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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
(XXXXXXX TRUCKING CO., INC.)
AMONG,
YALE E. KEY, INC.
AND
XXXXXX X. XXXXXXX
DATED AS OF SEPTEMBER 1, 1997
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
September 1, 1997 by and among Yale E. Key, Inc., a Texas corporation
("Buyer"), and Xxxxxx X. Xxxxxxx (the "Shareholder").
WITNESSETH:
WHEREAS, Buyer is a corporation duly organized and validly existing
under the laws of the State of Texas, with its principal executive offices at
0000 X. Xxxxxx, Xxxxxxx, Xxxxx 00000; and
WHEREAS, Xxxxxxx Trucking Co., Inc. (the "Company") is a corporation
duly organized and validly existing under the laws of the State of New Mexico,
with its principal executive offices at 0000 X. Xxxxxxx Xxxx. (P. X. Xxx 000 -
00000), Xxxxx, Xxx Xxxxxx 00000; and
WHEREAS, the Shareholder owns 500,000 shares (the "Xxxxxxx Shares") of
common stock, par value $1.00 per share, of the Company (the "Xxxxxxx Common
Stock") which constitutes all of the issued and outstanding shares of capital
stock of the Company; 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
WHEREAS, contemporaneously herewith the Shareholder is selling and the
Buyer is buying all of the issued and outstanding capital stock of Ram Oil Well
Service, Inc. ("Ram") pursuant to the terms of a Stock Purchase Agreement
between the Buyer and the Shareholder dated as of the date hereof (the "Ram
Agreement").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE
1.1. Purchase and Sale of the Xxxxxxx 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 (as
defined in Section 2.1.8.1 hereof), and Buyer agrees to purchase and accept
from the Shareholder, all of the Xxxxxxx Shares. In consideration of the sale
of the Xxxxxxx Shares, Buyer shall pay to the Shareholder $15,500,000 in cash
by wire transfer of immediately available funds (of which the sum of $37,000
shall be paid in consideration of the Shareholder's covenant not to compete as
set forth in Section 3.1 hereof), and the Cash Adjustment Payment (as defined
in Section 1.3 hereof), if any, in accordance with Section 1.3 hereof.
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1.2. Delivery of the Xxxxxxx Certificates. The Shareholder shall
deliver to Buyer on the date hereof duly and validly issued certificate(s)
representing all of the Xxxxxxx Shares, each such certificate having been duly
endorsed and in good form for transfer or accompanied by stock powers duly
executed, sufficient and in good form to properly transfer such shares to
Buyer.
1.3 Adjustment of Purchase Price. Shareholder and Buyer shall
cause to be prepared a balance sheet of the Company as of August 31, 1997 (the
"Final Balance Sheet") within 30 days after the date hereof. The Final Balance
Sheet shall be developed using accounting principles applied on a basis
consistent with the 12/31 Balance Sheet (as defined in Section 2.1.6 hereof).
Buyer and the Shareholder shall jointly review the Final Balance Sheet and any
supplemental reports delivered in connection therewith (including, but not
limited to, all adjusting entries made to the Final Balance Sheet) and will
endeavor in good faith to resolve all disagreements regarding the entries
thereon and reach a final determination thereof within 10 days from the date of
delivery of the Final Balance Sheet to the Shareholder.
Within 10 days of reaching such final determination, the following
adjusting payments shall be made:
(1) If the Final Net Book Value of the Company (defined below)
exceeds the Interim Net Book Value of the Company (defined
below), Buyer shall pay to the Shareholder the amount of such
excess (the "Cash Adjustment Payment").
(2) If the Final Net Book Value of the Company is less than the
Interim Net book Value of the Company, the Shareholder shall
pay to Buyer the amount of such difference (the "Cash
Adjustment Payment").
The term "Final Net Book Value of the Company" means the dollar value
of the amount by which (i) the total assets of the Company recorded on the
Final Balance Sheet exceeds (ii) the total liabilities of the Company as
recorded on the Final Balance Sheet. The term "Interim Net Book Value of the
Company" means $4,880,994.44. It is understood and agreed by the parties
hereto that Shareholder withdrew from the Company as of August 31, 1997 the sum
of $1,500,000.00 in cash and such withdrawal was taken into consideration in
developing the Closing Balance Sheets (as defined in 3.7 hereof) and will be
taken into consideration in developing the Final Balance Sheet.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to Buyer as follows:
2.1.1. Organization and Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New Mexico, has full
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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 a material
adverse effect on its financial condition, properties or business.
2.1.2. Agreement Authorized and its Effect on Other
Obligations. The Shareholder is a resident of Palo Pinto County,
Texas, above the age of 18 years, and has the legal capacity and
requisite power and authority to enter into, and perform his
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 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) the Certificate of Incorporation or
Bylaws of the Company or (ii) any obligation, indenture, mortgage,
deed of trust, lease, contract or other agreement to which the
Company or the Shareholder is a party or by which the Company or the
Shareholder or their respective properties are bound.
2.1.3. Capitalization; Total Assets. The authorized
capitalization of the Company consists of 500,000 shares of Xxxxxxx
Common Stock, of which, as of the date hereof, 500,000 shares are
issued and outstanding and owned beneficially and of record by the
Shareholder. On the date hereof, the Company has no 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 the Xxxxxxx Common Stock are validly
issued, fully paid and non-assessable and are subject to preemptive
rights. None of the outstanding shares of the Xxxxxxx Common Stock
are 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 Xxxxxxx Shares. The Shareholder holds
good and valid title to all of the Xxxxxxx Shares, free and clear of
all Encumbrances. The Shareholder possesses full authority and legal
right to sell, transfer and assign to Buyer the Xxxxxxx Shares, free
and clear of all Encumbrances. Upon transfer to Buyer by the
Shareholder of the Xxxxxxx Shares, subject to any Encumbrances created
by Buyer, Buyer will own the Xxxxxxx 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 Xxxxxxx Shares, or that seek to compel
the issuance of capital stock or other securities of the Company.
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2.1.5. No Subsidiaries. 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 Shareholder has delivered
to Buyer a copy of the Company's audited balance sheet for the year
ended December 31, 1996 (the "12/31 Balance Sheet"), and related
statements of earnings and retained earnings (collectively, the "12/31
Financial Statements"), and a copy of the Company's unaudited balance
sheet (the "Interim Balance Sheet") as at and for the four months
ended April 30, 1997 (the "Interim Balance Sheet Date"), and related
income statement (collectively, the "Interim Financial Statements"),
copies of all of which are attached hereto as Schedule 2.1.6. The
12/31 Financial Statements and the Interim Financial Statements are
complete in all material respects. The 12/31 Financial Statements
present fairly the financial condition of the Company as at the date
and for the periods indicated and have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis. The Interim Financial Statements present fairly the financial
condition of the Company as of the date and for the periods indicated
and have been prepared in accordance with generally accepted
accounting principals applied on a consistent basis, subject only to
normal year end adjustments consistent with those made on the 12/31
Financial Statements. The accounts receivable reflected in the Interim
Balance Sheet, or which have been thereafter acquired by the Company,
have been collected or are collectible at the aggregate recorded
amounts thereof. The inventory of the Company reflected in the
Interim Balance Sheet, or which has thereafter been acquired by it,
consists of items of a quality usable and salable in the normal course
of the Company's business, and the value at which the inventory is
carried is at the lower of cost or market.
2.1.7. Liabilities. Except as disclosed on Schedule 2.1.7
hereto, the Company has no liabilities or obligations, either
accrued, absolute or contingent, nor does the Shareholder have any
knowledge of any potential liabilities or obligations, other than
those (i) reflected or reserved against in the Interim Balance Sheet
or (ii) incurred in the ordinary course of business since the Interim
Balance Sheet Date that would materially adversely affect the value
and conduct of the business of the Company.
2.1.8 Additional Information. Attached hereto as
Subschedules to Section 2.1.8 are true, complete and correct lists of
the following items as of June 30, 1997 (unless otherwise specifically
noted):
2.8.1. Real Estate. All real property and
structures thereon owned, leased or subject to a contract of
purchase and sale, or lease commitment, by the Company, with a
description of the nature and amount of any Encumbrances
(defined below) thereon. The term "Encumbrances" 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,
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easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind or nature;
2.1.8.2. Machinery and Equipment. All machinery,
trucks, trailers and other transportation equipment, vehicles,
tools, equipment, furnishings and fixtures and other personal
property owned, leased or subject to a contract of purchase
and sale, or lease commitment, by the Company with a
description of the nature and amount of any Encumbrances
thereon;
2.1.8.3. Inventory. All inventory items or groups of
inventory items owned by the Company, excluding raw materials
and work in process, which raw materials and work in process
are valued on the Interim Balance Sheet, together with the
amount of any Encumbrances thereon;
2.1.8.4. Receivables. All accounts and notes
receivable of the Company, together with (i) aging schedules
by invoice date and due date, (ii) the amounts provided for as
an allowance for bad debts, (iii) the identity and location of
any asset in which the Company holds a security interest to
secure payment of the underlying indebtedness, and (iv) a
description of the nature and amount of any Encumbrances on
such accounts and notes receivable;
2.1.8.5. Payables. All accounts and notes payable of
the Company, all of which are current;
2.1.8.6. Insurance. All insurance policies or bonds
currently maintained by the Company, including title insurance
policies, with respect to the Company, including those
covering the Company's properties, machinery, equipment,
trucks, trailers and other transportation equipment and
vehicles, fixtures, employees and operations, as well as a
listing of any premiums, audit adjustments or retroactive
adjustments due or pending on such policies or any predecessor
policies;
2.1.8.7. Contracts. All material contracts,
including leases pursuant to which the Company is lessor or
lessee, which are to be performed in whole or in part after
the date hereof;
2.1.8.8. Employee Compensation Plans. All bonus,
incentive compensation, deferred compensation, profit-sharing,
retirement, pension, welfare, group insurance, death benefit,
or other employee benefit or fringe benefit plans,
arrangements or trust agreements of the Company or any
employee benefit plan maintained by the Company, together with
copies of the most recent reports with respect to such plans,
arrangements, or trust agreements filed with any governmental
agency and all Internal Revenue Service determination letters
and other correspondence from governmental entities that have
been received with respect to such plans, arrangements or
agreements (collectively, "Employee Plans");
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2.1.8.9. Employee Compensation. The names and levels
of compensation of all of the Company's present salaried
employees and the pay rates for each category of hourly
employees and, to the extent existing on the date of this
Agreement, all arrangements with respect to any bonuses to be
paid to them from and after the date of this Agreement;
2.1.8.10. Bank Accounts. The name of each bank in
which the Company has an account and the names of all persons
authorized to draw thereon;
2.1.8.11. Employee Agreements. Any collective
bargaining agreements of the Company with any labor union or
other representative of employees, including amendments,
supplements, and written or oral understandings, and all
employment and consulting and severance agreements of the
Company;
2.1.8.12. Licenses and Permits. All material
permits, authorizations, certificates, approvals,
registrations, variances, waivers, exemptions, rights-of-way,
franchises, ordinances, licenses and other rights of every
kind and character (collectively, the "Permits") of the
Company under which it conducts its business;
2.1.8.13. Promissory Notes; Guaranties. All
long-term and short-term promissory notes, installment
contracts, loan agreements, credit agreements and any other
agreements of the Company relating thereto or with respect to
collateral securing the same, together with all indebtedness,
liabilities and commitments of others and as to which the
Company is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor and
all letters of credit, whether stand-by or documentary, issued
by any third party;
2.1.8.14. Reserves and Accruals. All accounting
reserves and accruals materially affecting the Interim Balance
Sheet; and
2.1.8.15. Environment. All environmental permits,
approvals, certifications, licenses, registrations, orders and
decrees applicable to current operations conducted by the
Company and all environmental audits, assessments,
investigations and reviews conducted by the Company within the
last five years or otherwise in the Company's possession on
any property owned, leased or used by either of the Companies.
2.1.9. No Defaults. Except as listed on Schedule 2.1.8.7
hereto, to the knowledge of Shareholder, the Company is not a party
to, or bound by, any contract or arrangement of any kind to be
performed after the date hereof, nor is the Company in default in any
obligation or covenant on its part to be performed under any
obligation, lease, contract, order, plan or other arrangement.
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2.1.10. Absence of Certain Changes and Events. Other than as
a result of the transactions contemplated by this Agreement, since the
Interim Balance Sheet Date, there has not been:
2.1.10.1. Financial Change. Any material adverse
change in the financial condition, backlog, operations,
assets, liabilities or business of the Company;
2.1.10.2. Property Damage. Any material damage,
destruction, or loss to the business or properties of the
Company (whether or not covered by insurance);
2.1.10.3. Distributions. Any declaration, setting
aside, or payment of any dividend or other distribution in
respect of the Xxxxxxx Common Stock, or any direct or indirect
redemption, purchase or any other acquisition by the Company
of any such stock, except as disclosed on Schedule 2.1.10.3
hereto;
2.1.10.4. Capitalization Change. Any change in the
capital stock or in the number of shares or classes of the
Company's authorized or outstanding capital stock as described
in Section 2.1.3 hereof;
2.1.10.5. Labor Disputes. Any labor or employment
dispute of whatever nature; or
2.1.10.6. Other Material Changes. Any other event or
condition known to the Shareholder particularly pertaining to
and materially adversely affecting the operations, assets or
business of the Company.
2.1.11. Taxes. All federal, state and local income, value
added, sales, use, franchise, gross revenue, turnover, excise,
payroll, property, employment, customs, duties and any and all other
tax returns, reports, and estimates have been filed with appropriate
governmental agencies, domestic and foreign, by the Company for each
period for which any such returns, reports, or estimates were due
(taking into account any extensions of time to file before the date
hereof); all such returns are true and correct; the Company has only
done business in New Mexico and Texas; all taxes shown by such returns
to be payable and any other taxes due and payable have been paid other
than those being contested in good faith by the Company; and the tax
provisions reflected in the Interim Balance Sheet are adequate, in
accordance with generally accepted accounting principles, to cover
liabilities of the Company at the date thereof for all taxes,
including any assessed interest, assessed penalties and additions to
taxes of any character whatsoever applicable to the Company or its
assets or business. No waiver of any statute of limitations executed
by the Company with respect to any income or other tax is in effect
for any period. The income tax returns of the Company have never been
examined by the Internal Revenue Service or the taxing authorities of
any other jurisdiction. There are no tax liens on any assets of the
Company except for taxes not yet currently due. Except as it relates
to an allocation of tax attributes between the Company and Ram, the
Company is not subject to any tax-sharing or allocation
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agreement. The Company is, and has been a Subchapter S-Corporation
under the Internal Revenue Code of 1986, as amended since its
formation. The Company is not and never has been, a member of a
consolidated group subject to Treasury Regulation 1.1502-6 or any
similar provision.
2.1.12. Intellectual Property. To the Shareholder's knowledge,
the Company owns or possesses licenses to use all patents, patent
applications, trademarks or service marks (including representations
and applications therefor), trade names, copyrights or written know
how, trade secrets or similar proprietary data or the goodwill
associated therewith (collectively, the "Intellectual Property") that
are either material to the business of the Company or that are
necessary for the rendering of any services rendered by the Company
and the use or sale of any equipment or products used or sold by the
Company. The Company has not received any notice of infringement,
misappropriation or conflict with, the Intellectual Property rights of
others.
2.1.13. Title to and Condition of Assets. The Company has
good, indefeasible and marketable title to all its properties,
interests in properties and assets, real and personal, reflected in
the Interim Balance Sheet or in the subschedules to Section 2.1.8
hereto, free and clear of any Encumbrance of any nature whatsoever,
except (i) Encumbrances reflected in the Interim Balance Sheet or in
the subschedules to Section 2.1.8 hereto, (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 the business operations of the Company. All leases pursuant to
which the Company leases (whether as lessee or lessor) any real or
personal property are in good standing, valid, and effective; and
there is not, under any such leases, any existing default or event of
default or, to the knowledge of the Shareholder, event which with
notice or lapse of time, or both, would constitute a default by the
Company and in respect to which the Company has not taken adequate
steps to prevent a default from occurring. The buildings and
premises of the Company that are used in its business are in good
operating condition and repair, subject only to ordinary wear and
tear. All machinery, trucks, trailers and other transportation
equipment and vehicles, tools and other major items of equipment of
the Company are in good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted,
and, to the knowledge of the Shareholder, are free from any known
defects, except as may be repaired by routine maintenance and such
minor defects as to not substantially interfere with the continued use
thereof in the conduct of normal operations and all such assets
conform to all applicable laws governing their use. No notice of any
violation of any law, statute, ordinance or regulation relating to any
such assets has been received by the Company or the Shareholder,
except such as have been fully complied with.
2.1.14. Contracts. All contracts, leases, plans or other
arrangements to which the Company is a party, by which it is bound or
to which the Company or its assets are subject are in full force and
effect, and constitute valid and binding obligations of the Company.
The
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Company is not, and, to the knowledge of the Shareholder, no other
party to any such contract, lease, plan or other arrangement is in
default thereunder, and no event has occurred which (with or without
notice, lapse of time, or the happening of any other event) would
constitute a default thereunder. No contract has been entered into on
terms which could reasonably be expected to have a material adverse
effect on the Company. The Shareholder has not received any
information which would cause the Shareholder to conclude that any
customer representing annual revenues of $100,000 or more to the
Company will (or is likely to) cease doing business with the Company
(or its successors) as a result of the consummation of the
transactions contemplated hereby.
2.1.15. Licenses and Permits. The Company possesses all
Permits necessary under law or otherwise for the Company to conduct
its business as now being conducted and to construct, own, operate,
maintain and use its assets in the manner in which they are now being
constructed, operated, maintained and used, including all such Permits
listed in Schedule 2.1.8.12 hereto (collectively, the "Required
Permits"). To the knowledge of the Shareholder, each of the Required
Permits and the Company's rights with respect thereto is valid and
subsisting, in full force and effect, and enforceable by the Company
subject to administrative powers of regulatory agencies having
jurisdiction. To the knowledge of the Shareholder, the Company is in
compliance in all respects with the terms of each of the Required
Permits. None of the Required Permits have been, or to the knowledge
of the Shareholder, is threatened to be, revoked, canceled, suspended
or modified.
2.1.16. Litigation. Except as set forth in Schedule 2.1.16
hereto, there is no suit, action, or legal, administrative,
arbitration or other proceeding or governmental investigation pending
to which the Company is a party or, to the knowledge of the
Shareholder, might become a party or which particularly affects the
Company or its assets, nor is any change in the zoning or building
ordinances directly affecting the real property or leasehold interests
the Company, pending or, to the knowledge of the Shareholder,
threatened.
2.1.17. Environmental Compliance.
2.1.17.1. Environmental Conditions. Except as set
forth in Schedule 2.1.17.1 hereto, there are no environmental
conditions or circumstances, including, without limitation,
the presence or release of any Substance of Environmental
Concern (as defined below), on any property presently or
previously owned, leased or operated by the Company, or on
any property to which any Substance of Environmental Concern
or waste generated by the Company's operations or use of its
assets were disposed of, which would have a material adverse
effect on the business or business prospects of the Company.
The term "Substance of Environmental Concern" means (a) any
gasoline, petroleum (including crude oil or any fraction
thereof), petroleum product, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutant,
contaminant, radiation and any other substance of any kind,
whether or not any such substance is defined as toxic or
hazardous under any Environmental Law
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(as defined in Section 2.1.17.3 hereof), that is regulated
pursuant to or could give rise to liability under any
Environmental Law;
2.1.17.2 Permits, etc. The Company has, and within
the period of all applicable statute of limitations has had,
in full force and effect all environmental Permits required to
conduct its operations, and is, within the period of all
applicable statutes of limitations has been, operating in
compliance thereunder;
2.1.17.3. Compliance. The Company's operations and
use of its assets are, and within the period of all
applicable statutes of limitations, have been in compliance
with applicable Environmental Law. "Environmental Law" as
used herein means any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, and other
legally enforceable requirements (including, without
limitation, common law) of the United States, or any State,
local, municipal or other governmental authority or
quasi-governmental authority, regulating, relating to, or
imposing liability or standards of conduct concerning
protection of the environmental or of human health, or
employee health and safety as from time to time has been or is
now in effect.
2.1.17.4. Environmental Claims. No notice has been
received by the Company or the Shareholder from any entity,
governmental agency or individual regarding any existing,
pending or threatened investigation, inquiry, enforcement
action. litigation, or liability, including, without
limitation any claim for remedial obligations, response costs
or contribution, relating to any Environmental Law;
2.1.17.5. Enforcement. The Company, and to the
knowledge of the Shareholder, no predecessor of the Company or
other party acting on behalf of the Company, has entered into
or agreed to any consent, decree, order, settlement or other
agreement, nor is subject to any judgment, decree, order or
other agreement, in any judicial, administrative, arbitral, or
other forum, relating to compliance with or liability under
any Environmental Law;
2.1.17.6. Liabilities. The Company has not
assumed or retained, by contract or operation of law, any
liabilities of any kind, fixed or contingent under any
Environmental Law;
2.1.17.7. Renewals. The Shareholder does not know
of any reason why the Company (or its successors) would not be
able to renew without material expense any of the permits,
licenses, or other authorizations required pursuant to any of
the Environmental Law to conduct and use any of the
Company's current or planned operations; and
2.1.17.8. Asbestos and PCBs. No material amounts of
friable asbestos currently exist on any property owned or
operated by the Company , nor do
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polychlorinated biphenyls exist in concentrations of 50 parts
per million or more in electrical equipment owned or being
used by the Company in its operations or on its properties.
2.1.18. Compliance with Other Laws. To the knowledge of the
Shareholder, The Company is not in violation of or in default with
respect to, or in alleged violation of or alleged default with respect
to, the Occupational Safety and Health Act (29 U.S.C. Sections 651 et
seq.) as amended, or any other applicable law or any applicable rule,
regulation, or any writ or decree of any court or any governmental
commission, board, bureau, agency, or instrumentality, or delinquent
with respect to any report required to be filed with any governmental
commission, board, bureau, agency or instrumentality.
2.1.19. ERISA Plans or Labor Issues. Except as reflected in
Schedule 2.1.8.8 hereto, the Company does not currently sponsor,
maintain or contribute to and has not at any time sponsored,
maintained or contributed to any employee benefit plan which is or was
subject to any provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Company has not engaged in any
unfair labor practices which could reasonably be expected to result in
a material adverse effect on its operations or assets. There are no
labor disputes or, to the knowledge of the Shareholder, any disputes
threatened by current or former employees of the Company. As to each
Employee Plan:
(i) For purposes of this Section 2.1.19, all
references to the Company shall be deemed to refer to the
Company and any trade or business, whether or not
incorporated, which together with the Company would be deemed
or treated as a "single employer" with the meaning of Code
Section 414 or ERISA Section 4001. None of the Employee Plans
(i) is subject to Title IV of ERISA or the minimum funding
requirements of Section 412 of the Code of Section 302 of
ERISA, (ii) is a plan of the type described in Section 4063 of
ERISA or Section 413(c) of the Code, (iii) is a "multiemployer
plan" (as defined in Section 3(37) of ERISA), (iv) provides
for medical, life or other types of insurance benefits to
current or future retired or former employees of the Company
(other than as required for Consolidated Omnibus
Reconciliation Act of 1985, as amended ("COBRA") continuation
coverage under Code Section 4980B or similar state law), (v)
obligates the Company to pay any severance or similar benefits
solely as a result of a change in control or ownership of the
Company, or (vi) is a "voluntary employees' beneficiary
association" with the meaning of Code Section 501(c)(9).
(ii) Each Employee Plan complies with and has been
administered in form and in operation in compliance with all
applicable laws include, without limitation, ERISA, the
Internal Revenue Code of 1986, as amended (the "Code") and
COBRA, and the Shareholder has not received any notice from
any governmental authority questioning or challenging such
compliance;
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(iii) The Company's administration and operation of
the Employee Plans has not been conducted in such a manner as
would give rise to any material fines, penalties, taxes,
claims or charges against the Company by a governmental entity
or any third party or otherwise result in a material adverse
effect on the Company's financial condition.
(iv) Funding of the Xxxxxxx Trucking Co., Inc.
401(k) Plan is in the sole discretion of the Company
regardless of past funding practices, and the Xxxxxxx Trucking
Co., Inc. 401(k) Plan may be terminated at any time without
liability to the Company other than the obligation to
distribute the funds held by the Xxxxxxx Trucking Co., Inc.
401(k) Plan in accordance with the provisions thereof;
(v) There has been no event or condition which
presents a material risk of termination of any Employee Plan
of the Company;
(vi) The execution, delivery and performance of
this Agreement will not cause any Employee Plan of the Company
to be terminated or otherwise adversely affect the
administration or operation thereof. The Company's
administration of its Employee Plans following the date hereof
in the same manner as such plans were administered by the
Company prior to the Closing will not violate any applicable
laws or otherwise result in a material adverse effect on the
financial condition of the Company;
(vii) Except as would not cause a material adverse
effect, each Employee Plan which is intended to be qualified
under Code Section 401(a), (i) has been timely amended to
reflect all requirements of the Tax Reform Act of 1986 and all
subsequent federal legislation which is required to be adopted
prior to the date hereof and (ii) has received from the
Internal Revenue Service a favorable determination letter
which considers the terms of the Employee Plan as amended for
such tax law changes, or is within the remedial amendment
period for seeking such favorable determination letter.
Nothing has occurred since the date of the most recent
determination letter that would adversely affect the qualified
status of each such Employee Plan or the tax-exempt status of
any related trust;
(viii) During the five years preceding the date
hereof (i) no under-funded pension plan subject to Title IV of
ERISA or the minimum funding requirements of Code Section 412
or ERISA Section 302 has been transferred out of the Company
and (ii) the Company has not participated in or contributed
to, or had an obligation to participate in or contribute to,
any multiemployer plan (as defined in ERISA Section 3(37));
(ix) The Company has not incurred, and has no
reason to expect that it will incur, any liability to the
Internal Revenue Service, the Department of Labor, the Pension
Benefit Guaranty Corporation (PBGC), or to any multiemployer
plan, or
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otherwise under Title IV of ERISA (including any withdrawal
liability), or otherwise under ERISA or the Code, with respect
to any Employee Plan that the Company maintains or contributes
to, or had an obligation to contribute to;
(x) Consistent with applicable laws, the Company
may amend or terminate any Employee Plan at any time without
the consent of any participant therein or any other person.
2.1.20. Investigations; Litigation. Neither the Shareholder
nor the Company has received any notice or other indication that any
investigation or review by any governmental entity with respect to
the Company or any of the transactions contemplated by this Agreement
is pending. To the knowledge of the Shareholder, no investigation or
review by any governmental entity with respect to the Company or any
transaction contemplated by this Agreement is threatened, nor has any
governmental entity indicated to the Company an intention to conduct
the same, and there is no action, suit or proceeding pending or, to
the knowledge of the Shareholder, threatened against or affecting the
Company at law or in equity, or before any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, that either individually or in the aggregate, does or
is likely to result in any material adverse change in the financial
condition, properties or business of the Company.
2.1.21. No Trade Names. There are no trade names, assumed
names and fictitious names used or held by the Company.
2.1.22. Absence of Certain Business Practices. To the
knowledge of the Shareholder, neither the Company nor any officer,
employee or agent of the Company, nor any other person acting on their
behalf, has directly or indirectly, within the past five years, given
or agreed to give any gift or similar benefit to any customer,
supplier, government employee or other person who is or may be in a
position to help or hinder the business of the Company (or to assist
the Company in connection with any actual or proposed transaction)
which (i) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (ii) if not
given in the past, might have had a material adverse effect on the
assets, business or operations of the Company as reflected in the
Interim Balance Sheet, or (iii) if not continued in the future, might
materially adversely effect the assets, business operations or
prospects of the Company or which might subject the Company to suit
or penalty in a private or governmental litigation or proceeding.
2.1.23. No Untrue Statements. The Company and the
Shareholder have made available to Buyer true, complete and correct
copies of all contracts, documents concerning all litigation and
administrative proceedings, licenses, permits, insurance policies,
lists of suppliers and customers, and records relating principally to
the Company's assets and business, and such information covers all
commitments and liabilities of the Company relating to its business or
assets, as contemplated in the terms of this Agreement. This
Agreement and the agreements and instruments to be entered into in
connection herewith do
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not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made herein and
therein not misleading in any material respect.
2.1.24. Consents and Approvals. No consent, approval or
authorization of, or filing or registration with, any governmental or
regulatory authority, or any other person or entity other than the
Shareholder, is required to be made or obtained by the Company or the
Shareholder in connection with the execution, delivery or performance
of this Agreement or the consummation of the transactions contemplated
hereby.
2.1.25. Finder's Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried
on by the Shareholder and his 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 Buyer. Buyer represents and
warrants to the Shareholder as follows
2.2.1. Organization and Good Standing. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Texas, 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 a material adverse effect on
its financial condition, properties or business.
2.2.2. 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 Articles 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. 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
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performance of this Agreement or the consummation of the transactions
contemplated hereby.
2.2.4. 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 and the
Shareholder and their 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
3.1. Noncompetition. Except as disclosed on Schedule 3.1 hereto or
otherwise consented to or approved in writing by Buyer, the Shareholder agrees
that for a period of 60 months from the date hereof, he will not, 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 competition with the business or businesses conducted by
the Company, or in the business of providing property maintenance and workover
services to operators of oil and gas xxxxx, the contract drilling and
completion of oil and gas xxxxx or the production of oil and natural gas, or in
any other oil and gas well service business of the nature that are provided and
marketed by the Company, Buyer or any affiliate of Buyer on the date hereof in
any state of the United States, or any foreign country in which the Company ,
Buyer or any affiliate of Buyer transacts business on the date hereof; (ii)
request any present customers or suppliers of the Company to curtail or cancel
their business with the Company, Buyer or any affiliate of Buyer; (iii)
disclose to any person, firm or corporation any trade, technical or
technological secrets of the Company, 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, 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 the states in which he does 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. The Shareholder further agrees and acknowledges that the Company,
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 agrees that the
Company, 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
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delivered by the Shareholder in consideration of the covenants of Buyer
contained in this Agreement, the payment of the sum of $37,000 as specified in
Section 1.1 hereof and for other good and valuable consideration, receipt of
which is hereby acknowledged.
3.2. Employment. From the date hereof, Shareholder shall be
employed by the Company pursuant to the terms and conditions and the salary
specified in an employment agreement executed contemporaneously herewith
between the Shareholder and the Company.
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.
3.4. Purchase of Real Property From the Shareholder. The
Shareholder agrees that he will, on or before the consummation of the purchase
and sale of the Xxxxxxx Shares pursuant to the terms of this Agreement, sell
the real property described on Subschedule 2.1.8.1-6 hereto to the Company for
a cash consideration of $35,000, subject to the terms of a contract for the
sale of such property executed between the Shareholder and the Company
contemporaneously herewith.
3.5. Lease of Real Property from the Shareholder. The Shareholder
agrees that he will, on or before the consummation of the purchase and sale of
the Xxxxxxx Shares pursuant to the terms of this Agreement, lease those real
properties and improvements described on Subschedules 2.1.8.1-4, 2.1.8.1-5 and
2.1.8.1-7 hereto to the Company pursuant to the terms and conditions and for
the consideration set forth in a lease agreement agreed upon between the
Shareholder and the Buyer.
3.6. Ram Agreement. The Shareholder and the Buyer agree that their
obligations under this Agreement (including the Shareholder's obligations under
Sections 3.2, 3.4 and 3.5) are expressly conditioned upon the contemporaneous
consummation of the transactions contemplated by the Ram Agreement and that
neither transaction (or the Shareholder's obligations under Sections 3.2, 3.4
and 3.5) will be consummated unless both transactions are consummated
contemporaneously (unless otherwise mutually agreed by the parties hereto).
3.7. Closing Balance Sheets. The Shareholder has caused to be
delivered to Buyer balance sheets of Ram and the Company as of August 31, 1997
("Closing Balance Sheets") in the form of those attached hereto as Schedule 3.7
which reflect the total assets of the Company and Ram to be less than
$10,000,000 in the aggregate. The Closing Balance Sheets have been prepared in
a manner consistent with the prior regularly prepared monthly financial
statements of the Company and Ram, taking into account the timing of their
preparation and the withdrawal referred to in Section 1.3 hereof and the
bonuses and redemptions referred to in Section 1.3 of the Ram Agreement.
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3.8. Release of Guaranties. Buyer agrees that it will secure the release
of the Shareholder from his personal guaranties executed in conjunction with
the letters of credit and plugging bonds listed on Schedule 2.1.8.13 hereto
within 30 days following the date hereof.
ARTICLE 4
INDEMNIFICATION
4.1. 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, Buyer and
their affiliates and their respective officers, directors, employees, agents
and stockholders (collectively, the "Buyer Indemnified Parties"), against and
with respect to (a) any liability incurred by the Buyer Indemnified Parties in
connection with the litigation described on Schedule 2.1.16 in excess of any
insurance coverage applicable thereto and (b) 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
"Damages") in excess of $230,000 in the aggregate that the Buyer Indemnified
Parties shall incur or suffer, which arise, result from or relate to any breach
by the Shareholder of (or the failure of the Shareholder to perform) his
representations, warranties, covenants or agreements in this Agreement and/or
in the Ram Agreement or in any schedule, certificate, exhibit or other
instrument furnished or delivered to Buyer by the Shareholder under this
Agreement and/or the Ram Agreement; provided, however, under no circumstances
shall the Shareholder's liability under this Section 4.1 and under Section 4.1
of the Ram Agreement exceed the total purchase price payable by Buyer to the
Shareholder under this Agreement and the Ram Agreement..
4.2. 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 in excess of $230,000 in the aggregate that
the Shareholder shall incur or suffer, which arise, result from or relate to
(a) any breach of, or failure by Buyer to perform, any of its representations,
warranties, covenants or agreements in this Agreement or in the Ram 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 or
the Ram Agreement or (b) liabilities incurred by the Shareholder which arise
solely and completely out of events occurring in the operation of the Company
by Buyer on or after the date of this Agreement, unless such liabilities are of
the liabilities specified in Section 4.1 hereof for which the Shareholder has
agreed to indemnify the Buyer Indemnified Parties. Buyer further agrees that
any damages realized by the Shareholder as a result of Buyer's breach of its
obligations under Section 3.8 or such paragraph (b) of this Section 4.2 above
shall not be subject to the $230,000 threshold specified above.
4.3. Indemnification Procedure. If any party hereto discovers or
otherwise becomes aware of one or more indemnification claims in excess of
$230,000, in the aggregate, arising under Sections 4.1 and 4.2 of this
Agreement or under the Ram 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 or under the
Ram Agreement; provided,
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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 Sections 4.1 and 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
MISCELLANEOUS
5.1. Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements made by the parties
hereto shall survive until August 31, 1999, notwithstanding any investigation
made by or on behalf of any of the parties hereto; provided, however, that the
representations and warranties contained in Section 2.1.11 hereof shall survive
until the expiration of the applicable statute of limitations associated with
tax issues. 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 until August 31, 1999 despite any
investigation made by any party hereto or on its behalf. All covenants and
agreements contained herein shall survive as provided in this Agreement.
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5.2. 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. 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. 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
Addressed to: With a copy to:
Yale E. Key, Inc. Key Energy Group, Inc.
P. O. Box 00000 Xxx Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000 Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: President Attn: General Counsel
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
and
Xxxxx, Xxxxxxxx & Xxxxx
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
IF TO THE SHAREHOLDER
Addressed to: With a copy to:
Xxxxxx X. Xxxxxxx Xxxxxx Law Firm
Star Xxxxx 0, Xxx 00X X. X. Xxx 0000
Xxxxxx, Xxxxx 00000 Xxxxx, Xxx Xxxxxx 00000-0000
Attn: Xx. Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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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. 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. 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. 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. This Agreement shall be governed by and
construed and enforced in accordance with the applicable laws of the State of
New Mexico.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Shareholder has executed this Agreement and
the Buyer has caused this Agreement to be signed in its corporate name by its
duly authorized representative, all as of the day and year first above written.
YALE E. KEY, INC.
By: /s/ C. XXX XXXXXXX
-------------------------------------
C. Xxx Xxxxxxx, President
SHAREHOLDER
/s/ XXXXXX X. XXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxx
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