Stock Purchase Agreement
among
Yale e. Key, Inc.
and
RALEIGH K. TURN AND XXXXX XXXXX
Dated as of June 9, 1997
Stock Purchase Agreement
This Stock Purchase Agreement (this "Agreement") is entered into as of June
9 ,1997 by and among Yale E. Key, Inc., a Texas corporation ("Key"), and Raleigh
K. Turn ("Turn") and Xxxxx Xxxxx ("Butts") collectively as the "Shareholders".
WITNESSETH :
Whereas, Key is a corporation duly organized and validly existing under the
laws of the State of Texas, with its principal executive offices at Xxx Xxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; and
Whereas, Phoenix Well Service, Inc. ("Phoenix") is a corporation duly
organized and validly existing under the laws of the State of Texas, with its
principal executive offices at 0000 Xxxx Xxxxxx Xxxx 000, Xxxxxxx, Xxxxx 00000;
(X.X. Xxx 000, Xxxxxxx, Xxxxx 79702); and
Whereas, Turn and Butts own 165 shares and 135 shares (the "Phoenix
Shares"), respectively, of common stock, par value $1.00 per share, of Phoenix
("Phoenix Common Stock"), which constitutes all of the issued and outstanding
shares of capital stock of Phoenix; and
Whereas, the Shareholders desire to sell to Key and Key desires to purchase
from the Shareholders all of the issued and outstanding capital stock of
Phoenix.
Now, Therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1
Purchase and Sale
1.1. Purchase and Sale of Phoenix Shares. Subject to the terms and
conditions of this Agreement, on the date hereof, (a) Turn agrees to sell and
convey to Key 165 shares of Phoenix Common Stock and (b) Butts agrees to sell
and convey 135 shares of Phoenix Common Stock to Key, all of which shall be free
and clear of all Encumbrances (as defined in Section 2.1.8.1 hereof) (and which,
collectively, shall represent the Phoenix Shares), and Key agrees to purchase
and accept all of the Phoenix Shares from the Shareholders. Subject to the
provisions of Section 1.3 hereof, in consideration of the sale of the Phoenix
Shares, Key shall pay to Turn the sum of $1,265,000 and Butts the sum of
$1,035,000 (a total of $2,300,000), on the date hereof, by wire transfer of
immediately available funds.
1.2. Delivery of Phoenix Certificates. The Shareholders shall deliver to
Key, on the date hereof, duly and validly issued certificates representing all
of the Phoenix Shares, each such
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certificate having been duly endorsed in blank and in good form for
transfer or accompanied by stock powers duly executed in blank, sufficient and
in good form to properly transfer such shares to Key.
1.3 Adjustment of Purchase Price. Key shall cause to be prepared and
delivered to the Shareholders (i) a balance sheet of Phoenix as of the date
hereof (the "Final Balance Sheet") within thirty (30) days after the date
hereof. Key and the Shareholders shall jointly review the Final Balance Sheet,
endeavor in good faith to resolve all disagreements regarding the entries
thereon and reach a final determination thereof within 60 days from the date
hereof. Within 10 days of reaching such final determination, the following
adjusting payments shall be made:
(a) If the Final Net Current Value of Phoenix (as defined in Schedule 1.3
hereto) exceeds the 4/30 Net Current Value of Phoenix (as defined in Schedule
1.3 hereto), Key shall pay to the Shareholders the amount of such excess.
(b) If the Final Net Current Value of Phoenix is less than the 4/30 Net
Current Value of Phoenix, the Shareholders shall pay to Key the amount of such
difference.
ARTICLE 2
Representations and Warranties
2.1. General Representations and Warranties of the Shareholders. Each of
the Shareholders jointly and severally represents and warrants to Key as
follows:
2.1.1. Organization and Standing. Phoenix is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, has
full requisite corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently owned and
operated by it, and is duly qualified or licensed to do business and is in good
standing as a foreign corporation authorized to do business in all jurisdictions
in which the character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a material
adverse effect on its financial condition, properties or business.
2.1.2. Agreement Authorized and its Effect on Other Obligations. Each of
the Shareholders is above the age of 18 years, and has the legal capacity and
requisite power and authority to enter into, and perform his obligations under
this Agreement. This Agreement is a valid and binding obligation of each of the
Shareholders enforceable against each of the Shareholders (subject to normal
equitable principles) in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or similar
laws affecting the rights of creditors generally. The execution, delivery and
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performance of this Agreement by the Shareholders will not conflict with or
result in a violation or breach of any term or provision of, nor constitute a
default under (a) the Articles of Incorporation or Bylaws of Phoenix or (b) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which Phoenix or any of the Shareholders is a party or by which
Phoenix or either of the Shareholders or their respective properties are bound.
2.1.3. Capitalization. The authorized capitalization of Phoenix consists of
25,000 shares of Phoenix Common Stock, of which, as of the date hereof, 300
shares are issued and outstanding and held beneficially and of record by the
Shareholders. On the date hereof, Phoenix does not have any outstanding options,
warrants, calls or commitments of any character relating to any of its
authorized but unissued shares of capital stock. All issued and outstanding
shares of Phoenix Common Stock are validly issued, fully paid and non-
assessable and are not subject to preemptive rights. None of the outstanding
shares of Phoenix Common Stock is subject to any voting trusts, voting agreement
or other agreement or understanding with respect to the voting thereof, nor is
any proxy in existence with respect thereto.
2.1.4. Ownership of Phoenix Shares. Turn and Butts hold good and valid
title to 165 shares and 135 shares, respectively, of the Phoenix Common Stock,
free and clear of all Encumbrances which, in the aggregate, constitutes the
Phoenix Shares. The Shareholders possess full authority and legal right to sell,
transfer and assign to Key the Phoenix Shares, free and clear of all
Encumbrances. Upon transfer to Key by the Shareholders of the Phoenix Shares,
Key will own the Phoenix Shares free and clear of all Encumbrances. There are no
claims pending or, to the knowledge of any of the Shareholders, threatened,
against Phoenix or either of the Shareholders that concern or affect title to
either the Phoenix Shares, or that seek to compel the issuance of capital stock
or other securities of Phoenix.
2.1.5. No Subsidiaries. There is no corporation, partnership, joint
venture, business trust or other legal entity in which Phoenix, either directly
or indirectly through one or more intermediaries, owns or holds beneficial or
record ownership of at least a majority of the outstanding voting securities.
2.1.6. Financial Statements. The Shareholders have delivered to Key copies
of Phoenix's unaudited balance sheet and related statements of income, retained
earnings and cash flows as at and for the 12 months ended December 31, 1996
(collectively the "12/31 Financial Statements") and copies of Phoenix's
unaudited balance sheet (the "4/30 Balance Sheet"), and related statements of
income, retained earnings and cash flows (collectively, the "4/30 Financial
Statements"), for the four months ended April 30, 1997 (the "Balance Sheet
Date"), copies of which are attached hereto as Schedule 2.1.6 The 12/31
Financial Statements and the 4/30 Financial Statements are complete in all
material respects. The 12/31 Financial Statements and the 4/30 Financial
Statements present fairly the financial condition of Phoenix as of the dates and
for the periods indicated. The 12/31 Financial
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Statements and the 4/30 Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis. The accounts receivable reflected in the 4/30 Balance Sheet, or which
have been thereafter acquired by Phoenix, have been collected or are collectible
at the aggregate recorded amounts thereof less applicable reserves, which
reserves are adequate. The inventories of Phoenix reflected in the 4/30 Balance
Sheet, or which have thereafter been acquired by it, consist of items of a
quality usable and salable in the normal course of Phoenix's business, and the
values at which inventories are carried are at the lower of cost or market.
2.1.7. Liabilities. Except as disclosed on Schedule 2.1.7 hereto, Phoenix
does not have any liabilities or obligations, either accrued, absolute or
contingent, nor does either of the Shareholders have any knowledge of any
potential liabilities or obligations, which would materially adversely affect
the value and conduct of the business of Phoenix, other than those (a) reflected
or reserved against in the 4/30 Balance Sheet or (b) incurred in the ordinary
course of business since the Balance Sheet Date.
2.1.8. Additional Phoenix Information. Attached as Schedule 2.1.8 hereto
are true, complete and correct lists of the following items:
2.1.8.1. Real Estate. All real property and structures thereon owned,
leased or subject to a contract of purchase and sale, or lease commitment, by
Phoenix, with a description of the nature and amount of any Encumbrances
(defined below) thereon. The term "Encumbrances" means all liens, security
interests, pledges, mortgages, deed of trust, claims, rights of first refusal,
options, charges, restrictions or conditions to transfer or assignment,
liabilities, obligations, privileges, equities, easements, rights-of-way,
limitations, reservations, restrictions and other encumbrances of any kind or
nature;
2.1.8.2. Machinery and Equipment. All rigs, carriers, rig equipment,
machinery, transportation equipment, tools, equipment, furnishings, and fixtures
owned, leased or subject to a contract of purchase and sale, or lease
commitment, by Phoenix with a description of the nature and amount of any
Encumbrances thereon;
2.1.8.3. Inventory. All inventory items or groups of inventory items owned
by Phoenix, excluding raw materials and work in process, which raw materials and
work in process are valued on the 4/30 Balance Sheet, together with the amount
of any Encumbrances thereon;
2.1.8.4. Receivables. All accounts and notes receivable of Phoenix,
together with (a) aging schedules by invoice date and due date, (b) the amounts
provided for as an allowance for bad debts, (c) the identity and location of any
asset in which Phoenix holds a security interest to secure payment of the
underlying indebtedness,
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and (d) a description of the nature and amount of any Encumbrances on such
accounts and notes receivable;
2.1.8.5. Payables. All accounts and notes payable of Phoenix, together with
an appropriate aging schedule;
2.1.8.6. Insurance. All insurance policies or bonds currently maintained by
Phoenix, including title insurance policies, including those covering Phoenix's
properties, rigs, machinery, equipment, fixtures, employees and operations, as
well as a listing of any premiums, audit adjustments or retroactive adjustments
due or pending on such policies or any predecessor policies;
2.1.8.7. Contracts. All contracts, including leases under which Phoenix is
lessor or lessee, which are to be performed in whole or in part after the date
hereof;
2.1.8.8. Employee Compensation Plans. All bonus, incentive compensation,
deferred compensation, profit-sharing, retirement, pension, welfare, group
insurance, death benefit, or other employee benefit or fringe benefit plans,
arrangements or trust agreements of Phoenix or any employee benefit plan
maintained by Phoenix, together with copies of the most recent reports with
respect to such plans, arrangements, or trust agreements filed with any
governmental agency and all Internal Revenue Service determination letters and
other correspondence from governmental entities that have been received with
respect to such plans, arrangements or agreements (collectively, "Employee
Plans");
2.1.8.9. Certain Salaries. The names and salary rates of all present
employees of Phoenix, and, to the extent existing on the date of this Agreement,
all arrangements with respect to any bonuses to be paid to them from and after
the date of this Agreement;
2.1.8.10. Bank Accounts. The name of each bank in which Phoenix has an
account and the names of all persons authorized to draw thereon;
2.1.8.11. Employee Agreements. Any collective bargaining agreements of
Phoenix with any labor union or other representative of employees, including
amendments, supplements, and written or oral understandings, and all employment
and consulting and severance agreements of Phoenix;
2.1.8.12. Intellectual Property. All patents, patent applications,
trademarks and service marks (including registrations and applications
therefor), trade names, copyrights and written know-how, trade secrets and all
other similar proprietary data and the goodwill associated therewith
(collectively, the "Intellectual Property") used by Phoenix;
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2.1.8.13. Trade Names. All trade names, assumed names and fictitious names
used or held by Phoenix, whether and where such names are registered and where
used;
2.1.8.14. Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements of Phoenix relating thereto or with respect to collateral securing
the same;
2.1.8.15. Guaranties. All indebtedness, liabilities and commitments of
others and as to which Phoenix is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor and all letters of
credit, whether stand-by or documentary, issued by any third party;
2.1.8.16. Reserves and Accruals. All accounting reserves and accruals
maintained in the 4/30 Balance Sheet;
2.1.8.17. Leases. All leases to which Phoenix is a party (as either lessor
or lessee); and
2.1.8.18. Environment. All environmental permits, approvals,
certifications, licenses, registrations, orders and decrees applicable to
current operations conducted by Phoenix and all environmental audits,
assessments, investigations and reviews conducted by Phoenix within the last
five years or otherwise within the possession of Phoenix on any property owned
or used by Phoenix, including, specifically, a Phase I Environmental Site
Assessment (which shall have been conducted in conformance with the scope and
limitations of the ASTM Standard E 1527 by an environmental consultant approved
by Key) of any real property leased by Phoenix, the cost of which shall have
been paid by the Shareholders and not by Phoenix. The Shareholders shall also
cause a Phase II Environmental Site Assessment to be conducted on such property
at their sole expense by an environmental consultant acceptable to Key, if
deemed warranted by Key.
2.1.9. No Defaults. Phoenix is not a party to, or bound by, any contract or
arrangement of any kind to be performed after the Effective Date, nor is Phoenix
in default in any obligation or covenant on its part to be performed under any
obligation, lease, contract, order, plan or other arrangement.
2.1.10. Absence of Certain Changes and Events. Other than as a result of
the transactions contemplated by this Agreement, since the Balance Sheet Date,
there has not been:
2.1.10.1. Financial Change. Any material adverse change in the financial
condition, backlog, operations, assets, liabilities or business of Phoenix;
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2.1.10.2. Property Damage. Any material damage, destruction, or loss to the
business or properties of Phoenix (whether or not covered by insurance);
2.1.10.3. Dividends. Any declaration, setting aside, or payment of any
dividend or other distribution in respect of the Phoenix Common Stock, or any
direct or indirect redemption, purchase or any other acquisition by Phoenix of
any such stock;
2.1.10.4. Capitalization Change. Any change in the capital stock or in the
number of shares or classes of Phoenix's authorized or outstanding capital stock
as described in Section 2.1.3 hereof;
2.1.10.5. Labor Disputes. Any labor or employment dispute of whatever
nature; or
2.1.10.6. Other Material Changes. Any other event or condition known to
either of the Shareholders particularly pertaining to and adversely affecting
the operations, assets or business of Phoenix.
2.1.11. Taxes. All federal, state and local income, value added, sales,
use, franchise, gross revenue, turnover, excise, payroll, property, employment,
customs, duties and any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic and foreign, by
Phoenix for each period for which any such returns, reports, or estimates were
due (taking into account any extensions of time to file before the date hereof);
all such returns are true and correct; Phoenix has only done business in the
State of Texas; all taxes shown by such returns to be payable and any other
taxes due and payable have been paid (other than those being contested in good
faith by Phoenix); and the tax provision reflected in the 4/30 Balance Sheet is
adequate, in accordance with generally accepted accounting principles, to cover
liabilities of Phoenix at the date thereof for all taxes, including any assessed
interest, assessed penalties and additions to taxes of any character whatsoever
applicable to Phoenix or its assets or business. No waiver of any statute of
limitations executed by Phoenix with respect to any income or other tax is in
effect for any period. The income tax returns of Phoenix have never been
examined by the Internal Revenue Service or the taxing authorities of any other
jurisdiction. There are no tax liens on any assets of Phoenix except for taxes
not yet currently due. Phoenix is not subject to any tax-sharing or allocation
agreement. Phoenix is not, nor has it ever attempted to become a Subchapter
S-Corporation under the Internal Revenue Code of 1986, as amended. Phoenix is
not and never has been, a member of a consolidated group subject to Treasury
Regulation 1.1502-6 or any similar provision.
2.1.12. Intellectual Property. Phoenix owns or possesses licenses to use
all Intellectual Property that is either material to the business of Phoenix or
that is necessary for the rendering of any services rendered by Phoenix and the
use or sale of any equipment or
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products used or sold by Phoenix (collectively, the "Phoenix Intellectual
Property"), including all such Intellectual Property listed in Schedule 2.1.8
hereto. The Phoenix Intellectual Property is owned or licensed by Phoenix free
and clear of any Encumbrance. Phoenix has not granted to any other person any
license to use any Phoenix Intellectual Property. Phoenix has not received any
notice of infringement, misappropriation, or conflict with, the intellectual
property rights of others in connection with the use by Phoenix of the Phoenix
Intellectual Property or otherwise in connection with Phoenix's operation of its
business.
2.1.13. Title to and Condition of Assets. Phoenix has good, indefeasible
and marketable title to all its properties, interests in properties and assets,
real and personal, reflected in the 4/30 Balance Sheet or in Schedule 2.1.8
hereto, free and clear of any Encumbrance of any nature whatsoever, except
(a) Encumbrances reflected in the 4/30 Balance Sheet or in Schedule 2.1.8
hereto, (b) liens for current taxes not yet due and payable, and (c) such
imperfections of title, easements and Encumbrances, if any, as are not
substantial in character, amount, or extent and do not and will not materially
detract from the value, or interfere with the present use, of the property
subject thereto or affected thereby, or otherwise materially impair the business
operations of Phoenix. All leases pursuant to which Phoenix leases (whether as
lessee or lessor) any substantial amount of real or personal property are in
good standing, valid, and effective; and there is not, under any such leases,
any existing default or event of default or event which with notice or lapse of
time, or both, would constitute a default by Phoenix and in respect to which
Phoenix has not taken adequate steps to prevent a default from occurring. The
buildings and premises of Phoenix that are used in its business are in good
operating condition and repair, subject only to ordinary wear and tear. All
rigs, rig equipment, machinery, transportation equipment, tools and other major
items of equipment of Phoenix are in good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted, and are free
from any known defects except as may be repaired by routine maintenance and such
minor defects as to not substantially interfere with the continued use thereof
in the conduct of normal operations. To the best of each Shareholder's
knowledge, all such assets conform to all applicable laws governing their use.
No notice of any violation of any law, statute, ordinance, or regulation
relating to any such assets has been received by Phoenix or either of the
Shareholders, except such as have been fully complied with.
2.1.14. Contracts. All contracts, leases, plans or other arrangements to
which Phoenix is a party, by which it is bound or to which it or its assets are
subject are in full force and effect, and constitute valid and binding
obligations of Phoenix. Phoenix is not, and to the knowledge of either of the
Shareholders, no other party to any such contract, lease, plan or other
arrangement is, in default thereunder, and no event has occurred which (with or
without notice, lapse of time, or the happening of any other event) would
constitute a default thereunder. No contract has been entered into on terms
which could reasonably be expected to have an adverse effect on Phoenix. Neither
of the Shareholder has received any information which would cause such
Shareholder to conclude that any customer of Phoenix
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will (or is likely to) cease doing business with Phoenix (or its
successors) as a result of the consummation of the transactions contemplated
hereby.
2.1.15. Licenses and Permits. Phoenix possesses all permits,
authorizations, certificates, approvals, registrations, variances, waivers,
exemptions, rights-of-way, franchises, ordinances, licenses and other rights of
every kind and character (collectively, the "Permits") necessary under law or
otherwise for Phoenix to conduct its business as now being conducted and to
construct, own, operate, maintain and use its assets in the manner in which they
are now being constructed, operated, maintained and used (collectively, the
"Phoenix Permits") including all such Permits listed in Schedule 2.1.15 hereto.
Each of the Phoenix Permits and Phoenix's rights with respect thereto is valid
and subsisting, in full force and effect, and enforceable by Phoenix subject to
administrative powers of regulatory agencies having jurisdiction. Phoenix is in
compliance in all material respects with the terms of each of the Phoenix
Permits. None of the Phoenix Permits has been, or to the knowledge of any of the
Shareholders, is threatened to be, revoked, canceled, suspended or modified.
2.1.16. Litigation. there is no suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation pending to which
Phoenix is a party or, to the knowledge of either of the Shareholders, might
become a party or which particularly affects Phoenix, nor is any change in the
zoning or building ordinances directly affecting the real property or leasehold
interests of Phoenix, pending or, to the knowledge of either of the
Shareholders, threatened.
2.1.17. Environmental Compliance.
2.1.17.1. Environmental Conditions. There are no environmental conditions
or circumstances, including, without limitation, the presence or release of any
Substance of Environmental Concern (defined below), on any property presently or
previously owned, leased or operated by Phoenix, or on any property to which
Substance of Environmental Concern or waste generated by Phoenix's operations or
use of its assets were disposed of, which would have a material adverse effect
on the business or business prospects of Phoenix. The term "Substance of
Environmental Concern" means (a) any gasoline, petroleum (including crude oil or
any fraction thereof), petroleum product, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutant, contaminant, radiation and
any other substance of any kind, whether or not any such substance is defined as
toxic or hazardous under any Environmental Law (defined below), that is
regulated pursuant to or could give rise to liability under any Environmental
Law;
2.1.17.2. Permits, etc. Phoenix has, and within the period of all
applicable statutes of limitations has had, in full force and effect all
environmental permits, licenses, approvals and other authorizations required to
conduct its operations and is,
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and within the period of all applicable statutes of limitations, has been
operating in compliance thereunder;
2.1.17.3. Compliance. Phoenix's operations and use of its assets are, and
within the period of all applicable statutes of limitations, have been in
compliance with applicable Environmental Law. "Environmental Law" as used herein
means any and all laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, and other legally enforceable requirements (including, without
limitation, common law) of the United States, or any State, local, municipal or
other governmental authority or quasi-governmental authority, regulating,
relating to, or imposing liability or standards of conduct concerning protection
of the environmental or of human health, or employee health and safety as from
time to time has been or is now in effect.
2.1.17.4. Environmental Claims. No notice has been received by Phoenix or
either of the Shareholders from any entity, governmental agency or individual
regarding any existing, pending or threatened investigation, inquiry,
enforcement action. litigation, or liability, including, without limitation any
claim for remedial obligations, response costs or contribution, relating to any
Environmental Law;
2.1.17.5. Enforcement. Phoenix, and to the Shareholders' knowledge, no
predecessor of Phoenix or other party acting on behalf of Phoenix, has entered
into or agreed to any consent, decree, order, settlement or other agreement, nor
is subject to any judgment, decree, order or other agreement, in any judicial,
administrative, arbitral, or other forum, relating to compliance with or
liability under any Environmental Law;
2.1.17.6. Liabilities. Phoenix has not assumed or retained, by contract or
operation of law, any liabilities of any kind, fixed or contingent, known or
unknown, under any Environmental Law;
2.1.17.7. Renewals. Neither of the Shareholders knows of any reason Phoenix
(or its successors) would not be able to renew without material expense any of
the permits, licenses, or other authorizations required pursuant to any of the
Environmental Law to conduct and use any of Phoenix's current or planned
operations; and
2.1.17.8. Asbestos and PCBs. No material amounts of friable asbestos
currently exist on any property owned or operated by Phoenix, nor do
polychlorinated biphenyls exist in concentrations of 50 parts per million or
more in electrical equipment owned or being used by Phoenix in its operations or
on its properties.
2.1.18. Compliance with Other Laws. Phoenix is not in violation of or in
default with respect to, or in alleged violation of or alleged default with
respect to, the Occupational
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Safety and Health Act (29 U.S.C. 651 et seq.) as amended, or any other
applicable law or any applicable rule, regulation, or any writ or decree of any
court or any governmental commission, board, bureau, agency, or instrumentality,
or delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality.
2.1.19. No ERISA Plans or Labor Issues. Phoenix does not currently sponsor,
maintain or contribute to and has not at any time sponsored, maintained or
contributed to any employee benefit plan which is or was subject to any
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Phoenix does not maintain any plan, program, policy, contract or
other arrangement that provides retirement, medical, dental, disability, life
insurance or other benefits to any current or former employees of Phoenix,
including any retired employees, or their beneficiaries or dependents. Phoenix
is not obligated to pay any severance or benefits to any employee or former
employee of Phoenix as the result of any change in the ownership or control of
Phoenix ("Retained Employee Liabilities"). Phoenix shall be solely responsible
for all wages, benefits, vacation pay, sick or disability pay, taxes and other
compensation and payroll items, workers' compensation and other claims, damages,
obligations, commitments and assessments with respect to its employees, and
their dependents and beneficiaries, through the date of this Agreement. Phoenix
has not engaged in any unfair labor practices which could reasonably be expected
to result in a material adverse effect on its operations or assets. Phoenix does
not have any dispute with any of its existing or former employees. There are no
labor disputes or, to the knowledge of either of the Shareholders, any disputes
threatened by current or former employees of Phoenix.
2.1.20. Investigations; Litigation. No investigation or review by any
governmental entity with respect to Phoenix or any of the transactions
contemplated by this Agreement is pending or, to the knowledge of either of the
Shareholders, threatened, nor has any governmental entity indicated to Phoenix
an intention to conduct the same, and there is no action, suit or proceeding
pending or, to the knowledge of either of the Shareholders, threatened against
or affecting Phoenix at law or in equity, or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, that either individually or in the aggregate, does or is likely
to result in any material adverse change in the financial condition, properties
or business of Phoenix.
2.1.21. Absence of Certain Business Practices. Neither Phoenix nor any
officer, employee or agent of Phoenix, nor any other person acting on its
behalf, has, directly or indirectly, within the past five years, given or agreed
to give any gift or similar benefit to any customer, supplier, government
employee or other person who is or may be in a position to help or hinder the
business of Phoenix (or to assist Phoenix in connection with any actual or
proposed transaction) which (a) might subject Phoenix to any damage or penalty
in any civil, criminal or governmental litigation or proceeding, (b) if not
given in the past, might have had a material adverse effect on the assets,
business or operations of Phoenix as reflected in the
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12/31 Financial Statements and the 4/30 Financial Statements, or (c) if not
continued in the future, might materially adversely effect the assets, business
operations or prospects of Phoenix or which might subject Phoenix to suit or
penalty in a private or governmental litigation or proceeding.
2.1.22. No Untrue Statements. Phoenix and each of the Shareholders have
made available to Key true, complete and correct copies of all contracts,
documents concerning all litigation and administrative proceedings, licenses,
permits, insurance policies, lists of suppliers and customers, and records
relating principally to Phoenix's assets and business, and such information
covers all commitments and liabilities of Phoenix relating principally to its
business or the assets. This Agreement and the agreements and instruments to be
entered into in connection herewith do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made herein and therein not misleading in any material respect.
2.1.23. Consents and Approvals. No consent, approval or authorization of,
or filing or registration with, any governmental or regulatory authority, or any
other person or entity other than the Shareholders, is required to be made or
obtained by Phoenix or either of the Shareholders in connection with the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
2.1.24. Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Phoenix and the
Shareholders and their counsel directly with Key and its counsel, without the
intervention of any other person in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or any similar payments.
2.2. General Representations of Key. Key represents and warrants to each of
the Shareholders as follows
2.2.1. Organization and Good Standing. Key is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, has
full requisite corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently owned and
operated by it, and is duly qualified or licensed to do business and is in good
standing as a foreign corporation authorized to do business in all jurisdictions
in which the character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a material
adverse effect on its financial condition, properties or business.
2.2.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Key, and this
Agreement is a valid
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and binding obligation of Key enforceable (subject to normal equitable
principles) in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, debtor relief or similar laws
affecting the rights of creditors generally. The execution, delivery and
performance of this Agreement by Key will not conflict with or result in a
violation or breach of any term or provision of, or constitute a default under
(a) the Articles of Incorporation or Bylaws of Key or (b) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement to which
Key or any of its property is bound.
2.2.3. Consents and Approvals. No consent, approval or authorization of, or
filing of a registration with, any governmental or regulatory authority, or any
other person or entity is required to be made or obtained by Key in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
2.2.4. Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Key and its counsel
directly with Phoenix and the Shareholders and their counsel, without the
intervention by any other person as the result of any act of Key in such a
manner as to give rise to any valid claim against any of the parties hereto for
any brokerage commission, finder's fee or any similar payments.
ARTICLE 3
Additional Agreements
3.1. Noncompetition. Except as otherwise consented to or approved in
writing by Key, each of the Shareholders agrees that for a period of 60 months
following the date of execution hereof, such Shareholder will not, directly or
indirectly, acting alone or as a member of a partnership or as an officer,
director, employee, consultant, representative, holder of, or investor in as
much as 5% of any security of any class of any corporation or other business
entity (a) engage in competition with the business or businesses conducted by
Phoenix, Key or any affiliate of Key, or in any service business the services of
which are provided and marketed by Phoenix, Key or any affiliate of Key in the
states of Texas, Oklahoma or New Mexico; (b) request any present customers or
suppliers of Phoenix to curtail or cancel their business with Key or any
affiliate of Key; (c) disclose to any person, firm or corporation any trade,
technical or technological secrets of Phoenix, Key or any affiliate of Key or
any details of their organization or business affairs or (d) induce or actively
attempt to influence any employee of Key or any affiliate of Key to terminate
his employment. Each of the Shareholders agrees that if either the length of
time or geographical area set forth in this Section 3.1 is deemed too
restrictive in any court proceeding, the court may reduce such restrictions to
those which it deems reasonable under the circumstances. The obligations
expressed in this Section 3.1 are in addition to any other obligations that the
Shareholders may have under any
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applicable laws requiring an employee of a business or a shareholder who
sells his stock in a corporation (including a disposition in a merger) to limit
his activities so that the goodwill and business relations of his employer and
of the corporation whose stock he has sold (and any successor corporation) will
not be materially impaired. Each of the Shareholders further agrees and
acknowledges that Key and its affiliates do not have any adequate remedy at law
for the breach or threatened breach by such Shareholder of this covenant, and
agree that Key or Any affiliate of Key may, in addition to the other remedies
which may be available to it hereunder, file a suit in equity to enjoin such
Shareholder from such breach or threatened breach. If any provisions of this
Section 3.1 are held to be invalid or against public policy, the remaining
provisions shall not be affected thereby. Each of the Shareholders acknowledges
that the covenants set forth in this Section 3.1 are being executed and
delivered by such Shareholder in consideration of the covenants of Key contained
in this Agreement, and for other good and valuable consideration, receipt of
which is hereby acknowledged.
3.2. Employment Agreements. From the date hereof, Butts will be employed by
Phoenix at a salary of $7,500 per month for a period of twenty-four (24) months
following the date hereof, pursuant to an Employment Agreement executed and
delivered in connection herewith.
3.3. Further Assurances. From time to time, as and when requested by any
party hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effectuate the transactions contemplated hereby.
ARTICLE 4
Indemnification
4.1. Indemnification by Shareholders. In addition to any other remedies
available to Key under this Agreement, or at law or in equity, each of the
Shareholders shall indemnify, defend and hold harmless Phoenix and Key and their
representatives, officers, directors, employees, agents and stockholders,
against and with respect to any and all claims, costs, damages, losses,
expenses, obliga tions, liabilities, recoveries, suits, causes of action and
deficiencies, including interest, penalties and reasonable attorneys', experts'
and consultants' fees and expenses (collectively, the "Damages") that such
indemnitees shall incur or suffer, which arise, result from or relate to (i) any
breach by either of the Shareholders of (or the failure of either of the
Shareholders to perform) their respective re presentations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or delivered to Key by either of the
Shareholders under this Agreement or (ii) any Retained Employee Liabilities.
4.2. Indemnification by Key. In addition to any other remedies available to
the Shareholders under this Agreement, or at law or in equity, Key shall
indemnify, defend and hold harmless each of the Shareholders against and with
respect to any and all Damages that such
14
indemnitees shall incur or suffer, which arise, result from or relate to
any breach of, or failure by Key to perform, any of its representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or delivered to Phoenix or
either of the Shareholders by or on behalf of Key under this Agreement.
4.3. Indemnification Procedure. If any party hereto discovers or otherwise
becomes aware of an indemnification claim arising under Sections 4.1 4.2, 4.4 or
4.5 of this Agreement, such indemnified party shall give written notice to the
indemnifying party, specifying such claim, and may thereafter exercise any
remedies available to such party under this Agreement; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to this Article 4, such indemnified party shall, if a claim
in respect thereof is to be made against any indemnifying party, give written
notice to the latter of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. In case any such action
is brought against an indemnified party, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof unless the indemnifying party
has failed to assume the defense of such claim and to employ counsel reasonably
satisfactory to such indemnified person. An indemnifying party who elects not to
assume the defense of a claim shall not be liable for the fees and expenses of
more than one counsel in any single jurisdiction for all parties indemnified by
such indemnifying party with respect to such claim or with respect to claims
separate but similar or related in the same jurisdiction arising out of the same
general allegations. Notwithstanding any of the foregoing to the contrary, the
indemnified party will be entitled to select its own counsel and assume the
defense of any action brought against it if the indemnifying party fails to
select counsel reasonably satisfactory to the indemnified party, the expenses of
such defense to be paid by the indemnifying party. No indemnifying party shall
consent to entry of any judgment or enter into any settlement with respect to a
claim without the consent of the indemnified party, which consent shall not be
unreasonably withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action, the defense of which has been assumed by an
indemnifying party, without the consent of such indemnifying party, which
consent shall not be unreasonably withheld or delayed.
4.4. Litigation Indemnification by Shareholders. In addition to any other
remedies available to Key under this Agreement, or at law or in equity, each of
the Shareholders shall
15
indemnify, defend and hold harmless Phoenix and Key and their respective
officers, directors, employees, agents and stockholders, against and with
respect to any Damages that such indemnitees shall incur or suffer, which arise,
result from or relate to or arise out of any matters arising out of or related
to the Shareholder's or Phoenix's relationship to or dealings with Southwest
Petroservices, Inc.
4.5. Indemnification of Turn and Butts by Key for Certain Phoenix
Obligations. In addition to other remedies available to the Shareholders under
this Agreement, or at law or in equity, Key shall indemnify, defend and hold
harmless the Shareholders against and with respect to any personal liability
they may incur as a result of having guaranteed the obligations of Phoenix
listed on Schedule 4.5 hereto.
ARTICLE 5
Miscellaneous
5.1. Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements made by the parties hereto
shall survive indefinitely without limitation, notwithstanding any investigation
made by or on behalf of any of the parties hereto. All statements contained in
any certificate, schedule, exhibit or other instrument delivered pursuant to
this Agreement shall be deemed to have been representations and warranties by
the respective party or parties, as the case may be, and shall also survive
indefinitely without limitation despite any investigation made by any party
hereto or on its behalf.
5.2. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
5.3. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
5.4. Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested:
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If to Key
Addressed to: With copies to:
Yale E. Key, Inc. Yale E. Key, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx Xxxxx X. X. Xxx 00000
East Brunswick, New Jersey 08816 Xxxxxxx, Xxxxx 00000
Attn: General Counsel Attn: President
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Xxxxx, Xxxxxxxx & Xxxxx
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to either Shareholder
Addressed to: With a copy to:
Xx. Xxxxx Xxxxx XxXxxxx, Tidwell, Hansen, Xxxxxx
P. O. Box 108 & Peacock
Xxxxxxx, Xxxxx 00000 0000 X. 00xx, Xxxxx 000
Xxxxxxxxx: (915) __________ Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Xx. Xxxxxxx K. Turn Facsimile: (000) 000-0000
0000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
5.5. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
5.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
5.7. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms,
17
provisions, covenants and restrictions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
5.8. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Texas
IN WITNESS WHEREOF, the Shareholders have executed this Agreement and the
other parties hereto have caused this Agreement to be signed in their respective
corporate names by their respective duly authorized representatives, all as of
the day and year first above written.
YALE E. KEY, INC.
By:
C. Xxx Xxxxxxx, President
SHAREHOLDERS
Raleigh K. Turn
Xxxxx Xxxxx
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SCHEDULE 1.3
PURCHASE PRICE ADJUSTMENT DEFINITIONS
Final Net Current Value of Phoenix
"Final Net Current Value of Phoenix" means the dollar amount by which the
Final Total Current Assets exceed the Final Total Liabilities.
"Final Total Current Assets" means the dollar amount specified for the
"Total Current Assets" line item on the Final Balance Sheet.
"Final Total Liabilities" means the dollar amount of the sum of (a) the
Final Total Current Liabilities plus (b) the Final Total Long Term Liabilities.
"Final Total Current Liabilities" means the dollar amount specified for the
"Total Current Liabilities" line item on the Final Balance Sheet.
"Final Total Long Term Liabilities" means the dollar amount specified for
the "Total Long Term Liabilities" line item on the Final Balance Sheet.
4/30 Net Current Value of Phoenix
"4/30 Net Current Value of Phoenix" means the dollar amount by which the
4/30 Total Current Assets exceed the 4/30 Total Liabilities.
"4/30 Total Current Assets" means the dollar amount specified for the
"Total Current Assets" line item on the 4/30 Balance Sheet.
"4/30 Total Liabilities" means the dollar amount of the sum of (a) the 4/30
Total Current Liabilities plus (b) the 4/30 Eligible Long Term Liabilities.
"4/30 Total Current Liabilities" means the dollar amount specified for the
"Total Current Liabilities" line item on the 4/30 Balance Sheet.
"4/30 Eligible Long Term Liabilities" means the dollar amount specified for
the "Total Long Term Liabilities" line item on the 4/30 Balance Sheet less the
dollar amount specified for the "Notes Payable Related Party" line item on the
4/30 Balance Sheet.
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