Asset Purchase Agreement
dated September 9, 1998
By and Among
KEY ENERGY GROUP, INC.,
FLINT ENGINEERING & CONSTRUCTION CO.
and
FLINT INDUSTRIES, INC.
TABLE OF CONTENTS
Page
ARTICLE I AGREEMENT FOR SALE AND PURCHASE OF ASSETS
Section 1.01. Purchase and Sale of Assets 1
Section 1.02. Identification of Assets 1
Section 1.03. Instruments of Conveyance and Transfer 3
Section 1.04. Further Assurances 3
Section 1.05. Record Retention 3
ARTICLE II CONSIDERATION FOR SALE OF ASSETS
Section 2.01. Consideration Paid 4
Section 2.02. Value Assigned to the Assets 4
Section 2.03. Non-Assumption of Liabilities 4
Section 2.04. Other Funds Received 4
Section 2.05. Assumption of Obligations;
Excluded Liabilities; Excluded Assets 4
ARTICLE II CLOSING
Section 3.01. Closing 7
Section 3.02. Closing Obligations 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Section 4.01. Organization and Qualification 8
Section 4.02. Authority, Approval and Enforceability 9
Section 4.03. No Violation or Consent 9
Section 4.04. Material Contracts, Agreements, Plans
and Commitments 9
Section 4.05. Compliance with Law 10
Section 4.06. Litigation 10
Section 4.07. Environmental Matters 10
Section 4.08. Taxes 11
Section 4.09. Insurance 12
Section 4.10. Labor and Employee Benefits 12
Section 4.11. Brokerage Agreements 12
Section 4.12. Title to Property 13
Section 4.13. Absence of Certain Changes 13
Section 4.14. Permits 13
Section 4.15. Employees 13
Section 4.16. Customers 14
Section 4.17. No Arrangements with Respect to Assets 14
Section 4.18. Limitation of Representations and Warranties 14
Section 4.19. Absence of Certain Businesses Practices 14
Section 4.20. Solvency 15
Section 4.21. Real Property 15
Section 4.22. Intellectual Property 16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.01. Formation and Existence 16
Section 5.02. Authorization of Agreement; No Violation;
No Consents 16
Section 5.03. Litigation 17
Section 5.04. Brokerage Agreements 17
ARTICLE VI COVENANTS OF SELLER
Section 6.01. Conduct of Seller Pending the Closing and
the Vacuum Truck Closing 17
Section 6.02. Employees 19
Section 6.03. Access 19
Section 6.04. Consents 19
Section 6.05. Additional Action to Assure Transfers 19
ARTICLE VII COVENANTS OF BUYER
Section 7.01. Cooperation 20
Section 7.02. Post-Closing Employment 20
Section 7.03. Performance of Obligations 21
Section 7.04. Consents. 21
ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATIONS
Section 8.01. Representations and Warranties 21
Section 8.02. Performance 21
Section 8.03. Officer's Certificate 21
Section 8.04. Conveyance of Documents 22
Section 8.05. Litigation 22
Section 8.06. Third-Party Consents 22
Section 8.07. Opinion of Counsel 22
Section 8.08. Environmental Matters 22
Section 8.09. Real Estate Matters 23
ARTICLE IX CONDITIONS TO SELLER'S OBLIGATIONS
Section 9.01. Representations and Warranties 24
Section 9.02. Performance 24
Section 9.03. Payment of Purchase Price 24
Section 9.04. Officer's Certificate 24
Section 9.05. Opinion of Counsel 24
ARTICLE X SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
Section 10.01. Survival of Representations 24
Section 10.02. Agreement to Indemnify Buyer 25
Section 10.03. Agreement to Indemnify Seller 25
Section 10.04. Additional Agreements Concerning Indemnification 26
Section 10.05. Minimum and Maximum Amounts 26
Section 10.06. Exclusive Remedy 26
ARTICLE XI ADDITIONAL AGREEMENTS OF THE PARTIES
Section 11.01. Public Announcements 27
Section 11.02. Employees 27
Section 11.03. Non-Solicitation 28
Section 11.04. Covenant Not to Compete 28
ARTICLE XII TERMINATION OF AGREEMENT
Section 12.01. Termination 30
Section 12.02. Effect of Termination 30
ARTICLE XIIIMISCELLANEOUS
Section 13.01. Interpretive Provisions 31
Section 13.02. Expenses 31
Section 13.03. Reliance 31
Section 13.04. Notices 31
Section 13.05. Headings; References 32
Section 13.06. Entire Agreement 32
Section 13.07. Waiver 32
Section 13.08. Severability 32
Section 13.09. Amendment 33
Section 13.10. Further Actions 33
Section 13.11. Assignment; Parties in Interest 33
Section 13.12. Governing Law 33
Section 13.13. Specific Performance 33
Section 13.14. Counterparts 33
SCHEDULES
1.02(a) Rigs
1.02(b) Equipment & Rolling Stock
1.02(c) Real Property
1.02(d) Leased Vehicles
1.02(f) Contracts and Work Orders
1.02(g) Permits
1.02(i) Computers
1.02(k) Construction Equipment
1.02(l) Vacuum Trucks
3.02(a)(1) Form of Conveyance, Assignment and Xxxx of Sale
3.02(a)(2) Form of General Warranty Deed
3.02(b)(1) Form of Conveyance and Xxxx of Sale
4.03 No Violation or Consent
4.04 Contracts in Default
4.05 Compliance with Law
4.06 Litigation
4.07 Environmental Matters
4.09 Insurance
4.12 Permitted Liens
4.13 Absence of Certain Changes
4.15 Employees
4.16 Customers
8.07 Opinion of Seller's Counsel
9.05 Opinion of Buyer's Counsel
11.02 Excluded Employees
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into this
9th day of September, 1998 by and among Key Energy Group, Inc., a Maryland
corporation ("Buyer"), Flint Engineering & Construction Co., an Oklahoma
corporation ("Seller"), and Flint Industries, Inc., a Delaware corporation
("Parent").
RECITALS
WHEREAS, Seller owns and operates 55 workover rigs, related well servicing
equipment and rolling stock and five yards located in Chickasha, Oklahoma,
Liberty, Texas, Sidney, Montana, Ulysses, Kansas and Roosevelt, Utah through
which Seller conducts its well servicing business (the "WSB") and desires to
sell to Buyer the assets and to transfer certain liabilities of the WSB, in each
case upon the terms and subject to the conditions contained herein.
WHEREAS, Buyer desires to purchase the assets and to assume certain liabilities
of the WSB upon such terms and conditions.
WHEREAS, Parent owns all of the issued and outstanding capital stock of Seller.
NOW, THEREFORE, in consideration of the premises and representations, warranties
and agreements herein contained, the parties agree as follows:
ARTICLE I
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
Section 1.01. Purchase and Sale of Assets. Seller agrees to sell, transfer,
convey and assign to Buyer, and Buyer agrees to purchase and acquire from Seller
at the Closing or the Vacuum Truck Closing (as such terms are hereinafter
defined in Article III hereof), as the case may be, all of Seller's right, title
and interest in and to the assets, properties and rights of the WSB existing on
the date hereof, including without limitation, those assets, properties and
rights of the WSB set forth in Section 1.02 hereof, (such assets, properties and
rights being collectively referred to herein as the "Assets"), but excluding
those assets referred to in Section 2.05(b) hereof (the "Excluded Assets"), for
and in consideration of the payment by Buyer to Seller of the amounts
hereinafter specified.
Section 1.02. Identification of Assets. The Assets to be acquired by Buyer
hereunder shall include the following:
(a) Rigs. The 55 workover rigs which are described on Schedule 1.02(a) (the
"Rigs") and all spare parts related to the Rigs.
(b) Equipment and Rolling Stock. The utility/dog house trailers, mud pumps,
frac tanks, power swivels, blowout preventers and other miscellaneous
equipment and the vacuum trucks (other than those described on Schedule
1.02(l) which will be conveyed at the Vacuum Truck Closing), utility
vehicles, crew cabs, pick-up trucks and winch trucks which are described on
Schedule 1.02(b) (the "Equipment and Rolling Stock").
(c) Real Property. All of the right, title and interest of Seller in and to the
real property and buildings located at Chickasha, Oklahoma, Liberty, Texas,
Sidney, Montana, Ulysses, Kansas and Roosevelt, Utah which are described on
Schedule 1.02(c), together with all fixtures, improvements, betterments,
installments and additions constructed, erected or located on or attached
to such property (the "Fixtures and Improvements") and all reversionary
interests, privileges and appurtenances belonging, pertaining or relating
to such property including but not limited to all easements, mineral
rights, rights of way and utility facilities (collectively, the "Real
Property").
(d) Leased Vehicles. All right, title and interest in and to the rolling stock
leased by Seller prior to the Closing in connection with the operations of
the WSB and which are listed on Schedule 1.02(d) (the "Leased Vehicles").
(e) Inventory. The fuel stock inventory of Seller owned by Seller in connection
with the WSB located on the Real Property (the "Inventory").
(f) Contracts and Work Orders. The contracts and agreements (the "Contracts")
of Seller that were entered into in connection with the operation of the
WSB and which, with respect to any Contract for consideration in excess of
$10,000 (the "Material Contracts"), are described on Schedule 1.02(f),
together with any open work orders (the "Work Orders") of Seller that are
entered into by Seller in connection with the WSB prior to the Closing,
which provide for the delivery of services by the WSB following the Closing
and which, with respect to any Work Order for consideration in excess of
$10,000 (the "Material Work Orders") and any "rate sheets" pursuant to
which such work orders are written, are described on Schedule 1.02(f).
(g) Permits. All certificates, authorizations and similar rights granted by any
accrediting or governmental entity to Seller, or its predecessors in
interest, and used or held by Seller for use solely in connection with the
operation of the WSB (as distinct from general corporate and other similar
authorizations not specific to the WSB, such as qualifications to transact
business), including, without limitation, those listed on Schedule 1.02(g)
(the "Permits") that may be transferred without the payment of other than a
de minimis fee.
(h) Records. All books, files, documents, sales literature, customer lists and
records, instructions, advertising and marketing and sales materials (other
than central filing and legal records) used solely in the operation of the
WSB (the "Records").
(i) Computers. All right, title and interest of Seller in computer hardware
located on the Real Property which are described on Schedule 1.02(i).
(j) Other Intangibles. All of Seller's intangible assets (the "Intangibles"),
including (i) all right, title and interest of Seller in, to and under all
privileges, claims, causes of action and options relating or pertaining to
the WSB or the foregoing Assets and (ii) the WSB's telephone numbers other
than the telephone numbers related to the WSB's property at Farmington, New
Mexico.
(k) Construction Equipment. The engineering and construction equipment located
at Sydney, Montana which is described on Schedule 1.02(k) (the "Purchased
Construction Equipment").
(l) Vacuum Trucks. The vacuum trucks which are described on Schedule 1.02(l)
(the "Vacuum Trucks").
(m) Goodwill. All of Seller's goodwill in the WSB.
Section 1.03. Instruments of Conveyance and Transfer. Seller agrees that it will
execute, acknowledge and deliver to Buyer, or its designee or designees, at the
Closing such good and sufficient instruments of sale, conveyance, transfer and
assignment as shall be effective to vest in Buyer all right, title and interest
of Seller in and to the Assets (other than the Vacuum Trucks, which will be
conveyed at the Vacuum Truck Closing), in each case, free and clear of all
claims, liens, security interests, mortgages, encumbrances and restrictions of
any kind or nature. Seller will take such steps as may be necessary to put Buyer
in actual possession and operating control of (i) the Assets as of the Closing
and (ii) the Vacuum Trucks as of the Vacuum Truck Closing. Such instruments of
sale, conveyance, transfer and assignment shall include, without limitation:
(a) general warranty deeds for the Real Property, (b) a xxxx of sale, (c) an
assignment of the Contracts (together with any written consents required for
such assignments) and (d) title transfers to vehicles and any other certificated
personal property.
Section 1.04. Further Assurances. Seller agrees that from time to time after the
Closing it will, at the request of Buyer and without further consideration,
execute and deliver such supplemental and additional instruments of sale,
conveyance, transfer and assignment and take such other action as may be
reasonably necessary to effectively sell, convey, transfer and assign to Buyer,
and to put it in the possession of, the Assets.
Section 1.05. Record Retention. For a period of three years after the Closing,
Buyer and Seller each agree that prior to the destruction or disposition of any
Records, Contracts or any commitments that relate directly to the WSB, each
party shall provide not less than 30 nor more than 60 days prior written notice
to the other of any such proposed destruction or disposal. If the recipient of
such notice desires to obtain any of such documents, it may do so by notifying
the other party in writing at any time prior to the scheduled date for such
destruction or disposal. Such notice must specify the documents which the
requesting party wishes to obtain. The parties shall then promptly arrange for
the delivery of such documents. All out-of-pocket costs associated with the
delivery of the requested documents shall be paid by the requesting party.
ARTICLE II
CONSIDERATION FOR SALE OF ASSETS
Section 2.01. Consideration Paid. The purchase price (the "Purchase Price") for
the Assets shall consist of cash in the amount of $12,350,000. In addition,
Buyer shall pay $500,000 in cash (the "Non-Compete Payment") at the Closing in
consideration of the non-compete agreement set forth in Section 11.04. Buyer
shall pay Seller the Purchase Price and the Non-Compete Payment, by wire
transfer of immediately available funds into an account or accounts designated
by Seller or as otherwise agreed to by Buyer and Seller, as follows:
(a) $11,875,000 at the Closing;
(b) $950,000 at the Vacuum Truck Closing; and
(c) $25,000 as provided in Section 8.08(b).
Section 2.02. Value Assigned to the Assets. As soon as practicable after the
Closing, the proportion of the consideration allocable to the Assets purchased
pursuant to the terms of this Agreement shall be determined by Buyer and Seller,
and Buyer and Seller agree that they will take no action inconsistent with such
allocation subsequent to such date in the filing of any federal income tax
returns, including for purposes of filing Form 8594.
Section 2.03. Non-Assumption of Liabilities. Buyer shall not be deemed in any
manner to have assumed or agreed to perform or pay any debts, liabilities,
obligations or contracts of Seller of any nature, whether or not known,
presently existing, absolute, accrued, contingent or otherwise, except with
respect to any obligations expressly assumed by Buyer as set forth in
Section 2.05(a) of this Agreement.
Section 2.04. Other Funds Received. If any party to this Agreement receives or
otherwise acquires funds (including, but not limited to, rebates, warranty
proceeds, incentives, accounts receivables, deposits and asset dispositions, in
any form whatsoever), which are properly due and payable to any other party to
this Agreement, the recipient of such funds shall immediately (and within three
business days following the receipt thereof) forward such funds to the other
party at the address provided in Section 13.04 hereof.
Section 2.05. Assumption of Obligations; Excluded Liabilities; Excluded Assets.
(a) As additional consideration to Seller in exchange for the performance by
Seller of its obligations hereunder, at the Closing Date or, in the case of
the Vacuum Trucks and the Vacuum Truck Transferred Employees (as defined in
Section 11.02(a)), at the Vacuum Truck Closing Date (as defined in Section
3.01(b)), Buyer hereby assumes and agrees to pay, discharge and perform as
and when due, each of the following obligations of Seller (the "Assumed
Obligations"):
(1) all obligations and liabilities of Seller under the Contracts and Work
Orders, to the extent that such obligations are attributable to the period
of time following the Closing, except to the extent that such obligations
arise solely from a breach or default by Seller under the Contracts or Work
Orders prior to the Closing Date;
(2) all liabilities and obligations arising from activities of the WSB (other
than those arising from the activities of the Vacuum Trucks) on and after
the Closing Date, and all liabilities and obligations arising from
activities of the Vacuum Trucks on and after the Vacuum Truck Closing Date;
and
(3) accrued vacation liabilities attributable to the Transferred Employees and
the Vacuum Truck Transferred Employees (each as defined in Section
11.02(a)) as set forth on Schedule 4.15.
(b) It is agreed that Buyer shall not assume or be liable for, directly or
indirectly, any liabilities or obligations of Seller that are not
specifically identified as Assumed Obligations in Section 2.05(a) hereof,
including, without limitation, the following debts, liabilities and
obligations of Seller in respect of the Assets or the WSB (collectively,
the "Unassumed Obligations"), as to which Seller shall be liable:
(1) any payable balances as of the Closing Date for intercompany advances;
(2) any accruals as of the Closing Date for professional fees (legal and
accounting), broker's fees or commissions, printing costs, severance and
relocation;
(3) any insurance reserves accruing prior to the Closing Date;
(4) all liabilities and obligations attributable to the WSB, including accounts
payable and accrued payrolls attributable to the WSB;
(5) any obligations arising from Seller's employment of (i) the Transferred
Employees prior to the Closing Date, and the Vacuum Truck Transferred
Employees prior to the Vacuum Truck Closing Date, other than as specified
in Section 2.05(a)(3) hereof and (ii) all other employees of Seller whether
before or after the Closing Date;
(6) any failure to pay any taxes owed by Seller which are applicable to the
period ending with the Closing Date, or, for taxes owed with respect to the
operations of the Vacuum Trucks, if any, the Vacuum Truck Closing Date; and
(7) any other liabilities resulting from Seller's operation of the Assets
(other than the Vacuum Trucks) or conduct of the WSB before the Closing
Date or, with respect to the Vacuum Trucks, any other liabilities resulting
from Seller's operation of the Vacuum Trucks before the Vacuum Truck
Closing Date.
(c) Notwithstanding anything in this Agreement to the contrary, Seller shall
not, and is not hereby agreeing to, sell, assign, convey, transfer or
deliver to Buyer any of Seller's right, title and interest in, to or under
any of the assets listed below (the "Excluded Assets"):
(1) cash or cash equivalents, whether on hand at the premises, in banks or in
transit between accounts of Seller and whether or not relating to the WSB;
(2) the bank accounts, deposit accounts or similar accounts of the WSB;
(3) any and all policies of insurance or surety bonds of the WSB;
(4) any and all notes receivable of the WSB, except those notes receivable
related to the Contracts or Work Orders;
(5) all receivables of Seller relating to the WSB outstanding as of the Closing
Date;
(6) all interest of Seller in and to all advance payments, prepayments, prepaid
expenses, deposits and the like, that are recorded on the books and records
of Seller as of the Closing Date and which were incurred by Seller solely
with respect to the operation of the WSB;
(7) any and all accruals as of the Closing Date for income taxes and deferred
income taxes relating to the WSB;
(8) any choses in action, claims or causes of action or rights of Seller to
recovery or offset of any kind or character relating to the operation of
the WSB prior to the Closing Date, except as such may arise with respect to
the Contracts and the Work Orders; and
(9) any of the assets of Seller relating to Seller's engineering and
construction business other than the Purchased Construction Equipment,
which assets are being conveyed to a third party in a separate transaction.
ARTICLE III
CLOSING
Section 3.01. Closing.
(a) Subject to the terms and conditions of this Agreement, the Closing with
respect to all of the Assets except for the Vacuum Trucks (the "Closing")
shall occur on September 15, 1998 (the "Closing Date") at 9:00 a.m.;
provided, however, that if all of the conditions to Closing set forth in
Articles VIII and IX have not been satisfied or waived by such date or any
extended date for Closing, either party shall have the right to extend the
date of Closing for successive periods of up to seven days each, or for
such longer period as the parties may agree upon in writing, in either case
until such conditions have been satisfied or waived or until this Agreement
shall have been terminated pursuant to Section 12.01(a).
(b) The Closing with respect to the Vacuum Trucks (the "Vacuum Truck Closing")
shall occur within three (3) business days after notice from Buyer (which
notice shall be delivered in a timely manner) of the receipt by Buyer of
permits authorizing the operation of the Vacuum Trucks in the State of
Colorado and states contiguous thereto; provided, however, that the Vacuum
Truck Closing is expressly conditioned upon (i) the occurrence of the
Closing, (ii) Seller's compliance with the covenants set forth in Article
VI hereof with respect to the Vacuum Trucks and (iii) satisfaction or
waiver of the conditions to the Vacuum Truck Closing set forth in Articles
VIII and IX hereof. The date on which the Vacuum Truck Closing occurs is
referred to herein as the "Vacuum Truck Closing Date".
(c) The Closing and the Vacuum Truck Closing shall be held at the Tulsa office
of Parent, or at such other location as may be mutually agreed upon by
Seller and Buyer.
Section 3.02. Closing Obligations.
(a) At the Closing, the following events shall occur:
(1) Seller and Buyer shall each execute, acknowledge and deliver to one another
a Conveyance, Assignment and Xxxx of Sale in the form of
Schedule 3.02(a)(1) whereby Seller shall convey the Assets (other than the
Vacuum Trucks, which will be conveyed at the Vacuum Truck Closing) to
Buyer;
(2) Seller shall execute and deliver general warranty deeds in the form of
Schedule 3.02(a)(2) whereby Seller shall convey the Real Property to Buyer;
(3) Seller shall deliver to Buyer evidence of the amount owed to U.S. Fleet
Leasing with respect to the Leased Vehicles, proof (in the form of a wire
transfer confirmation) of the payment of such amount, and a payoff letter
from U.S. Fleet Leasing confirming that upon payment of such amount it will
endorse and convey certificates of title to the Leased Vehicles in the name
of Buyer. Seller shall cause U.S. Fleet Leasing to deliver to Buyer
certificates of title free of all Liens (as defined in Section 4.12) with
respect to each of the Leased Vehicles within 10 business days of the
Closing Date;
(4) Seller, Parent and Buyer shall exchange the certificates described in
Sections 8.03 and 9.04;
(5) Seller, Parent and Buyer shall provide each other with a certified copy of
the resolutions of their respective Boards of Directors (and, in the case
of Seller, shareholder resolutions) authorizing the execution of this
Agreement and the consummation of the transactions contemplated hereby in a
form reasonably acceptable to the other party;
(6) each of Seller, Parent and Buyer shall execute such other instruments and
take such other action as may be necessary to carry out their respective
obligations under this Agreement; and
(7) Seller and Buyer shall provide each other with the legal opinion of their
respective counsel in the form attached hereto as Schedule 8.07 and
Schedule 9.05, respectively.
(b) At the Vacuum Truck Closing, the following events shall occur:
(1) Seller and Buyer shall each execute, acknowledge and deliver to one another
a Conveyance and Xxxx of Sale in the form of Schedule 3.02(b)(1) whereby
Seller shall convey the Vacuum Trucks to Buyer; and
(2) Seller, Parent and Buyer shall exchange the certificates described in
Sections 8.03 and 9.04.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Each of Parent and Seller jointly and severally hereby represents and warrants
to Buyer as of the date hereof as follows:
Section 4.01. Organization and Qualification. Each of Parent and Seller is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and Oklahoma, respectively, and has the requisite corporate power to
own, lease and operate its properties and, in the case of Seller, to carry on
its business as now being conducted. Seller is qualified to do business and is
in good standing in each jurisdiction in which the nature and conduct of its
business requires it to be qualified to do business. Parent owns beneficially
and of record all of the issued and outstanding shares of Seller's capital
stock.
Section 4.02. Authority, Approval and Enforceability. Each of Parent and Seller
has all requisite corporate power and authority to execute and deliver this
Agreement and all other instruments, agreements and other documents to be
executed and delivered by Parent or Seller in connection herewith (the
"Collateral Documents") and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Collateral Documents by
Seller and Parent and the performance of the transactions contemplated hereby
and thereby have been duly and validly authorized by all corporate action on the
part of Seller and Parent. This Agreement constitutes the legal, valid and
binding obligation of Seller and Parent, enforceable against Seller and Parent
in accordance with its terms, except as enforceability may be affected by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally and general principles of equity, whether in a
proceeding in equity or at law.
Section 4.03. No Violation or Consent. Except as set forth in Schedule 4.03,
neither the execution and delivery of this Agreement, nor the effectuation by
Seller or Parent of the transactions contemplated hereby (a) will violate any
applicable statute or law, or any rule, regulation, order, writ, injunction or
decree of any court or governmental authority, or (b) will violate or conflict
with or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the Assets under, any
term or provision of (i) the Certificate of Incorporation or Bylaws of Seller or
Parent or (ii) any lease, contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Seller or Parent is a
party or by which Seller, Parent or any of the Assets may be bound or affected.
No filing with, or consent, approval, authorization or action by, any
governmental authority is required in connection with the execution and delivery
by Seller or Parent of this Agreement or the effectuation by Seller of the
transactions contemplated hereby or thereby other than (A) those which if not
made, obtained or taken would have no material adverse effect on the WSB or the
Assets and (B) those that have been made, obtained or taken.
Section 4.04. Material Contracts, Agreements, Plans and Commitments.
Schedules 1.02(d) and 1.02(f) set forth a complete list of all Material
Contracts and agreements and all open Material Work Orders to which Seller is a
party or by which any of the Assets are bound that are in existence as of the
date hereof and have been entered into by Seller in connection with the WSB.
True and complete copies of the Material Contracts and Material Work Orders have
been furnished by Seller to Buyer prior to the date hereof. Except as set forth
on Schedule 4.04, Seller is not in default, nor but for the requirement that
notice be given or that a period of time elapse or both, would be in default,
under any of the Contracts or Work Orders, nor to the knowledge of Seller or
Parent, is any other party to such Contracts or Work Orders in default
thereunder.
Section 4.05. Compliance with Law. Except as set forth in Schedule 4.05, Seller
is in compliance with all legal requirements applicable to the ownership, use or
operation of the Assets or the conduct of the WSB, including, without
limitation, the Occupational Health and Safety Act and the Americans with
Disabilities Act, other than environmental legal requirements (the compliance
with which is governed by Section 4.07).
Section 4.06. Litigation. Except as described in Schedule 4.06, there are no
civil, criminal, administrative, arbitration, or other proceedings or
governmental investigations pending or, to the knowledge of Seller or Parent,
threatened, against Seller or its Affiliates that could materially adversely
affect (a) any of the transactions contemplated by this Agreement or (b) the
ownership, use, operation or value of the Assets or (c) the conduct of the WSB.
Section 4.07. Environmental Matters. Except as set forth in Schedule 4.07:
(a) The land and premises comprising the Real Property and all operations
conducted thereon by Seller are in compliance in all material respects with
all applicable Environmental Legal Requirements (defined below) and there
are no Hazardous Materials (defined below) present on the Real Property,
except for those Hazardous Materials that are used in the ordinary course
of operating the Assets and the WSB or that do not require remedial action
under applicable Environmental Legal Requirements. The term "Hazardous
Materials" means any substance that is defined as hazardous or toxic under
Environmental Legal Requirements or that is known, as of the date of this
Agreement, to pose a threat or endangerment to human health, safety or the
environment (including, without limitation, any asbestos, formaldehyde,
radioactive substance, hydrocarbons, polychlorinated biphenyls, industrial
solvents, flammables, explosives and any other hazardous substance, solid
waste or toxic material). The term "Environmental Legal Requirements" means
any and all laws, statutes, ordinances, rules, regulations, orders or
legally enforceable requirements of any governmental authority pertaining
to health or the environment in effect as of the date of this Agreement,
including the Clean Air Act, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Federal Water
Pollution Control Act, the Occupational Safety and Health Act of 1970, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), the Toxic
Substances Control Act, the Hazardous Materials Transportation Act, and the
Oil Pollution Act of 1990, all as amended through the date of this
Agreement, and any state or local laws implementing the foregoing federal
laws.
(b) No Hazardous Materials have been disposed or otherwise released onto or
under the Real Property by Seller or in connection with the ownership, use
or operation of the Assets of the conduct of the WSB by Seller at any
on-site or off-site location in quantities, concentrations or locations
that require remedial action under any such Environmental Legal
Requirements.
(c) All permits, licenses or similar authorizations, if any, required to be
obtained or filed by Seller under any Environmental Legal Requirements in
connection with the Real Property, the operation of the Assets or the
conduct of the WSB have been duly obtained, applied for or filed, and
Seller is in compliance in all material respects with the terms and
conditions of such permits, licenses and similar authorizations.
(d) Neither Seller nor Parent has received any notice or other communication of
any claims, notices, actions, suits, citations, summons, investigations or
other demands or proceedings ("Claims") regarding the environmental
condition of the Real Property or the Assets, and there exists no writ,
injunction, decree, order or judgment outstanding, nor any pending or
threatened claim, relating to any alleged or suspected violation of
Environmental Legal Requirements arising out of the ownership, use or
operation of the Assets, whether or not corrected to the satisfaction of
the appropriate governmental entity.
(e) To the knowledge of Seller or Parent, there has been no exposure of any
person or property to Hazardous Materials on the Real Property or in
connection with the Assets or the WSB that could reasonably be expected to
result in a Claim for damages or compensation.
(f) There are no underground storage tanks (as defined under Environmental
Legal Requirements) located under any of the Real Property except for
underground storage tanks that are in compliance with Environmental Legal
Requirements and except for such underground storage tanks the presence of
which would not have a material adverse effect on the WSB. Each underground
storage tank previously located under the Real Property was removed in
accordance with Environmental Legal Requirements in effect at the time of
such removal.
(g) There are no environmental conditions or circumstances, including the
presence or release of any Hazardous Materials, on any property presently
or previously owned, used or leased by Seller, which would result in a
material adverse change in the Assets or the WSB or a Claim against Buyer
following the Closing.
Section 4.08. Taxes. With respect solely to the operation of the WSB: (a) all
contributions due from Seller pursuant to any unemployment insurance or workers
compensation laws and all sales or use taxes which are due or payable by Seller
have been paid in full and will be so paid through the Closing Date; (b) Seller
has withheld and paid to, or will cause to be paid to, the appropriate taxing
authorities all amounts required to be withheld from the wages of the employees
of the WSB under state law and the applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code") (and Seller will continue to do so with
respect to all wages paid by them prior to the Closing); and (c) Seller has
timely paid, or will pay prior to the due date therefor, all taxes which, if not
paid, could result in the imposition of a lien or encumbrance on the Assets
(except for liens for taxes not yet due) or otherwise interfere with Buyer's
ability to own and operate the Assets after the Closing. All taxes assessed
against the Real Property for the period commencing January 1, 1998 will be
prorated through the Closing Date (based on 1997 assessed values) with 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.
Section 4.09. Insurance. Schedule 4.09 sets forth a list of all insurance
policies, by which the Assets or the WSB, and any operations relating thereto,
are covered against present losses or claims and which insurance provides
coverage consistent with the past conduct of the WSB.
Section 4.10. Labor and Employee Benefits.
(a) Seller has not at any time had or been threatened with any work stoppages
or other material labor disputes.
(b) As to any "employee benefit plan," as such term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") sponsored or maintained by Seller within six years prior to the
Closing Date ("Plan"), including without limitation (i) a multiemployer
plan within the meaning of Section 3(37) of ERISA and (ii) a Plan subject
to Title IV of ERISA, there has been no event or condition which presents
the material risk of Plan termination, no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, no reportable event within the
meaning of Section 4043 of ERISA (for which the disclosure requirements of
Regulation ss2615.3 promulgated by the Pension Benefit Guaranty Corporation
("PBGC") have not been waived) has occurred, no notice of intent to
terminate the Plan has been given under Section 4041 of ERISA, no
proceeding has been instituted under Section 4042 of ERISA to terminate the
Plan, no liability to the PBGC has been incurred, and the assets of the
Plan equal or exceed the actuarial present value of the benefit
liabilities, within the meaning of Section 4041 of ERISA, under the Plan,
based upon reasonable actuarial assumptions and the asset valuation
principles established by the PBGC. For purposes of this Section 4.10, the
term "Seller" shall collectively refer to Seller and each other entity
which is treated as a single employer with Seller under Section 414 of the
Code. No employee benefit plan, program or arrangement of whatever nature,
whether or not subject to any provisions of ERISA, bonus or other employee
pay practice or leave policy maintained by Seller (a "Plan"), will by its
terms or applicable law, become binding upon or an obligation, liability or
responsibility of Buyer, financial or otherwise. Seller warrants that no
Plan provides for payments of retiree benefits in any manner such that
Buyer would become liable to make such payments. There have been no
failures to offer or provide health care continuation coverage ("COBRA
Coverage") under any employee welfare benefit plan sponsored or maintained
by Seller which is required under Sections 601 through 608 of ERISA or
applicable state law.
(c) Seller does not maintain or contribute to any multiemployer plan within the
meaning of Section 3(37) of ERISA.
Section 4.11. Brokerage Agreements. Seller has not entered (directly or
indirectly) into any agreement with any Person that provides for the payment of
any commission, brokerage or "finder's fee" arising out of the transaction
contemplated by this Agreement for which Buyer might have any liability or
obligation.
Section 4.12. Title to Property. Seller has good and marketable title to the
personal and tangible property included in the Assets being acquired by Buyer
under this Agreement, including, without limitation, the assets described in
Sections 1.02(a), 1.02(b), 1.02(e), 1.02(i), 1.02(k) and 1.02(l), free and clear
of all mortgages, pledges, liens, security interests, encumbrances or claims of
any kind or nature (collectively, "Liens"), except (i) Liens for current taxes
and assessments not yet due and payable, (ii) Liens in existence that do not
materially detract from the value thereof or interfere with the present use of
the property subject thereto and (iii) Liens set forth on Schedule 4.12
(collectively, "Permitted Liens").
Section 4.13. Absence of Certain Changes. Except as disclosed in Schedule 4.13
and except for changes, events or occurrences permitted by Section 6.01, since
May 31, 1998, there has not been:
(a) any material adverse change in the WSB, taken as a whole;
(b) any damage, destruction or loss, whether covered by insurance or not, to
the Assets that could have a material adverse effect on the WSB, taken as a
whole;
(c) any waiver by Seller of any rights under the Contracts or Leases that,
singularly or in the aggregate, are material to the WSB, taken as a whole;
or
(d) any intention, contract, agreement or commitment on the part of Seller or
any of its Affiliates to do any of the foregoing.
Section 4.14. Permits. To Seller's and Parent's knowledge, there are no other
permits not listed on Schedule 1.02(g) that are material to the operation and
use of the Assets or the conduct of the WSB as currently conducted. Each of the
Permits and Seller's rights with respect thereto is valid and subsisting, in
full force and effect, and enforceable by Seller and Seller is in compliance in
all material respects with the terms of each of the Permits. To Seller's and
Parent's knowledge, no proceeding is pending or threatened which seeks to repeal
or limit any of the Permits, and to Seller's and Parent's knowledge, no
suspension or cancellation of any Permit is threatened.
Section 4.15. Employees. Set forth in Schedule 4.15 is an accurate list of the
employees of the WSB, which list shall include their duties and/or job titles,
current salaries and other compensation, date of employment, date of last salary
increase, the number of accrued but unused vacation days to which such employees
will be entitled as of the Closing Date and an indication by the name of any
employee employed in connection with the operation of the Vacuum Trucks (such
employees being referred to herein as the "Vacuum Truck Employees"). Except as
set forth on Schedule 4.15, no employee of Seller has an employment agreement or
understanding with Seller which is not terminable on notice by Seller without
cost or other liability to Seller.
Section 4.16. Customers. Set forth in Schedule 4.16 is an accurate list of all
customers of the WSB that constituted 5% or more of the revenues of the WSB for
the fiscal year ended May 31, 1998, including the amount of xxxxxxxx made by the
WSB to such customers during such periods. Seller has not received written
notice that any customer of the WSB intends to cease doing business with Buyer
(or its successors) as a result of the consummation of the transactions
contemplated hereby.
Section 4.17. No Arrangements with Respect to Assets. There are no existing
agreements, options, commitments or rights that have been provided to any person
or entity to acquire any of the Assets to be acquired by Buyer, except for those
contracts entered into in the normal course of business consistent with past
practices with respect to the sale of inventory of the business.
Section 4.18. Limitation of Representations and Warranties. EXCEPT AS
SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE SCHEDULES AND EXHIBITS HERETO AND
ALL OTHER DOCUMENTS EXECUTED BY PARENT OR SELLER IN CONNECTION HEREWITH, SELLER
MAKES NO REPRESENTATION OR WARRANTY, AND HEREBY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WHICH RELATES TO THE RIGS, THE EQUIPMENT AND
ROLLING STOCK, THE VACUUM TRUCKS, THE INVENTORY OR THE FIXTURES AND
IMPROVEMENTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY, VALUE, REPAIR,
SUITABILITY OR FITNESS FOR A PARTICULAR USE, OR QUALITY, OR AS TO THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT THE
RIGS, THE EQUIPMENT AND ROLLING STOCK, THE VACUUM TRUCKS, THE INVENTORY AND THE
FIXTURES AND IMPROVEMENTS ARE BEING TRANSFERRED HEREUNDER "AS IS AND WHERE IS"
WITH ALL FAULTS AND IN THEIR PRESENT STATE AND CONDITION. BUYER ACKNOWLEDGES
THAT IT HAS EXAMINED AND MADE ITS OWN INDEPENDENT INVESTIGATION AS IT RELATES TO
THE RIGS, THE EQUIPMENT AND ROLLING STOCK, THE VACUUM TRUCKS, THE INVENTORY AND
THE FIXTURES AND IMPROVEMENTS AND, AS IT RELATES TO SUCH ASSETS, HAS NOT RELIED
ON ANY STATEMENTS OF ANY SELLER, OFFICER OR REPRESENTATIVE AS TO VALUES, OR
CONDITION OR APPRAISALS OF, OR REPRESENTATIONS OR WARRANTIES (OTHER THAN AS SET
FORTH IN THIS AGREEMENT, THE SCHEDULES AND EXHIBITS HERETO AND ALL OTHER
DOCUMENTS EXECUTED BY PARENT OR SELLER IN CONNECTION HEREWITH). NOTHING IN THIS
SECTION 4.18 SHALL BE CONSTRUED TO IN ANY WAY DETRACT FROM THE REPRESENTATIONS
AND WARRANTIES OF SELLER AND PARENT IN SECTION 4.12, 4.13 OR 4.17.
Section 4.19. Absence of Certain Businesses Practices. Neither Seller, nor any
officer, employee or agent of Seller, or any other person acting on behalf of
Seller, has, within the past five years, given or agreed to give any gift or
similar benefit (the fair market value of which exceeded $10,000) to any
customer, supplier, government employee or other person, for purposes of
influencing such person's judgment or decision, who is in a position to help or
hinder the profitable conduct of the WSB 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, would have had a material adverse effect on the
profitable conduct of the WSB or the profitable use of the Assets, or if not
continued in the future, would have a material adverse effect on the profitable
conduct of the WSB or the profitable use of the Assets.
Section 4.20. 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 undisputed or secured or unsecured.
Section 4.21. Real Property.
(a) All of the real property owned by Seller in connection with the WSB is
described on Schedule 1.02(c). Seller has and will convey to Buyer good and
indefeasible title to the Real Property free and clear of any and all
Liens.
(b) The Real Property does not violate any material provisions of any
applicable building code, fire, health or safety regulations, or other
governmental ordinances, orders or regulations. No condition exists with
respect to the Real Property which would prevent, or require repair or
modification thereof as a prerequisite to Buyer using the Real Property in
the conduct of the WSB.
(c) The zoning classification of the Real Property is such that the Real
Property may be used as currently used in the WSB.
(d) There are no parties in possession of any portion of the Real Property as
lessees, tenants, at sufferance or trespassers.
(e) There is no pending or threatened condemnation or similar proceeding or
assessment affecting the Real Property, or any part thereof, nor is any
such proceeding or assessment contemplated by any governmental body or
entity.
(f) Seller has complied in all material respects with all applicable laws,
ordinances, regulations, statutes, rules and restrictions relating to the
Real Property, or any part thereof.
(g) There are water, sewer, and electricity lines to the Real Property
presently sufficient for the conduct of the WSB in the ordinary course of
business.
(h) The Real Property has full and free access to and from public highways,
streets or roads and, to the best of Seller's knowledge, there is no
pending or threatened proceeding by any governmental entity which would
impair or result in the termination of such access.
Section 4.22. Intellectual Property. No intellectual property is necessary to
the conduct of the WSB as presently conducted. Neither Seller nor Parent has
received notice of any claim for infringement or interference or other conflict
by Seller with the asserted rights of others with respect with any intellectual
property.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof as follows:
Section 5.01. Formation and Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to own, lease and operate
its properties and to carry on its business as now being conducted.
Section 5.02. Authorization of Agreement; No Violation; No Consents.
(a) Buyer has all requisite corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement.
The execution and delivery of this Agreement by Buyer and the performance
of the transactions contemplated hereby by Buyer have been duly and validly
authorized by all corporate action on the part of Buyer. This Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as enforceability may be
affected by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and general principles of
equity, whether in a proceeding in equity or at law.
(b) Neither the execution and delivery of this Agreement nor the effectuation
by Buyer of the transactions contemplated hereby (a) will violate any
statute or law, or any rule, regulation, order, writ, injunction or decree
of any court or governmental authority, or (b) will violate or conflict
with or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, any term or
provision of (i) the Amended and Restated Articles of Incorporation, Bylaws
or other constituent documents of Buyer or (ii) any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or
character to which Buyer is a party or by which Buyer or any of its assets
or properties may be bound or affected. No filing with, or consent,
approval, authorization or action by, any governmental authority is
required in connection with the execution and delivery by Buyer of this
Agreement or the effectuation by Buyer of the transactions contemplated
hereby or thereby other than (A) those which if not made, obtained or taken
would have no material adverse effect and (B) those that have been made,
obtained or taken.
Section 5.03. Litigation. There are no civil, criminal, administrative,
arbitration or other proceedings or governmental investigations pending, or, to
the knowledge of Buyer, threatened against Buyer that could jeopardize or
adversely affect any of the transactions contemplated by this Agreement.
Section 5.04. Brokerage Agreements. Buyer has not entered (directly or
indirectly) into any agreement with any person that provides for the payment of
any commission, brokerage or "finder's fee" arising out of the transactions
contemplated by this Agreement for which Seller might have any liability or
obligation.
ARTICLE VI
COVENANTS OF SELLER
Section 6.01. Conduct of Seller Pending the Closing and the Vacuum Truck
Closing. Except as otherwise required by, or agreed in, this Agreement, from and
after the execution of this Agreement and until the Closing, or, in the case of
the Vacuum Trucks, until the Vacuum Truck Closing, Seller agrees to:
(a) maintain all Assets in such manner that at the Closing, or, in the case of
the Vacuum Trucks, at the Vacuum Truck Closing, they will be in
substantially the same condition and repair as on the date of the execution
of the Agreement, subject only to ordinary wear and tear;
(b) except in the ordinary course of business, not (i) enter into any (A)
Contracts, Work Orders or other agreements relating to the WSB or (B) other
agreements relating to the WSB for consideration in excess of $25,000, or
(ii) make any sales, assignments, trades or transfers of or encumber all or
any part of the Assets;
(c) use reasonable efforts to continue to employ the present employees engaged
in the operation of the WSB and preserve the present business organization
and customer relations of the WSB; provided, however, that Seller (i) may
hire or fire employees in the ordinary course of business, consistent with
past practices, (ii) may terminate any contract which is not included in
the Assets and (iii) shall not be required to make any expenditures out of
the ordinary course of business in order to comply with the covenants set
forth in this Section 6.01(c); provided, further, that this paragraph shall
not apply to the WSB employees not being retained by Buyer as contemplated
by this Agreement;
(d) in a timely manner make all payments due under and otherwise perform in all
material respects all its other obligations under the Contracts, the Work
Orders and other agreements relating to the WSB in accordance with their
respective terms and not cancel, amend, modify, abandon, extend or renew
any of the same, or permit any of the same to lapse (except in accordance
with their terms);
(e) maintain in full force and effect all of the insurance set forth on
Schedule 4.09;
(f) comply in all material respects with and fulfill its obligations and
responsibilities under all legal requirements applicable to the Assets or
their ownership, use or operation, including, but not limited to,
preparation and submittal of any and all reports required by any
governmental entities in connection therewith;
(g) promptly notify Buyer of any actions, claims or proceedings commenced or,
to the knowledge of Seller, threatened against Seller or Parent that
affects the WSB or any of the Assets after the date of this Agreement;
(h) operate its business only in the usual, regular, and ordinary manner so as
to maintain the goodwill it now enjoys and, to the extent consistent with
such operation, preserve intact its present business organization, keep
available the services of its present officers and employees, and preserve
its relationship with customer, suppliers, jobbers, distributors and others
having business dealing with it;
(i) maintain its books of account and records in the usual, regular, and
ordinary manner, in accordance with its customary accounting principles
applied on a consistent basis; (j) not amend its charter documents, or
merge or consolidate with or into any person, change in any manner the
rights of its capital stock or the character of its business;
(k) not issue or sell, or issue options or rights to subscribe to, or enter
into any contract or commitment to issue or sell (upon conversion or
otherwise), any shares of its capital stock, or subdivide or in any way
reclassify any shares of its capital stock, or acquire, or agree to
acquire, any shares of its capital stock;
(l) not declare any dividend on shares of its capital stock or make any other
non-cash distribution of assets to the holders thereof;
(m) promptly notify Buyer in writing of any event or condition which could
reasonably be expected to have a material adverse effect on the Assets or
the WSB (a "Material Adverse Event"); and
(n) not directly or indirectly (i) solicit, initiate or encourage any inquiry
or Acquisition Proposal (defined below) from any person or (ii) participate
in any discussions or negotiations regarding, or furnish to any person
other than Buyer or its representatives any information with respect to, or
otherwise facilitate or encourage any Acquisition Proposal by any other
person. As used herein "Acquired Proposal" means any proposal for a merger,
consolidation or other business combination involving Seller or for the
acquisition or purchase of any equity interest in, or a material portion of
the assets of, Seller, other than the transactions with Buyer contemplated
by this Agreement. Seller shall promptly communicate to Buyer the terms of
any such written Acquisition Proposals which they may receive or any
written inquiries made to them or any of their respective directors,
officers, representatives or agents.
Section 6.02. Employees. As soon as reasonably administratively practicable
after the Closing, Seller agrees to pay or otherwise provide for payment of all
amounts due and payable to the Transferred Employees (as defined in Section
11.02(a)) as of such date and through the Closing, including salaries, wages,
commissions and bonuses due and arising out of their employment with Seller,
except with respect to any obligations expressly assumed by Buyer as set forth
in Section 2.05(a)(3) hereof. As soon as reasonably administratively practicable
after the Vacuum Truck Closing, Seller agrees to pay or otherwise provide for
payment of all amounts due and payable to the Vacuum Truck Transferred Employees
(as defined in Section 11.02(a)) as of such date and through the Closing,
including salaries, wages, commissions and bonuses due and arising out of their
employment with Seller, except with respect to any obligations expressly assumed
by Buyer as set forth in Section 2.05(a)(3) hereof.
Section 6.03. Access. Seller will give to Buyer and its representatives and
agents, after reasonable advance notice to Seller, and as often as Buyer may
reasonably request, full and complete access to the Assets and the WSB,
including, without limitation, such of Seller's assets, books, agreements,
papers and records, employees and financial statements pertaining to the Assets
or the WSB, and Seller will cause its officers, employees, agents, advisors and
other representatives to cooperate fully with Buyer's officers, employees and
other representatives in the course of such obligation.
Section 6.04. Consents. Seller will use all commercially reasonable efforts to
satisfy or cause to be satisfied all of the conditions to Closing set forth in
Article VIII hereof, including obtaining, prior to the Closing, all consents
necessary to the effectuation of the transactions contemplated hereby. All such
consents will be in writing and executed counterparts thereof will be delivered
to Buyer promptly after receipt by Seller thereof, but in no event later than
immediately prior to the Closing.
Section 6.05. Additional Action to Assure Transfers. Nothing in this Agreement
shall be construed to assign any Contract that is by its terms or by law
nonassignable without the consent of the other party or parties thereto, unless
such consent shall have been given, or as to which all the remedies for the
enforcement thereof enjoyed by Seller would not, as a matter of law pass to
Buyer as an incident of the assignments provided for by this Agreement. In
order, however, to provide Buyer the full realization and value of the
Contracts, Seller, at and after the Closing, will, at the request and under the
direction of Buyer and in the name of Seller or otherwise as Buyer shall
specify, take or cause to be taken all such action and do or cause to be done
all such things as shall be necessary or proper to (a) assure that the rights of
Seller under the Contracts shall be preserved for the benefit of Buyer, and (b)
facilitate receipt by Buyer of the consideration to which Seller would otherwise
be entitled in and under the Contracts which consideration shall be held for the
benefit of, and shall be delivered to, Buyer. In order to accomplish the
foregoing, Seller may designate Buyer as subcontractor (under mutually agreeable
terms and conditions) to perform obligations of Seller under the Contracts if so
requested by Buyer.
ARTICLE VII
COVENANTS OF BUYER
Section 7.01. Cooperation. Buyer acknowledges that Seller may have continuing
obligations on certain matters relating to the WSB after the Closing.
Accordingly, Buyer agrees to grant to Seller and its representatives access
during normal business hours to such books and records as may be necessary for
the defense and/or disposition of such other matters that Seller may be
obligated to perform relating to the WSB, and to furnish such additional
information as Seller or its representatives may reasonably request.
Section 7.02. Post-Closing Employment. After the Closing Date, Buyer agrees to
provide employee benefits to the Transferred Employees through one of its wholly
owned subsidiaries that are, in all material respects, no less favorable to such
transferred employees than the employee benefits provided to similarly situated
employees of Buyer located in the same geographic region under employee benefit
plans sponsored by Buyer; provided that such Transferred Employees will be
subject to the terms and conditions of the applicable employee benefit plan,
subject, in all cases, to the provisions of this Section 7.02. After the Vacuum
Truck Closing Date, Buyer agrees to provide employee benefits to the Vacuum
Truck Transferred Employees that are, in all material respects, no less
favorable to such transferred employees than the employee benefits provided to
similarly situated employees of Buyer located in the same geographic region
under employee benefit plans sponsored by Buyer; provided that such Vacuum Truck
Transferred Employees will be subject to the terms and conditions of the
applicable employee benefit plan, subject, in all cases, to the provisions of
this Section 7.02. Further, Buyer shall (i) provide the Transferred Employees
and the Vacuum Truck Transferred Employees and their eligible dependents as of
the Closing Date or the Vacuum Truck Closing Date, as the case may be, with
coverage in a group medical and dental plan maintained by Buyer, (ii) waive any
preexisting condition limitations applicable to the Transferred Employees or the
Vacuum Truck Transferred Employees under Buyer's group medical plan to the
extent that a Transferred Employee's or a Vacuum Truck Transferred Employee's
condition would not have operated as a preexisting condition limitation under
Seller's group medical plan, (iii) cause any employee pension benefit plan (as
such term is defined in Section 3(2) of ERISA) which is intended to be qualified
under Section 401 of the Code to be amended to provide that the Transferred
Employees and the Vacuum Truck Transferred Employees shall receive credit for
participation and vesting purposes under such plan for their period of
continuous employment with Seller and its predecessors to the extent such
predecessor employment was recognized by Seller, and (iv) credit the Transferred
Employees and the Vacuum Truck Transferred Employees under each other employee
benefit plan or policy of Buyer for their period of continuous employment with
Seller or its predecessors to the extent such predecessor employment was
recognized by Seller.
Section 7.03. Performance of Obligations. Buyer agrees to perform all
obligations under the Contracts and Work Orders for all periods following the
Closing Date as such obligations become due, except to the extent that such
obligations arise solely from a breach or default by Seller under the Contracts
or Work Orders prior to the Closing Date.
Section 7.04. Consents. Buyer will use all commercially reasonable efforts to
satisfy or cause to be satisfied all of the conditions to Closing set forth in
Article IX hereof, including obtaining, prior to the Closing, all consents
necessary to the effectuation of the transactions contemplated hereby. All such
consents will be in writing and executed counterparts thereof will be delivered
to Seller promptly after receipt by Buyer thereof, but in no event later than
immediately prior to the Closing.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
Except as may be waived by Buyer, the obligations of Buyer are subject to the
fulfillment, prior to or at the Closing, or, where specifically identified, the
Vacuum Truck Closing, of each of the following conditions:
Section 8.01. Representations and Warranties. The representations and warranties
made by Seller and Parent in this Agreement shall have been true, correct and
accurate, in all material respects, when made and shall be true, correct and
accurate, in all material respects, at and as of the Closing, with the same
force and effect as if such representations and warranties were made at and as
of the Closing, and the representations and warranties made by Seller and Parent
in Sections 4.01, 4.02, 4.03, 4.05, 4.10, 4.12, 4.17, 4.18 and 4.19 of this
Agreement, insofar as, and only to the extent that, they relate to the ownership
or operation of the Vacuum Trucks, shall be true, correct and accurate, in all
material respects, at and as of the Vacuum Truck Closing, with the same force
and effect as if such representations and warranties were made at and as of the
Vacuum Truck Closing.
Section 8.02. Performance. Seller and Parent shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with prior to or at the Closing, and Seller and Parent shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with prior to or at the Vacuum Truck
Closing.
Section 8.03. Officer's Certificate. Seller and Parent shall deliver to Buyer at
the Closing certificates, attesting to the truth, accuracy and correctness of
such representations and warranties and to Seller's and Parent's compliance and
conformity with such covenants and conditions in a form reasonably satisfactory
to Buyer, and Seller and Parent shall deliver to Buyer at the Vacuum Truck
Closing certificates, attesting to the truth, accuracy and correctness of the
representations and warranties contained in Sections 4.01, 4.02, 4.03, 4.05,
4.10, 4.12, 4.17, 4.18 and 4.19 of this Agreement to the extent they relate to
the ownership or operation of the Vacuum Trucks and to Seller's and Parent's
compliance and conformity with such covenants and conditions in a form
reasonably satisfactory to Buyer.
Section 8.04. Conveyance of Documents. At the Closing, Seller shall have
executed and delivered to Buyer the necessary instruments and documents to vest
in Buyer all right, title and interest to the Assets (other than the Vacuum
Trucks), including those documents described in Section 3.02(a) hereof. At the
Vacuum Truck Closing, Seller shall have executed and delivered to Buyer the
necessary instruments and documents to vest in Buyer all right, title and
interest to the Vacuum Trucks, including those documents described in Section
3.02(b) hereof.
Section 8.05. Litigation.
(a) With respect to the Closing or the Vacuum Truck Closing, as the case may
be, there shall be no litigation, inquiry or proceeding pending or imminent
in or by any court, tribunal or any governmental agency or authority
including, without limitation, the entry of a preliminary or permanent
injunction that (i) prevents or delays the performance by Seller or Buyer
of its obligations hereunder, or (ii) would impose any material limitation
on the ability of Seller effectively to convey full rights of ownership to
(A) the Assets (other than the Vacuum Trucks) to Buyer as of the Closing or
(B) the Vacuum Trucks to Buyer as of the Vacuum Truck Closing Date.
(b) With respect to the Closing and the Vacuum Truck Closing, no action, suit
or proceeding before any court, tribunal or any governmental agency or
authority shall be pending against Seller or Buyer challenging the validity
or legality of the transactions contemplated by this Agreement.
Section 8.06. Third-Party Consents. All consents required to be obtained in
connection with the assignment by Seller to Buyer of the Assets (other than the
Vacuum Trucks) at the Closing, or the Vacuum Trucks at the Vacuum Truck Closing,
shall have been received and delivered to Buyer.
Section 8.07. Opinion of Counsel. Buyer shall have received an opinion, dated
the Closing Date, from Doerner, Saunders, Xxxxxx & Xxxxxxxx, L.L.P., counsel to
Seller and Parent, in the form attached hereto as Schedule 8.07.
Section 8.08. Environmental Matters.
(a) Seller will have caused to be conducted a Phase I Environmental Site
Assessment (a "Phase I") (including any updates as are, in the judgment of
Buyer, necessary; provided that such updates shall be at Buyer's sole
expense), and if deemed necessary by Buyer, at Buyer's sole expense, a
Phase II Environmental Site Assessment (a "Phase II"), on all of the Real
Property, both of which shall be conducted in conformance with the scope
and limitations of ASTM Standard Practice E1527 (except for the survey
requirements included therein) by an environmental surveyor approved by
Buyer. Buyer will be satisfied, in its reasonable judgment, that either (x)
the results of such Phase I's and, if necessary, such Phase II's have
revealed no environmental condition except for Permitted Conditions (as
defined below) that would result in any liability or obligation on the part
of Buyer or would, except for any Permitted Conditions, adversely affect or
reduce the value of the Real Property, or (y) any such conditions have been
cured or appropriate agreements shall be in place to provide for such a
cure. As used herein, the term "Permitted Conditions" means any
environmental conditions on the Real Property that would (i) result in
liabilities or obligations routinely incurred in connection with the
ordinary operation of the business or (ii) adversely affect or reduce the
value of the Real Property, in the case of clauses (i) and (ii) above, by
no more that $10,000 in the aggregate. If neither of the conditions set
forth in clauses (x) and (y) above can be met with respect to any tract of
Real Property, Seller shall have the option to exclude such tract of Real
Property from the Assets and the Purchase Price shall be reduced by the
value of such excluded tract or tracts (as agreed to in good faith by
Seller and Buyer).
(b) If all environmental conditions on the Liberty, Texas tract of Real
Property (the "Liberty Property") have not been Remediated (as defined
below) as of the Closing, Buyer shall have the right to withhold $25,000
from the Purchase Price. Buyer shall have no obligation to pay such amount
to Seller until all environmental conditions on the Liberty Property are
Remediated. Once the Liberty Property has been Remediated, Buyer will
deliver to Seller the entire amount withheld by Buyer at the Closing
without interest thereon. As used herein, the term "Remediated" means the
receipt by Buyer of a Phase I on the Liberty Property which, in Buyer's
reasonable judgment, demonstrates that, except for Permitted Conditions, no
environmental conditions exist that would (i) result in any liability or
obligation on the part of Buyer or (ii) materially adversely affect or
reduce the value of the Liberty Property.
Section 8.09. Real Estate Matters. Buyer shall have obtained, at its sole
expense, a commitment to issue an owner's title policy insuring that Buyer will
own, upon the Closing, fee simple title to the Real Property subject to no
exceptions other than those encumbrances reasonably acceptable to Buyer.
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATIONS
Except as may be waived by Seller, the obligations of Seller under this
Agreement are subject to the fulfillment, prior to or at the Closing, or, where
specifically identified, the Vacuum Truck Closing, of each of the following
conditions:
Section 9.01. Representations and Warranties. The representations and warranties
made by Buyer in this Agreement shall have been true, correct and accurate in
all material respects when made and shall be true, correct and accurate in all
material respects at and as of the Closing, and the representations and
warranties made by Buyer in Sections 5.01 and 5.02 of this Agreement shall be
true, correct and accurate in all material respects at and as of the Vacuum
Truck Closing.
Section 9.02. Performance. Buyer shall have performed and complied with in all
material respects all covenants and conditions required by this Agreement to be
performed or complied with prior to or at the Closing, and Buyer shall have
performed and complied with in all material respects all covenants and
conditions required by this Agreement to be performed or complied with prior to
or at the Vacuum Truck Closing.
Section 9.03. Payment of Purchase Price. At the Closing, or in the case of the
Vacuum Trucks, the Vacuum Truck Closing, Buyer shall have delivered to the
parties referred to therein the amounts payable pursuant to and in the manner
set forth in Article II of this Agreement.
Section 9.04. Officer's Certificate. Buyer shall deliver to Seller at the
Closing a certificate, attesting to the truth, accuracy and correctness of such
representations and warranties and to Buyer's compliance and conformity with
such covenants and conditions, and Buyer shall deliver to Seller at the Vacuum
Truck Closing a certificate, attesting to the truth, accuracy and correctness of
the representations and warranties contained in Section 5.01 and 5.02 of this
Agreement and to Buyer's compliance and conformity with such covenants and
conditions.
Section 9.05. Opinion of Counsel. Seller shall have received an opinion, dated
the Closing Date, from Xxxx X. Xxxxxx, Xx., General Counsel of Buyer, in the
form attached hereto as Schedule 9.05.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
Section 10.01. Survival of Representations. The representations and warranties
in this Agreement and in any certificate delivered pursuant hereto shall,
notwithstanding any investigation made by or on behalf of the parties hereto,
survive the Closing solely for purposes of this Article X and shall terminate at
the close of business one year after the Closing Date; provided, however, that
(i) the representations and warranties contained in Section 4.07 shall survive
the Closing and shall terminate at the close of business two years after the
Closing Date, (ii) the representations and warranties contained in Sections
4.02, 4.12, 4.17 and 4.20 shall survive the Closing and shall terminate at the
close of business four years after the Closing Date and (iii) the
representations and warranties contained in Section 4.08 shall survive the
Closing and shall terminate upon the expiration of the applicable statute of
limitations period therefor.
Section 10.02. Agreement to Indemnify Buyer. Seller and Parent shall, jointly
and severally indemnify, defend and hold harmless Buyer and any of its officers,
directors, shareholders, affiliates, representatives or agents (the "Buyer
Group") from and against all losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys' fees and expenses, incurred
by Buyer, the Buyer Group or any member thereof, directly or indirectly, by
reason of or resulting from (a) a breach or inaccuracy of any representation or
warranty of Seller or Parent contained in or made pursuant to this Agreement;
(b) any failure to perform any covenant or obligation required to be performed
by Seller or Parent under this Agreement; or (c) the Unassumed Obligations.
Buyer agrees to give Seller prompt notice of any action or proceedings to which
they or any of the Buyer Group believe they have a right of indemnification
hereunder, and failure to give such notice shall be a breach of this
Section 10.02; provided, however, that the failure to provide notice promptly to
Seller shall not release Seller from any liability that they may have to Buyer
or the Buyer Group, except to the extent that the failure to give prompt notice
materially prejudices Seller's ability to defend any such actions or
proceedings. If any action or proceeding shall be brought against Buyer or the
Buyer Group, and Seller shall be notified or otherwise learn of the commencement
thereof, then Seller shall have the right to participate in, and, to the extent
that it may wish, to assume the defense thereof, and after notice of its
election to assume the defense thereof, Seller will not be liable to Buyer or
the Buyer Group for any further legal or other expenses incurred by Buyer or the
Buyer Group in connection with any such action or proceeding. Buyer may
participate actively, at its expense, after notice of assumption of defense has
been given by Seller, in any negotiations, lawsuit or other resolution of such
claim. Buyer shall have the right to approve any out-of-court settlement if it
would divest Buyer of any Asset or otherwise materially affect the WSB acquired
by Buyer; provided that such approval shall not be unreasonably withheld.
Section 10.03. Agreement to Indemnify Seller. Buyer hereby agrees to indemnify,
defend and hold harmless Seller and any of its respective officers, directors,
shareholders or Affiliates (the "Seller Group") from and against all losses,
damages, liabilities, costs and expenses, including, without limitation,
reasonable attorneys' fees and expenses, incurred by Seller, the Seller Group or
any member thereof, directly or indirectly, by reason of or resulting from (a) a
breach or inaccuracy of any material representation or warranty of Buyer
contained in or made pursuant to this Agreement; (b) any failure to perform any
covenant or obligation required to be performed by Buyer under this Agreement;
or (c) any claims or damages relating to the Assumed Obligations set forth in
Section 2.05. Seller agrees to give Buyer prompt notice of any action or
proceeding to which it or any of the Seller Group believes they have a right of
indemnification hereunder, and failure to give such notice shall be a breach of
this Section 10.03; provided, however, that the failure to provide notice
promptly to Buyer shall not release Buyer from any liability that Buyer may have
to Seller or the Seller Group, except to the extent that the failure to give
prompt notice materially prejudices Buyer's ability to defend any such actions
or proceedings. If any action or proceeding shall be brought against Seller or
the Seller Group, and Buyer shall be notified or otherwise learn of the
commencement thereof, then Buyer shall have the right to participate in, and, to
the extent that they may wish, to assume the defense thereof, and after notice
of its election to assume the defense thereof, Buyer will not be liable to
Seller or the Seller Group for any further legal or other expenses incurred by
Seller or the Seller Group in connection with any such action or proceeding.
Seller may participate actively, at its expense, after notice of assumption of
defense has been given by Buyer, in any negotiations, lawsuit or other
resolution of such claim.
Section 10.04. Additional Agreements Concerning Indemnification. Buyer and
Seller and Parent agree that if either of them or the Buyer Group or the Seller
Group, respectively, becomes entitled to indemnification under this Agreement
(the "Indemnified Party"), they shall cooperate with the party obligated to
provide such indemnification (the "Indemnifying Party") and permit the
Indemnifying Party reasonable access to the Indemnified Party's books, records,
facilities and employees for the purpose of permitting the Indemnifying Party to
perform its obligations under this Article X.
Section 10.05. Minimum and Maximum Amounts. Notwithstanding anything to the
contrary in Article X hereof, (i) the Indemnifying Party shall not be required
to make any payment pursuant to the terms hereof or otherwise in connection with
any claims, demands, actions, losses, expenses or other liability incurred by
the Indemnifying Party in connection with or arising out of this Agreement
("Liabilities") until the aggregate amount of all Liabilities exceeds on a
cumulative basis Three Hundred Thousand Dollars ($300,000) (and then only to the
extent of the excess), and (ii) except as provided, in the following sentence,
the maximum amount that an Indemnifying Party shall be required to pay to the
Indemnified Party or anyone claiming by, through or under them, with respect to
Liabilities, shall be One Million Five Hundred Thousand Dollars ($1,500,000)
(the "Maximum Amount"). The limitations set forth in this Section 10.05 with
respect to the Maximum Amount shall not apply (i) to Liabilities arising out of
the breach of representations and warranties contained in Sections 4.02, 4.11,
4.12, 4.17, 4.20, 5.02 and 5.04, (ii) to Liabilities arising out of any matter
subject to indemnification pursuant to clause (c) of Section 10.02 or clause (c)
of Section 10.03 or (iii) to Liabilities arising out of the breach of the
covenant contained in Section 11.04.
For purposes of the indemnification obligations set forth in this Section 10.05,
all representations, warranties and covenants set forth in this Agreement shall
be assumed to be free of qualifications with respect to materiality.
Section 10.06. Exclusive Remedy. Subsequent to Closing, the provisions of this
Article X shall provide the exclusive monetary, but not injunctive, remedy of
the parties for any breach of this Agreement.
ARTICLE XI
ADDITIONAL AGREEMENTS OF THE PARTIES
Section 11.01. Public Announcements. Buyer and Seller shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or the transactions contemplated hereby and shall
not issue any such press release or make any such public statement prior to such
consultation.
Section 11.02. Employees.
(a) Buyer shall through one of its wholly owned subsidiaries employ (i) all
employees of Seller who (A) have been engaged directly in the WSB (except
for the operations relating to the Vacuum Trucks), including rig crews and
supervisors and certain administrative personnel, (B) are listed on
Schedule 4.15, (C) are in active service on the Closing Date and not on
leave of absence for any health or non-health related reason or confined in
any health care facility, and (D) pass a drug test and/or the physical
exam, which, to the extent applicable, will be administered by Buyer or its
subsidiaries prior to the Closing, other than those listed on Schedule
11.02 (the"Transferred Employees") and (ii) all Vacuum Truck Employees who
pass the drug test and/or the physical exam, which, to the extent
applicable, will be administered by Buyer or its subsidiaries prior to the
Closing, other than those listed on Schedule 11.02 (the "Vacuum Truck
Transferred Employees"). Seller shall remain solely responsible for those
employees that are listed on Schedule 11.02 and Buyer shall have no
responsibility therefor, including responsibility for severance or other
benefits for such employees. Seller shall provide eligible employees (and
dependants thereof) with COBRA Coverage upon their termination of
employment with Seller according to the applicable requirements of ERISA
and the Code and any applicable state law. Seller will retain liability for
all workers' compensation claims for work-related injuries occurring prior
to the Closing Date, or, with respect to the Vacuum Truck Transferred
Employees, the Vacuum Truck Closing Date.
(b) As soon as administratively practicable following the Closing Date, or,
with respect to the Vacuum Truck Transferred Employees, the Vacuum Truck
Closing Date, Seller shall cause to be transferred from the trustee of the
Flint Companies Hourly Savings Plus Plan and from the trustee of the Flint
Engineering & Construction Co. Savings Plus Plan (collectively, the "Seller
Plan") to the trustee of the Key Energy Group, Inc. 401(k) Savings and
Retirement Plan ("Buyer's 401(k) Plan") an amount in cash equal to the
aggregate account balances of the Transferred Employees and the Vacuum
Truck Transferred Employees who transfer to employment with Buyer under the
Seller Plan determined as of the transfer date (which shall be a valuation
date) in accordance with the methods of valuation as set forth in the
Seller Plan; provided, however, that to the extent any Transferred Employee
or any Vacuum Truck Transferred Employee owes any amount to the Seller Plan
pursuant to the terms of a loan from such plan to such Transferred Employee
or Vacuum Truck Transferred Employee, as the case may be, an in-kind
transfer of such loan shall be made in lieu of the transfer of cash. From
and after the date of such transfer, Buyer shall cause Buyer's 401(k) Plan
to assume the obligations of the Seller Plan with respect to benefits
accrued by the Transferred Employees and the Vacuum Truck Transferred
Employees under the Seller Plan, and the Seller Plan shall cease to be
responsible therefor. Buyer and Seller shall cooperate in making all
appropriate arrangements and filings, if any, in connection with the
transfer described above. Further, Buyer and Seller shall cooperate and
take such actions as are necessary to permit the continuation of loan
repayments by Transferred Employees and Vacuum Truck Transferred Employees
to the Seller Plan by payroll deductions during the period beginning on the
Closing Date, or in the case of the Vacuum Truck Transferred Employees, the
Vacuum Truck Closing Date, and ending on the date of the transfer described
in this Subsection. Seller represents, covenants and agrees with respect to
the Seller Plan, and Buyer represents, covenants and agrees with respect to
Buyer's 401(k) Plan, that, as of the date of the transfer described in this
paragraph, such plan will satisfy the requirements of Sections 401(a), (k),
and (m) of the Code. Buyer and Seller agree to enter into a "spin-off
agreement" to record and effectuate the transfer of plan assets from the
Seller Plan trust to Buyer's 401(k) Plan trust for the benefit of the
Transferred Employees, the Vacuum Truck Transferred Employees and their
respective beneficiaries.
(c) Effective as of the Closing, Buyer assumes, and Seller shall have no
further responsibility for, any accrued but unused vacation liabilities
that are set forth on Schedule 4.15 as of the Closing Date. Buyer agrees
that employees of the WSB shall be entitled to use such vacation in
accordance with the vacation policy currently in effect as of the Closing
Date.
Section 11.03. Non-Solicitation. For a period of one year from the date of
Closing, neither Seller nor any of its directors will directly or indirectly
solicit, or attempt to solicit, for employment any Transferred Employee or any
Vacuum Truck Transferred Employee.
Section 11.04. Covenant Not to Compete. Seller and Parent covenant and agree
that, for a period of three years from the date of Closing (the "Noncompete
Term"), neither they nor any of their subsidiaries will, directly or indirectly,
(i) engage in the WSB acquired by Buyer within the states of Utah, Texas,
Oklahoma, Colorado, Kansas, North Dakota, New Mexico or Montana (the "Restricted
Territory") or (ii) own any interest in any person, corporation, partnership,
proprietorship or other business organization or association (whether as
stockholder, agent, independent contractor, consultant, representative, partner,
lender (other than through a passive, non-control investment in an entity that
acts as a lender) or otherwise) which derives a substantial portion of its
revenues from business operations which compete with the WSB acquired by Buyer.
Notwithstanding anything to the contrary in this Agreement, Seller may (A) make
passive investments of five percent (5%) or less in any outstanding equity
securities of corporations whose equity securities are publicly traded and which
compete with the WSB, (B) acquire outstanding equity securities of a corporation
that competes in the WSB in the Restricted Territory whose equity securities are
publicly traded in connection with the sale of the capital stock or
substantially all of the assets of Servicios Petroleros Flint C.A., a Venezuelan
corporation, the capital stock of which is owned by Flint Construction Company
of South America, Inc., a majority shareholder of Parent; provided that such
acquisition will not result in Seller (or a successor thereof) being a majority
or controlling shareholder of such entity, or (C) maintain a passive, minority
investment in an entity to be formed with SCF Partners, Inc. (the "SCF Entity")
in conjunction with the sale of the remaining assets of Seller even in the case
that the SCF Entity invests in an entity that competes in the WSB in the
Restricted Territory; provided that no employee, officer or director of Seller
or Parent (or successors thereof) may work for, render assistance or advice to,
or participate in the management of the well servicing business of such entity,
except for any work, assistance, advice or participation that may be rendered
indirectly and solely as a result of such employee's, officer's or director's
obligations or duties as a director of such entity.
In addition, Seller and Parent agree that for a period of three years from the
Closing Date, they will not:
(a) request any present customers or suppliers of the WSB or any customers of
Buyer or any affiliates of Buyer ("Buyer's Affiliates") to curtail or
cancel their business with Buyer (or Buyer's Affiliates);
(b) disclose to any person, firm or corporation any trade, technical or
technological secrets of or any details of the organization or business
affairs of the WSB; or
(c) induce or actively attempt to influence any employee of Buyer (or Buyer's
Affiliates) to terminate his or her employment.
Seller and Parent agree that if either the length of time or geographical area
as set forth in this Section 11.04 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
11.04 are in addition to any other obligations that Seller and Parent may have
under the laws of any state requiring a corporation selling its assets (or a
shareholder of such corporation) to limit its activities so that the goodwill
and business relations being transferred with such assets will not be materially
impaired. Seller and Parent further acknowledge that Buyer and Buyer's
Affiliates do not have any adequate remedy at law for the breach or threatened
breach by Seller or Parent of the covenants contained in this Section 11.04, and
agree that Buyer may, in addition to the other remedies which may be available
to it hereunder, file a suit in equity to enjoin Seller or Parent from such
breach or threatened breach. If any provisions of this Section 11.04 are held to
be invalid or against public policy, the remaining provisions of this Section
11.04 and the Agreement shall not be affected thereby. Seller and Parent
acknowledge that the covenants set forth in this Section 11.04 are being
executed and delivered by such party in consideration of (i) the covenants of
Buyer contained in this Agreement, (ii) the Non-Compete Payment, and (iii) for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged.
ARTICLE XII
TERMINATION OF AGREEMENT
Section 12.01. Termination.
This Agreement may be terminated at any time prior to the Closing:
(a) by mutual agreement of Seller and Buyer;
(b) by Buyer, if notice has been given to Seller of the occurrence of a
material violation or breach by Seller of any of its agreements,
representations or warranties contained in this Agreement that has not been
waived in writing; provided, however, that Seller shall, after receipt of
such notice, have a period of twenty (20) business days in which to cure
such default, and, if it is so cured, Buyer shall, for that reason, have no
right to terminate this Agreement;
(c) by Seller, if notice has been given to Buyer of the occurrence of a
material violation or breach by Buyer of any of its agreements,
representations or warranties contained in this Agreement which has not
been waived in writing; provided, however, that Buyer shall, after receipt
of such notice, have a period of twenty (20) business days in which to cure
such default, and, if it is so cured, Seller shall, for that reason, have
no right to terminate this Agreement; or
(d) by any party hereto if the Closing shall not have occurred on or before
November 1, 1998; provided, however, that any termination by a defaulting
party shall not affect any rights that a non-defaulting party may have
against such defaulting party.
Section 12.02. Effect of Termination. In the event of the termination of this
Agreement by either party in accordance with the provisions of Section 12.01
hereof, this Agreement shall become void and have no force or effect, without
any liability on the part of any party hereto (or its stockholders or
controlling persons or directors or officers) and with each party bearing its
own expenses as incurred; provided, however, that if such termination is the
result of the non-terminating party having breached (i) its obligations under
Section 6.04 or 7.05 hereof, as applicable, or (ii) any of its other material
representations, warranties, covenants or agreement contained herein, the
terminating party shall have the right to issue all remedies available to it at
law or in equity as a result of such breach (including reasonable attorney's
fees and expenses incurred in connection with enforcing such remedies).
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Interpretive Provisions. For purposes of this Agreement, the
phrase "to the knowledge" and any other phrases generally referring to the
knowledge of a party hereto, shall mean the actual knowledge of such party's
officers or of such party's managerial and supervisory personnel having
responsibility for the matters in question.
Section 13.02. Expenses. Except as otherwise expressly provided in this
Agreement, each party hereto shall bear all of its legal, accounting and other
costs and expenses incident to the negotiation of this Agreement and the
performance of the transactions contemplated herein, including any fees paid to
any governmental entity in connection with the obtaining of any consent required
or contemplated by this Agreement.
Section 13.03. Reliance. The parties hereto agree that, notwithstanding the
right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right shall have the right to
rely fully upon the representations and warranties of the other party expressly
contained in the Agreement and on the accuracy of any exhibit or other document
attached hereto or referred to herein or delivered by such other party or
pursuant to this Agreement.
Section 13.04. Notices. All notices, consents, requests or other documents
required or expressly provided to be furnished hereunder shall be in writing and
delivered by hand, or sent by facsimile transmission, prepaid air courier or
prepaid U.S. registered mail, return receipt requested, as follows:
If to Seller: Flint Industries, Inc.
X.X. Xxx 000
Xxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx
Fax: 918/000-0000
with a copy to: Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: T. Xxxx Xxxxx
Fax: 713/000-0000
and to: Doerner, Saunders, Xxxxxx & Xxxxxxxx, L.L.P.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxx, Xx.
Fax: 918/000-0000
If to Buyer: Key Energy Group, Inc.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: General Counsel
Fax: 732/000-0000
provided that any notice furnished by facsimile shall be followed immediately
with notice by delivery using one of the other means of notice provide for
above. The addresses and facsimile numbers for notices to a party given pursuant
to this Agreement may be changed by means of a written notice given to the other
party in the manner stated above at least two business days prior to the
effective date of such change. Any notice delivered by any of the means provided
for above shall be considered effective upon receipt by or on behalf of the
intended recipient; provided, however, that any notice sent by prepaid U.S.
registered mail, return receipt requested, to the address provided for above
shall be considered effective on the fifth day after mailing, if not previously
received.
Section 13.05. Headings; References. The descriptive headings of the Articles
and Sections of this Agreement are inserted for convenience only and do not
constitute a part of the Agreement. All references to "Section" shall refer to a
section of this Agreement and all references to a "Schedule" shall refer to a
Schedule attached hereto unless otherwise stated.
Section 13.06. Entire Agreement. This Agreement (including the documents,
schedules, attachments, exhibits, annexes and instruments referred to herein)
constitutes the entire agreement between the parties and supersedes all prior
agreements, documents or other instruments with respect to the matters covered
hereby. The parties will make, and have made, no oral agreements or undertakings
pertaining to the subject matter of this Agreement, except for any that are no
longer in effect.
Section 13.07. Waiver. At any time prior to the Closing, either party may
(a) extend the time for the performance of any of the obligations or other acts
of the other party or (b) waive compliance with any of the agreements of the
other party or with any conditions to its own obligations. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
Section 13.08. Severability. If any provision of this Agreement is declared by a
court of competent jurisdiction to be invalid or unenforceable, such declaration
shall not affect the validity or enforceability of the remaining provisions of
this Agreement, which shall continue in full force and effect. In such event,
however, the parties shall negotiate in good faith to replace such invalid or
unenforceable provision with a valid and enforceable provision that places each
party in substantially the same position it would have been in had such original
provision been valid and enforceable.
Section 13.09. Amendment. This Agreement (including the documents, schedules,
attachments, exhibits, annexes and instruments referred to herein) may not be
amended except by an instrument in writing signed by each of the parties.
Section 13.10. Further Actions. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be requested by the other party in order to consummate or implement
the transactions contemplated by this Agreement.
Section 13.11. Assignment; Parties in Interest. The rights under this Agreement
shall not be assignable nor the duties delegable by any party without the
written consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that Buyer may assign the rights to a subsidiary;
provided, further, that such assignment shall not affect Buyer's obligations
hereunder. This Agreement shall be binding upon and inure solely to the benefit
of each of the parties hereto and their permitted assigns, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Nothing in this Agreement shall be construed to create any rights or
obligations except among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.
Section 13.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, WITHOUT REGARD TO CONFLICT
OF LAW RULES THAT WOULD DIRECT APPLICATION OF THE LAWS OF ANOTHER JURISDICTION,
EXCEPT TO THE EXTENT THAT IT IS MANDATORY THAT THE LAW OF SOME OTHER
JURISDICTION, WHEREIN THE ASSETS ARE LOCATED, SHALL APPLY, EXCLUDING THE
CONFLICT OF LAWS RULES OF SUCH STATE.
Section 13.13. Specific Performance. Buyer and Seller each agree that, in
addition to the other legal remedies provided by the terms of this Agreement,
they shall be entitled to a decree of specific performance to enforce this
Agreement.
Section 13.14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by Buyer
and Seller as of the date first above written.
BUYER:
KEY ENERGY GROUP, INC.
By
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
and Chief Operating Officer
SELLER:
FLINT ENGINEERING &
CONSTRUCTION CO.
By
Name: Xxxx X. Xxxxxxx
Title: President
PARENT:
FLINT INDUSTRIES, INC.
By
Name: Xxxx X. Xxxxx
Title: President
