Asset Purchase Agreement
by and BETWEEN
Key Energy Services South Texas, Inc.
and
TransTexas Gas Corporation
August 17, 1998
1. Asset Purchase Agreement
This Asset Purchase Agreement (this "Agreement") is entered into as of August
17, 1998 between Key Energy Services South Texas, Inc., a Delaware corporation
("Buyer"), and TransTexas Gas Corporation, a Delaware corporation (the
"Seller").
RECITATIONS
WHEREAS, the Seller is currently engaged in the business of providing onshore
oilfield services through its Integrated Services Division and its Fluids
Services Division (such business being collectively referred to herein as the
"Services Divisions"); and
WHEREAS, the Seller desires to sell substantially all the assets of the Services
Divisions, and Buyer desires to acquire such assets.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements, and subject to the terms
and conditions herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Purchase and Sale of Assets
1.1 Purchase and Sale of the Assets. Subject to the terms and conditions set
forth in this Agreement, the Seller hereby agrees to sell, convey, transfer,
assign and deliver to Buyer effective as of 12:01 A.M. Texas time on the date of
the execution hereof (the "Closing Date"), all of the assets, rights and
interests of the Seller used, primarily or exclusively, in the conduct of the
Services Divisions as the Services Divisions were conducted by the Seller before
the Closing Date other than the Excluded Assets (as defined in Section 1.2
hereof), whether real, personal, tangible or intangible, including, without
limitation, the following assets (all such assets being sold hereunder are
referred to collectively herein as the "Assets"):
(a) all tangible personal property owned by the Seller and used, primarily or
exclusively, in the conduct of the Service Divisions or the operation of
the Assets (such as rigs, machinery, equipment, leasehold improvements,
furniture and fixtures, and vehicles), including, without limitation, that
which is more fully described on Schedule 1.1(a) hereto (collectively, the
"Tangible Personal Property");
(b) all of the inventory, including parts supplies and spare parts inventory,
owned by the Seller and used, primarily or exclusively, in the conduct of
the Services Divisions or the operation of the Assets, including without
limitation, that which is more fully described on Schedule 1.1(b) hereto
(collectively, the "Inventory");
(c) all of the Seller's intangible assets used, primarily or exclusively, in
the conduct of the Services Divisions or the operation of the Assets,
including without limitation, (i) the Seller's rights to the name
"PetroAmerican Services Corporation" (or any name similar thereto or which
incorporates the term "PetroAmerican") which the Seller used, primarily or
exclusively, in connection with the Services Divisions, (ii) all of the
Seller's rights to any patents, patent applications, trademarks and service
marks (including registrations and applications therefor), trade names, and
copyrights and written know-how, trade secrets, licenses and sublicenses
and all other similar proprietary data and the goodwill associated
therewith (collectively, the "Intellectual Property") used or held,
primarily or exclusively, in the conduct of the Services Divisions (the
"Seller Intellectual Property"), and (iii) the sales and promotional
literature, computer software, customer and supplier lists and all other
records of the Seller relating, primarily or exclusively, to the Assets or
the Services Divisions (collectively, the "Intangibles");
(d) all of Seller's rights under those leases, subleases, contracts, contract
rights and agreements relating to the operation of the Assets or the
conduct of the Services Divisions listed on Schedule 1.1(d) hereto
(collectively, the "Contracts");
(e) all of the permits, authorizations, certificates, approvals, registrations,
variances, waivers, exemptions, rights-of-way, franchises, ordinances,
orders, licenses and other rights of every kind and character
(collectively, the "Permits") relating, primarily or exclusively, to all or
any of the Assets or to the conduct of the Services Divisions to the extent
they are assignable, including, but not limited to, those that are more
fully described on Schedule 1.1(e) hereto (collectively, the "Seller
Permits");
(f) the goodwill associated with the Assets or the Services Divisions; and
(g) all other or additional privileges, rights, interests, properties and
assets of the Seller of every kind and description and wherever located
that are used, primarily or exclusively, in the conduct of the Services
Divisions or the operation of the Assets.
1.2 Excluded Assets. The Assets shall not include the following (collectively,
the "Excluded Assets"): (i) all of the Seller's accounts receivable and all
other rights of the Seller to payment for services rendered by the Seller in its
conduct of the Services Divisions before the Closing Date ("Pre-Closing Accounts
Receivable"), it being understood that Seller shall xxxx all of its customers on
the Closing Date for services or materials provided up to that date and that (A)
Buyer will forward any payment on Pre-Closing Accounts Receivable received by it
to the Seller within ten (10) business days of receipt thereof; (B) the Seller
will forward to Buyer any payment received by it in respect of revenues and
accounts receivable relating to the Assets, which relate to services or
materials provided on or after the Closing Date, and any such amounts shall not
be deemed Excluded Assets; and (C) the Seller will coordinate all collection
efforts in respect of Pre-Closing Accounts Receivable through Buyer and will not
directly or indirectly contact the customers of the business regarding
Pre-Closing Accounts Receivable (or any other matters) without the consent of
Buyer (which consent will not be unreasonably withheld or delayed); (ii) all
cash accounts of the Seller and all xxxxx cash of the Seller kept on hand; (iii)
all other receivables and prepaid expenses relating to the Services Divisions,
including all right, title and interest of the Seller in and to any prepaid
expenses, bonds, deposits and other current assets; (iv) the real estate and
other assets described in Schedule 1.2 attached hereto relating to the Services
Divisions; (v) the corporate minute books, accounting records, files, tax
returns and other financial data on whatever media, relating to the Seller or
the Excluded Assets; (vi) the cash consideration paid or payable by Buyer to the
Seller pursuant to Section 1.3 hereof; (vii) all other rights of Seller under
this Agreement; (viii) all rights to refunds, rebates or credits of any taxes
for all periods prior to the Closing; (ix) all insurance policies and (x) all of
the assets and rights of Seller under all employee benefit plans and programs of
Seller.
1.3 Consideration for Assets. As consideration for the sale of the Assets to
Buyer and for the other covenants and agreements of the Seller contained herein,
Buyer agrees to pay to the Seller by wire transfer of immediately available
funds to an account designated by the Seller or by delivery of immediately
available funds.
(a) on or within 3 business days of the Closing Date, the sum of Sixteen
Million Seventy-Seven thousand and No/100 dollars ($16,077,000); and
(b) an amount up to Four Hundred Twenty-Three thousand and No/100 Dollars
($423,000), upon satisfaction of the terms and conditions set forth in the
Letter Agreement dated of even date herewith between the Seller and Buyer.
The aggregate amounts paid by Buyer to the Seller pursuant to this Section 1.3
shall be referred to herein as the "Purchase Price".
1.4 Liabilities. Effective on the Closing Date, Buyer shall assume those, and
only those, liabilities and obligations of the Seller to perform the Contracts
to the extent that the Contracts have not been performed and are not in default
on the Closing Date (the "Assumed Liabilities"). On and after the Closing Date,
the Seller shall be responsible for any and all liabilities and obligations of
the Seller other than the Assumed Liabilities (collectively, the "Retained
Liabilities"), including, without limitation, (a) any obligations arising from
the Seller's employment of the Employees (as defined in Section 3.2 hereof),
including those employees of the Seller listed on Schedule 3.2 hereto; (b) any
liabilities arising from or relating to the Seller's failure to be duly
qualified or licensed to do business and in good standing as a foreign
corporation in all jurisdictions in which the character of the properties owned
or the nature of the business conducted by the Seller would make such
qualification or licensing necessary; (c) any failure to pay any taxes owed by
the Seller which are applicable to the period ending with the Closing Date; (d)
any liability for commissions or other fees payable to brokers, attorneys or
others; (e) all liabilities and obligations relating to, resulting from or
arising out of any and all businesses, assets, properties, rights and interests
that are not being acquired by Buyer hereunder, including without limitation the
Excluded Assets, whether such liabilities or obligations arose before or after
the Closing Date; and (f) any other liabilities resulting from the Seller's
operation of the Assets or conduct of the Services Divisions or any of its
businesses before the Closing Date, including all liabilities and obligations of
the Seller in connection with accounts payable as of the Closing Date.
1.5 Closing. The closing of the purchase and sale provided for hereunder (the
"Closing") shall take place on the Closing Date at the offices of TransTexas Gas
Corporation, 0000 X. Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000-0000.
1.6 Closing Deliveries. At the Closing, Buyer and the Seller will deliver to one
another the documents described below:
1.6.1. Certificate of Secretary of the Seller. The Seller shall deliver an
originally executed Certificate of its Secretary certifying that (i) the Company
has been duly incorporated, and is validly existing and in good standing in the
State of Delaware, as evidenced by a good standing certificate issued by the
Secretary of State of the State of Delaware attached thereto; (ii) the Articles
of Incorporation (as certified as by the Secretary of State of the State of
Delaware) and By-laws of the Company, copies of each of which shall be attached
thereto, are true and complete copies of each as of the Closing Date; (iii) an
annex of the board resolutions authorizing the transactions contemplated by this
Agreement and attached thereto were duly adopted and have not been amended or
rescinded; and (iv) the officers of the Company whose signatures are set forth
on such Certificate, one or more of whom will execute the Agreement and such
other documents contemplated thereby on behalf of the Company, are duly elected,
qualified and incumbent as of the Closing Date, and that the signatures of each
are genuine.
1.6.2. Xxxx of Sale. Buyer and the Seller shall execute a Xxxx of Sale
transferring the Assets to Buyer and such other instruments of transfer as are
necessary to transfer the Assets to Buyer, all of which shall be in a form
mutually acceptable to the Seller and Buyer.
1.6.3. Instrument of Assumption. Buyer and the Seller shall execute an
Instrument of Assumption, which shall be in a form mutually acceptable to the
Seller and Buyer, pursuant to which Buyer will assume the Assumed Liabilities.
1.6.4. Opinion of Seller's Counsel. Buyer shall have received a favorable
opinion, dated as of the Closing Date, from Gardere & Xxxxx, L.L.P., counsel to
the Seller, in a form and substance satisfactory to Buyer, to the effect that
(i) the Seller has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is
qualified to do business in the State of Texas; (ii) all proceedings required to
be taken by or on the part of the Seller to authorize the execution of this
Agreement, the other agreements and instruments to be entered into between the
Seller and Buyer contemplated hereby (collectively, the "Other Agreements"), and
the consummation of the transactions contemplated hereby and thereby have been
taken; (iii) the compliance by the Seller with all of the provisions of this
Agreement and the Other Agreements and the transactions contemplated hereby and
thereby will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, or other agreement or instrument to which the Seller is a
party or by which the Seller is bound or to which any of the Assets of the
Seller are subject; and (iv) this Agreement and the Other Agreements have been
duly executed and delivered by, and are the legal, valid and binding obligation
of the Seller, and are enforceable against the Seller in accordance with their
respective terms, except as the enforceability may be limited by (a) equitable
principles of general applicability or (b) bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws affecting the rights of
creditors generally. In rendering such opinion, such counsel may rely upon (x)
certificates of public officials and of officers of the Seller as to the matters
of fact and (y) the opinion or opinions of other counsel, which opinions shall
be reasonably satisfactory to Buyer, as to matters other than federal or Texas
law.
1.6.5 Officer's Certificate. Seller shall deliver an originally executed
Certificate of one of its Vice Presidents or its President to the effect that
(i) this Agreement and all other agreements to be entered into by Buyer and the
Seller do not conflict with, or result in a breach or violation of, any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to which
the Seller or its affiliates is a party or by which the Seller or its affiliates
or the Assets are bound; and (ii) the Seller is qualified to do business in each
jurisdiction in which the operations of the Services Divisions requires it to be
qualified to do business.
ARTICLE II
Representations and Warranties
2.1 Representations and Warranties of the Seller. The Seller represents and
warrants to Buyer as follows:
2.1.1 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is qualified to do business in the State of Texas and in each other
state in which the nature and conduct of its business requires it to be
qualified to do business, 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.
2.1.2 Agreement Authorized and Effect on Other Obligations. The execution and
delivery of this Agreement and all instruments to be executed by the Seller
hereunder and all transactions contemplated to be entered into by the Seller
hereby have been authorized by all necessary corporate, shareholder and other
action on the part of the Seller, and this Agreement and all instruments to be
executed by the Seller hereunder are the valid and binding obligations of the
Seller enforceable (subject to normal equitable principles) in accordance with
their 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 and all
instruments to be executed by the Seller hereunder and the consummation of the
transactions contemplated hereby and thereby, will not (i) conflict with or
result in a violation or breach of any term or provision of, nor constitute a
default under (A) the Certificate of Incorporation or Bylaws (or other
organizational documents) of the Seller, (B) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which the Seller
is a party or by which the Seller or its respective properties are bound, or (C)
any provision of any law, rule, regulation, order, permits, certificate, writ,
judgment, injunction, decree, determination, award or other decision of any
court, arbitrator or other governmental authority to which the Seller or its
properties are subject; (ii) result in the creation or imposition of any
Encumbrance (as defined in Section 2.1.4 hereof) on any of the Assets; or (iii)
constitute a breach of, default under, result in the termination, right of
termination or cancellation of, or accelerate the performance required by, any
of the Contracts.
2.1.3 Contracts. Schedule 1.1(d) hereto sets forth a complete list of all
contracts, including leases under which the Seller is lessor or lessee, which
relate to the Assets or the conduct of the Services Divisions and which are to
be performed in whole or in part on or after the date hereof. In addition, (a)
all of the Contracts are in full force and effect, and constitute valid and
binding obligations of the Seller, (b) the Seller is not, and to the knowledge
of the Seller no other party to any of the Contracts 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, (c) no
Contract has been entered into on terms which could reasonably be expected to
have an adverse effect on the use of the Assets by Buyer, (d) the Seller has not
received any information which would cause any of such parties to conclude that
any customer of the Seller will (or is likely to) cease doing business with
Buyer (or its successors) as a result of the consummation of the transactions
contemplated hereby.
2.1.4 Title to Assets. Except as set forth in Schedule 2.1.4 hereto, the Seller
has good, indefeasible and marketable title to all of the Assets, free and clear
of any Encumbrances (defined below). All of the Assets conform to all applicable
laws governing their use, and no notice of any violation of any law, statute,
ordinance or regulation relating to any of the Assets has been received by the
Seller, except such as have been fully complied with. The term "Encumbrances"
means all liens, security interests, pledges, mortgages, deeds of trust, claims,
rights of first refusal, options, charges, restrictions or conditions to
transfer or assignment, liabilities, obligations, taxes, privileges, equities,
easements, rights of way, limitations, reservations, restrictions and other
encumbrances of any kind or nature except for statutory liens for taxes,
assessments, governmental charges or levies, or claims of materialmen, carriers,
landlords and like persons, all of which are not yet due and payable and have
not attached.
2.1.5 Licenses and Permits. Schedule 1.1(e) hereto sets forth a complete list of
all Permits necessary under law or otherwise for the operation, maintenance and
use of the Assets in the manner in which the Assets were operated, maintained
and used before the date hereof; each of the Seller Permits and the Seller=s
rights with respect thereto is valid and subsisting, in full force and effect,
and enforceable by the Seller; the Seller is in compliance in all material
respects with the terms of each of the Seller Permits; none of the Seller
Permits have been, or are threatened to be, revoked, canceled, suspended or
modified.
2.1.6 Intellectual Property. Schedule 1.1(c) hereto sets forth a complete list
of all Intellectual Property material or necessary for the continued use of the
Assets; the Seller Intellectual Property is owned or licensed by the Seller free
and clear of any Encumbrances; the Seller has not granted to any other person
any license to use any the Seller Intellectual Property and use of the Seller
Intellectual Property by Buyer in the manner used by Seller before the Closing
will not infringe, misappropriate or conflict with the Intellectual Property
rights of others. The Seller has not received any notice of infringement,
misappropriation or conflict with the Intellectual Property rights of others in
connection with the use by the Seller of the Seller Intellectual Property.
2.1.7 Absence of Certain Changes and Events. Since May 28, 1998, there has not
been:
(a) Financial Change. Any adverse change in the Assets, the Services Divisions
or the financial condition, operations or liabilities of the Seller
relating to the Services Divisions;
(b) Property Damage. Any damage, destruction, or loss to any of the Assets or
the Services Divisions (whether or not covered by insurance);
(c) Waiver. Any waiver or release of a material right of or claim held by the
Seller not purported to be transferred hereunder;
(d) Change in Assets. Any acquisition, disposition, transfer, encumbrance,
mortgage, pledge or other encumbrance of any of the Asset other than in the
ordinary course of business;
(e) Labor Disputes. Any labor disputes between the Seller and its employees who
work in the Services Divisions; or
(f) Other Changes. Any other event or condition known to the Seller that
particularly pertains to and has or might have an adverse effect on the
Assets or the operations of Services Divisions.
2.1.8 Necessary Consents. Except for the Seller Permits, the Seller has obtained
and delivered to Buyer all consents to assignment or waivers thereof required to
be obtained from any governmental authority or from any other third party in
order to validly transfer the Assets hereunder, including, without limitation,
the Contracts.
2.1.9 Environmental Matters.
(a) The Seller is and has been in compliance in all respects with all
applicable Environmental Laws (as defined below) relating to the Assets, or
any operations conducted by the Seller utilizing the Assets, the violation
of which would create any liabilities or obligations for Buyer. The Seller
has obtained and is and has been in compliance with all permits relating to
any operations conducted by the Seller utilizing the Assets required under
applicable Environmental Laws. There is no past or present event, condition
or circumstance that will interfere with the use of the Assets or the
operations of Buyer utilizing the Assets (as such Assets were operated by
the Services Divisions) or which would interfere in any respect with the
Buyer's compliance with Environmental Laws in connection with the Assets or
the operations utilizing the Assets or constitute a violation thereof.
(b) The Assets are not subject to any actual or, to the knowledge of the
Seller, potential action, claim, investigation, review or other proceeding
by any third party or before any governmental entity or authority (or
subdivision thereof) under or based upon any Environmental Law.
(c) The facilities and property included in the Assets and the operations of
the Services Division have been operated in substantial compliance with all
applicable Environmental Laws and are not (and would not be, if all
relevant facts were known to any applicable governmental entity or
authority (or subdivision thereof)) subject to any removal, clean-up,
remediation, restoration, reporting, notification, closure, recordation
obligations under such laws. There are not, and there have not been, any
underground or above-ground storage tanks or pits on the real property
included in the Assets that require (and would require if all relevant
facts were known to any applicable any governmental entity or authority (or
subdivision thereof)) removal, clean-up, remediation, restoration,
reporting, notification, closure, recordation, or any other action.
(d) There are no environmental conditions or circumstances, including the
presence or release of any Hazardous Materials (as defined below), on any
property presently or previously owned or leased by the Seller, or on any
property on which Hazardous Materials generated by the Seller=s operations
or the use of the Assets were disposed of, which would result in an adverse
change in the Assets or which would result in a claim against Buyer.
(e) The Seller has provided to Buyer true and correct copies of all
environmental audits, assessments or other reports relating to (i) the
Assets or operations conducted by the Seller utilizing the Assets, and (ii)
compliance by the Seller with, or liability of the Seller under,
Environmental Laws in connection with the Assets or the operations
conducted by the Seller utilizing the Assets.
(f) The term "Environmental Law" 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, regional, city, local, municipal or other
governmental authority or quasi-governmental authority, regulating,
relating to, or imposing environmental standards of conduct concerning
protection of the environment or human health, or employee health and
safety as from time to time has been or is now in effect. The term
"Hazardous Materials" means (x) asbestos, polychlorinated biphenyls, urea
formaldehyde, lead based paint, radon gas, petroleum, oil, solid waste,
pollutants and contaminants, and (y) any chemicals, materials, wastes or
substances that are defined, regulated, determined or identified as toxic
or hazardous in any Environmental Law.
2.1.10 No ERISA Plans or Labor Issues. No employee benefit plan, program or pay
practice of the Seller, whether or not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended, will by its terms or
applicable law, become binding upon or an obligation, liability or
responsibility of Buyer, financial or otherwise; the Seller has not engaged in
any unfair labor practices which will result in an adverse effect on the Assets
or a claim against Buyer; and there are no labor disputes, pending or threatened
by any employee of the Seller listed on Schedule 3.2 or any former employee of
the Services Divisions. The Seller has no knowledge of any organizational effort
presently being made or threatened on behalf of any labor union with respect to
the employees listed on Schedule 3.2 hereto or any former employee of the
Services Divisions.
2.1.11 Investigations; Litigation. No investigation or review by any
governmental entity with respect to any of the transactions contemplated by this
Agreement is pending or threatened, nor has any governmental entity indicated to
the Seller an intention to conduct the same; and, there is no civil or criminal
suit, action, or legal, administrative, arbitration or other proceeding or
governmental investigation pending, threatened or unasserted to which the Seller
is or would be a party or any other unasserted claims against the Seller which
would have an adverse effect on any of the Assets or result in a claim against
Buyer.
2.1.12 Solvency. The Seller is not presently insolvent, nor will the Seller be
rendered insolvent by the occurrence of the transactions contemplated by this
Agreement. The term Ainsolvent,@ with respect to the Seller, means that the sum
of the present fair and saleable value of the Seller=s assets does not and will
not exceed its debts and other probable liabilities, and the term Adebts@
includes any legal liability whether matured or unmatured, liquidated or
unliquidated, absolute fixed or contingent, disputed or undisputed or secured or
unsecured.
2.1.13 Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Seller, Jefferies &
Co., and their 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 Buyer for a brokerage commission, finder=s fee, financial advisory
fee or any similar payment. The Seller shall pay all fees associated with
Jefferies & Co. and Buyer shall have no liabilities or obligations therefor.
2.1.14 Taxes. All federal, state and local taxes assessed or assessable against
the Assets for periods prior to January 1, 1998 have been paid by the Seller and
the Assets will be conveyed to Buyer free and clear of any such taxes or claims
therefor. All taxes assessed against the Assets for the period commencing
January 1, 1998 will be prorated through the Closing Date (based on 1997
assessed values) with the Seller paying to Buyer at Closing an amount equal to
the portion of such taxes applicable to the period between January 1, 1998 and
the Closing Date.
2.1.15 Equipment and Inventory. Buyer acknowledges that, as to condition and
quality of the equipment and inventory, it will take the equipment and Inventory
to be sold, transferred and conveyed to it hereunder "as is" and "where is" and
that the Seller makes no representation or warranty, expressed or implied, as to
freedom from defects or as to the merchantibility or fitness for any particular
purpose of the equipment or the Inventory.
2.2 Representations and Warranties of Buyer. Buyer represents and warrants to
the Seller 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 Delaware,
has full requisite corporate power and authority to carry on its businesses 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 businesses and is in
good standing as a foreign corporation authorized to do business in the State of
Texas.
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 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. 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 Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Buyer and its counsel
directly with the Seller, Jefferies & Co. 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 the Seller for any brokerage
commission, finder's fee, financial advisory fee or any similar payments.
2.3 Survival of Representations and Warranties. Notwithstanding any
investigation made on the part of the parties hereto, the respective
representations and warranties of the parties contained herein shall survive for
a period of one year following the Closing Date, except for the representations
and warranties set forth in Sections 2.1.4, 2.1.10, 2.1.11 and 2.1.14 hereof,
which shall survive for the applicable statute of limitations period therefor,
and except for the representations and warranties set forth in Section 2.1.9
hereof which shall survive for a period of two years following the Closing Date,
provided that there shall be no expiration of any such representation or
warranty with respect to any bona fide claim that has been asserted by written
notice of such claim delivered to the party or parties making such
representation or warranty during the applicable survival period. 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
notwithstanding any investigation made on the part of the parties hereto shall
also survive for a period of one year following the Closing Date except for the
representations and warranties set forth in any certificate, schedule, exhibit
or other instrument relating to the subject matter of Sections 2.1.4, 2.1.10,
2.1.11 and 2.1.14 hereof, which shall survive for the applicable statute of
limitations period therefor, and except for the representations and warranties
set forth in any certificate, schedule, exhibit or other instrument relating to
the subject matter of Section 2.1.9 hereof which shall survive for a period of
two years following the Closing Date. This Section 2.3 shall not, at any time,
relieve any party hereto from the performance of such party's covenants,
agreements and undertakings set forth in this Agreement, which shall survive as
provided herein.
2.4 Remedy for Breach of Representations and Warranties. The exclusive remedy
for any breach by a party of the representations and warranties contained in
Section 2.1 and 2.2 hereof shall be as set forth in Article IV hereof.
ARTICLE III
Additional Agreements
3.1 Noncompetition. Except as set forth below or as otherwise consented to or
approved in writing by Buyer, the Seller agrees that for a period of 48 months
following the Closing Date, it will not, directly or indirectly, acting alone or
as a member of a partnership or as a consultant, representative, advisor, lender
(including gifts used for capitalization or collateral), a holder of, or
investor in as much as 3% of any security of any class of any corporation or
other business entity (a) engage in any business in competition with the
operations engaged in by the Seller through the Services Divisions within a
territory defined as the Texas Railroad Commission Districts 1 through 6, but
excluding the area east of Highway 288 and south of Interstate 10, (b) request
any present customers or suppliers of the Seller or any customers of Buyer or
any affiliate of Buyer to curtail or cancel their business with Buyer (or
Buyer=s affiliates); (c) disclose to any person, firm or corporation any trade,
technical or technological secrets of the operations of the Services Divisions,
Buyer or any affiliate of Buyer or any non-public details of their business
affairs; or (d) seek out and actively attempt to influence any employee of Buyer
or any affiliate of Buyer to terminate his or her employment. The Seller agrees
that if either the length of time or geographical area as 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 (and any monetary damages for a violation of such restrictions and
breach of the court-altered provisions hereof shall run from the date such
violation began). The obligations expressed in this Section 3.1 are in addition
to any other obligations that the Seller may have under the laws of any state
requiring a corporation selling its assets (or a shareholder of such
corporation) to limit its activities so that the goodwill and business relations
being transferred with such assets will not be materially impaired. The Seller
further agrees and acknowledges that Buyer and affiliates of Buyer do not have
any adequate remedy at law for the breach or threatened breach by the Seller of
the covenants contained in this Section 3.1, and agree that Buyer and/or
affiliates of Buyer may, in addition to the other remedies which may be
available to them hereunder, file a suit in equity to enjoin the Seller 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 Seller acknowledges that the covenants set forth in this
Section 3.1 are being executed and delivered by such party in consideration of
(i) the covenants of Buyer contained in this Agreement, (ii) additional
consideration in the amount of $500,000 payable by Buyer on the date hereof by
wire transfer of immediately available funds to the Seller, on the Closing Date
or within 3 business days of the Closing Date, and (iii) for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged.
3.2 Hiring Employees. Schedule 3.2 hereto is a complete and accurate listing of
all employees of the Seller who devote their full time in the operation of the
Assets (the "Employees"), together with each Employee's pay rate and job
description. Effective as of the Closing Date, those Employees which Buyer, in
its sole discretion, determines to be necessary to continue to operate the
Assets as Buyer deems appropriate, will be offered employment by Buyer, subject
to such Employees meeting Buyer=s standard employment eligibility requirements.
Buyer shall have no liability or obligation with respect to any employee
benefits of any Employees except those benefits that accrue pursuant to such
Employees= employment with Buyer on or after the Closing Date. The Seller shall
cooperate with Buyer in connection with any offer of employment from Buyer to
the Employees and use reasonable efforts to cause the acceptance of any and all
such offers.
3.3 Allocation of Purchase Price. The parties hereto agree to allocate the
Purchase Price payable by Buyer for the Assets hereunder as set forth on
Schedule 3.3 hereto, and shall report this transaction for federal income tax
purposes in accordance with the allocation so agreed upon. The parties hereto
for themselves and for their respective successors and assigns covenant and
agree that they will file coordinating Form 8594's in accordance with Section
1060 of the Internal Revenue Code of 1986, as amended, with their respective
income tax returns for the taxable year that includes the date hereof.
3.4 Publicity; Non-disclosure. The Seller and Buyer agree that each of Buyer and
the Seller will be authorized to issue a press release announcing the
consummation of the transactions contemplated by this Agreement, subject to
prior review and approval of the other party. Except as provided in the
preceding sentence, Buyer and the Seller will not issue any publication or press
release, or disclose to any third party (except for their respective advisors,
counsel and other agents, provided that Buyer and the Seller will remain liable
for any disclosures in violation of the provisions of this Section by such
persons) the existence or provisions of this Agreement, the transactions
contemplated hereby or the negotiations preceding the execution hereof, except
as may be required by (i) applicable law, including disclosures required by the
securities laws, (ii) an order of a court or governmental or administrative
body, or (iii) obligations pursuant to any listing agreement with any securities
exchange or securities exchange regulation.
3.5 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 reasonable necessary to
effect the transactions contemplated hereby.
ARTICLE IV
Indemnification
4.1 Indemnification by the Seller. In addition to any other remedies available
to Buyer under this Agreement, or at law or in equity, the Seller shall
indemnify, defend and hold harmless Buyer and its 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 attorneys= fees
and expenses (collectively, the ADamages@) a Buyer Indemnified Party shall incur
or suffer (whether the damages are suffered or incurred by such Buyer
Indemnified Party directly or as a result of a third party claim against such
Buyer Indemnified Party), which arise or result from (a) any breach of, or
failure by the Seller to perform, its representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or delivered to Buyer by the Seller under this Agreement or
(b) the Seller's failure to satisfy the Retained Liabilities.
4.2 Indemnification by Buyer. In addition to any other remedies available to the
Seller under this Agreement, or at law or in equity, Buyer shall indemnify,
defend and hold harmless the Seller and its officers, directors, employees,
agents and stockholders against and with respect to any and all Damages that
such indemnitees shall incur or suffer, which arise or result from (a) 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 Seller by
or on behalf of Buyer under this Agreement, (b) Buyer's failure to satisfy the
Assumed Liabilities, or (c) all liabilities and obligations resulting from
Buyer's operation of the Assets or the conduct of the Services Divisions after
the Closing Date except to the extent such Damages result from or relate to (x)
any breach of, or failure by the Seller to perform its representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or delivered to Buyer by the
Seller under this Agreement or (y) the Seller's failure to satisfy the Retained
Liabilities.
4.3 Limitations on Indemnification. With respect to Damages that arise or result
from or relate to the matters referred to in Section 4.1(a) and 4.2(a) hereof
(collectively, the "Capped Damages"), neither the Seller nor Buyer shall be
obligated to pay any amounts for indemnification under Article IV of this
Agreement for any Capped Damages until the aggregate of all Capped Damages
actually incurred by the indemnified party equals $50,000, whereupon the
indemnifying party shall be obligated to pay any Capped Damages actually
incurred by the indemnified party in excess of $50,000, but in no event shall
the indemnifying party be liable for an aggregate amount of Capped Damages in
excess of the Maximum Amount (as defined here). With respect to the matters
referred to in Sections 4.1(b), 4.2(b) and 4.2(c) hereof, the indemnifying party
shall be obligated to pay any and all Damages actually incurred by an
indemnified party up to the full amount thereof. As used herein, the "Maximum
Amount" shall mean, with respect to an indemnifying party, an amount equal to
$20,500,000 less any damages actually paid by such indemnifying party as of the
date such indemnification is sought pursuant to the indemnification provisions
of the Purchase and Sale Agreement relating to certain real property to be
purchased by Buyer, dated an even date herewith, by and between the Seller and
Buyer.
4.4 Indemnification Procedure. If 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 an indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligation 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 third party action or proceeding against such indemnified party with
respect to which a claim for indemnification may be made pursuant to this
Article IV, 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 third party action; provided, however, that the failure of
an indemnified party to give notice as provided herein shall not relieve the
indemnifying party of any obligation hereunder to the extent the indemnifying
party is not materially prejudiced thereby. In case any such third party 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 third party claim and to employ counsel
reasonably satisfactory to such indemnified person. An indemnifying party who
elects not to assume the defense of a third party 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 third
party claim or with respect to third party 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 third party
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 third party
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 third party claimant or plaintiff
to such indemnified party of a release from all liability with respect to such
third party claim. No indemnified party shall consent to entry of any judgment
or enter into any settlement of any such third party 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, delayed or
continued.
ARTICLE V
Miscellaneous
5.1 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.
5.2 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.
5.3 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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Key Energy Services South Texas, Inc. Key Energy Group, Inc.
C/o Key Energy Group, Inc. Two Tower Center, 20th Floor
Two Tower Center, 20th Floor East Brunswick, New Jersey 08816
East Brunswick, New Jersey 08816 Attn: General Counsel
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: President
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If to the Seller
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Addressed to:
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Trans Texas Gas Corporation
0000 X. Xxx Xxxxxxx Xxxx. Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxxxxxx, President
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 fifth (5th) businesses day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal businesses
hours on any businesses day.
5.4 Captions. The 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.
5.5 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. No assignment of this Agreement or of any rights or obligations
hereunder may be made by either the Seller or Buyer (by operation of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void; provided,
however, that Seller or Buyer may assign this Agreement and any or all rights
and obligations hereunder, in whole or in part, to any of its affiliates. Upon
such permitted assignment, the references in this Agreement to Seller or Buyer
shall also apply to any such assignee unless the context otherwise requires.
5.6 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.
4.7 Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Texas
(regardless of the laws that might be otherwise be applicable under its
conflicts of law principles).
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to be
executed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
BUYER:
KEY ENERGY SERVICES SOUTH
TEXAS, INC.
By:
Name:
Title:
SELLER:
TRANSTEXAS GAS CORPORATION
By:
Name:
Title:
