Asset Purchase Agreement
among
Xxxxxx Well Servicing, Inc.
Hot Oil Plus, Inc.,
Xxxxxx X. Xxxxxxx, Xx.
and
Xxxxxxxx Xxxxxxx
January 29, 1998
Asset Purchase Agreement
This Asset Purchase Agreement (this "Agreement") is entered into as of January
29, 1998 among Xxxxxx Well Servicing, Inc., a Delaware corporation ("Buyer"),
Hot Oil Plus, Inc., a Texas corporation ("Seller"), Xxxxxx X. Xxxxxxx, Xx.
("Xxxxxxx") and Xxxxxxxx Xxxxxxx (the "Shareholder").
Article I
Purchase and Sale of Assets
I.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 the assets of the Seller existing on the date hereof
other than the Excluded Assets (defined below), whether real, personal, tangible
or intangible, including, without limitation, the following assets of the Seller
relating to or used or useful in the operation of the business as conducted by
the Seller on and before the date hereof (the "Business") (all such assets being
sold hereunder are referred to collectively herein as the "Assets"):
(a) all tangible personal property of the Seller (such as 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 of Seller, including without limitation, that which is
more fully described on Schedule 1.1(b) hereto (collectively, the
"Inventories");
(c) all of the Seller's intangible assets, including without limitation, (i)
all of the Seller's rights to the names under which it is incorporated or
under which it currently does business, (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 in connection with
the Business, including without limitation, that which is more fully
described on Schedule 1.1(c) hereto (the "Seller Intellectual Property")
and (iii) the Seller's telephone numbers and all of its account ledgers,
sales and promotional literature, computer software, books, records, files
and data (including customer and supplier lists), and all other records of
the Seller relating to the Assets or the Business (collectively, the
"Intangibles");
(d) those leases, subleases, contracts, contract rights, and agreements
relating to the Assets or the operation of the Business listed on Schedule
1.1(d) hereto (collectively, the "Contracts");
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(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 principally to all or any of the
Assets or to the operation of the Business, including, but not limited to,
those which are more fully described on Schedule 1.1(e) hereto
(collectively, the "Seller Permits");
(f) the goodwill and going concern value of the Business; 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 in the Business or intended for use in the Business in
connection with, or that are necessary for the continued conduct of, the
Business.
The Assets shall not include the following (collectively, the "Excluded
Assets"): (i) the assets described on Schedule 1.1 hereto, (ii) the real
property owned by Seller listed on Schedule 1.1, which constitutes all of the
real property owned by the Seller, (iii) all of the Seller's accounts receivable
and all other rights of the Seller to payment for services rendered by the
Seller before the date hereof; (iv) all cash accounts of the Seller and all
xxxxx cash of the Seller kept on hand for use in the Business; (v) all right,
title and interest of the Seller in and to all prepaid rentals, other prepaid
expenses, bonds, deposits and financial assurance requirements, and other
current assets relating to any of the Assets or the Business; (vi) all assets in
possession of the Seller but owned by third parties; (vii) the corporate
charter, related organizational documents and minute books of the Seller; and
(viii) the cash consideration paid or payable by Buyer to Seller pursuant to
Section 1.2 hereof.
I.2 Consideration for Assets. As consideration for the sale of the Assets to
Buyer and for the other covenants and agreements of the Seller and the
Shareholders contained herein, Buyer agrees to pay to the Seller, on the date
hereof, the amount of $1,900,000 by wire transfer of immediately available funds
to an account designated by the Seller.
I.3 Liabilities. Effective as of the date hereof, 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 date hereof (the "Assumed Liabilities"). On and after the date hereof,
the Seller shall be responsible for any and all other liabilities and
obligations of the Seller other than the Assumed Liabilities, including, without
limitation, any obligations arising from the Seller's employment of those
employees of the Seller listed on Schedule 3.1 hereto (collectively, the
"Retained Liabilities").
I.4 Time and Place of Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place on the date hereof at the
offices of Xxxxx Xxxxx, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000.
I.5 Closing Deliveries. At the Closing, in addition to the conveyances of the
Assets to the Buyer in exchange for the Purchase Price: (i) the Buyer and Seller
will enter into a lease agreement in the form of Exhibit A (the "Lease
Agreement"), (ii) the Buyer and Xxxxxx X. Xxxxxxx, Xx. ("Xxxxxxx") will enter
into an employment agreement in the form of Exhibit B hereto, (iii) the Buyer
and Hy-Point Energy, Inc. ("Hy-Point") will enter into a propane purchase
agreement (the "Propane Purchase Agreement") in the form of Exhibit C hereto;
(iv) the Seller, Xxxxxxx and the Shareholder shall enter into an agreement not
to compete (the "Noncompetition Agreement") in the form of Exhibit D hereto, (v)
the Buyer and Seller shall implement the employee retention bonus program (the
"Bonus Program") pursuant to the retention bonus agreements (the "Retention
Bonus Agreements") in the form of Exhibit E hereto and the Escrow Agreement (the
"Escrow Agreement") in the form of Exhibit F hereto; and (vi) Buyer and Seller
will deliver to one another the opinions of counsel described below:
I.5.1. Opinion of Buyer's Counsel. The Seller shall have received a favorable
opinion, dated as of the Closing Date, from Xxxxxx & Xxxxxx, L.L.P., counsel for
Buyer, in form and substance satisfactory to the Seller, to the effect that (i)
Buyer has been duly incorporated and is validly existing as a corporation in
good standing under the laws of Delaware; (ii) all corporate proceedings
required to be taken by or on the part of the Buyer to authorize the execution
of this Agreement, the Lease Agreement, the Employment Agreement, the Propane
Purchase Agreement, the Noncompetition Agreement, the Retention Bonus Agreements
and the Escrow Agreement, and the implementation of the transactions
contemplated hereby and thereby, have been taken; and (iii) this Agreement, the
Lease Agreement, the Employment Agreement, the Propane Purchase Agreement, the
Noncompetition Agreement, the Retention Bonus Agreements and the Escrow
Agreement, have been duly executed and delivered by, and are the legal, valid
and binding obligations of Buyer and are enforceable against Buyer in accordance
with their respective terms, except as 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 (i)
certificates of public officials and of officers of Buyer as to matters of fact
and (ii) the opinion or opinions of other counsel, which opinions shall be
reasonably satisfactory to the Seller, as to matters other than federal or Texas
law.
I.5.2. Opinion of Seller's Counsel. The Buyer shall have received a favorable
opinion, dated as of the Closing Date, from Xxxxx X. Xxxxx, counsel to Seller,
Hy-Point, Xxxxxxx and the Shareholder, in form and substance satisfactory to
Buyer, to the effect that (i) each of the Seller and Fuel Gas has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its state of organization; (ii) all corporate proceedings required to be
taken by or on the part of Seller to authorize the execution of this Agreement,
the Lease Agreement, the Noncompetition Agreement and the Escrow Agreement, and
the implementation of the transactions contemplated hereby and thereby have been
taken; (iii) all corporate proceedings required to be taken by or on the part of
Hy-Point to authorize the execution of the Propane Purchase Agreement and the
implementation of the transactions contemplated thereby have been taken, (iv)
the Company owns all of its Assets free and clear of any Encumbrances other than
those Encumbrances listed on the Schedules to this Agreement; and (v) (A) this
Agreement, the Lease Agreement and the Escrow Agreement have been duly executed
and delivered by, and are the legal, valid and binding obligations of the Seller
and are enforceable against the Seller in accordance with their respective
terms, (b) the Propane Purchase Agreement has been duly executed and delivered
by, and is a legal, valid and binding obligation of Hy-Point, enforceable
against Hy-Point in accordance with its terms; (c) the Noncompetition Agreement
has been duly executed and delivered by, and is the legal, valid and binding
obligation of the Seller, Xxxxxxx and the Shareholder, and is enforceable
against the Seller, Xxxxxxx and the Shareholder in accordance with their
respective terms, in each case, 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 (i)
certificates of public officials and of officers of the Sellers as to matters of
fact and (ii) on the opinion or opinions of other counsel, which opinions shall
be reasonably satisfactory to Buyer, as to matters other than federal or Texas
law.
Article II
Representations and Warranties
II.1 Representations and Warranties of the Seller, Xxxxxxx and the Shareholder.
The Seller, Xxxxxxx and the Shareholder jointly and severally represents and
warrants to Buyer as follows:
II.1.1. Organization and Good Standing. Each of the Seller and Hy-Point is a
corporation duly organized, validly existing and in good standing under the laws
of its state of organization, has full requisite corporate power and authority
to carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing 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.
II.1.2. Agreements Authorized and their Effect on Other Obligations. The
execution and delivery of this Agreement, the Lease Agreement, the Employment
Agreement, the Propane Purchase Agreement, the Noncompetition Agreement and the
Escrow Agreement have been authorized by all necessary corporate, shareholder
and other action on the part of the Seller, Hy-Point, Xxxxxxx and the
Shareholder, and this Agreement, the Lease Agreement, the Employment Agreement,
the Propane Purchase Agreement, the Noncompetition Agreement and the Escrow
Agreement are the valid and binding obligations of the Seller and each of the
other parties thereto other than the Buyer, enforceable (subject to normal
equitable principals) against each of such parties in accordance with their
respective 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, the Lease Agreement, the Employment Agreement, the Propane Purchase
Agreement, the Noncompetition Agreement and the Escrow Agreement, 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 (or other
organizational documents) of the Seller or Hy-Point, (ii) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement to which
the Seller, Hy-Point, Xxxxxxx or the Shareholder is a party or by which the
Seller, Hy-Point, Xxxxxxx or the Shareholder 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 the
Seller, Hy-Point, Xxxxxxx or the Shareholder or any of their respective
properties are subject.
II.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 and are to be performed in whole or in part after the date
hereof. All of the Contracts are in full force and effect, and constitute valid
and binding obligations of the Seller. The Seller is not, and 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. 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. Neither the Seller nor any of the Shareholders has received
any information that 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. All of the Contracts are assignable (and are hereby validly
assigned) to Buyer without the consent of any other party thereto.
II.1.4. Title to and Condition of Assets. 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 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. All of the Assets 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 the Seller or any
of the Shareholders, 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.
II.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 they are now being operated,
maintained and used. 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 subject to administrative powers of regulatory
agencies having jurisdiction. 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 to the knowledge of the Seller or any of the Shareholders,
are threatened to be, revoked, canceled, suspended or modified. Upon
consummation of the transactions contemplated hereby, all of the Seller Permits
shall be assignable (and are hereby assigned) to Buyer without the consent of
any regulatory agency. On and after the date hereof, each of the Seller Permits
and Buyer's rights with respect thereto will be valid and subsisting in full
force and effect, and enforceable by Buyer subject only to the administrative
powers of regulatory agencies having jurisdiction over the assigned Seller
Permit.
II.1.6. Intellectual Property. Schedule 1.1(c) hereto sets forth a complete list
of all Intellectual Property material to or necessary for the continued conduct
of the Business. 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 Seller Intellectual Property. Use of the
Seller Intellectual Property will not, and the conduct of the Business did not,
infringe, misappropriate or conflict with the Intellectual Property rights of
others. Neither the Seller nor any of the Shareholders 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.
II.1.7. Financial Statements. The Seller has delivered to Buyer copies of
certain unaudited financial statements of Seller, copies of which are attached
hereto as Schedule 2.1.7 (collectively, the "Seller Financial Statements"), and
include an unaudited balance sheet (the "Unaudited Balance Sheet") as of
September 30, 1997 (the "Balance Sheet Date"). The Seller Financial Statements
are true, correct and complete in all material respects and present fairly and
fully the financial condition of the Seller as at the dates and for the periods
indicated thereon, and have been prepared in accordance with generally accepted
accounting principles as promulgated by the American Institute of Certified
Public Accountants ("GAAP") applied on a consistent basis, except as noted
therein. Each of the Seller Financial Statements include all adjustments that
are necessary for a fair presentation of the Seller's results for that period.
The inventories of the Seller reflected in the Unaudited Balance Sheet, or which
have thereafter been acquired by the Seller, consist of items of a quality and
quantity salable in the normal course of the Business. The values at which such
inventories are carried are in accordance with GAAP applied on a consistent
basis, and are consistent with the normal inventory level and practices of the
Seller with respect to the Business.
II.1.8. Absence of Certain Changes and Events. Since the Balance Sheet Date,
there has not been:
(a) Financial Change. Any adverse change in the Assets, the Business or the
financial condition, operations, liabilities or prospects of the Seller;
(b) Property Damage. Any damage, destruction, or loss to any of the Assets or
the Business (whether or not covered by insurance);
(c) Waiver. Any waiver or release of a material right of or claim held by the
Seller;
(d) Change in Assets. Any acquisition, disposition, transfer, encumbrance,
mortgage, pledge or other encumbrance of any asset of the Seller other than
in the ordinary course of business;
(e) Labor Disputes. Any labor disputes between the Seller and its employees; or
(f) Other Changes. Any other event or condition known to the Seller or any of
the Shareholders that particularly pertains to and has or might have an
adverse effect on the Assets, the operations of the Business or the
financial condition or prospects of the Seller.
II.1.9. Necessary Consents. 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, any consents
required to assign the Contracts and the Seller Permits.
II.1.10. Environmental Matters. None of the current or past operations of the
Business or any of the Assets is being or has been conducted or used in such a
manner as to constitute a violation of any Environmental Law (defined below).
Neither the Seller nor any of the Shareholders 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 Environmental Law or regarding any claims
for remedial obligations or contribution for removal costs or damages under any
Environmental Law. There are no writs, injunction decrees, orders or judgments
outstanding, or lawsuits, claims, proceedings or investigations pending or, to
the knowledge of the Seller or any of the Shareholders, threatened relating to
the ownership, use, maintenance or operation of the Assets or the conduct of the
Business, nor, to the knowledge of the Seller or any of the Shareholders, is
there any basis for any of the foregoing. Buyer is not required to obtain any
permits, licenses or similar authorizations pursuant to any Environmental Law in
effect as of the date hereof to operate and use any of the Assets for their
current or proposed purposes and uses. To the knowledge of the Seller or any of
the Shareholders, the Assets include all environmental and pollution control
equipment necessary for compliance with applicable Environmental Law. No
Hazardous Materials (defined below) have been or are currently being used by the
Seller in the operation of the Assets. No Hazardous Materials are or have ever
been situated on or under any of the Seller's properties, whether owned or
leased, or incorporated into any of the Assets. There are no, and there have
never been any, underground storage tanks (as defined under Environmental Law)
located under any of the Seller's properties, whether owned or leased. There are
no environmental conditions or circumstances, including the presence or release
of any Hazardous Materials, 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 Business or business prospects of the
Seller. 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.
II.1.11. No ERISA Plans or Labor Issues. No employee benefit plan 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 of Buyer. The Seller has not engaged in any unfair
labor practices which could reasonably be expected to result in an adverse
effect on the Assets or the Business. The Seller does not have any dispute with
any of its existing or former employees, and there are no labor disputes or, to
the knowledge of the Seller or any of the Shareholders, any disputes threatened
by current or former employees of any of the Seller.
II.1.12. Investigations; Litigation. No investigation or review by any
governmental entity with respect to the Seller or any of the transactions
contemplated by this Agreement is pending or, to the knowledge of the Seller or
any of the Shareholders, threatened, nor has any governmental entity indicated
to the Seller or any of the Shareholders an intention to conduct the same. There
is no suit, action, or legal, administrative, arbitration, or other proceeding
or governmental investigation pending to which the Seller or any of the
Shareholders is a party or, to the knowledge of the Seller or any of the
Shareholders, might become a party or which would adversely affect the Assets or
the Buyer's future conduct of the Business.
II.1.13. Absence of Certain Business Practices. Neither the Seller, the
Shareholders, nor any officer, employee or agent of the Seller, or any other
person acting on behalf of the Seller or any of the Shareholders, 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 conduct of the
Business or the profitable use of the Assets (or to assist the Seller in
connection with any actual or proposed transaction) which if not given in the
past, might have had an adverse effect on the profitable conduct of the Business
or the profitable use of the Assets, or if not continued in the future, might
adversely affect the profitable conduct of the Business or the profitable use of
the Assets.
II.1.14. 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 "insolvent", with respect to a particular Seller, means that
the sum of the present fair and saleable value of such 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.
II.1.15. Untrue Statements. This Agreement and all other agreements executed by
the Seller or any of the Shareholders and delivered to Buyer does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Seller has also made available to Buyer true, complete and correct copies of all
contracts, documents concerning all litigation and administrative proceedings,
licenses, permits, insurance policies, lists of suppliers and customers, and
records relating principally to the Business and the Assets, and such
information covers all commitments and liabilities of Buyer relating principally
to the Business and the Assets.
II.1.16. Finder's Fee. Except as described on Schedule 2.1.16, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by the Seller and the Shareholders 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 any of the parties hereto for
a brokerage commission, finder's fee or any similar payment.
II.2 Representations and Warranties of Buyer. Buyer represents and warrants to
the Seller and each of the Shareholders as follows
II.2.1. Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has full requisite corporate power and authority to carry on its business as it
is currently conducted, and to own and operate the properties currently owned
and operated by it, and is duly qualified or licensed to do business and is in
good standing as a foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned or the nature of
the business conducted by it would make such qualification or licensing
necessary.
II.2.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby, the Lease Agreement, the
Employment Agreement, the Propane Purchase Agreement, each of the Noncompetition
Agreements, each of the Retention Bonus Agreements and the Escrow Agreement have
been duly and validly authorized by all necessary corporate action on the part
of Buyer, and each of this Agreement , the Lease Agreement, the Employment
Agreement, the Propane Purchase Agreement, each of the Noncompetition
Agreements, each of the Retention Bonus Agreements and the Escrow 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, the Lease Agreement, the Employment Agreement,
the Propane Purchase Agreement, each of the Noncompetition Agreements, each of
the Retention Bonus Agreements and the Escrow 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.
Article III
Additional Agreements
III.1 Hiring Employees. Schedule 3.1 hereto is a complete and accurate listing
of all employees of the Seller that devote their full time and effort in the
operation of the Assets and the conduct of the Business (the "Employees").
Effective as of the date hereof, all of the Employees shall be terminated by the
Seller and, subject to such Employees meeting Buyer's standard employment
eligibility requirements, hired by Buyer. 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 date hereof. The Seller and each of the Shareholders 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.
III.2 Allocation of Purchase Price. The parties hereto agree to allocate the
purchase price paid 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.
III.3 Name Change. The Seller and each of the Shareholders shall, within ten
days from the date hereof, caused to be filed (i) with the secretary of state of
the Seller's state of organization an amendment to the charter (or other
applicable organization document) of the Seller changing the name of the Seller
from its current name to a name that is not similar to such name, and (ii) with
the appropriate authorities of the Seller's state of organization and any other
states such documents as are required to effect such name change, including
without limitation, amendments or withdrawals of certificates of authority to do
business and assumed name filings. The Seller and each of the Shareholders
shall, within five days from the date of its receipt of confirmation of such
filings from the applicable state authorities, cause to be delivered to Buyer
copies of all such confirmations.
III.4 Environmental Matters. The Seller and Xxxxxx Xxxxxxx, Xx. agree that
within 90 days after the date hereof they will, to the extent not completed
before the date hereof, at their sole expense, conduct restoration activities
with respect to the environmental matters described on Schedule 3.4 hereof. If
the Seller and Xx. Xxxxxxx fail to conduct the required restoration activities
within the 90 days following the date hereof, then the Buyer may conduct such
restoration activities at the expense of the Seller and Xx. Xxxxxxx and the
Seller and Xx. Xxxxxxx agree to reimburse the Buyer for all such restoration
costs and expenses within 10 business days of being billed for such expenses by
the Buyer. If the Seller and Xx. Xxxxxxx fail to make the payment to Buyer for
such costs and expenses when due, then, in addition to being liable to the Buyer
for such costs and expenses, the Seller and Xx. Xxxxxxx shall be liable to pay
to Buyer all attorneys' fees and expenses and other costs incurred by the Buyer
in connection with the collection activities with respect to the amounts due.
Article IV
Indemnification
IV.1 Indemnification by the Seller and the Shareholders. In addition to any
other remedies available to Buyer under this Agreement, or at law or in equity,
the Seller and each of the Shareholders shall, jointly and severally, indemnify,
defend and hold harmless Buyer and its 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 indemnitee
shall incur or suffer, which arise, result from or relate to (i) any breach of,
or failure by the Seller or any of the Shareholders to perform, their respective
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or delivered to
Buyer by the Seller or any of the Shareholders under this Agreement; and (ii)
the Retained Liabilities.
IV.2 Indemnification by Buyer. In addition to any other remedies available to
the Shareholders under this Agreement, or at law or in equity, Buyer shall
indemnify, defend and hold harmless the Seller and each of the Shareholders
against and with respect to any and all Damages that such indemnitees shall
incur or suffer, which arise, result from or relate to any breach of, or failure
by Buyer to perform, any of its representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or delivered to the Seller or any of the Shareholders by or
on behalf of Buyer under this Agreement.
IV.3 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 any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to this Article 4, such indemnified party shall, if a claim
in respect thereof is to be made against any indemnifying party, give written
notice to the latter of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. In case any such action
is brought against an indemnified party, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof unless the indemnifying party
has failed to assume the defense of such claim and to employ counsel reasonably
satisfactory to such indemnified person. An indemnifying party who elects not to
assume the defense of a claim shall not be liable for the fees and expenses of
more than one counsel in any single jurisdiction for all parties indemnified by
such indemnifying party with respect to such claim or with respect to claims
separate but similar or related in the same jurisdiction arising out of the same
general allegations. Notwithstanding any of the foregoing to the contrary, the
indemnified party will be entitled to select its own counsel and assume the
defense of any action brought against it if the indemnifying party fails to
select counsel reasonably satisfactory to the indemnified party, the expenses of
such defense to be paid by the indemnifying party. No indemnifying party shall
consent to entry of any judgment or enter into any settlement with respect to a
claim without the consent of the indemnified party, which consent shall not be
unreasonably withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action, the defense of which has been assumed by an
indemnifying party, without the consent of such indemnifying party, which
consent shall not be unreasonably withheld or delayed.
IV.4 Limitation on Damages. Notwithstanding anything in this Agreement to the
contrary, neither the Seller nor any of the Shareholders shall be liable to the
Buyer or any of its affiliates, and Buyer shall not be liable to the Seller and
the Shareholders, for cumulative costs of any Damages in excess of $1,900,000;
provided, however, that such limitation on liability shall not include Damages
for breaches of the representations and warranties contained in Section 2.1.10.
Article V
Miscellaneous
V.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.
V.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.
V.3 Counterparts. Any number of counterparts of this Agreement may be executed
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one instrument.
V.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
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Addressed to: With a copy to:
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Xxxxxx Well Servicing, Inc. Xxxxxx & Xxxxxx, L.L.P.
Two Tower Center, 20th Floor 000 Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: General Counsel Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
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If to the Seller or any of the Shareholders
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Addressed to: With a copy to:
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Hot Oil Plus, Inc. Xxxxx X. Xxxxx
c/o Xxxxxx X. Xxxxxxx, Xx. 000 Xxxxx Xxxxxx
Xxxxx 0, Xxx 0X Xxxxxxx, Xxxxx 00000
Xxxxxxx 00 Xxxx
Xxxxxxxx, Xxxxx 00000
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Any communication so addressed and mailed by first-class registered or certified
mail, postage prepaid, with return receipt requested, shall be deemed to be
received on the third business day after so mailed, and if delivered by courier
or facsimile to such address, upon delivery during normal business hours on any
business day.
V.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.
V.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.
V.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.
V.8 Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Texas.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Shareholders have 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 as of
the day and year first above written.
BUYER:
XXXXXX WELL SERVICING, INC.
By:
Xxxxx Xxxxxxxx, President
SELLER:
HOT OIL PLUS, INC.
By:
Xxxxxx X. Xxxxxxx, Xx., President
SHAREHOLDER:
Xxxxxxxx Xxxxxxx
XXXXXXX:
Xxxxxx X. Xxxxxxx, Xx.
