ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXX OILFIELD SERVICE & SUPPLY, INC.,
AND
XXXXXX TRUCK & SUPPLY, INC.
May 19, 1998
Asset Purchase Agreement
This Asset Purchase Agreement (this Agreement) is entered into as of May
19, 1998 between Xxxxxx Oilfield Service & Supply, Inc., a Delaware
corporation ("Buyer"), and Xxxxxx Truck & Supply, Inc., a New Mexico
corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of the refurbishing and
repairing of oilfield service equipment, including well service rigs,
workover rigs, drilling rigs and components and parts thereof and selling
oilfield parts and equipment for customers in the Territories (as defined
in Section 3.1), including, but not limited to, Xxxxxx parts under the
provisions of and subject to the Xxxxxx Xxxxxx Distribution Agreement (as
hereinafter defined) with Xxxxxx Xxxxxx, Inc., a New Mexico corporation
("Xxxxxx Xxxxxx"), which is a wholly-owned subsidiary of Seller (the
"Business");
WHEREAS, in addition to the Business, Seller is also currently engaged in
the business of the refurbishing and repairing of well service rigs,
workover rigs, drilling rigs and refurbishing, repairing and fabricating
components and parts thereof and selling of oilfield parts and equipment
for customers outside the Territories, selling of new and used pulling
units, manufacturing of pulling units and parts (through its subsidiary,
Xxxxxx Xxxxxx), selling and leasing of new and used vehicles (automobiles
and trucks), vehicle repair and maintenance services, and financing and
insurance activities related to such businesses (collectively, the
"Excluded Business"); and
WHEREAS, Seller desires to sell the assets of the Business, 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 at the Closing (as defined in Section
5.1 hereof) all of the assets of the Seller existing on the Closing Date
(as defined in Section 5.1 hereof) relating to or used or useful in the
conduct of the Business other than the Excluded Assets (as defined in
Section 1.2 hereof), whether real, personal, tangible or intangible,
including, without limitation, the following assets owned by Seller (all
such assets being sold hereunder are referred to collectively herein as the
Assets):
(a) all of the inventory of Seller relating to, used or useful in the
conduct of the Business, including, without limitation, that which is more
fully described on Schedule 1.1(a) hereto (the Inventory);
(b) all tangible personal property owned by Seller relating to, used or
useful in the conduct of the Business (such as machinery, equipment,
leasehold improvements, furniture and fixtures, and vehicles), including,
without limitation, that which is more fully described on Schedule 1.1(b)
hereto (collectively, the "Tangible Personal Property");
(c) all of Seller's uncompleted repair services constituting work in
progress relating to, used or useful in the conduct of the Business
including, without limitation, that which is described on Schedule 1.1(c)
hereto (the "Work in Progress");
(d) those leases, subleases, contracts, subcontracts, contract rights, and
agreements described on Schedule 1.1(d) hereto (collectively, the
Contracts);
(e) all of the permits, authorizations, certificates, approvals,
registrations, variances, waivers, exemptions, rights-of-way, franchises,
ordinances, orders, licenses and other rights of every kind and character
(collectively, the Permits) relating to the conduct of the Business or
the ownership or operation of any of the Assets , including, but not
limited to, that which is more fully described on Schedule 1.1(e) hereto
(collectively, the Seller Permits) ;
(f) all of the Seller's intangible assets relating to, used or useful in
the operation of the Assets or the conduct of the Business (the
"Intangibles"), including without limitation, (i) Seller's rights to any
patents, patent applications, trademarks and service marks (including
registrations and applications therefor), trade names, and copyrights and
written know-how, trade secrets, licenses and sublicenses and all other
similar proprietary data and the goodwill associated therewith used or held
in connection with the Business (collectively, the "Intellectual
Property"), (ii) the Seller's telephone numbers relating to the Business,
and (iii) the sales and promotional literature, computer software, customer
and supplier lists and all other records of the Seller relating to the
Assets or the Business, excluding the corporate minute books, accounting
records, files, tax returns and other financial data on whatever media,
relating to the Seller or the Excluded Assets (the "Retained Records");
(g) subject to Section 3.6 hereof, the goodwill and going concern value of
the Business; and
(h) all other or additional privileges, rights, interests, properties and
assets of the Seller of every kind and description and wherever located
that are related to, used or useful in the Business or intended for use in
the Business in connection with, or that are necessary for the continued
conduct of, the Business (other than the Excluded Assets).
1.2 Excluded Assets. The Assets shall not include the following
(collectively, the "Excluded Assets"): (i) all of the Seller's accounts
receivable and all other rights of the Seller to payment for services
rendered by the Seller before Closing (except service rendered in
connection with the Work in Progress), it being understood that all of
Seller's customers relating to the Business shall be billed on the Closing
Date (as defined in Section 5.1 hereof) for services or materials provided
through that date and that Buyer will forward any payment on such accounts
received by it to Seller within five (5) business days of receipt; (ii) all
cash accounts of the Seller and all xxxxx cash of the Seller kept on hand
for use in the Business; (iii) all other receivables and prepaid expenses,
including all right, title and interest of the Seller in and to any prepaid
expenses, bonds, deposits and other current assets relating to any of the
Assets or the Business; (iv) the Retained Records; (v) the cash
consideration paid or payable by Buyer to Seller pursuant to Section 1.3
hereof; (vi) the assets listed on Schedule 1.2 hereto; (vii) all rights of
Seller covered by the Xxxxxx Xxxxxx Distribution Agreement; and (viii) all
assets whether real, personal, tangible, or intangible related to the
Excluded Business and which are not also related to the Business.
1.3 Consideration for Assets. As consideration for the sale of the Assets
to Buyer and for the other covenants and agreements of Seller contained
herein, Buyer agrees to pay to Seller, on the Closing Date, the amount of
One Million Three Hundred Twenty-Seven Thousand Thirty-Five Dollars and
Seventy-Four Cents ($1,327,035.74) by wire transfer of immediately
available funds to an account designated by Seller.
1.4 Liabilities. Effective on the Closing Date, Buyer shall assume those,
and only those, liabilities and obligations of the Seller to perform the
Contracts described on Schedule 1.1(d) hereto to the extent such Contracts
have not been performed and are not in default on the Closing Date (the
"Assumed Liabilities"). On and after the Closing Date, the Seller shall be
responsible for any and all liabilities and obligations of the Seller other
than the Assumed Liabilities, including, without limitation, (a) any
obligations arising from the Seller's employment of employees of the
Seller; (b) any liabilities arising from or relating to Seller's failure to
be duly qualified or licensed to do business and 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 Seller would make such qualification or licensing necessary;
(c) any failure to pay any taxes owed by Seller which are applicable to the
period ending with the Closing Date (including, specifically, all taxes
applicable to any of the Assets); (d) any liabilities resulting from or
related to Seller's violation of Environmental Laws (as hereinafter
defined); (e) any liabilities arising out of any matters listed on Schedule
2.1.9 hereto; (f) all products liability claims, as well as other
liabilities involving products sold or services provided by the Seller
prior to the Closing Date, and (g) any other liabilities or obligations
arising out of Seller's ownership or operation of the Assets or conduct of
the Business prior to the Closing Date or Seller's ownership of the
Excluded Assets or conduct of the Excluded Business whether before or after
the Closing Date (collectively, the "Retained Liabilities").
Article I
Representations and Warranties
Article I.1 Representations and Warranties of Seller. Seller represents and
warrants to
Buyer as follows:
Article I.1.1. Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
state of organization, has full requisite corporate power and authority to
carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of
the properties owned or the nature of the business conducted by it would
make such qualification or licensing necessary except where the failure to
make such qualification would not have a material adverse effect on Seller.
Article I.1.1. Agreements Authorized and their Effect on Other Obligations.
The execution and delivery of this Agreement have been authorized by all
necessary corporate, shareholder and other action on the part of Seller,
and this Agreement is the valid and binding obligation of Seller
enforceable (subject to normal equitable principals) against Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, debtor relief or similar laws
affecting the rights of creditors generally. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, will not conflict with or result in a violation or
breach of any term or provision of, nor constitute a default under (i) the
charter or bylaws (or other organizational documents) of Seller, (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which Seller is a party or by which Seller 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 Seller or any of its properties are subject.
2.1.3 Contracts. Schedule 1.1(d) hereto sets forth a complete list of all
contracts, including leases under which Seller is lessor or lessee, that
relate to the conduct of the Business or the ownership or operation of the
Assets and are to be performed in whole or in part after the Closing Date.
All of the Contracts are in full force and effect and constitute valid and
binding obligations of Seller. Seller is not, and to the knowledge of
Seller, no other party to any of the Contracts is, in default thereunder,
and to the knowledge of Seller, no event has occurred which (with or
without notice, lapse of time, or the happening of any other event) would
constitute a default thereunder. No Contract has been entered into on terms
which could reasonably be expected to have an adverse effect on the use of
the Assets by Buyer. Seller has not received any definitive information
which would cause Seller to conclude that any customer of Seller related to
the Business representing more than ten (10%) percent of Seller's total
revenue from the Business for the fiscal year of Seller ended April 30,
1998 will (or is likely to) cease doing business with Buyer (or its
successors) as a result of the consummation of the transactions
contemplated hereby. All of the Contracts are assignable (and are hereby
validly assigned) to Buyer without the consent of any other party thereto.
2.1.4 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). Assets are being transferred as is, where is. Seller makes
no warranties as to general condition or fitness for a particular purpose
or otherwise regarding the condition of the Assets save and except as
provided in this Agreement. No notice of any violation of any law, statute,
ordinance, or regulation relating to any of the Assets has been received by
Seller or any director, officer, or shareholder of Seller, 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.
2.1.5 Licenses and Permits. Schedule 1.1(e) hereto sets forth a complete
list of all Permits necessary under law or otherwise for the conduct of the
Business and the ownership, operation, maintenance and use of the Assets in
the manner in which the Business is currently being conducted and in the
manner in which the Assets are now being operated, maintained and used .
Each of the Seller Permits and Seller's 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 are threatened to be, revoked, canceled,
suspended or modified. Upon consummation of the transactions contemplated
hereby, all of the Seller Permits shall be assignable (and are hereby
assigned) to Buyer without the consent of any regulatory agency or any
other third party. On and after the Closing Date, each of the Seller
Permits and Buyer's rights with respect thereto will be valid and
subsisting in full force and effect, and enforceable by Buyer subject only
to the administrative powers of regulatory agencies having jurisdiction
over the applicable Seller Permit.
2.1.6 Financial Information. Seller has delivered to Buyer copies of
certain financial information of Seller related to the Business, copies of
which are attached hereto as Schedule 2.1.6 (collectively, the "Seller
Financial Information"), and include a "Gross Margin Statement" as of March
31, 1998 (the "Statement Date"). The Seller Financial Information is true,
correct and complete in all material respects and presents fairly and fully
such financial information of the Business for the periods indicated
thereon. The inventories of Seller, which have thereafter been acquired by
Seller, consist of items of a quality and quantity salable in the normal
course of the applicable Business. The values at which such inventories are
carried are consistent with the normal inventory level and practices of
Seller with respect to the Business.
2.1.7 Absence of Certain Changes and Events. Since the Statement Date,
there has not been: (a) Financial Change. Any adverse change in the Assets
or the Business or prospects of the Business;
(a) Property Damage. Any damage, destruction, or loss to any of the Assets
(whether or not covered by insurance);
(a) Waiver. Any waiver or release of a material right of or claim held by
Seller related to the Assets or the Business;
(a) Change in Assets. Any acquisition, disposition, transfer, encumbrance,
mortgage, pledge or other encumbrance of any of the Assets other than in
the ordinary course of business;
(a) Labor Disputes. Any labor disputes between the Seller and the
Employees, as defined in Section 3.2 hereof; or
(a) Other Changes. Any other event or condition known to the Seller that
particularly pertains to and has or might have a material adverse effect on
the Assets, the operations of the Business or the prospects of the
Business.
2.1.8 Necessary Consents. Seller has obtained and delivered to Buyer all
consents to assignment or waivers thereof required to be obtained from any
governmental authority or from any other third party in order to validly
transfer the Assets hereunder, including, without limitation, any consents
required to assign the Contracts and the Seller Permits.
2.1.9 Environmental Matters. None of the current or past operations of the
Business, any of the Assets or the Land, as that term is defined in that
certain Real Estate Purchase Agreement (the "Real Estate Purchase
Agreement") between Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxx, as Co-Trustees of
the Charley and Xxxxx Xxxxx Living Trust (the "Xxxxx Trust") and Xxxxxxx X.
Xxxxx and Xxxxx X. Xxxxx, individually (the "Trustors"), dated May 19,
1998, is being or has been conducted or used in such a manner as to
constitute a violation of any Environmental Law (defined below). Except as
disclosed on Schedule 2.1.9 hereto Seller has not received any notice
(whether formal or informal, written or oral) from any entity, governmental
agency or individual regarding any existing, pending or threatened
investigation or inquiry related to violations of any Environmental Law or
regarding any claims for remedial obligations or contribution for removal
costs or damages under any Environmental Law. There are no writs,
injunction decrees, orders or judgments outstanding, or lawsuits, claims,
proceedings or investigations pending or, to the knowledge of Seller ,
threatened relating to the ownership, use, maintenance or operation of the
Assets, the conduct of the Business or the Land, nor, to the knowledge of
Seller, is there any basis for any of the foregoing. Buyer is not required
to obtain any permits, licenses or similar authorizations pursuant to any
Environmental Law in effect as of the Closing Date to operate and use any
of the Assets for their current or proposed purposes and uses. To the
knowledge of Seller, the Assets include all environmental and pollution
control equipment necessary for compliance with applicable Environmental
Law. No Hazardous Materials (defined below) have been or are currently
being used by Seller in the operation of the Assets, the Business or the
Land. No Hazardous Materials are or have ever been situated on or under the
Land, or incorporated into any of the Assets. There are no underground
storage tanks (as defined under Environmental Law) currently located under
the Land, and any underground storage tanks previously located on or under
the Land have been removed in compliance with all applicable Environmental
Law. There are no environmental conditions or circumstances, including the
presence or release of any Hazardous Materials, on any property presently
or previously owned or leased by Seller related to the Business or Assets,
including but not limited to, the Land, or on any property on which
Hazardous Materials generated by Seller's operations of the Business or the
use of the Assets were disposed of, which would result in an adverse change
in the Assets, the Business or business prospects of the Business. The term
Environmental Law means any and all laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, and other legally enforceable
requirements (including, without limitation, common law) of the United
States, or any state, regional, city, local, municipal or other
governmental authority or quasi-governmental authority, regulating,
relating to, or imposing environmental standards of conduct concerning
protection of the environment or human health, or employee health and
safety as from time to time has been or is now in effect. The term
"Hazardous Materials" means (x) asbestos, polychlorinated biphenyls, urea
formaldehyde, lead based paint, radon gas, petroleum, oil, solid waste,
pollutants and contaminants, and (y) any chemicals, materials, wastes or
substances that are defined, regulated, determined or identified as toxic
or hazardous in any Environmental Law.
2.1.10 No ERISA Plans or Labor Issues. No employee benefit plan of Seller,
whether or not subject to any provisions of the Employee Retirement Income
Security Act of 1974, as amended, will by its terms or applicable law,
become binding upon or an obligation of Buyer. Seller has not engaged in
any unfair labor practices which could reasonably be expected to result in
an adverse effect on the Assets. Seller does not have any dispute with any
of the Employees or any of its former employees, and there are no labor
disputes or, to the knowledge of Seller, any disputes threatened by current
or former employees of Seller which would have an adverse effect on the
Assets or the Business.
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 is pending or, to the knowledge of Seller,
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 might become a party or
any other unasserted claims against Seller which would have an adverse
effect on the Assets or the Business.
2.1.12 Absence of Certain Business Practices. Neither Seller, nor any
officer, employee or agent of Seller, nor any other person acting on behalf
of Seller, has, directly or indirectly, within the past five years, given
or agreed to give any gift or similar benefit to any customer, supplier,
government employee or other person who is or may be in a position to help
or hinder the profitable conduct of the Business or the profitable use of
the Assets (or to assist Seller in connection with any actual or proposed
transaction) which if not given in the past, might have had an adverse
effect on the profitable conduct of the Business or the profitable use of
the Assets, or if not continued in the future, might adversely affect the
profitable conduct of the Business or the profitable use of the Assets.
2.1.13 Solvency. Seller is not presently insolvent, nor will Seller be
rendered insolvent by the occurrence of the transactions contemplated by
this Agreement. The term "insolvent", with respect to Seller, 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
secured or unsecured.
2.1.14 Untrue Statements. This Agreement and all other agreements executed
by Seller and delivered to Buyer do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Seller has also
made available to Buyer true, complete and correct copies of all contracts,
documents concerning all litigation and administrative proceedings,
licenses, permits, insurance policies, lists of suppliers and customers,
and records relating principally to the Business and the Assets, and such
information covers all commitments and liabilities of Buyer relating
principally to the Business and the Assets.
2.1.15 Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller and its
counsel directly with Buyer and its counsel, without the intervention of
any other person in such manner as to give rise to any valid claim against
any of the parties hereto for a brokerage commission, finder's fee or any
similar payment.
2.1.16 Taxes. All federal, state and local taxes assessed or assessable
against the Assets for periods prior to January 1, 1998 have been paid by
Seller and the Assets will be conveyed to Buyer free and clear of any such
taxes or claims therefor. All taxes assessed against the Assets for the
period commencing January 1, 1998 will be prorated through the Closing Date
(based on 1997 assessed values) with the Seller paying to Buyer at Closing
an amount equal to the portion of such taxes applicable to the period
between January 1, 1998 and the Closing Date. Buyer agrees to pay all such
taxes on or before the due date of such taxes to the appropriate taxing
authority.
2.1.17 Bulk Sales. Seller has complied with all provisions of any
applicable, laws, rules or regulations relating to "Bulk Sales" (as that
term is interpreted in accordance with Uniform Commercial Code as enacted
in the jurisdiction in which the Assets are located and in which this
Agreement is to be enforced).
2.1.18 Intellectual Property. The Intangibles are all of the intangible
assets relating to, used or useful in the operation of the Assets or the
conduct of the Business. To the knowledge of Seller, the Intellectual
Property is owned or licensed by the Seller free and clear of any
Encumbrances; Seller has not granted to any other person any license to use
any of the Intellectual Property; and, to the knowledge of Seller, use of
the Intellectual Property will not, and the conduct of the Business did
not, infringe, misappropriate or conflict with the intellectual property
rights of others. The Seller has not received any notice of infringement,
misappropriations or conflict with the intellectual property rights of
others in connection with the use by Seller of the Intellectual Property.
Article I.1 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
Article I.1.1. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has full requisite corporate power and authority to
carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of
the properties owned or the nature of the business conducted by it would
make such qualification or licensing necessary.
Article I.1.1. Agreement Authorized and its Effect on Other Obligations.
The consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Buyer,
and this Agreement is a valid and binding obligation of Buyer enforceable
(subject to normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of
creditors generally. The execution, delivery and performance of this
Agreement by Buyer will not conflict with or result in a violation or
breach of any term or provision of, or constitute a default under (a) the
Certificate of Incorporation or Bylaws of Buyer or (b) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement to
which Buyer or any of its property is bound.
Article I.1.1. Consents and Approvals. No consent, approval or
authorization of, or filing of a registration with, any governmental or
regulatory authority, or any other person or entity is required to be made
or obtained by Buyer in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
Article I.1.1. 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 the Seller and its counsel, without the
intervention by 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 payments.
Article I
Additional Agreements
3.1 Noncompetition. Except as otherwise consented to or approved in writing
by Buyer, Seller agrees that for a period of 60 months from the Closing
Date (the "Noncompetition Period"), Seller will not, directly or indirectly
acting alone or as a member of a partnership or as a consultant,
representative, advisor, lender (including gifts used for capitalization),
holder of, or investor in any security of any class of any corporation or
other business entity (i) own, lease, or operate a facility or sell service
parts manufactured by Xxxxxx Xxxxxx in the states of Wyoming, Colorado,
Montana, North Dakota, Utah, Nebraska, and South Dakota, as well as the
area which is within a 25 mile radius from the city limits of Farmington,
New Mexico (collectively, the "Territories") which would be in competition
with any of the Business conducted by Buyer or any affiliate of Buyer; (ii)
request any customers or suppliers of Buyer or any affiliate of Buyer to
curtail or cancel any of their Business conducted with Buyer or any
affiliate of Buyer; (iii) disclose to any person, firm or corporation any
trade, technical or technological secrets of the Business other than any
such information which relates to the Excluded Business, or any other
business of Buyer or any affiliate of Buyer or any details of their
organization or business affairs not otherwise available in the public
domain; or (iv) induce or actively attempt to influence any Employee, as
hereinafter defined, or an Employee of Buyer or any affiliate of Buyer to
terminate his or her employment. It is specifically understood and agreed
by the parties hereto that in the event a customer or potential customer of
Buyer in the Territories desires to utilize the services of Seller from
facilities outside the Territories during the Noncompetition Period, such a
transaction will not be in violation of this Section 3.1. Seller 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, such court
may reduce such restrictions to those which it deems reasonable under the
circumstances. Seller further agrees and acknowledges that the Buyer and
its affiliates do not have any adequate remedy at law for the breach or
threatened breach by Seller of this covenant, and agrees that the Buyer or
any affiliate of Buyer may, in addition to the other remedies which may be
available to it hereunder, file a suit in equity to enjoin Seller 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. Seller acknowledges that the covenants set forth in
this Section 3.1 are being executed and delivered by Seller in
consideration of the covenants of Buyer contained in this Agreement, and
for other good and valuable consideration, receipt of which is hereby
acknowledged.
3.2 Hiring Employees. Schedule 3.2 hereto is a complete and accurate
listing of certain employees of Seller that devote their full time and
effort in the conduct of the Business (the "Employees"). Effective as of
the Closing Date, all of the Employees shall be offered employment by Buyer
subject to such Employees meeting Buyer's standard employment eligibility
requirements. 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 Closing
Date . Seller 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. Seller acknowledges its
understanding that it is Buyer's intent that all Employees hired by Buyer
shall be at-will employees of Buyer. Buyer agrees that as to each Employee
hired by Buyer that such Employee shall be hired at each such Employee's
respective current salary with credit for prior service with Seller as it
relates to compensation and benefit plans of Buyer.
3. 3 Allocation of Purchase Price of Assets. The parties hereto agree to
allocate the purchase price paid by Buyer for the Assets hereunder as set
forth on Schedule 3.3 hereto, and shall report this transaction for federal
income tax purposes in accordance with the allocation so agreed upon. The
parties hereto for themselves and for their respective successors and
assigns covenant and agree that they will file coordinating Form 8594's in
accordance with Section 1060 of the Internal Revenue Code of 1986, as
amended, with their respective income tax returns for the taxable year that
includes the Closing Date .
3.4 Real Estate Purchase. Concurrent with the execution and delivery
hereof, the Xxxxx Trust and Buyer shall have entered into the Real Estate
Purchase Agreement (and consummated the transactions contemplated thereby)
pursuant to which the Xxxxx Trust will have conveyed to Buyer the real
property owned by the Xxxxx Trust described on Schedule 3.4 hereto.
3.5 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.
3.6 Use of Name. Seller consents to the use of the name "Xxxxxx Oilfield
Service & Supply, Inc." (or a substantially similar name) in the
Territories. Seller agrees to execute any and all instruments, certificates
or other documents and take any and all action as may be necessary or
appropriate of Seller for Buyer to use such name in the Territories. Buyer
agrees that prior to a change in control of Buyer that Buyer shall obtain
the written consent of Seller to the continued use of the name "Xxxxxx Oil
Field Service & Supply, Inc." by Buyer, or change the name of Buyer to
delete the use of the name "Xxxxxx." For purposes of this Section 3.6, the
term "control" shall be ownership of voting rights of not less than 70% of
the voting rights related to all issued and outstanding securities of
Buyer. Additionally, Buyer agrees that it will not sell or transfer the
name "Xxxxxx Oilfield Service & Supply, Inc." (or a substantially similar
name containing the name "Xxxxxx") to a non-affiliate of Buyer without the
prior written consent of Seller."
3.7 Use of Xxxxxx Xxxxxx Blueprints. Seller agrees to make available to
Buyer and allow Buyer to use the blueprints and other technical information
necessary for Buyer to conduct the Business for the term and any renewals
and extensions of the Xxxxxx Xxxxxx Distribution Agreement.
3.8 Guaranty by Seller of Indemnification under Real Estate Purchase
Agreement. Seller agrees to and hereby unconditionally guarantees the
performance of any and all indemnifications and obligations of the Xxxxx
Trust or the Trustors under the terms of the Real Estate Purchase Agreement
(the "Guaranty"). Seller waives notice of any amendments, changes or
modifications to the Real Estate Purchase Agreement or any agreements or
obligations of any of the parties to the Real Estate Purchase Agreement
which survive the Closing (as that term is defined in the Real Estate
Purchase Agreement and the use of the term "Closing" as defined in the Real
Estate Purchase Agreement shall be limited to use only in this Section
3.8). Seller further expressly waives notice of non-payment, protest, and
notice of protest with respect to the indebtedness and obligations covered
by the Guaranty. It shall not be necessary for Buyer, in order to enforce
payment by Seller under the Guaranty, to first institute suit or to pursue
or exhaust its remedies against either the Xxxxx Trust or the Trustors.
Seller agrees that this Guaranty shall continue in full force and effect,
notwithstanding the termination of the Xxxxx Trust or the death of either
of the Trustors or the release by agreement or by operation of law or the
extension of time to the Xxxxx Trust or either of the Trustors as to any of
their obligations then existing. Seller acknowledges that the covenants set
forth in this Section 3.8 are being delivered by Seller in consideration of
the covenants of Buyer contained in this Agreement, and for other good and
valuable consideration, receipt of which is hereby acknowledged.
Article I
Indemnification Article I.1 Indemnification by Seller. In addition to any
other remedies available to Buyer under this Agreement, or at law or in
equity, Seller shall indemnify, defend and hold harmless Buyer and its
affiliates, officers, directors, employees, agents and stockholders,
against and with respect to any and all claims, costs, damages, losses,
expenses, obligations, liabilities, recoveries, suits, causes of action and
deficiencies, including interest, penalties and reasonable attorneys' fees
and expenses (collectively, the "Damages") that such indemnitee shall incur
or suffer (whether the Damages are suffered or incurred by a Buyer
Indemnified Party directly or as a result of a third party claim against
such Buyer Indemnified Party), which arise, result from or relate to (i)
any breach of, or failure by Seller to perform, its representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or delivered to Buyer by
Seller under this Agreement or (ii) the Retained Liabilities, provided
however, that (x) Seller shall not be required to so indemnify, defend and
hold harmless Buyer against and with respect to any Damages incurred as a
result of a breach by Seller of its representations and warranties in this
Agreement, or in any schedule, certificate, exhibit or other instrument
furnished or delivered by Seller to Buyer under this Agreement for which
Buyer fails to provide written notice of a claim for such damages to Seller
on or before the expiration of the survival period. (As specified in
Section 6.1 hereof) of the specific representation or warranty alleged to
have been breached, and (y) Seller shall not be required to so indemnify,
defend and hold harmless Buyer unless and until the Damages equal or exceed
$25,000 in the aggregate (the "Indemnification Threshold"), at which xxxx
Xxxxxx shall indemnify, defend and hold harmless Buyer for all Damages,
including but not limited to those Damages less than the Indemnification
Threshold.
Article I.1 Indemnification by Buyer. In addition to any other remedies
available to Seller under this Agreement, or at law or in equity, Buyer
shall indemnify, defend and hold harmless Seller against and with respect
to any and all Damages that such indemnitees shall incur or suffer, which
arise, result from or relate to (i) any breach of, or failure by Buyer to
perform, any of its representations, warranties, covenants or agreements in
this Agreement or in any schedule, certificate, exhibit or other instrument
furnished or delivered to Seller by or on behalf of Buyer under this
Agreement, (ii) the Assumed Liabilities, or (iii) except to the extent that
any Damages arise out of a breach by Seller of any of its respective
representations, warranties or covenants contained herein, the Buyer's
conduct of the Business after the Closing Date save and except for the
Retained Liabilities, provided however, that (x) Buyer shall not be
required to so indemnify, defend and hold harmless Seller against and with
respect to any Damages incurred as a result of a breach by Buyer of its
representations and warranties in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or delivered by Buyer
to Seller under this Agreement for which Seller fails to provide written
notice of a claim for such Damages to Buyer on or before the expiration of
the survival period (as specified in Section 6.1 hereof), of the specific
representation or warranty alleged to have been breached, and (y) Buyer
shall not be required to so indemnify, defend and hold harmless Seller
unless and until the Damages equal or exceed $25,000 in the aggregate (the
"Indemnification Threshold"), at which time Buyer shall indemnify, defend
and hold harmless Seller for all Damages, including but not limited, to
those Damages less than the Indemnification Threshold.
Article I.1 Indemnification Procedure. If any party hereto discovers or
otherwise becomes aware of an indemnification claim arising under Section
4.1 or 4.2 of this Agreement, such indemnified party shall give written
notice to the indemnifying party, specifying such claim, and may thereafter
exercise any remedies available to such party under this Agreement;
provided, however, that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of any
obligations hereunder, to the extent the indemnifying party is not
materially prejudiced thereby. Further, promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any
third party action or proceeding against such indemnified party with
respect to which a claim for indemnification may be made pursuant to this
Article 4, such indemnified party shall, if a claim in respect thereof is
to be made against any indemnifying party, give written notice to the
latter of the commencement of such third party 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 third party 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 third party claim and to
employ counsel reasonably satisfactory to such indemnified person. An
indemnifying party who elects not to assume the defense of a third party
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 third party claim or with respect
to third party 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 third
party 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 third party 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 third party claimant or plaintiff to such indemnified party of a
release from all liability with respect to such third party claim. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such third party action, the defense of which has been
assumed by an indemnifying party, without the consent of such indemnifying
party, which consent shall not be unreasonably withheld or delayed.
Article V
THE CLOSING 5.1 Time and Place. The consummation of the transactions
contemplated by this Agreement (the "Closing') shall take place on the date
hereof (the "Closing Date") at the offices of the Xxxxxx Law Firm,
beginning at 9:00 a.m. on the Closing Date.
5.2 Deliveries. At the Closing, the following shall occur: (a) Seller shall
transfer good, marketable and valid title to the Assets to Buyer, free and
clear of any and all Encumbrances by execution and delivery of a Xxxx of
Sale and Assignment Agreement and such other documents as may be requested
by Buyer;
(b) The Xxxxxx Law Firm, counsel to Seller, shall deliver its opinion of
counsel covering such matters as may be requested by Buyer; and
(c) Buyer shall pay to Seller in immediately available funds, the purchase
price specified in Section 1.2 hereof.
(d) The execution and delivery of a Distribution Agreement between Xxxxxx
Xxxxxx and Buyer (the "Xxxxxx Xxxxxx Distribution Agreement") acceptable to
Buyer.
(e) The execution and delivery of a Distribution Agreement between Xxxxxx
Oil Well Tools, a division of Xxxxxx Enterprises, a California corporation
and Buyer acceptable to Buyer.
(f) The execution and delivery of a Non-Competition Agreement between the
Buyer and Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx, and R. Xxxx Xxxxx.
Article I I Miscellaneous
6.1 Survival of Representations, Warranties and Covenants. All
representations and warranties made by the parties hereto shall survive until
three (3) years after the Closing Date, notwithstanding any investigation made
on the part of the parties hereto; provided however, that the representations
and warranties made in Section 2.1.16 hereof shall survive until the expiration
of applicable statute of limitations associated with tax issues. All statements
contained in the 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 until three (3) years after the Closing Date despite any
investigation made by any party hereto or on its behalf. All covenants and
agreements contained herein shall survive as provided herein.
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. 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.
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
Addressed to: With a copy to:
Xxxxxx Oilfield Service & Supply, Inc. Cotton, Xxxxxxx, Xxxxx & Xxxxxx
Two Tower Center, 20th Floor 000 X. Xxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: General Counsel Attn: Xxxxxxx X. XxXxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Seller or any of the Shareholders
Addressed to: With a copy to:
Xxxxxx Truck & Supply, Inc. Xxxxxx Law Firm
Attention: Chairman of the Board Attention: Xxxxx X. Xxxxxx
P. O. Xxx 00 X. X. Xxx 0000
Xxxxx, Xxx Xxxxxx 00000 Xxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
or or
Xxxxxx Truck & Supply, Inc. Xxxxxx Law Firm
Attention: Chairman of the Board Attention: Xxxxx X. Xxxxxx
1501 X. Xxxxxx 000 X. Xxxxxxxx, Xxxxx 000
Xxxxx, Xxx Xxxxxx 00000 Xxxxx, Xxx Xxxxxx 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 New Mexico.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
BUYER:
XXXXXX OILFIELD SERVICE & SUPPLY, INC.
By:
Name: Xxxxxxx X. Xxxxxxx
Title: President
SELLER:
XXXXXX TRUCK & SUPPLY, INC.
By:
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board and President
