ASSET PURCHASE AGREEMENT
AMONG
WELLTECH EASTERN, INC.,
KEY ENERGY GROUP, INC.,
TRI STATE WELLHEAD & VALVE, INC.
AND
XXXX X. XXXXXXX
MARCH 14, 1997
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of March 15,
1997 (the "Effective Date") among Key Energy Group, Inc., a Maryland corporation
("Key"), WellTech Eastern, Inc., a Delaware corporation and a wholly-owned
subsidiary of Key ("Buyer"), Tri State Wellhead & Valve, Inc., a Texas
corporation ("Seller"), and Xxxx X. Xxxxxxx, the sole shareholder of the Seller
(the "Shareholder").
WITNESSETH:
WHEREAS, Seller desires to sell substantially all of its assets, and Buyer
desires to purchase such assets.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants, and agreements, and subject to the terms
and conditions herein contained, the parties hereto hereby agree as follows:
Article 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 from Seller, all of
the assets of Seller existing on the date hereof other than the Excluded Assets
(defined below), whether, tangible, or intangible, including, without
limitation, the following assets of Seller relating to or used or useful in the
operation of the business of Seller as conducted by 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 Seller (such as machinery, equipment,
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"), subject to changes in the ordinary course of business since the
Balance Sheet Date (as defined in Section 2.1.3 hereof
(c) all of Sellers' intangible assets collectively, the "Intangibles"),
including, without limitation, (i) all of Seller's rights to the names under
which it is incorporated or under which it currently does business, (ii) all of
Seller's rights to any patents, copyrights, trademarks, service marks, licenses
or sublicenses, trade names, written know-how, trade secrets and all other
similar proprietary data and the goodwill associated therewith (collectively,
the "Intellectual Property") used or held in connection with the business,
including those specifically listed on Schedule 1.1(c) hereto (collectively, the
"Seller Intellectual Property"), and (iii) all of Seller's rights in its phone
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 Seller relating to the Assets or the
Business, excluding the corporation minutes books of Seller;
(d) to the extent that Seller has the legal power to convey same, those leases,
subleases, contracts, contract rights, and agreements, (collectively, the
"Contracts") relating to the of the Business, specifically listed on Schedule
1.1(d) hereto (collectively, the Transferred "Contracts");
(e) to the extent that Seller has the legal power to convey same, all permits,
authorizations, certificates, approvals, registrations, variances, waivers,
exemptions, rights-of-way, franchises, ordinances, licenses and other rights of
every kind and character (collectively, the "Permits") of Seller obtained from
governments and governmental agencies relating to including, without limitation,
that which is 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) to the extent that Seller has the legal power to convey same, all other or
additional privileges, rights, interests, properties and assets of Seller of
every kind and description and wherever located that are used in the Business,
intended for use in the Business, or necessary for the continued conduct of the
Business other than the Excluded Assets. The Assets described in this
subparagraph (g) shall include the right to complete all work in progress of
Seller as it exists at 12:01 A.M. on March 15, 1997 (the Effective Date"). All
customer payments due or to become due with respect to such work in process
arising out of services performed or products furnished prior to the Effective
Date shall be retained by Seller and all customer payments due or to become due
with respect to services furnished and products furnished subsequent to the
Effective Date shall be the property of Buyer. All expenses incurred, including
expenses of wages or salaries of employees, incurred prior to the Effective Date
shall remain the liability of Seller and all such expenses incurred after the
Effective Date shall be the liability of Buyer.
The Assets shall not include the following (collectively, the "Excluded
Assets"); (i) notes or indebtedness owed to Seller including all of Seller's
accounts receivable and all other rights of Seller to payment for services
rendered by Seller before the Effective Date the ("Seller Receivables"); (ii)
all cash accounts, cash equivalents or similar investments of Seller and all
xxxxx cash of Seller kept on hand for use in the Business; (iii) all right,
title and interest of Seller in and to all prepaid rentals, other prepaid
expenses, prepaid taxes, bonds, deposits and financial assurance requirements,
and other current assets relating to any of the Assets of the Business; (iv) the
corporate charter, corporate seal, organizational documents and minute books of
Seller; (v) all assets in possession of Seller but owned by third parties; (vi)
all rights under the Contracts of Seller not specifically assigned to Buyer
hereunder; and (viii) Seller's right, title and interest in and to this
Agreement; and (ix) two hot oiler trucks, all tubing owned by Seller, and one
end dump trailer.
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 (i) agrees to pay to Seller, on the date hereof, the amount of $550,000 in
the form of a cashier's check or bank check or wire transfer of immediately
available funds to an account designated by Seller; and (ii) Key, for the
benefit of Buyer, agrees to issue, in accordance with Section 4.2 hereof, 83,770
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 Transferred 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 Assets Owned by Shareholder. Buyer and Seller acknowledge that some of the
Assets listed on Schedule 1.1(a) hereto are in fact owned by Shareholder rather
than by Tri-State. With respect to all such Assets owned by Shareholder, the
term "Seller" as used in this Article I shall include Shareholder.
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, except where the failure to so qualify or be licensed would
not have a material adverse effect on the Assets or the Business.
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 or the Shareholder 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 and the Shareholder, as applicable,
enforceable (subject to normal equitable principals) against such parties 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 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 or the Shareholder is
a party or by which Seller 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
Seller or the Shareholder or any of their respective properties are subject.
2.1.3. Financial Statement; Absence of Certain Changes and Events. Seller has
delivered to Buyer copies of certain unaudited financial statements of Seller.
Such financial statements are attached hereto as Schedule 2.1.3 (collectively,
the "Seller Financial Statements") and include Seller's balance sheet (the
"January 31, Balance Sheet") as at January 31, 1997 (the "Balance Sheet Date").
The Seller Financial Statements present fairly and fully the financial condition
of the Seller as at the dates and for the periods indicated thereon, subject, in
the case of interim financial statements, to normal year end adjustments. Other
than as a result of the transactions contemplated by this Agreement, since the
Balance Sheet Date, there has not been (whether as a result of a single event or
in the aggregate):
(a) Financial Change. Any material adverse change in the Assets, the Business or
the financial condition, operations, liabilities or prospects of Seller;
(b) Property Damage. Any material 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
Seller;
(d) Change in Assets. Any acquisition, disposition, transfer, encumbrance,
mortgage, pledge or other encumbrance of any material asset of Seller other than
in the ordinary course of business;
(e) Labor Disputes. Any labor disputes between Seller and its employees; or
(f) Other Changes. Any other event or condition known to either Seller or the
Shareholder that particularly pertains to and has or is likely to have a
material adverse effect on the Assets, the operations and the Business or the
financial condition or prospects of Seller.
2.1.4. Transferred Contracts. Schedule 1.1(d) hereto sets forth a complete list
of all Contracts, relating to the Assets or the operation, of the Business. All
of the Transferred Contracts are in full force and effect, and constitute valid
and binding obligations of Seller. Seller is not, and no other party to any
Transferred 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 Transferred 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. Neither Seller nor the Shareholder has
received any information which would cause such party to conclude that any
customer of Seller will (or is likely to) cease doing business with Buyer, as
successor the Business, 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). Except as noted on Schedule 1.1(a), 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. To the knowledge of
either Seller or the Shareholder, 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
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.
2.1.6. Licenses and Permits. Schedule 1.1(e) hereto sets forth a complete list
of all Permits necessary under law or otherwise for the ownership, operation,
maintenance or use of the Assets and for the conduct of the Business in the
manner in which the Assets are now being owned, operated, maintained and used
and the manner in which the Business is being conducted. 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 which may be
lawfully assigned by Seller 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(c) hereto sets forth a complete list
of all Intellectual Property material to or necessary for the cooperation of the
Assets and the continued conduct of the Business. 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. Seller will use its best efforts to obtain and
deliver 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 Transferred Contracts.
2.1.9. Environmental Matters. None of the current or past operations of the
Business or 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, 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 date hereof 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. Those Hazardous Materials (defined below) which have been or
are currently being used by Seller in the operation of the Assets are listed in
Schedule 2.1.9 hereto. No other Hazardous Materials have been or are currently
being used by Seller in the operation 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. There are no
environmental conditions or circumstances, including the presence or release of
any Hazardous Materials, or any property owned or leased by Seller, or on any
property on which Hazardous Materials generated by Seller's operations or the
use of the Assets were disposed of, which would result in a material adverse
change in the Business. 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 Assets or the conduct of the Business (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 or the Business.
Seller does not have any dispute with any of its existing 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
or Shareholder, might become a party or which particularly affects the Assets or
the Business.
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
or his 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 conduct of the Business (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 conduct of the Business , or if not continued in the future, might
materially adversely effect the profitable use of the Assets or conduct of the
Business.
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 the business, and such information covers all commitments and
liabilities of Seller relating principally to the Assets. This Agreement, the
Seller Agreements and the other instruments executed by Seller, or the
Shareholder 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.
2.1.16. Investment Representations of Seller. Pursuant to Sections 1.2 and 4.2
hereof, Key will issue the Key shares to the Shareholder. In connection with
this issuance, each of Seller and the Shareholder acknowledges, represents and
agrees that :
(a) 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) The Shareholder, through his own operations, is 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) the Shareholder
is aware of the risks associated with ownership of the Key Shares, (vi) the
Shareholder is capable of bearing the financial risks associated with such
ownership, and (vii) while recognizing that he cannot effectively waive the
protections afforded to it under the Securities Act, he regards himself as an
entity of such financial capacity, sophistication, and prudence that he does not
require the protections afforded to him by the Securities Act, and is relying
upon his own investigation of Key in making his 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 the Shareholder in reliance upon
exemptions from such registration or qualification requirements, and the
availability of such exemptions depends in part upon the Shareholder'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
(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.
2.2. Limitation on Representations. The existence of an inaccuracy or
incorrectness with respect to a representation contained in this Article II
shall not constitute a misrepresentation or a breach of any such representation
unless such inaccuracy or incorrectness shall be material. An inaccuracy or
incorrectness shall be considered material if:
(a) it is contained in a financial statement delivered by Seller to Buyer prior
to Closing and relates to a financial matter which could reasonably be expected
to be relied on by Buyer in determining the advisability of the purchase
described herein or the amount of consideration to be paid; or,
(b) it results in an actual financial loss to Buyer.
2.3 To the Knowledge of Seller. The term "to Seller's or the Shareholder's
knowledge" or any similar term, where any representation or warranty contained
in Article II is expressly qualified by reference to such phrase, shall mean
that Seller acting by and through its duly appointed and authorized officers,
confirms that as to the matters that are the subject of such representations and
warranties, such officers either have actual knowledge of such matters or have
made inquiries with respect to such matters, sufficient to allow Seller to make
such representation or warranty in good faith without actual knowledge that such
representation is untrue.
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 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, except where the
failure to so qualify or be licensed would not have a material adverse effect on
the business of Buyer.
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 or the Shareholder 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 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, except
where the failure to so qualify or be licensed would not have a material adverse
effect on the business of Buyer.
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, or the Shareholder 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 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, each of Seller and the Shareholder agrees that for a period of 60
months following the Effective Date, 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 selling and installing wellhead and down hole equipment, providing
drilling, workover or well services, engaging in oil field tool rental, or
providing any other oil field services previously provided by Seller during the
twenty-four (24) month period in Texas, Oklahoma or Kansas (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, 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 or the Shareholder may have under the laws of
any state requiring a corporation who sells its assets (and the shareholders of
such corporation) to limit its activities so that the goodwill and business
relations being transferred with such assets 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 hereof, 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 the Shareholder and deliver such certificate(s) to the Shareholder
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 Employment of the Shareholder. Buyer hereby agrees to employ the Shareholder
as Buyer's area manager at a salary of $5,000 per month, a monthly vehicle
allowance and those additional benefits now afforded buyer's employees
commensurate with shareholder's area manager position with Buyer. 4.4 Hiring
Employees. Effective as of the date hereof, 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 date hereof. 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 date hereof. 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.
4.5 Registration Rights. Key has delivered to the Shareholder 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, if any, of Key
Common Stock by those debenture holders exercising their rights under the
Registration Rights Agreement. In the event that the Shelf Registration
Statement is declared effective by July 3, 1997, Key shall, subject to the
"Black-out" provision in Section 4(b)(i) of the Registration Rights Agreement,
use its best efforts to keep such Shelf Registration Statement continuously
effective, supplemented and amended as required to the extent necessary to
ensure that it is available for resale of the Key Shares and to insure that it
conforms with the Securities Act and the policies, rules and regulations of the
commission as announced from time to time, for a period of at least three (3)
years following the date of issuance of the Key Shares or such shorter period
that will terminate when all of the Key Shares have been sold pursuant to the
Shelf Registration Statement or pursuant rule 144 of the Securities Act. If Key
shall fail to keep such registration statement so effective, then during any
period prior to the date termination is allowed during which the Shelf
Registration Statement is not effective in accordance with the foregoing
provision, Seller or Shareholder shall have a Put Right to the same extent and
exercisable in the same manner as provided in the following sentence relating to
the Put Right available during the period July 3, 1997 through August 3, 1997,
in the event the Shelf Registration Statement does not become effective. 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") to 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.
During any period in which Seller or Shareholders holds a Put Right pursuant to
this Section 4.5, such Put Right may be exercised as often as Seller or
Shareholder desires and such Put Right may be exercised with respect to all or
such portion of the Key Shares as Seller or Shareholder may desire. The rights
of Seller set forth in this paragraph shall be transferable to Shareholder but
not otherwise. To the extent shares have been transferred to Shareholder, the
term Seller shall include shareholder.
4.6 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
4.6 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.
4.7 Name Change. Seller and the Shareholder shall, within thirty (30) days from
the date hereof, caused to be filed (i) with the secretary of state of Seller's
state of organization an amendment to the charter (or other applicable
organization document) of Seller changing the name of Seller from its current
name to a name that is not similar to such name or such documents required to
effect the dissolution of Seller so that the separate corporate existence of
Seller is terminated, and (ii) with the appropriate authorities of Seller's
state of organization and any other states such documents as are required to
effect such name change or dissolution, including without limitation, amendments
or withdrawals of certificates of authority to do business and assumed name
filing. Seller and the Shareholder shall, within five (5) business 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.
4.8 Collection of Receivables. Buyer shall cooperate with and assist Seller in
collecting the Seller Receivables, which cooperation and assistance shall
include promptly forwarding to Seller all payments received by Buyer that are
made in respect of the Seller Receivables. Seller shall cooperate with and
assist Buyer in collecting receivables of Buyer, which cooperation and
assistance shall include promptly forwarding to Buyer all payments received by
the Seller that are made in respect of Buyer's receivables.
4.9 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. 4.10 Access to Records. Buyer shall
preserve all account ledgers, computer software and data, books, records, files
and data transferred to Buyer pursuant to this Agreement for a period of at
least six (6) years and shall at any reasonable time allow Seller or Shareholder
full access to such records and shall, at Seller's or Shareholder's expense,
furnish copies of any such material as may be requested.
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, each of 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 or the Shareholder under this Agreement, or at law or in
equity, Buyer and Key shall, jointly and severally, indemnify, defend and hold
harmless the Shareholder, 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, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or delivered to Seller or the Shareholder
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 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 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 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.
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.
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:
Key Energy Group, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
With Copy to:
Xxxxxxx X. Xxxxxx, P.C.
Attorney at Law
0000 XX 00xx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
If to Seller or the Shareholder
Addressed to:
Tri State Wellhead & Valve, Inc.
000 X. Xxxxxxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
With Copy to:
Xxxxxx Xxxxx, Attorney
Xxxxxxxxx Law Firm
XX Xxx 0000
Xxxxxxxx, XX 00000
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.
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
15th day of March, 1997 to be effective as of the Effective Date.
SCHEDULE 1.1(a) - TANGIBLE PERSONAL PROPERTY
Property
SCHEDULE 1.1(c) - SELLER INTELLECTUAL PROPERTY
(Patents, Copy Rights, Trademarks, Service Marks, Licenses and all applicable
customer and supplier lists of Seller)
None
SCHEDULE 1.1(d) - CONTRACTS
(Leases, Subleases, Contracts, Contract Rights and
Agreements relating to ownership, operation or maintenance
or use of Tangible Personal Property)
None
Amoco Production Company
Anadarko Petroleum Corporation
Citation Oil & Gas Corp.
Corlena Oil Company
Cross Timbers Oil Company
Enron Oil & Gas Company
Exxon Company, U.S.A.
Marathon Oil Company
Midgard Energy Company (formerly Maxus Exploration Company)
MESA Inc.
Mobil Administrative Services Company Inc.
Oryx Energy Company
Xxxxxxxx Petroleum Company
Samson Hydrocarbons Company
Sonat Exploration Company
Strat Land Exploration Company
Texaco Exploration and Production Inc.
Unit Drilling Company/Unit Petroleum Company
Vintage Petroleum, Inc.
West Texas Gas, Inc.
Xxxxx & Xxxxxx, Inc.
SCHEDULE 1.1(e) - SELLER PERMITS
(Permits, Authorizations, Certificates, Approvals,
Registrations, Variances, Waivers, Exemptions,
Rights of Way, Franchises, Ordinances, Licenses and Rights
obtained from governmental agencies relating to use,
operation, maintenance or use of Tangible Personal Property)
1. Various state permits authorizing variances from size and weight rules and
regulations.
2. Commercial hauler permit issued by Texas Transportation Division.
3. License issued pursuant to International Fule Tax Agreement (FTA Permit).
SCHEDULE 2.1.3 - FINANCIAL STATEMENTS
SCHEDULE 2.1.9 - HAZARDOUS MATERIALS
SCHEDULE 2.1.10 - EMPLOYEES Employee Social Security
No.
SCHEDULE 4.6 - ALLOCATION OF PURCHASE PRICE
Equipment $1,109,410.00
Wellhead Inventory 220,961.00
Goodwill 119,629.00
Covenant not to compete 100,000.00
Total $1,550,000.00
