Execution Copy
ASSET PURCHASE AGREEMENT
AMONG
YALE E. KEY, INC.,
KEY ENERGY GROUP, INC.,
ENERGY AIR DRILLING SERVICE CO.
AND
XXXX XXXXXXX
November 1, 1996
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into
effective as of November 1, 1996 (the "Effective Date") among Key Energy Group,
Inc., a Maryland corporation ("Key"), Yale E. Key, Inc., a Texas corporation and
a wholly-owned subsidiary of Key ("Buyer"), Energy Air Drilling Service Co., a
Colorado corporation ("Seller") and Xxxx Xxxxxxx, the sole shareholder of the
Seller (the "Shareholder").
Article I
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of the Assets. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, convey,
transfer, assign and deliver to Buyer, and Buyer hereby agrees to purchase, the
following assets (the "Assets"):
(a) those items of tangible personal property listed on
Schedule 1.1(a) hereto
(collectively, the "Tangible Personal Property");
(b) Sellers' intangible assets required by Buyer to own,
operate, maintain and use the Tangible Personal Property, including (i)
all of Seller's rights to any patents, copyrights, trademarks, service
marks, licenses or sublicenses (collectively, the "Intellectual
Property") used or held in connection with the ownership, operation,
maintenance and use of the Tangible Personal Property, including those
specifically listed on Schedule 1.1(b) hereto (collectively, the
"Seller Intellectual Property"), and (iii) all applicable customer and
supplier lists of Seller (collectively, the "Intangibles");
(c) those leases, subleases, contracts, contract rights, and
agreements relating to the ownership, operation, maintenance or use of
the Tangible Personal Property, including those specifically listed on
Schedule 1.1(c) hereto (collectively, the "Contracts"); and
(d) all of the Seller's 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") obtained from
governments and governmental agencies relating to the ownership,
operation, maintenance or use of the Tangible Personal Property,
including that which is more fully described on Schedule 1.1(d)
attached hereto (collectively, the "Seller Permits").
1.2 Consideration for Assets. As consideration for the sale of the
Assets to Buyer and for the other covenants and agreements of Seller contained
herein, Buyer agrees to pay to Seller, on the date of execution of this
Agreement, the amount of $500,000 in the form of a cashier's check or bank check
or wire transfer of immediately available funds to an account designated by
Seller. As additional consideration for the sale of the Assets to Buyer and for
the other covenants and agreements of Seller contained herein, Key, for the
benefit of Buyer, agrees to issue, in accordance
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with Section 4.2 hereof, 4,386 shares (the "Key Shares") of common stock, par
value $.01 per share, of Key (the "Key Common Stock").
1.3 Assumed Liabilities. Buyer shall assume only those liabilities of
Seller associated with Buyer's assumption of the Contracts. Seller shall be
responsible for all other liabilities of Seller (collectively, the "Retained
Liabilities"), including, without limitation all obligations and liabilities
owed by Seller to the Employees (as defined in Section 2.1.10 hereof).
1.4 Effective Date; Additional Payments. This Agreement shall be
effective as of the Effective Date. All payments received by Seller for services
using the Tangible Personal Property rendered by Seller on or after the
Effective Date (including payments received by Seller prior to the date of
execution of this Agreement) are being purchased hereunder and shall be the
considered the property of Buyer. Promptly upon receipt by Seller of any such
payments (the "November Payments"), Seller shall either endorse and deliver the
check or draft representing the November Payment (with a copy of the applicable
invoice) to Buyer or remit payment to Buyer in an amount equal to the amount of
the November Payment. Buyer shall reimburse Seller for any payments made by
Seller to an Employee for services rendered to Seller in connection with the
operation or maintenance of the Tangible Personal Property on or after the
Effective Date.
Article II
REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE SHAREHOLDER
2.1 Representations and Warranties of Seller. Each of Seller and
the Shareholder jointly
and severally represents and warrants to Buyer and Key as follows:
2.1.1. Organization and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
the state of its organization, has full requisite corporate power and
authority to carry on its business as it is currently conducted, and to
own and operate the properties currently owned and operated by it, and
is duly qualified or licensed to do business and is in good standing 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.
2.1.2. Agreements Authorized and their Effect on Other
Obligations. The execution and delivery of this Agreement and all other
agreements executed by Seller, the Shareholder or Xxxxx Xxxxx ("Xxxxx")
and delivered to Buyer or Key in connection herewith (the "Seller
Agreements") have been authorized by all necessary corporate action on
the part of Seller, and this Agreement and the Seller Agreements are
valid and binding obligations of Seller, the Shareholder and Tufly, as
applicable, enforceable (subject to normal equitable principals)
against such parties in accordance with their terms, except as
enforceability may be limited
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by bankruptcy, insolvency, reorganization, debtor relief or similar
laws affecting the rights of creditors generally. The execution,
delivery and performance of this Agreement and the Seller Agreements
and the consummation of the transaction contemplated hereby and
thereby, will not conflict with or result in a violation or breach of
any term or provision of, nor constitute a default under (i) the
charter or bylaws of Seller, (ii) any obligation, indenture, mortgage,
deed of trust, lease, contract or other agreement to which Seller, the
Shareholder or Tufly is a party or by which Seller, the Shareholder or
Tufly or their respective properties are bound; or (iii) 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 Seller,
the Shareholder or Tufly or any of their respective properties are
subject.
2.1.3. Liabilities. Except as set forth on Schedule 2.1.3
hereto, Seller does not have any liabilities or obligations either
accrued, absent, contingent or otherwise, and neither Seller nor the
Shareholder has any knowledge of any potential liabilities or
obligations, that would adversely affect the value of the Assets.
2.1.4. Contracts. Schedule 1.1(c) hereto sets forth a complete
list of all contracts, agreements and other written arrangements
relating to the ownership, operation, maintenance or use of the
Tangible Personal Property. All of the Contracts are in full force and
effect, and constitute valid and binding obligations of Seller. Seller
is not, and no other party to any Contract 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 use of
the Assets by Buyer. Seller has not received any information which
would cause Seller to conclude that any customer of Seller will (or is
likely to) cease doing business with Seller as a result of the
consummation of the transactions contemplated hereby.
2.1.5. Title to and Condition of Assets. Seller has good,
indefeasible and marketable title to all of the Assets, free and clear
of any Encumbrances (defined below). All of the Tangible Personal
Property are in a state of good operating condition and repair,
ordinary wear and tear excepted, and 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. To Seller's or the Shareholder's
knowledge, all of the Tangible Personal Property conform to all
applicable laws governing their use. No notice of any violation of any
law, statute, ordinance, or regulation relating to any of the Assets
has been received by Seller or the Shareholder, 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, privileges, equities,
easements, rights of way, limitations, reservations, restrictions, and
other encumbrances of any kind or nature.
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2.1.6. Licenses and Permits. Schedule 1.1(d) hereto sets forth
a complete list of all Permits necessary under law or otherwise for the
ownership, operation, maintenance or use of the Tangible Personal
Property in the manner in which they are now being owned, operated,
maintained and used. Each of the Seller Permits and Sellers' rights
with respect thereto is valid and subsisting, in full force and effect,
and enforceable by Seller subject to administrative powers of
regulatory agencies having jurisdiction. Seller is in compliance in all
material respects with the terms of each of the Seller Permits. None of
the Seller Permits has been, or to the knowledge of Seller or the
Shareholder, are threatened to be, revoked, canceled, suspended or
modified. Upon consummation of the transactions contemplated hereby,
each of the Seller Permits shall have been validly assigned to Buyer,
will be valid and subsisting in full force and effect, and will be
enforceable by Buyer subject to administrative powers of regulatory
agencies having jurisdiction.
2.1.7. Intellectual Property. Schedule 1.1(b) hereto sets
forth a complete list of all Intellectual Property used or held in
connection with the ownership, operation, maintenance and use of the
Tangible Personal Property. The Seller Intellectual Property is owned
or licensed by Seller free and clear of any Encumbrances. Seller has
not granted to any other person any license to use any Seller
Intellectual Property. Use of the Seller Intellectual Property by Buyer
will not, and the use of the Seller Intellectual Property by Seller did
not, infringe, misappropriate or conflict with the intellectual
property rights of others. Neither Seller nor the Shareholder has
received any notice of infringement, misappropriation, or conflict with
the intellectual property rights of others in connection with the use
by Seller of the Seller Intellectual Property.
2.1.8. Necessary Consents. Except as provided in Schedule
2.1.8 hereto, 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 the assignment of the
Seller Permits and the Contracts. To the extent any such consents have
not been obtained by Seller as of the date of the execution of this
Agreement, Seller covenants to use its best efforts to cause such
consents to be obtained following the date of the execution of this
Agreement.
2.1.9. Environmental Matters. None of the current or past
operations of the business of Seller as such business relates or
related to Seller's ownership, operation, maintenance or use of the
Assets is being or has been conducted or used in such a manner as to
constitute a violation of any Applicable Environmental Laws (defined
below). Neither Seller nor the Shareholder has received any notice
(whether formal or informal, written or oral) from any entity,
governmental agency or individual regarding any existing, pending or
threatened investigation or inquiry related to violations of any
Applicable Environmental Laws or regarding any claims for remedial
obligations or contribution for removal costs or damages under any
Applicable Environmental Laws. There are no writs, injunction decrees,
orders or judgments outstanding, or lawsuits, claims, proceedings or
investigations pending or, to Seller's or the Shareholder's knowledge,
threatened relating to the ownership, use,
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maintenance or operation of the Assets or the conduct of the business
of Seller, nor, to Seller's or Shareholder's knowledge, is there any
basis for any of the foregoing. Buyer is not required to obtain any
permits, licenses or similar authorizations pursuant to any Applicable
Environmental Laws in effect as of the Effective Date to operate and
use any of the Assets for their current or proposed purposes and uses.
To Seller's or the Shareholder's knowledge, the Assets include all
environmental and pollution control equipment necessary for compliance
with all Applicable Environmental Laws. No Hazardous Materials (defined
below) have been or are currently being used by Seller in the operation
of the Assets. No Hazardous Materials are or have ever been situated on
or under Seller's properties, whether owned or leased, or incorporated
into any of the Assets. To Seller's or the Shareholder's knowledge,
there are no, and there have never been any, underground storage tanks
(as defined under Applicable Environmental Laws) located under Seller's
properties, whether owned or leased. The term "Applicable Environmental
Laws" means any applicable federal, state or local law, statute,
ordinance, rule, regulation, order or notice requirement pertaining to
human health, the environment, or to the storage, treatment, discharge,
release or disposal of hazardous wastes or hazardous substances,
including, without limitation (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. ss.ss.9601
et seq.), as amended from time to time, including, without limitation,
as amended pursuant to the Superfund Amendments and Reauthorization Act
of 1986 ("CERCLA"), and regulations promulgated thereunder, (ii) the
Resources Conservation and Recovery Act of 1976 (42 U.S.C. ss.ss.6901
et seq.), as amended from time to time ("RCRA"), and regulations
promulgated thereunder, (iii) the Federal Water Pollution Control Act
(U.S.C.A. ss.9601 et seq.), as amended, and regulations promulgated
thereunder, and (iv) any applicable state laws or regulations relating
to the environment. 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
Applicable Environmental Laws, including, but not limited to,
substances defined as "hazardous substances," "hazardous materials," or
"hazardous waste" in CERCLA, RCRA, the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801, et seq.), or comparable state
and local statutes or in the regulations adopted and publications
promulgated pursuant to said statutes.
2.1.10. Employees. Schedule 2.1.10 hereto is a complete and
accurate listing of all employees of Seller that are involved in the
ownership, operation, maintenance or use of the Tangible Personal
Property (the "Employees"). Seller does not currently sponsor, maintain
or contribute to, and has not at anytime 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. No employee benefit plan of Seller will, by its terms or
applicable law, become binding upon or an obligation of Buyer. Buyer
has not engaged in any unfair labor practices which could reasonably be
expected to result in a material adverse effect on the Assets. Seller
does not have any dispute with any of its existing
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or former employees. There are no labor disputes or to the knowledge
of Seller, any disputes
threatened by current or former employees of Seller.
2.1.11. Investigations; Litigation. No investigation or review
by any governmental entity with respect to Seller or any of the
transactions contemplated by this Agreement or the Seller Agreements is
pending or, to the best of Seller's knowledge, threatened, nor has any
governmental entity indicated to Seller an intention to conduct the
same. There is no suit, action, or legal, administrative, arbitration,
or other proceeding or governmental investigation pending to which
Seller is a party or, to the knowledge of Seller, might become a party
or which particularly affects the Assets.
2.1.12. Absence of Certain Business Practices. Neither Seller,
the Shareholder nor any officer, employee or agent of Seller, nor any
other person acting on its 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 profitable use of
the Assets (or to assist Seller in connection with any actual or
proposed transaction) which if not given in the past, might have had a
material adverse effect on the profitable use of the Assets, or if not
continued in the future, might materially adversely effect the
profitable use of the Assets.
2.1.13. Solvency. Seller is not now insolvent, nor will Seller
be rendered insolvent by the occurrence of the transactions
contemplated by this Agreement. The term "insolvent" means that the sum
of the present fair and saleable value of Seller's assets does not and
will not exceed its debts and other probable liabilities, and the term
"debts" includes any legal liability whether matured or unmatured,
liquidated or unliquidated, absolute fixed or contingent, disputed or
undisputed or secured or unsecured.
2.1.14. Untrue Statements. Seller has made available to Buyer
and Key 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 Assets, and such information covers
all commitments and liabilities of Buyer relating principally to the
Assets. This Agreement, the Seller Agreements and the other instruments
executed by Seller, the Shareholder or Tufly and delivered to Buyer or
Key in connection herewith do 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.
2.1.15. Finder's Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by Seller, the Shareholder and their counsel directly with Buyer, Key
and their 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 payment.
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2.1.16. Investment Representations of Seller. Each
of Seller and the
Shareholder acknowledges, represents and agrees that :
(a) Each of Seller and the Shareholder is an "accredited
investor" as such term is defined in Regulation D under the Securities
Act of 1933, as amended (the "Securities Act").
(b) (i) Seller and the Shareholder, through their own
operations, are knowledgeable in operations of the type conducted by
Key, (ii) Key has made available to Seller and the Shareholder
extensive legal, financial, accounting and other business records for
examination by Seller and the Shareholder, (iii) Key has made its
principal executive and operating personnel available for consultation
with the designated representatives of Seller and the Shareholder, (iv)
Seller and the Shareholder have made an extensive investigation of
Key's assets and liabilities, business and financial affairs, and
operations, (v) Seller and the Shareholder are aware of the risks
associated with ownership of the Key Shares, (vi) Seller is capable of
bearing the financial risks associated with such ownership, and (vii)
while recognizing that it cannot effectively waive the protections
afforded to it under the Securities Act, Seller regards itself as an
entity of such financial capacity, sophistication, and prudence that it
does not require the protections afforded to it by the Securities Act,
and is relying upon its own investigation of Key in making its decision
to enter into this Agreement.
(c) The Key Shares have not been registered under the
Securities Act, or
registered or qualified under any applicable state securities laws;
(d) The Key Shares are being issued to Seller in reliance upon
exemptions from such registration or qualification requirements, and
the availability of such exemptions depends in part upon Seller's bona
fide investment intent with respect to the Key Shares;
(e) Seller's acquisition of the Key Shares is solely for its
own account for investment, and Seller is not acquiring the Key Shares
for the account of any other person or with a view toward resale,
assignment, fractionalization, or distribution thereof;
(f) Seller shall not offer for sale, sell, transfer, pledge,
hypothecate or otherwise dispose of any of the Key Shares except in
accordance with the registration requirements of the Securities Act and
applicable state securities laws or upon delivery to Key of an opinion
of legal counsel reasonably satisfactory to Key that an exemption from
registration is available;
(g) Since the Key Shares have not been registered under the
Securities Act or applicable state securities laws, Seller must bear
the economic risk of holding the Key Shares for an indefinite period of
time, and Seller is capable of bearing such risk; and
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(h) In addition to any other legends required by law or the
other agreements entered into in connection herewith, the certificate
evidencing the Key Shares will bear a conspicuous restrictive legend
substantially as follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED
EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE
ACT AND SUCH OTHER STATE LAWS OR UPON DELIVERY TO THIS
CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Article III
REPRESENTATIONS AND WARRANTIES OF BUYER AND
KEY
3.1 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller
and the Shareholder as follows:
3.1.1. Organization and Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws 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.
3.1.2. Agreement Authorized and its Effect on Other
Obligations. The execution and delivery of this Agreement and all other
agreements executed by Buyer and delivered to Seller, the Shareholder
or Tufly in connection herewith (the "Buyer Agreements") have been
authorized by all necessary corporate action on the part of Buyer, and
this Agreement and the Buyer Agreements are valid and binding
obligations of Buyer, enforceable (subject to normal equitable
principals) against Buyer 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 the Buyer Agreements and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a violation or breach of any term or provision of, nor
constitute a default under (i) the charter or bylaws of Buyer; (ii) any
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obligation, indenture, mortgage, deed of trust, lease, contract or
other agreement to which Buyer is a party or by which Buyer or its
properties are bound; or (iii) 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 Buyer or any of its properties
is subject.
3.1.3. 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 Seller, the Shareholder and
their counsel, without the intervention of 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 payment.
3.2 Representations and Warranties of Key. Key represents and
warrants to Seller and
the Shareholder as follows:
3.2.1. Organization and Standing. Key is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maryland, 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.
3.2.2. Agreement Authorized and its Effect on Other
Obligations. The execution and delivery of this Agreement and all other
agreements executed by Key and delivered to Seller, the Shareholder or
Tufly in connection herewith (the "Key Agreements") have been
authorized by all necessary corporate action on the part of Key, and
this Agreement and the Key Agreements are valid and binding obligations
of Key, enforceable (subject to normal equitable principals) against
Key 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 the Key
Agreements and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in a violation or breach
of any term or provision of, nor constitute a default under (i) the
charter or bylaws of Key; (ii) any obligation, indenture, mortgage,
deed of trust, lease, contract or other agreement to which Key is a
party or by which Key or its properties are bound; or (iii) 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 Key or any of its properties is subject.
3.2.3. Finder's Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by Key and its counsel directly with Seller, the Shareholder and their
counsel, without the intervention by any other person as the result of
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any act of Key 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 IV
ADDITIONAL AGREEMENTS
4.1 Noncompetition. Except as otherwise consented to or approved in
writing by Buyer and Key, Seller agrees that for a period of 60 months following
the Effective Date, it will not, except as expressly provided in that certain
Joint Alliance Agreement of even date herewith by and between Seller and Buyer,
directly or indirectly, acting alone or as a member of a partnership or a holder
of, or investor in as much as 5% of any security of any class of any corporation
or other business entity (i) engage in any business providing drilling, workover
or well clean-out services utilizing air, foam, mist or aerated fluid
circulating systems (but specifically excluding the teaching of courses offered
by the University of Tulsa Continuing Education program) within (A) the entire
state of State of Texas excluding Dallam, Sherman, Hansford, Ochiltree,
Lipscomb, Hartley, Moore, Hutchinson, Roberts, Hemphill, Oldham, Potter, Carson,
Gray and Xxxxxxx counties; and (B) and that portion of the State of New Mexico
located south of U.S. Interstate 40 (the "Territory"); (ii) request any present
customers or suppliers of Seller to curtail or cancel their business with Buyer
or Key; (iii) disclose to any person, firm or corporation any trade, technical
or technological secrets of Seller relating to Seller's ownership, operation,
maintenance or use of the Assets, Buyer or Key or any details of their
organization or business affairs or (iv) induce or actively attempt to influence
any employee of Buyer or Key to terminate his employment. Seller agrees that if
either the length of time or geographical area of the Territory 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 4.1 are in addition to any other obligations that
Seller may have under the laws of any state requiring a corporation who sells
its assets to limit its activities so that the goodwill and business relations
associated with the assets being sold (and any successor corporation) will not
be materially impaired. Seller further agrees and acknowledge that Buyer and Key
do not have any adequate remedy at law for the breach or threatened breach by
Seller of this covenant, and agree that Buyer or Key may, in addition to the
other remedies which may be available to them hereunder, file a suit in equity
to enjoin Seller from such breach or threatened breach. If any provisions of
this Section 4.1 are held to be invalid or against public policy, the remaining
provisions shall not be affected thereby. Seller acknowledges that the covenants
set forth in this Section 4.1 are being executed and delivered by Seller in
consideration of the covenants of Buyer and Key contained in this Agreement, and
for other good and valuable consideration, receipt of which is hereby
acknowledged.
4.2 Issuance of Key Shares. On the date of execution of this Agreement,
Key shall file an additional listing application with the American Stock
Exchange requesting the listing of the Key Shares. On the date Key receives
notice of approval of such request, Key shall send written instructions to its
transfer agent and registrar to issue, countersign and register one or more
certificates representing the Key Shares in the name of Seller and deliver such
certificate(s) to Seller
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at the address specified in Section 6.4 hereof. In the event that the American
Stock Exchange does not approve the listing application, the parties hereto
shall negotiate in good faith the appropriate consideration to replace such
shares.
4.3 Hiring Employees. Effective as of the Effective Date, all of the
Employees shall be terminated by Seller. Buyer may, but shall be under no
obligation to, hire any of the Employees effective as of the Effective Date.
Except as provided in Section 1.4 hereof, Buyer shall have no liability or
obligation with respect to any employee benefits of any Employee except those
benefits that accrue pursuant to such Employees' employment with Buyer on or
after the Effective Date. Seller and the Shareholder shall cooperate with Buyer
in connection with any offer of employment from Buyer to the Employees and use
its best efforts to cause the acceptance of any and all such offers. All
Employees hired by Buyer shall be at-will employees of Buyer.
4.4 Registration Rights. Key has delivered to the Shareholders a copy
of the Registration Right Agreement among Key, XxXxxxx Securities Co. L.P. and
Xxxxxxxx Xxxxxx Refsnes, Inc. dated July 3, 1996 (the "Registration Rights
Agreement") pursuant to which Key has agreed to (i) file a registration
statement (the "Shelf Registration Statement") with the SEC on or before April
3, 1997 registering the resale of certain shares of Key Common Stock issuable
upon conversion of certain outstanding convertible debentures of Key and (ii)
use its best efforts to cause the Shelf Registration Statement to be declared
effective by the SEC on or before July 3, 1997. Key hereby agrees to include the
resale of the Key Shares in the Shelf Registration Statement; provided, that (i)
each of the Shareholders shall have all duties and obligations of a "Holder"
under the Registration Rights Agreement and (ii), notwithstanding the inclusion
of the resale of the Key Shares in the Shelf Registration Statement, the
Shareholders shall have no right to participate in an underwritten offering of
Key Common Stock by those debenture holders, if any, exercising their rights
under the Registration Rights Agreement. In the event that the Shelf
Registration Statement is not declared effective by the SEC by July 3, 1997,
Seller shall have the right (the "Put Right") require Key to purchase the Key
Shares from Seller for an aggregate purchase price equal to ninety- percent
(90%) of the aggregate market value of the Key Shares calculated using the per
share closing price on July 3, 1997 as reported by the American Stock Exchange.
The Put Right shall be exercised by delivery of written notice to Key on or
before August 3, 1997, after which date the Put Right shall expire.
4.5 Possession of Tangible Personal Property. Possession of the
Tangible Personal Property shall be deemed to have passed from Seller to Buyer
on the Effective Date. All items of Tangible Personal Property located at the
yard of E. L. Xxxxxx Transportation, 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxx, 00000 (the
"Xxxxxx Facility") on the date of execution of this Agreement shall be moved by
Buyer on or before December 31, 1996 (the "Removal Deadline") at Buyer's sole
cost and expense. Until the Removal Deadline, Seller shall be responsible for
the costs and expenses, if any, associated with the storage of any Tangible
Personal Property at the Xxxxxx Facility. All items of Tangible Personal
Property in use and not located at the Xxxxxx Facility on the date of execution
of this Agreement shall, when such use is completed, be moved at the direction
and expense of Buyer. Buyer shall be responsible for all cost and expense
associated with the shipping of the "spare parts"
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comprising the Tangible Personal Property to Buyer, which shall occur on or
before December 31, 1996.
4.6 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
effect the transactions contemplated hereby.
Article V
INDEMNIFICATION
5.1 Indemnification by Seller and the Shareholder. In addition to any
other remedies available to Buyer and Key under this Agreement, or at law or in
equity, Seller and the Shareholder shall, jointly and severally, indemnify,
defend and hold harmless each of Buyer and Key, and their respective officers,
directors, employees, agents and stockholders, 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
"Damages") that such indemnitees shall incur or suffer, which arise, result from
or relate to (i) any breach of, or failure by Seller or the Shareholder to
perform, their respective re presentations, warranties, covenants or agreements
in this Agreement or in any schedule, certificate, exhibit or other instrument
furnished or delivered to Buyer and Key by Seller or the Shareholder under this
Agreement and (ii) the Retained Liabilities.
5.2 Indemnification by Buyer and Key. In addition to any other remedies
available to Seller under this Agreement, or at law or in equity, Buyer and Key
shall, jointly and severally, indem nify, defend and hold harmless Seller and
its officers, directors, employees and agents against and with respect to any
and all Damages that such indemnitees shall incur or suffer, which arise, result
from or relate to any breach of, or failure by Buyer or Key to perform any of
its representations, war ranties, covenants or agreements in this Agreement or
in any schedule, certificate, exhibit or other instrument furnished or delivered
to Seller by or on behalf of Buyer or Key under this Agreement.
5.3 Indemnification Procedure. If any party hereto discovers or
otherwise becomes aware of an indemnification claim arising under Section 5.1 or
Section 5.2 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. 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 this Article 5, 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. 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
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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.
Article VI
MISCELLANEOUS
6.1 Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements made by the parties hereto
shall survive indefinitely without limitation, notwithstanding any investigation
made by or on behalf of any of the parties hereto. All statements contained in
any certificate, schedule, exhibit or other instrument delivered pursuant to
this Agreement shall be deemed to have been representations and warranties by
the respective party or parties, as the case may be, and shall also survive
without limitation despite any investigation made by any party hereto or on its
behalf.
6.2 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.
6.3 Counterparts. This Agreement may be executed by facsimile signature
and in one or more counterparts, each of which shall deemed to be an original
instrument, but all of which together shall constitute one and the same
instrument.
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6.4 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 or Key
Addressed to: With a copy to:
Key Energy Group, Inc. Xxxxxx & Xxxxxx, L.L.P.
Two Tower Center, Tenth Floor 000 Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Seller or the Shareholder
Addressed to: With a copy to:
Energy Air Drilling Service Co. Hoskin, Farina, Xxxxxxx & Kampf, P.C.
0000 Xxxxxxxxxx Xxxxxxxxx 000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxxx, Xxxxxxxx 00000 Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx Attn: Xxxxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
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.
6.5 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.
6.6 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.
6.7 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.
6.8 Applicable Law. This Agreement shall be governed by and
construed and enforced
in accordance with the applicable laws of the State of Texas.
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IN WITNESS WHEREOF, the Shareholder has executed this Agreement and the
other parties hereto have caused this Agreement to be signed in their respective
corporate names by their respective duly authorized representatives, all on this
7th day of November, 1996 to be effective as of the Effective Date.
YALE E. KEY, INC.
By: \s\ C. Xxx Xxxxxxx
Name: C. Xxx Xxxxxxx
Title: President
KEY ENERGY GROUP, INC.
By: \s\ C. Xxx Xxxxxxx
Name: C. Xxx Xxxxxxx
Title: Vice President
ENERGY AIR DRILLING SERVICE CO.
By: \s\ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: President
THE SHAREHOLDER:
\s\ Xxxx X. Xxxxxxx
Xxxx Xxxxxxx
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