NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT ("Agreement") is made and entered into
as of the 14th day of February, 2002 by and between CJS PINNACLE PETROLEUM
SERVICES, LLC,a Texas limited liability company ("Covenantor") and BASIC ENERGY
SERVICES, INC., a Delaware corporation ("Basic").
RECITALS:
A. Covenantor is an oil and gas well servicing company based out of
Beeville, Texas and Artesia, New Mexico.
B. Covenantor contracted to sell substantially all of its assets to
Basic upon and subject to the terms of an asset purchase agreement (the "Asset
Purchase Agreement") dated as of December 31, 2001, between Covenantor, and
Basic, as Purchaser, less and except the Excluded Assets (as defined in the
Asset Purchase Agreement).
C. In connection with Basic's purchase of such assets under the Asset
Purchase Agreement (therein and herein referred to collectively as the
"Assets"), Basic is requiring Covenantor to provide, and Covenantor has agreed
to give to Basic, certain covenants and assurances of non-competition and
non-interference as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the benefits
derived or expected to be derived by Covenantor upon closing under the Asset
Purchase Agreement, and other good and valuable consideration, the legal
sufficiency of which is hereby acknowledged, the parties hereto have agreed and
do hereby agree as follows:
1. Monetary Consideration. Covenantor and Basic have allocated
$10,000.00 of the "Purchase Price" under the Asset Purchase Agreement to this
Non-Competition Agreement.
2. Non-Competition/Non-Interference. Ancillary and incident to the
sale by Covenantor to Basic of the Assets, Covenantor covenants and agrees, for
itself and its Affiliates, as follows:
(a) Covenantor and its Affiliates (hereinafter defined) will not:
(1) for a period of three (3) years following the date of
this Agreement, directly or indirectly, own, manage,
operate, control, be employed by, engage or participate
in the ownership, management, operation, or control of,
or be connected in any manner with, or have any other
direct or indirect financial interest in, any business,
firm, person, partnership, corporation, enterprise, or
other concern which is engaged in the Business
(hereinafter defined) anywhere within a radius of 200
miles from the existing offices of Covenantor in
Beeville, Texas and in Artesia, New Mexico;
(2) for a period of three (3) years following the date of
this Agreement, persuade or attempt to persuade any
customer, client, or supplier with whom Covenantor or
any Affiliate of Covenantor or Basic or any Affiliate
of Basic has been having discussions or has done
business, not to engage in the Business with Basic or
any Affiliate, or to engage in the Business with
another person, firm or company which competes with
Basic or any Affiliate of Basic in the Business;
(3) for a period of three (3) years following the date of
this Agreement, make use of, disclose, or divulge to
any third party any information of a proprietary nature
relating to the Business as conducted by Covenantor up
to the time of closing under the Asset Purchase
Agreement, save and except as strictly necessary to
wind up the existing business affairs of Covenantor;
(4) except as otherwise provided in or authorized by the
Asset Purchase Agreement, at any time following the
date of this Agreement, use or authorize to be used the
name "CJS Pinnacle Petroleum Services" or any other
trade or business name, xxxx, symbol, logo, or other
means of identification which was, or is confusingly
similar to, "CJS Pinnacle Petroleum Services";
(5) for a period of three (3) years following the date of
this Agreement, whether on its own behalf or behalf of
any other person, firm, or company, solicit, encourage,
or entice away from Basic or any Affiliate of Basic (or
attempt to do so) any officer or employee engaged in
the Business (including, without limitation, any
employees of Covenantor whom Basic or any Affiliate of
Basic may determine to employ following closing under
the Asset Purchase Agreement); and
(6) for a period of three (3) years following the date of
this Agreement, interfere or attempt to interfere with
the continuance of services, equipment, materials,
supplies, or other goods by or to Basic in connection
with the business or its Affiliates (or the terms
relating to such services, equipment, materials, or
supplies), to or from any customer, client, vendor,
subcontractor, supplier, or other person or business
entity who has been utilizing, purchasing, or supplying
services or goods from or to Covenantor or Basic in
connection with the Business or any Affiliate of Basic.
(b) For purposes of this Agreement, the term "Business" shall mean
the oil and gas well workover, completion, plugging, abandonment, and related
oil and gas well servicing businesses as presently conducted by Covenantor in
Beeville, Texas and Artesia, New Mexico, and the provision of all goods and
services incidental thereto.
(c) For purposes of this Agreement, the term "Affiliate" shall
mean any person, corporation, subsidiary, partnership, or other business entity
which is engaged in the Business and which, whether directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, Covenantor or Basic, as applicable.
3. Exceptions. Notwithstanding the provisions of Section 2(a)(1)
hereof, but subject to all of the other prohibitions and restraints set forth in
Section 2, Covenantor may, without being in breach of this Agreement, at any
time: (a) serve on the board of directors (but not as officers or employees) of
one or more publicly traded corporations which are directly or indirectly
engaged or involved in the Business and (b) own up to 5.00% of the issued and
outstanding equity securities in publicly traded entities which are directly or
indirectly engaged in the Business.
4. Injunctive Relief. Covenantor acknowledges and agrees that damages
in the event of breach of this Agreement by Covenantor will be difficult, if not
impossible, to ascertain, and accordingly that Basic or any applicable Affiliate
of Basic shall have the right to injunctive or other equitable relief in any
court of competent jurisdiction to enjoin any such breach. The existence of this
right shall not limit or preclude any other rights or remedies at law or in
equity which Basic or any applicable Affiliate of Basic might have. Covenantor
further acknowledges and agrees that: (a) the covenants and restrictions
contained herein are reasonable, are the product of arms-length negotiation, and
are necessary to protect the goodwill and other assets being acquired by Basic
from Covenantor pursuant to the Asset Purchase Agreement, and (b) but for this
Agreement and the restrictions imposed upon Covenantor herein, Basic would not
enter into or close under the Asset Purchase Agreement.
5. Representations and Warranties by Covenantor. Covenantor
represents and warrants that: (a) Covenantor has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder; and (b) this Agreement has been duly and validly executed and
delivered by Covenantor, constitutes the legal, valid, and binding obligation of
Covenantor, and is enforceable against Covenantor in accordance with its terms.
6. Litigation. In the event any party hereto shall determine it
necessary to institute litigation against any other party for construction or
enforcement of the terms of this Agreement, the prevailing party in such
litigation shall be entitled to recover its reasonable attorneys' fees and court
costs incurred in connection with such litigation.
7. Further Assurances. The parties agree to execute, acknowledge, and
deliver, as appropriate, such other and further instruments, documents, and
assurances as Basic or any Affiliate of Basic may reasonably require to
effectuate the purpose and intent of this Agreement.
8. Expenses. Each of the parties hereto shall bear its own attorneys'
fees and other expenses incurred in connection with the negotiation and
preparation of this Agreement.
9. Waiver of Compliance. Any failure of Covenantor to comply with any
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by Basic and its applicable Affiliates; provided, however, any
such waiver or failure to insist upon strict compliance shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
10. Binding Effect. This Agreement and all of the provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
11. Governing Law. This Agreement, and the legal relations among the
parties hereto arising from this Agreement, shall be governed by and construed
in accordance with the laws of the State of Texas.
12. Entire Agreement. This Agreement (including any Exhibits hereto
and any other instruments referred to herein) embodies the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and may be modified, supplemented, or amended only by writing duly executed and
delivered by all of the parties hereto.
13. No Presumption. Neither this Agreement nor any other agreement
between the parties nor any uncertainty or ambiguity herein or therein shall be
construed or resolved using any presumption against any party hereto or thereto,
whether under any rule of construction or otherwise. On the contrary, this
Agreement and the other agreements between the parties have been reviewed by the
parties and their counsel and, in the case of any ambiguity or uncertainty,
shall be construed according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
14. Headings. The headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
16. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such provision
shall be fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid, or unenforceable provision had never comprised a part
hereof, and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically, as part of this
Agreement, a provision as similar in terms and substance to such illegal,
invalid, or unenforceable provision as may be possible and legal, valid, and
enforceable.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
CJS PINNACLE PETROLEUM SERVICES, LLC
By: /s/ Xxx X. Xxxxxxx, Xx.
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Printed Name: Xxx X. Xxxxxxx, Xx.
Title: President of PEDECO, Inc.,
Managing Member
BASIC ENERGY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Printed Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
