition to any other remedies available
to Buyer under this Agreement, or at law or in equity, the Shareholder shall
indemnify, defend and hold harmless the Company, the Company Subsidiary, Buyer
and their affiliates and their respective officers, directors, employees, agents
and stockholders (collectively, the ABuyer Indemnified Parties@), against and
with respect to any and all claims, costs, damages, losses, expenses,
obligations, liabilities, recoveries, suits, causes of action and deficiencies,
including interest, penalties and reasonable fees and expenses of attorneys,
consultants and experts (collectively, the ADamages@) that the Buyer Indemnified
Parties shall incur or suffer, which arise, result from or relate to (i) any
breach by the Shareholder of (or the failure of the Shareholder to perform) its
respective representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or delivered to Buyer by the Shareholder under this Agreement or (ii) the ▇▇▇▇▇
Termination.
4.2. Indemnification by Buyer4.2. Indemnification by Buyer. In addition to
any other remedies available to the Shareholder under this Agreement, or at law
or in equity, Buyer shall indemnify, defend and hold harmless the Shareholder
against and with respect to any and all Damages that such indemnitees shall
incur or suffer, which arise, result from or relate to any breach of, or failure
by Buyer to perform, any of its representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or delivered to the Shareholder by or on behalf of Buyer
under this Agreement.
4.3. Indemnification Procedure. In the event that any party hereto
discovers or otherwise becomes aware of an indemnification claim arising under
Section 4.1 or 4.2 of this Agreement, such indemnified party shall give written
notice to the indemnifying party, specifying such claim, and may thereafter
exercise any remedies available to such party under this Agreement; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of any obligations hereunder, to
the extent the indemnifying party is not materially prejudiced thereby. Further,
promptly after receipt by an indemnified party hereunder of written notice of
the commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to Section 4.1 or 4.2 hereof, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of any
obligations hereunder, to the extent the indemnifying party is not materially
prejudiced thereby. In case any such action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after such notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof unless the indemnifying party has failed to assume the defense
of such claim and to employ counsel reasonably satisfactory to such indemnified
person. An indemnifying party who elects not to assume the defense of a claim
shall not be liable for the fees and expenses of more than one counsel in any
single jurisdiction for all parties indemnified by such indemnifying party with
respect to such claim or with respect to claims separate but similar or related
in the same jurisdiction arising out of the same general allegations.
Notwithstanding any of the foregoing to the contrary, the indemnified party will
be entitled to select its own counsel and assume the defense of any action
brought against it if the indemnifying party fails to select counsel reasonably
satisfactory to the indemnified party, the expenses of such defense to be paid
by the indemnifying party. No indemnifying party shall consent to entry of any
judgment or enter into any settlement with respect to a claim without the
consent of the indemnified party, which consent shall not be unreasonably
withheld, or unless such judgment or settlement includes as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability with respect to such claim. No indemnified party
shall consent to entry of any judgment or enter into any settlement of any such
action, the defense of which has been assumed by an indemnifying party, without
the consent of such indemnifying party, which consent shall not be unreasonably
withheld or delayed.
ARTICLE 5
ARTICLE 5 MiscellaneousMiscellaneous
5.1. Survival of Representations, Warranties and Covenants5.1. Survival of
Representations, Warranties and Covenants. All representations, warranties,
covenants and agreements made by the parties hereto shall survive indefinitely
without limitation, notwithstanding any investigation made by or on behalf of
any of the parties hereto. All statements contained in any certificate,
schedule, exhibit or other instrument delivered pursuant to this Agreement shall
be deemed to have been representations and warranties by the respective party or
parties, as the case may be, and shall also survive indefinitely despite any
investigation made by any party hereto or on its behalf.
5.2. Entirety5.2. Entirety. This Agreement embodies the entire agreement
among the parties with respect to the subject matter hereof, and all prior
agreements between the parties with respect thereto are hereby superseded in
their entirety.
5.3. Counterparts.Counterparts. Any number of counterparts of this
Agreement may be executed and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
instrument.
5.4. Notices and Waivers.Notices and Waivers. Any notice or waiver to be
given to any party hereto shall be in writing and shall be delivered by courier,
sent by facsimile transmission or first class registered or certified mail,
postage prepaid, return receipt requested:
If to Buyer -----------------------------------------------------------
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Addressed to: With a copy to:
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WellTech Eastern, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
Two Tower Center, Tenth Floor 700 Louisiana, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to any Shareholder
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Addressed to: With a copy to:
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Kenting Energy Services Inc. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇. ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇.▇.
Attn: Chief Operating Officer ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
5.5. Table of Contents and Captions.Table of Contents and Captions. The
table of contents and captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any article, section, or paragraph hereof.
5.6. Successors and Assigns.Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
successors and assigns of the parties hereto.
5.7. Severability.Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and shall in no
way be affected, impaired or invalidated. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
5.8. Applicable Law.Applicable Law. While the parties hereto acknowledge
and agree that the transfer of the Company Shares and the Shareholder-Owned
Subsidiary Shares hereunder shall be effected and recorded in accordance with
Argentina law, this Agreement shall be governed by and construed and enforced in
accordance with the applicable laws of the Province of Alberta.
5.9. Fees, Expenses.Fees, Expenses. All legal and other fees and expenses
incurred by the parties hereto in connection with the negotiation of this
Agreement and the consummation of the transactions contemplated hereby shall be
borne solely by the party incurring such fee or expense. Without limiting the
generality of the foregoing, any fees and expenses incurred by the Shareholder=s
counsel in connection with updating the stock records of the Company and the
Company Subsidiary as required to properly record the transfer of the shares
hereunder shall not be the obligation of the Company or the Company Subsidiary.
All out-of-pocket expenses incurred by Buyer, the Company or the Company
Subsidiary in connection with resolving the title exceptions described in
Schedule 2.1.9 hereto shall be reimbursed by the Shareholder promptly upon
written request accompanied by written evidence of such expense.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
WELLTECH EASTERN, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
KENTING ENERGY SERVICES INC.
By: /s/▇. ▇. ▇▇▇▇▇▇
Name: ▇. ▇. ▇▇▇▇▇▇
Title: President
Schedule 2.1.6 - 4/30 Financial Statements
See the financial statements attached hereto
Schedule 2.1.7 - Liabilities
See the listing attached hereto
Schedule 2.1.8 - Material Pre-Closing Transactions
Excluded Assets:
Since the Balance Sheet date and in anticipation of the consummation of the
transactions contemplated by this Agreement, the Company Subsidiary has
transferred to P.D. Technical Services Inc. the following assets referred to in
the attached ▇▇▇▇ of Sale (the AExcluded Assets@):
Balance Sheet Adjustments:
The amounts payable from the Company or the Company Subsidiary to the
Shareholder or its affiliates in excess of the amounts payable to the Company or
the Company Subsidiary from the Shareholder or its affiliates shall be satisfied
as follows:
$3,000,000 US will be canceled in consideration for the transfer of the
Excluded Assets with the remaining $525,000 US to be paid by the Buyer on the
date hereof.
Schedule 2.1.9 - Title Exceptions
1. The Argentina real property records do not currently show that the
Company Subsidiary is the owner of the parcel of real property located in Las
Heres, Argentina and the two parcels of real property located in Comodoro
Rivadavia, Argentina (the ACompany Property@) that valid purchase documents in
the possession of the Company Subsidiary indicate it as owning. The Shareholder
represents and warrants that (i) the Company Subsidiary is the owner in fee
simple of the Company Property (with no material Encumbrances thereon), (ii) no
other party has claimed or can validly claim title to any portion of the Company
Property and (iii) it has (or will cause to be) delivered all documents
necessary to file in the appropriate real property records to reflect that the
Company Subsidiary owns the Company Property in fee simple, free from any
material Encumbrances.
2. Some of the certificates of title covering the thirty-seven (37)
automobiles and light pickup trucks owned by the Company Subsidiary (the
ACompany Vehicles@) either do not properly reflect the Company Subsidiary as the
owner thereof or indicate that such automobile is subject to a third part lien.
The Shareholder represents and warrants that Company Vehicles are owned outright
by the Company Subsidiary subject to no Encumbrances, (ii) no other party has
claimed or can validly claim title to any of the Company Vehicles and (iii) it
has (or will cause to be) delivered to Buyer all documents necessary to file
with the appropriate governmental agency to enable the Company Subsidiary to
obtain a clear certificate of title to each Company Vehicle.