DRAFT: 11/11/97
AMENDMENT ONE TO STOCK PURCHASE AGREEMENT
This Amendment One to Stock Purchase Agreement, dated as of October 10,
1997, amends the Stock Purchase Agreement (the "Stock Purchase Agreement") dated
as of July 31, 1997 among Xxxxxx Acquisition Corp. IV (the "Seller"), Key Rocky
Mountain, Inc. (the "Buyer") and Key Energy Group, Inc. ("Key Energy") with
respect to Seller's sale of all the issued and outstanding capital stock of X.X.
Xxxxxx Well Service Company (the "Company"). Capitalized terms used but not
defined herein are used as defined in the Stock Purchase Agreement.
WHEREAS, the parties desire to amend the Stock Purchase Agreement to change
the Closing Date, to make certain other changes related thereto and to clarify
certain other conditions and provisions thereof; and
WHEREAS, the parties are concurrently amending the Operating Agreement and
Escrow Agreement to give effect to the changes made hereby and to enter into
certain other agreements;
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller, the Buyer and Key Energy agree to make certain
amendments to the Stock Purchase Agreement as follows:
1. From and after effectiveness of this Amendment and the amendments to the
Operating Agreement and the Escrow Agreement, the terms "Agreement", "Operating
Agreement" and "Escrow Agreement" used in the Stock Purchase Agreement shall be
deemed to refer to each such agreement as amended on the date hereof or as may
be amended from time to time. 2. Section 2.3 is hereby amended to read in its
entirety as follows:
2.3 Additional Purchase Price Adjustments and Procedures.ts and Procedures
(a) On the date hereof, the Buyer has delivered to the Seller a balance
sheet of the Company as of July 31, 1997 (the "July 31 Balance Sheet"). The July
31 Balance Sheet shall have included all information necessary to compute the
Working Capital of the Company. The Buyer shall make available to the Seller all
information which may be in the possession of the Buyer or the Company which the
Seller requests in order to verify the accuracy of the July 31 Balance Sheet.
Within 60 days from the date hereof, the Seller shall notify the Buyer whether
it agrees with the July 31 Balance Sheet. In the event that the Seller disagrees
with the July 31 Balance Sheet, the Seller shall provide the Buyer with a
written notice specifying the basis for the Seller's disagreement, and the
Seller and the Buyer shall work in good faith to reach agreement on the
composition of the July 31 Balance Sheet, but, in the event that they shall not
agree within 30 days following the date of such written notice, the matter will
be referred to a "Big Six" independent public accounting firm mutually agreed to
by the Buyer and the Seller. The fees and disbursements of such accounting firm
shall be borne equally by the Buyer and the Seller. Such accounting firm shall
examine the records of the Company, and, within 30 days following the date upon
which such matter shall be referred to such accounting firm, such accounting
firm shall determine the disposition of any dispute with respect to the July 31
Balance Sheet (the date on which the determination is made, whether by the
accounting firm or by agreement of the parties, is referred to as the "Final
Determination Date"). Any such determination shall be final and binding on the
parties, and may be enforced by appropriate judicial or other proceedings.
(b) (i) In the event that the Working Capital of the Company is less than
the Estimated Working Capital, then the amount of such difference shall be paid
by the Seller to the Buyer within two business days of the Final Determination
Date, plus interest of 8% per annum payable from July 31, 1997 to the Final
Determination Date. If the Final Determination Date occurs at least three
business days prior to the Closing Date, and the Seller is required to make a
payment to the Buyer in accordance with the first sentence of this Section
2.3(b)(i), the additional amount due shall be disbursed to the Buyer from the
funds deposited with the escrow agent under the Escrow Agreement.
(ii) In the event that the Working Capital of the Company is more than the
Estimated Working Capital, then the amount of such difference shall be paid by
the Buyer to the Seller within two business days of the Final Determination
Date, plus interest of 8% per annum payable from July 31, 1997 to the Final
Determination Date. If the Final Determination Date occurs at least three
business days prior to the Closing Date, and the Buyer is required to make a
payment to the Seller in accordance with the third sentence of this Section
2.3(b), the Buyer shall deposit the additional amount due with the escrow agent
under the Escrow Agreement.
(iii) Each of the Seller, the Buyer and Key Energy agrees to provide such
notices as may be required under the Escrow Agreement to carry out the purposes
and intents of this Section 2.3(b).
(c) The July 31 Balance Sheet shall have been prepared in accordance with
generally accepted accounting principles applied in a manner consistent with the
Company's historical accounting policies and practices; except that all
intercompany balances will be eliminated. Each party agrees to use reasonable
efforts to arrive at a final determination of the Purchase Price adjustment on
or before the Closing Date.
(d) On or prior to 90 days from the Closing Date, the Seller will prepare
and deliver to the Buyer a calculation of the State Tax Detriment (as defined
below) resulting from the sale of the Company, showing all necessary information
for such calculation. The Seller shall make available to the Buyer all
information which may be in the possession of the Seller which the Buyer
reasonable requests in order to verify the accuracy of the State Tax Detriment
calculation. Within 30 days following delivery of the calculation of the State
Tax Detriment, the Buyer shall notify the Seller whether it disagrees with such
calculation and the Buyer shall be deemed to agree with such calculation if no
notice of disagreement is received within such time period. In the event that
the Buyer disagrees with such calculation, the Buyer shall attach to its notice
of disagreement or incorporate therein a written notice specifying the basis for
the Buyer's disagreement, and the Seller and the Buyer shall work in good faith
to reach agreement on the calculation but, in the event that they shall not
agree within 30 days following the date of such written notice, the matter will
be referred to a nationally recognized independent public accounting firm
mutually agreed to by the Buyer and the Seller. The fees and the disbursements
of such accounting firm shall be borne equally by the Buyer and the Seller. Such
accounting firm shall examine the records of the Seller and the Company, and,
within 30 days following the date upon which such matter shall be referred to
such accounting firm, such accounting firm shall determine the disposition of
any dispute with respect to the calculation. Any such determination shall be
final and binding on the parties, and may be enforced by appropriate judicial or
other proceedings. Payment of the amount of the State Tax Detriment shall be
made by the Buyer to the Seller no later than five business days after the date
agreement is reached between the Buyer and the Seller or the decision of the
accounting firm is made. The "State Tax Detriment" equals the difference between
(A) the state Taxes payable by the Seller or any related party as a result of
making the Section 338(h)(10) election contemplated by Section 5.11(c) of this
Agreement and (B) the state Taxes that would have been payable as a result of
the sale pursuant to this Agreement had such a Section 338(h)(10) election not
been made, such calculation to be grossed up for any additional state or other
Taxes payable as a result of the payment to the Seller under this provision."
3. Section 2.4, clause (a) of the Stock Purchase Agreement is hereby
amended to read in its entirety as follows: "(a) a date between January 2, 1998
and January 15, 1998 or". 4. Sections 7.1 (b) and (c) are hereby amended by
changing the date therein from "December 31, 1997" to "January 31, 1998". 5. The
Loan Agreement referenced in Schedule 3.6 to the Disclosure Schedule was
terminated on September 10, 1997, and UCC-3 termination statements have been
filed with respect thereto, all as evidenced on Attachment 1 hereto. The Seller
represents and warrants to the Buyer and Key Energy that there are no
encumbrances arising under such Loan Agreement on the Company or its property at
the date hereof and agrees that it will perform all acts reasonably requested by
the Buyer to remove any such encumbrances in the event the foregoing
representation is not true. The execution and delivery of this Amendment
satisfies the closing condition set forth in Section 6.1(i) of the Stock
Purchase Agreement. 6. The parties hereby agree that, notwithstanding footnote 2
to Schedule 3.14 of the Disclosure Schedule, as promptly as practicable after
the date hereof an affiliate of the Seller will convey to the Company the yard
in Gillette, Wyoming referenced in such Schedule 3.14, and the Company will
convey to an affiliate of the Seller the yard in Rock Springs, Wyoming
referenced in such Schedule 3.14. Such conveyances will be in substantially the
forms attached hereto as Attachment 2.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
XXXXXX ACQUISITION CORP. IV
By:
Xxxxx X. Xxxxx
Executive Vice President
KEY ROCKY MOUNTAIN, INC.
By:
Xxxxxxx X. XxXxxxxx
Executive Vice President
KEY ENERGY GROUP, INC.
By:
Xxxxxxx X. XxXxxxxx
Vice President
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