Execution Copy
STOCK PURCHASE AGREEMENT
AMONG
KEY ENERGY GROUP, INC.,
XX XXXX, XXXXX XXXX,
XXXXXXX X. XXXXXXXX
AND
XXXXXX XXXXXX, XX.
Dated as of December 2, 1996
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
December 2, 1996 by and among Key Energy Group, Inc., a Maryland corporation
("Key"), Xx Xxxx ("Ed"), Xxxxx Xxxx ("Xxxxx"), Xxxxxxx X. Xxxxxxxx ("Xxxxxxx")
and Xxxxxx Xxxxxx, Xx. ("Xxxxxx"). Ed, Helen, Xxxxxxx and Xxxxxx are referred to
individually herein as a "Shareholder" and collectively herein as the
"Shareholders."
WITNESSETH :
WHEREAS, Key is a corporation duly organized and validly existing under
the laws of the State of Maryland, with its principal executive offices at Xxx
Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; and
WHEREAS, Hitwell Surveys, Inc. ("Hitwell") is a corporation duly organized
and validly existing under the laws of the State of West Virginia, with its
principal executive offices at Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxx Xxxxxxxx
00000; and
WHEREAS, the Shareholders own 112 shares (the "Hitwell Shares") of
common stock, par value $1.00 per share, of Hitwell ("Hitwell Common Stock"),
which constitutes all of the issued and outstanding shares of capital stock of
Hitwell; and
WHEREAS, the Shareholders desire to sell to Key and Key desires to
purchase from the Shareholders all of the issued and outstanding capital stock
of Hitwell.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE
1.1. Purchase and Sale of Hitwell Shares. Subject to the terms and
conditions of this Agreement, on the date hereof, the Shareholders agree to sell
and convey to Key, free and clear of all Encumbrances (as defined in Section
2.1.8.1 hereof), and Key agrees to purchase and accept from the Shareholders,
all of the Hitwell Shares. In consideration of the sale of the Hitwell Shares,
Key shall (i) execute and deliver to the Shareholders that certain promissory
note of even date herewith in the original principal amount of $1,300,000 made
by Key payable to the Shareholders (the "Key Note") and (ii) pay to the
Shareholders the Cash Adjustment Payment (as defined in Section 1.3 hereof), if
any, in accordance with Section 1.3 hereof.
1.2. Delivery of Hitwell Certificates. The Shareholders shall deliver to
Key on the date hereof duly and validly issued certificate(s) representing all
of the Hitwell Shares, each such certificate
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having been duly endorsed in blank and in good form for transfer or accompanied
by stock powers duly executed in blank, sufficient and in good form to properly
transfer such shares to Key.
1.3 Adjustment of Purchase Price. The Shareholders shall cause to be
prepared and delivered to Key (i) a balance sheet of Hitwell as of the date
hereof (the "Final Balance Sheet") within thirty (30) days after the date hereof
and (ii), to the extent requested by any party hereto, a supplemental written
report of the appraiser referred to in items (3) and (4) below. Key and the
Shareholders shall jointly review the Final Balance Sheet and such supplemental
report, endeavor in good faith to resolve all disagreements regarding the
entries thereon and reach a final determination thereof within 60 days from the
date hereof. Within 10 days of reaching such final determination, the following
adjusting payments shall be made:
(1) If the Final Net Current Asset Valuation (defined
below) exceeds $8,347, Key shall pay to the
Shareholders the amount of such excess (the "Cash
Adjustment Payment").
(2) If the Final Net Current Asset Valuation is less than
$8,347, the Shareholders
shall pay to Key the amount of such difference.
(3) If Hitwell transfers any items of operational
equipment (other than equipment sold to Key prior to
the date hereof) listed in that certain Superior
Auction Appraisal report dated August 6, 1996, a copy
of which is attached hereto as Schedule 1.3 (the
"Appraisal"), after the date thereof which have an
aggregate value as reported in the Appraisal of at
least $10,000, or if any items of operational
equipment (other than equipment sold to Key prior to
the date hereof) listed in the Appraisal in the
aggregate suffer deterioration (other than ordinary
wear and tear) after the date of the Appraisal which
reduces the value of such items by at least $10,000
as determined and reported in writing by the
appraiser that prepared the Appraisal, the
Shareholders shall pay to Key the amount of such
aggregate value.
(4) If Hitwell acquires any items of operational
equipment after the date of the Appraisal which have
an aggregate value of at least $10,000 as determined
and reported in writing by the appraiser that
prepared the Appraisal, or if Hitwell makes
improvements to any items of operational equipment
(other than equipment sold to Key prior to the date
hereof) listed in the Appraisal which increases the
aggregate value of such items by at least $10,000 as
determined and reported in writing by the appraiser
that prepared the Appraisal, Key shall pay to the
Shareholders the amount of such aggregate value.
The term "Final Net Current Asset Valuation" means the dollar value of
the amount by which the Current Assets (defined below) exceed the Total
Liabilities (defined below) on the Final Balance
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Sheet. The term "Current Assets" means the aggregate of the following line items
shown on the Final Balance Sheet: "cash", "accounts receivable", "employees
receivable", "prepaid insurance", "deposits-utilities" and "worker's comp"
(where such line item shall be that amount reported by the West Virginia
Worker's Compensation Commission as of September 30, 1996) and any other line
item properly classified as a current asset. The term "Total Liabilities" means
the following line items shown on the Final Balance Sheet: "total current
liabilities" and "note payable (net of current portion)" and any other line item
properly classified as a liability.
In the event that an account receivable was not included in the
calculation of the Current Assets but is later collected by Hitwell, Key shall
pay to the Shareholders the amount so collected within 10 days of its receipt.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS
2.1. Representations and Warranties of the Shareholders.
Each of the Shareholders jointly
and severally represents and warrants to Key as follows:
2.1.1. Organization and Standing. Hitwell is a corporation
duly organized, validly existing and in good standing under the laws of
the State of West Virginia, 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 be so qualified or licensed
would not have a material adverse effect on its financial condition,
properties or business.
2.1.2. Agreement Authorized and its Effect on Other
Obligations. Each of the Shareholders is a resident of West Virginia,
above the age of 18 years, and has the legal capacity and requisite
power and authority to enter into, and perform his or her obligations
under this Agreement. This Agreement is a valid and binding obligation
of each of the Shareholders enforceable against each of the
Shareholders (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 or the terms and conditions hereof. The
execution, delivery and performance of this Agreement by the
Shareholders will not conflict with or result in a violation or breach
of any term or provision of, nor constitute a default under (i) the
Certificate of Incorporation or Bylaws of Hitwell or (ii) any
obligation, indenture, mortgage,
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deed of trust, lease, contract or other agreement to which Hitwell or
any of the Shareholders is a party or by which Hitwell or any of the
Shareholders or their respective properties are bound.
2.1.3. Capitalization. The authorized capitalization of
Hitwell consists of 1,000 shares of Hitwell Common Stock, of which, as
of the date hereof, 112 shares were issued and outstanding and held
beneficially and of record by the Shareholders. On the date hereof,
Hitwell does not have any outstanding options, warrants, calls or
commitments of any character relating to any of its authorized but
unissued shares of capital stock. All issued and outstanding shares of
Hitwell Common Stock are validly issued, fully paid and non-assessable
and are not subject to preemptive rights. None of the outstanding
shares of Hitwell Common Stock is subject to any voting trusts, voting
agreement or other agreement or understanding with respect to the
voting thereof, nor is any proxy in existence with respect thereto.
2.1.4. Ownership of Hitwell Shares. The Shareholders hold good
and valid title to all of the Hitwell Shares, free and clear of all
Encumbrances. The Shareholders possess full authority and legal right
to sell, transfer and assign to Key the Hitwell Shares, free and clear
of all Encumbrances. Upon transfer to Key by the Shareholders of the
Hitwell Shares, Key will own the Hitwell Shares free and clear of all
Encumbrances. There are no claims pending or, to the knowledge of any
of the Shareholders, threatened, against Hitwell or any of the
Shareholders that concern or affect title to either the Hitwell Shares,
or that seek to compel the issuance of capital stock or other
securities of either Hitwell.
2.1.5. No Subsidiaries. There is no corporation, partnership,
joint venture, business trust or other legal entity in which Hitwell,
either directly or indirectly through one or more intermediaries, owns
or holds beneficial or record ownership of at least a majority of the
outstanding voting securities.
2.1.6. Financial Statements. Hitwell has delivered to Key
copies of Hitwell's unaudited balance sheet, a copy of which is
attached hereto as Schedule 2.1.6 (the "6/30 Balance Sheet"), and
related statements of income (collectively, the "6/30 Financial
Statements"), as at and for the six months ended June 30, 1996 (the
"Balance Sheet Date") and will deliver the Final Balance Sheet in
accordance with Section 1.10.3 hereof. The 6/30 Financial Statements
are (and the Final Balance Sheet will be) complete in all material
respects. The 6/30 Financial Statements present (and the Final Balance
Sheet will present) fairly the financial condition of Hitwell as at the
dates and for the periods indicated. The 6/30 Financial Statements have
been (and the Final Balance Sheet will be) prepared in accordance with
generally accepted accounting principles applied on a consistent basis.
The accounts receivable reflected in the 6/30 Balance Sheet, or which
have been thereafter acquired by Hitwell, have been collected or are
collectible at the aggregate recorded amounts thereof less applicable
reserves, which reserves are adequate. The inventories of Hitwell
reflected in the 6/30 Balance Sheet, or which have thereafter been
acquired by it, consist of items of a quality
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usable and salable in the normal course of Hitwell's business, and the
values at which inventories are carried are at the lower of cost or
market.
2.1.7. Liabilities. Except as disclosed on Schedule 2.1.7
hereto, Hitwell does not have any liabilities or obligations, either
accrued, absolute or contingent, nor does any of the Shareholders have
any knowledge of any potential liabilities or obligations, which would
materially adversely affect the value and conduct of the business of
Hitwell, other than those (i) reflected or reserved against in the 6/30
Balance Sheet or (ii) incurred in the ordinary course of business since
the Balance Sheet Date.
2.1.8. Additional Hitwell Information. Attached as Schedule
2.1.8 hereto are true,
complete and correct lists of the following items:
2.1.8.1. Real Estate. All real property and
structures thereon owned, leased or subject to a contract of
purchase and sale, or lease commitment, by Hitwell, with a
description of the nature and amount of any Encumbrances
(defined below) thereon. The term "Encumbrances" means all
liens, security interests, pledges, mortgages, deed 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;
2.1.8.2. Machinery and Equipment. All rigs, carriers, rig equipment,
machinery, transportation equipment, tools, equipment, furnishings, and fixtures
owned, leased or subject to a contract of purchase and sale, or lease
commitment, by Hitwell with a description of the nature and amount of any
Encumbrances thereon;
2.1.8.3. Inventory. All inventory items or groups of inventory items owned
by Hitwell, excluding raw materials and work in process, which raw materials and
work in process are valued on the 6/30 Balance Sheet, together with the amount
of any Encumbrances thereon;
2.1.8.4. Receivables. All accounts and notes
receivable of Hitwell, together with (i) aging schedules by
invoice date and due date, (ii) the amounts provided for as an
allowance for bad debts, (iii) the identity and location of
any asset in which Hitwell holds a security interest to secure
payment of the underlying indebtedness, and (iv) a description
of the nature and amount of any Encumbrances on such accounts
and notes receivable;
2.1.8.5. Payables. All accounts and notes payable
of Hitwell, together with
an appropriate aging schedule;
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2.1.8.6. Insurance. All insurance policies or bonds currently maintained by
Hitwell, including those covering Hitwell's properties, rigs, machinery,
equipment, fixtures, employees and operations, as well as a listing of any
premiums, audit adjustments or retroactive adjustments due or pending on such
policies or any predecessor policies;
2.1.8.7. Contracts. All contracts, including leases under which Hitwell is
lessor or lessee, which are to be performed in whole or in part after the date
hereof;
2.1.8.8. Employee Compensation Plans. All bonus,
incentive compensation, deferred compensation, profit-sharing,
retirement, pension, welfare, group insurance, death benefit,
or other fringe benefit plans, arrangements or trust
agreements of Hitwell, together with copies of the most recent
reports with respect to such plans, arrangements, or trust
agreements filed with any governmental agency and all Internal
Revenue Service determination letters that have been received
with respect to such plans (collectively, "Employee Plans");
2.1.8.9. Certain Salaries. The names and salary rates of all present
employees of Hitwell, and, to the extent existing on the date of this Agreement,
all arrangements with respect to any bonuses to be paid to them from and after
the date of this Agreement;
2.1.8.10. Bank Accounts. The name of each bank in which Hitwell has an
account and the names of all persons authorized to draw thereon; 2.1.8.11.
Employee Agreements. Any collective bargaining agreements of Hitwell with any
labor union or other representative of employees, including amendments,
supplements, and written or oral understandings, and all employment and
consulting and severance agreements of Hitwell; 2.1.8.12. Intellectual Property.
All patents, trademarks, copyrights and other intellectual property rights
owned, licensed, or used by Hitwell; 2.1.8.13. Trade Names. All trade names,
assumed names and fictitious names used or held by Hitwell, whether and where
such names are registered and where used; 2.1.8.14. Promissory Notes. All
long-term and short-term promissory notes, installment contracts, loan
agreements, credit agreements, and any other agreements of Hitwell relating
thereto or with respect to collateral securing the same; 2.1.8.15. Guaranties.
All indebtedness, liabilities and commitments of others and as to which Hitwell
is a guarantor, endorser, co-maker, surety, or accommodation
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maker, or is contingently liable
therefor and all letters of credit, whether stand-by or documentary, issued by
any third party; 2.1.8.16. Reserves and Accruals. All accounting reserves and
accruals maintained in the 6/30 Balance Sheet; 2.1.8.17. Leases. All leases to
which Hitwell is a party; and
2.1.8.18. Environment. All environmental permits,
approvals, certifications, licenses, registrations, orders and
decrees applicable to current operations conducted by Hitwell
and all environmental audits, assessments, investigations and
reviews conducted by Hitwell within the last five years on any
property owned or used by Hitwell.
2.1.9. No Defaults. Except as is specified in Schedule 2.1.8
hereto, Hitwell is not a party to, or bound by, any contract or
arrangement of any kind to be performed after the Effective Date, nor
is Hitwell in default in any obligation or covenant on its part to be
performed under any obligation, lease, contract, order, plan or other
arrangement.
2.1.10. Absence of Certain Changes and Events. Except as set forth in
Schedule 2.1.10 hereto, other than as a result of the transactions contemplated
by this Agreement, since the Balance Sheet Date, there has not been: 2.1.10.1.
Financial Change. Any material adverse change in the financial condition,
backlog, operations, assets, liabilities or business of Hitwell; 2.1.10.2.
Property Damage. Any material damage, destruction, or loss to the business or
properties of Hitwell (whether or not covered by insurance); 2.1.10.3.
Dividends. Any declaration, setting aside, or payment of any dividend or other
distribution in respect of the Hitwell Common Stock, or any direct or indirect
redemption, purchase or any other acquisition by Hitwell of any such stock;
2.1.10.4. Capitalization Change. Any change in the capital stock or in the
number of shares or classes of Hitwell's authorized or outstanding capital stock
as described in Section 2.1.3 hereof; 2.1.10.5. Labor Disputes. Any labor
dispute; or 2.1.10.6. Other Material Changes. Any other event or condition known
to any of the Shareholders particularly pertaining to and adversely affecting
the
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operations, assets or business of Hitwell which would
constitute a material adverse change.
2.1.11. Taxes. All federal, state and local income, value
added, sales, use, franchise, gross revenue, turnover, excise, payroll,
property, employment, customs, duties and any and all other tax
returns, reports, and estimates have been filed with appropriate
governmental agencies, domestic and foreign, by Hitwell for each period
for which any such returns, reports, or estimates were due (taking into
account any extensions of time to file before the date hereof); all
taxes shown by such returns to be payable and any other taxes due and
payable have been paid other than those being contested in good faith
by Hitwell; and the tax provision reflected in the 6/30 Balance Sheet
is (and the tax provision reflected in the Final Balance Sheet will be)
adequate, in accordance with generally accepted accounting principles,
to cover liabilities of Hitwell at the date thereof for all taxes,
including any assessed interest, assessed penalties and additions to
taxes of any character whatsoever applicable to Hitwell or its assets
or business. No waiver of any statute of limitations executed by
Hitwell with respect to any income or other tax is in effect for any
period. The income tax returns of Hitwell have never been examined by
the Internal Revenue Service or the taxing authorities of any other
jurisdiction. There are no tax liens on any assets of Hitwell except
for taxes not yet currently due.
2.1.12. Intellectual Property. Hitwell owns or possesses
licenses to use all patents, patent applications, trademarks and
service marks (including registrations and applications therefor),
trade names, copyrights and written know-how, trade secrets and all
other similar proprietary data and the goodwill associated therewith
(collectively, the "Intellectual Property") that are either material to
the business of Hitwell or that are necessary for the rendering of any
services rendered by Hitwell and the use or sale of any equipment or
products used or sold by Hitwell, including all such Intellectual
Property listed in Schedule 2.1.8 hereto. The Intellectual Property is
owned or licensed by Hitwell free and clear of any Encumbrance. Hitwell
has not granted to any other person any license to use any Intellectual
Property. Hitwell has not received any notice of infringement,
misappropriation, or conflict with, the intellectual property rights of
others in connection with the use by Hitwell of the Intellectual
Property or otherwise in connection with Hitwell's operation of its
business.
2.1.13. Title to and Condition of Assets. Except as disclosed on Schedule
2.1.13 hereto, Hitwell has good, indefeasible and marketable title to all its
properties, interests in properties and assets, real and personal, reflected in
the 6/30 Balance Sheet or in Schedule 2.1.8 hereto, free and clear of any
Encumbrance of any nature whatsoever, except (i) Encumbrances reflected in the
6/30 Balance Sheet or in Schedule 2.1.8 hereto, (ii) liens for current taxes not
yet due and payable, and (iii) such imperfections of title, easements and
Encumbrances, if any, as are not substantial in character, amount, or extent and
do not and will not materially detract from the value, or interfere with the
present use, of the property subject thereto or affected thereby, or otherwise
materially impair business operations. All
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leases pursuant to which Hitwell leases (whether as lessee or lessor)
any substantial amount of real or personal property are in good
standing, valid, and effective; and there is not, under any such
leases, any existing default or event of default or event which with
notice or lapse of time, or both, would constitute a default by Hitwell
and in respect to which Hitwell has not taken adequate steps to prevent
a default from occurring. The buildings and premises of Hitwell that
are used in its business are in good operating condition and repair,
subject only to ordinary wear and tear. All rigs, rig equipment,
machinery, transportation equipment, tools and other major items of
equipment of Hitwell are in good operating condition and in a state of
reasonable maintenance 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 best of each Shareholder's knowledge, all such assets conform to
all applicable laws governing their use. No notice of any violation of
any law, statute, ordinance, or regulation relating to any such assets
has been received by Hitwell or any of the Shareholders, except such as
have been fully complied with.
2.1.14. Contracts. All contracts, leases, plans or other
arrangements to which Hitwell is a party, by which it is bound or to
which it or its assets are subject are in full force and effect, and
constitute valid and binding obligations of Hitwell. Hitwell is not,
and to the knowledge of any of the Shareholders, no other party to any
such contract, lease, plan or other arrangement 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 Hitwell. None
of the Shareholder has received any information which would cause such
Shareholder to conclude that any customer of Hitwell will (or is likely
to) cease doing business with Hitwell as a result of the consummation
of the transactions contemplated hereby.
2.1.15. Licenses and Permits. Hitwell possesses 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") necessary under law or otherwise for Hitwell to conduct its
business as now being conducted and to construct, own, operate,
maintain and use its assets in the manner in which they are now being
constructed, operated, maintained and used. Each of such Permits and
Hitwell's rights with respect thereto is valid and subsisting, in full
force and effect, and enforceable by Hitwell subject to administrative
powers of regulatory agencies having jurisdiction. Hitwell is in
compliance in all material respects with the terms of such Permits.
None of such Permits have been, or to the knowledge of any of the
Shareholders, are threatened to be, revoked, canceled, suspended or
modified.
2.1.16. Litigation. There is no suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation pending to which
Hitwell is a party or, to the knowledge of any of the Shareholders, might become
a party or which particularly
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affects Hitwell, nor is any change in the zoning or building ordinances
directly affecting the real property or leasehold interests of Hitwell,
pending or, to the knowledge of any of the Shareholders, threatened.
2.1.17. Environmental Compliance.
2.1.17.1. Environmental Conditions. Except as
specified in the Phase I Environmental Site Audit Summary
Report prepared by Special Analytical Services, Inc. Included
in Item 2.1.8.18 of Schedule 2.1.8 hereto, there are no
environmental conditions or circumstances, including, without
limitation, the presence or release of any hazardous
substance, on any property presently or previously owned by
Hitwell, or on any property to which hazardous substances or
waste generated by Hitwell's operations or use of its assets
were disposed of, which would result in a material adverse
change in the business or business prospects of Hitwell;
2.1.17.2. Permits, etc. Hitwell has in full force and
effect all environmental permits, licenses, approvals and
other authorizations required to conduct its operations, other
than those that are not material to the business or operations
of Hitwell, and is operating in compliance thereunder;
2.1.17.3. Compliance. Hitwell's operations and use of its assets do not
violate in any material respect any applicable federal, state or local law,
statute, ordinance, rule, regulation, order or notice requirement pertaining to
(a) the condition or protection of air, groundwater, surface water, soil, or
other environmental media, (b) the environment, including natural resources or
any activity which affects the environment, or (c) the regulation of any
pollutants, contaminants, waste, substances (whether or not hazardous or toxic),
including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 1609 et seq.), the Clean Water Act
(33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the
Toxic Substances Control Act (17 U.S.C. ss. 2601 et seq.), the Federal
Insecticide Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), the Safe
Drinking Water Act (42 U.S.C. ss. 201 and ss. 300f et seq.), the Rivers and
Harbors Act (33 U.S.C. ss. 401 et seq.), the Oil Pollution Act (33 U.S.C. ss.
2701 et seq.) and analogous federal, interstate, state and local requirements,
as any of the foregoing may have been amended or supplemented from time to time
(collectively the "Applicable Environmental Laws"); 2.1.17.4. Past Compliance.
None of the operations or assets of Hitwell has ever been conducted or used in
such a manner as to constitute violation of any of the Applicable Environmental
Laws, other than violations that in the aggregate are not material to the
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2.1.17.5. Environmental Claims. No notice has been served on Hitwell or any of
the Shareholders from any entity, governmental agency or individual regarding
any existing, pending or threatened investigation, inquiry, enforcement action
or litigation related to alleged violations under any Applicable Environmental
Laws, or regarding any claims for remedial obligations, response costs or
contribution under any Applicable Environmental Laws; 2.1.17.6. Renewals. None
of the Shareholders knows of any reason Key would not be able to renew any of
the permits, licenses, or other authorizations required pursuant to any of the
Applicable Environmental Laws to operate and use any of Hitwell's assets for
their current purposes and uses; and 2.1.17.7. Asbestos and PCBs. No material
amounts of friable asbestos currently exist on any property owned or operated by
Hitwell, nor do polychlorinated biphenyls exist in concentrations of 50 parts
per million or more in electrical equipment owned or being used by Hitwell in
its operations or on its properties. 2.1.18. Compliance with Other Laws. Hitwell
is not in violation of or in default with respect to, or in alleged violation of
or alleged default with respect to, the Occupational Safety and Health Act (29
U.S.C. ss.ss.651 et seq.) as amended, or any other applicable law or any
applicable rule, regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any governmental
commission, board, bureau, agency or instrumentality. 2.1.19. No ERISA Plans or
Labor Issues. Hitwell does not currently sponsor, maintain or contribute to and
has not at any time 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 ("ERISA"). Hitwell has not engaged in any
unfair labor practices which could reasonably be expected to result in a
material adverse effect on its operations or assets. Hitwell does not have any
dispute with any of its existing or former employees. There are no labor
disputes or, to the knowledge of any of the Shareholders, any disputes
threatened by current or former employees of Hitwell. 2.1.20. Terminated
Employees. Hitwell has terminated all of its employees listed effective as of
the date hereof (the "Terminated Employees"), all of which will be hired by
WellTech Eastern, Inc., a wholly-owned subsidiary of Key. Hitwell has paid the
Terminated Employees all wages and other compensation owed them through the date
of termination and Hitwell has no further obligations with respect to any of the
Terminated Employees. 2.1.21. Investigations; Litigation. No investigation or
review by any governmental entity with respect to Hitwell or any of the
transactions contemplated by this Agreement is pending or, to the knowledge of
any of the Shareholders, threatened, nor has any C:\34ACTREP\EXFILES\EXHIBIT.2D
11
governmental entity indicated to Hitwell an intention to conduct the
same, and there is no action, suit or proceeding pending or, to the knowledge of
any of the Shareholders, threatened against or affecting Hitwell at law or in
equity, or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, that either
individually or in the aggregate, does or is likely to result in any material
adverse change in the financial condition, properties or business of Hitwell.
2.1.22. Absence of Certain Business Practices. Neither Hitwell nor any officer,
employee or agent of Hitwell, nor any other person acting on its behalf, has,
directly or indirectly, within the past five years, given or agreed to give any
gift or similar benefit to any customer, supplier, government employee or other
person who is or may be in a position to help or hinder the business of Hitwell
(or to assist Hitwell in connection with any actual or proposed transaction)
which (i) might subject Hitwell to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (ii) if not given in the past, might
have had a material adverse effect on the assets, business or operations of
Hitwell as reflected in the 6/30 Financial Statements, or (iii) if not continued
in the future, might materially adversely effect the assets, business operations
or prospects of Hitwell or which might subject Hitwell to suit or penalty in a
private or governmental litigation or proceeding. 2.1.23. Untrue Statements.
Hitwell and each of the Shareholders have made available to 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 Hitwell's assets
and business, and such information covers all commitments and liabilities of
Hitwell relating principally to its business or the assets. This Agreement and
the agreements and instruments to be entered into 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. 2.1.24. Consents and Approvals. No consent, approval or
authorization of, or filing or registration with, any governmental or regulatory
authority, or any other person or entity other than Hitwell and the
Shareholders, is required to be made or obtained by Hitwell or any of the
Shareholders in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby. 2.1.25.
Finder's Fee. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Hitwell and the Shareholders and
their counsel directly with Key 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
payments. C:\34ACTREP\EXFILES\EXHIBIT.2D 12
ARTICLE 3 ADDITIONAL
AGREEMENTS 3.1. Noncompetition. Except as otherwise consented to or approved in
writing by Key, each of the Shareholders agrees that for a period of 60 months
the Effective Date, such Shareholder will not, directly or indirectly, acting
alone or as a member of a partnership or as an officer, director, employee,
consultant, representative, 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
competition with the business or businesses conducted by Hitwell, Key or any
affiliate of Key at the Effective Date, or in any service business the services
of which are provided and marketed by Hitwell, Key or any affiliate of Key at
the Effective Date in any state of the United States, or any foreign country in
which Hitwell, Key or any affiliate of Key transacts business on the Effective
Date; (ii) request any present customers or suppliers of Hitwell to curtail or
cancel their business with Key or any affiliate of Key; (iii) disclose to any
person, firm or corporation any trade, technical or technological secrets of
Hitwell, Key or any affiliate of Key or any details of their organization or
business affairs or (iv) induce or actively attempt to influence any employee of
Key or any affiliate of Key to terminate his employment. Each of the
Shareholders agrees that if either the length of time or geographical area set
forth in this Section 3.1 is deemed too restrictive in any court proceeding, the
court may reduce such restrictions to those which it deems reasonable under the
circumstances. The obligations expressed in this Section 3.1 are in addition to
any other obligations that the Shareholders may have under the laws of the State
of West Virginia requiring an employee of a business or a shareholder who sells
his stock in a corporation (including a disposition in a merger) to limit his
activities so that the goodwill and business relations of his employer and of
the corporation whose stock he has sold (and any successor corporation) will not
be materially impaired. Each of the Shareholders further agrees and acknowledges
that Key and its affiliates do not have any adequate remedy at law for the
breach or threatened breach by such Shareholder of this covenant, and agree that
Key or Any affiliate of Key may, in addition to the other remedies which may be
available to it hereunder, file a suit in equity to enjoin such Shareholder from
such breach or threatened breach. If any provisions of this Section 3.1 are held
to be invalid or against public policy, the remaining provisions shall not be
affected thereby. Each of the Shareholders acknowledges that the covenants set
forth in this Section 3.1 are being executed and delivered by such Shareholder
in consideration of the covenants of Key contained in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged.
3.2. Payment of Certain Debts. On or before February 27, 1996, Key shall pay all
amounts owed by Hitwell to Commercial Banking & Trust Company under that certain
promissory note dated March 18, 1994 in the original principal amount of
$310,000 (the "Hitwell Note"). Prior to such payoff, Key shall timely make all
monthly payments due under the Hitwell Note. 3.3. Restrictions on Additional
Shares. Until the Key Note is paid in full, Key shall not issue any additional
shares of Hitwell Common Stock. C:\34ACTREP\EXFILES\EXHIBIT.2D 13
3.4.
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
effectuate the transactions contemplated hereby. ARTICLE 4 INDEMNIFICATION 4.1.
Indemnification by Shareholders. In addition to any other remedies available to
Key under this Agreement, or at law or in equity, each of the Shareholders shall
indemnify, defend and hold harmless Key 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 indemnitees
shall incur or suffer, which arise, result from or relate to (i) any breach by
any of the Shareholders of (or the failure of 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 Key by any of the Shareholders under this Agreement or
(ii) Hitwell's relationship with any Terminated Employees on or before the date
hereof; provided, however, that the Shareholders shall not be required to so
indemnify, defend and hold harmless Key and its officers, directors, employees,
agent and stockholders, against and with respect to any Damages incurred as a
result of a breach by any of the Shareholders of their respective
representations and warranties in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or delivered to Key by any of
the Shareholders under this Agreement for which Key fails to provide written
notice of a claim for such Damages to the Shareholders on or before the
expiration of the survival period (as specified in Section 5.1 hereof) of the
specific representation or warranty alleged to have been breached. 4.2.
Indemnification by Key. In addition to any other remedies available to the
Shareholders under this Agreement, or at law or in equity, Key shall indemnify,
defend and hold harmless each of the Shareholders and his 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 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 Hitwell or any of the Shareholders by or on
behalf of Key under this Agreemen; provided, however, that Key shall not be
required to so indemnify, defend and hold harmless the Shareholders and their
employees and agents against and with respect to any Damages incurred as a
result of a breach by Key of any of its representations and warranties in this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or delivered to the Shareholders by Key under this Agreement for which the
Shareholders fail to provide written notice of a claim for such Damages to Key
on or before the expiration of the survival period (as specified in Section 5.1
hereof) of the specific representation or warranty alleged to have been
breached. C:\34ACTREP\EXFILES\EXHIBIT.2D 14
4.3. Indemnification
Procedure. In the event that any party hereto discovers or otherwise becomes
aware of an indemnification claim arising under Section 4.1 or Section 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 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. 4.4. Offset. The parties hereto
agree that if Key shall incur any Damages for which it is entitled to
indemnification by the Shareholders pursuant to the terms of this Agreement, Key
shall have the right to offset any payments due or to be due under the terms of
this Agreement or any other agreement executed in connection herewith, by the
amount of the Damages. Such right of offset shall not be considered an exclusive
remedy, it being agreed that Key shall also be entitled to exercise any other
remedies available to it at law or in equity, including, without limitation, the
indemnification rights set forth in this Article 4. In the event of an offset by
Key as a result of any C:\34ACTREP\EXFILES\EXHIBIT.2D 15
account
receivable of Hitwell not being collected in breach of the representation of any
of the Shareholders in Section 2.1.6 hereof, upon any such offset, Key shall
assign to the Shareholders the account receivable subject to offset, and the
Shareholders shall thereafter have the right to take any reasonable action to
collect such account receivable. In the event of an offset by Key as a result of
any inventory of Hitwell being unsalable in the normal course of business in
breach of the representations of Hitwell and the Shareholders in Section 2.1.6
hereof, upon any such offset, Key shall convey and transfer to the Shareholders
title to such inventory subject to offset. ARTICLE 5 MISCELLANEOUS 5.1. Survival
of Representations, Warranties and Covenants. All representations and,
warranties, made by the parties hereto shall survive for a period of 24 months
from the date hereof, notwithstanding any investigation made by or on behalf of
any of the parties hereto; provided, however, that the representations and
warranties contained in Section 2.1.11 hereof shall survive until the expiration
of the applicable statute of limitations associated with the taxes at issue. 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 for a period of 24 months from the date hereof
despite any investigation made by any party hereto or on its behalf. All
covenants and agreements contained herein shall survive indefinitely without
limitation, except as otherwise provided herein. 5.2. 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. 5.3. 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. 5.4. 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. C:\34ACTREP\EXFILES\EXHIBIT.2D
16
If to Key Addressed to: With a copy to: Key Energy Group, Inc. Xxxxxx
& Xxxxxx, L.L.P. Two Tower Center, Tenth Floor 700 Louisiana, 00xx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000 Attn: General Counsel
Attention: Xxxxxx X. Xxxxx Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to any Shareholder Addressed to: With a copy to: Xx Xxxx Xxxxxx Xxxx XxXxxxx
Xxxxx & Love X.X. Xxx 00 000 Xxxxx Xxxxxx Xxxxxxxxxxx, Xxxx Xxxxxxxx 00000
Xxxxxxxxxxx, Xxxx Xxxxxxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxx X.
Xxxxxx Facsimile: (000) 000-0000 Any communication so addressed and mailed by
first-class registered or certified mail, postage prepaid, with return receipt
requested, shall be deemed to be received on the third business day after so
mailed, and if delivered by courier or facsimile to such address, upon delivery
during normal business hours on any business day. 5.5. Table of Contents and
Captions. The table of contents and captions contained in this Agreement are
solely for convenient reference and shall not be deemed to affect the meaning or
interpretation of any article, section, or paragraph hereof. 5.6. 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. 5.7.
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. 5.8. Applicable Law. This
Agreement shall be governed by and construed and enforced in accordance with the
applicable laws of the State of West Virginia. [SIGNATURE PAGE FOLLOWS]
C:\34ACTREP\EXFILES\EXHIBIT.2D 17
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.
KEY ENERGY GROUP, INC. By: \s\ Xxxxxxx X. Xxxx Name: Xxxxxxx X. Xxxx Title: Vice
President SHAREHOLDERS \s\ Xx Xxxx Xx Xxxx \s\ Xxxxx Xxxx Xxxxx Xxxx \s\ Xxxxxxx
X. Xxxxxxxx Xxxxxxx X. Xxxxxxxx \s\ Xxxxxx Xxxxxx, Xx. Xxxxxx Xxxxxx, Xx.
C:\34ACTREP\EXFILES\EXHIBIT.2D i
