Asset Purchase Agreement
among
Key Energy Drilling, Inc.,
Lakota Drilling Company
and
Xxxx Xxxxxxx, Xxxxxxxxx Xxxxxxx,
M. Xxxx Xxxxxxx, Xx., Xxxxxxx X. Xxxxxx,
Xxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxx,
X. X. Xxxxxx and Xxxxx X. Xxxxxxxx
May 22, 1998
TABLE OF CONTENTS
ARTICLE 1Purchase and Sale of Assets 1
1.1 Purchase and Sale of the Assets 1
1.2 Excluded Assets 2
1.3 Consideration for Assets 2
1.4 Liabilities 3
1.5 Closing 3
1.6 Closing Deliveries 3
1.6.1 Opinion of Buyer's Counsel 3
1.6.2 Opinion of Seller's Counsel. 4
ARTICLE IIRepresentations and Warranties 4
2.1 Representations and Warranties of
the Seller and the Shareholders 4
2.1.1 Organization and Good Standing 4
2.1.2 Agreement Authorized and Effect
on Other Obligations. 4
2.1.3 Contracts 5
2.1.4 Title to Assets 5
2.1.5 Licenses and Permits 5
2.1.6 Intellectual Property 6
2.1.7 Financial Statements 6
2.1.8 Absence of Certain Changes and Events 6
(a) Financial Change 6
(b) Property Damage 6
(c) Waiver 6
(d) Change in Assets 6
(e) Labor Disputes 7
(f) Other Changes 7
2.1.9 Necessary Consents 7
2.1.10 Environmental Matters 7
2.1.11 No ERISA Plans or Labor Issues 8
2.1.12 Investigations; Litigation 8
2.1.13 Absence of Certain Businesses Practices 8
2.1.14 Solvency 8
2.1.15 Finder's Fee 9
2.1.16 Taxes 9
2.2 Representations and Warranties of Buyer 9
2.2.1 Organization and Good Standing 9
2.2.2 Agreement Authorized and its
Effect on Other Obligations 9
2.2.3 Consents and Approvals 9
2.2.4 Finder's Fee 10
ARTICLE IIIAdditional Agreements 10
3.1 Noncompetition. 10
3.2 Hiring Employees 11
3.3 Allocation of Purchase Price 11
3.4 Name Change 11
ARTICLE IVIndemnification 11
4.1 Indemnification by the Seller
and the Shareholders 11
4.2 Indemnification by Buyer 12
4.3 Indemnification Procedure 12
ARTICLE VMiscellaneous 13
5.1 Survival of Representations,
Warranties and Covenants 13
5.2 Entirety 13
5.3 Counterparts. 13
5.4 Notices and Waivers. 14
5.5 Captions. 14
5.6 Successors and Assigns. 14
5.7 Severability. 14
5.8 Applicable Law. 15
Asset Purchase Agreement
This Asset Purchase Agreement (this Agreement) is entered into as of May 22,
1998 among Key Energy Drilling, Inc., a Delaware corporation (the Buyer), Lakota
Drilling Company, a Nebraska corporation (the Seller), and Xxxx Xxxxxxx,
Xxxxxxxxx Xxxxxxx, M.Xxxx Xxxxxxx, Xx., Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxxx,
Xxxxx X. Xxxxxxx, X. X. Xxxxxx and Xxxxx X. Xxxxxxxx (collectively, the
Shareholders).
RECITATIONS
The Seller desires to sell substantially all of its assets, and Buyer desires to
acquire such assets.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements, and subject to the terms
and conditions herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Purchase and Sale of Assets
ARTICLE 1
Purchase and Sale of Assets"
1.1 Purchase and Sale of the Assets
Subject to the terms and conditions set forth in this Agreement, the Seller
hereby agrees to sell, convey, transfer, assign and deliver to Buyer effective
as of 11:00 P.M. Texas time on the day preceding the date of execution hereof ,
all of the assets of the Seller existing on the date hereof (the Closing Date)
other than the Excluded Assets (defined below), whether real, personal, tangible
or intangible, including, without limitation, the following assets owned by the
Seller relating to or used or useful in the operation of the business as
conducted by the Seller on and before the date hereof (the Business) (all such
assets being sold hereunder are referred to collectively herein as the Assets):
all tangible personal property owned by Seller (such as machinery, equipment,
leasehold improvements, furniture and fixtures, and vehicles), including,
without limitation, that which is more fully described on Schedule 1.1(a) hereto
(collectively, the Tangible Personal Property);
all of the inventory owned by Seller, including without limitation, that which
is more fully described on Schedule 1.1(b) hereto (collectively, the
Inventory);
all of the Seller's intangible assets (the "Intangibles"), including without
limitation, (i) all of the Seller's rights to the names under which it is
incorporated or under which they currently do business, (ii) all of the Seller's
rights to any patents, patent applications, trademarks and service marks
(including registrations and applications therefor), trade names, and copyrights
and written know-how, trade secrets, licenses and sublicenses and all other
similar proprietary data and the goodwill associated therewith (collectively,
the Intellectual Property) used or held in connection with the Business,
including without limitation, that which is more fully described on Schedule
1.1(c) hereto (the Seller Intellectual Property), (iii) the Seller's telephone
numbers, and (iv) the sales and promotional literature, computer software,
customer and supplier lists and all other records of the Seller relating to the
Assets or the Business, excluding the corporate minute books, accounting
records, files, tax returns and other financial data on whatever media, relating
to the Seller or the Shareholders or the Excluded Assets (the Retained Records);
those leases, subleases, contracts, contract rights and agreements relating to
the Assets or the operation of the Business listed on Schedule 1.1(d) hereto
(collectively, the Contracts);
all of the permits, authorizations, certificates, approvals, registrations,
variances, waivers, exemptions, rights-of-way, franchises, ordinances, orders,
licenses and other rights of every kind and character (collectively, the
Permits) relating to all or any of the Assets or to the operation of the
Business, including, but not limited to, those that are more fully described on
Schedule 1.1(e) hereto;
the goodwill and going concern value of the Business; and
(g) all other or additional privileges, rights, interests, properties and assets
of the Seller of every kind and description and wherever located that are used
in the Business or intended for use in the Business in connection with, or that
are necessary for the continued conduct of, the Business.
1.2 Excluded Assets
The Assets shall not include the following (collectively, the Excluded
Assets): (i) all of the Seller's accounts receivable and all other rights of
the Seller to payment for services rendered by the Seller before Closing, it
being understood that all of Seller's customers shall be billed on the Closing
Date for services or materials provided through that date and that Buyer will
forward any payment on such accounts received by it to Seller within ten (10)
business day of receipt; (ii) all cash accounts of the Seller and all xxxxx cash
of the Seller kept on hand for use in the Business; (iii) all other receivables
and prepaid expenses, including all right, title and interest of the Seller in
and to any prepaid expenses, bonds, deposits and other current assets relating
to any of the Assets or the Businesses; (iv) the Retained Records; (v) the cash
consideration paid or payable by Buyer to Seller pursuant to Section 1.3 hereof;
and (vi) the real estate and other assets described in Schedule 1.2 attached
hereto.
1.3 Consideration for Assets
As consideration for the sale of the Assets to Buyer and for the other covenants
and agreements of the Seller and the Shareholders contained herein, Buyer agrees
to pay on the Closing Date, the sum of Eleven Million, Nine Hundred Fifty
Thousand Dollars ($11,950,000) to Seller by wire transfer of immediately
available funds to an account designated by the Seller or by delivery of
immediately available funds. In addition, within thirty (30) days following the
Closing, Buyer will pay Seller an additional amount equal to the amounts paid by
Seller for equipment purchases made by Seller after May 6, 1998, and before the
date hereof which expand the capabilities of the Business and which are
described on Schedule 1.3 hereto.
1.4 Liabilities
Effective on the Closing Date, Buyer shall assume those, and only those,
liabilities and obligations of the Seller to perform the Contracts described on
Schedule 1.1(d) hereto to the extent that the Contracts have not been performed
and are not in default on the date hereof (the Assumed Liabilities). On and
after the date hereof, the Seller shall be responsible for any and all
liabilities and obligations of the Seller other than the Assumed Liabilities,
including, without limitation, (a) any obligations arising from the Seller's
employment of those employees of the Seller listed on Schedule 3.2 hereto; (b)
any liabilities arising from or relating to Seller's failure to be duly
qualified or licensed to do business and in good standing as a foreign
corporation in all jurisdictions in which the character of the properties owned
or the nature of the business conducted by Seller would make such qualification
or licensing necessary; (c) any failure to pay any taxes owed by Seller which
are applicable to the period ending with the date hereof; (d) any liabilities
arising out of any matters listed on Schedule 2.1.12 hereto; (e) any liability
for commission or other fees payable to brokers, attorneys or others; and (f)
any other liabilities resulting from Seller's operation of the Assets or conduct
of its business before the date hereof (collectively, the Retained Liabilities).
1.5 Closing
The closing of the purchase and sale provided for hereunder (the Closing)
shall take place on the date hereof , at the offices of Norwest Bank, 000 Xxxx
Xxxxx, Xxxxxxx, Xxxxx.
1.6 Closing Deliveries
At the Closing, in addition to the conveyances of the Assets to the Buyer in
exchange for the Purchase Price, Buyer and Seller will deliver to one another
the opinions of counsel described below:
1.6.1 Opinion of Buyer's Counsel
The Seller shall have received a favorable opinion, dated as of the Closing
Date, from Xxxxx, Xxxxxxxx & Xxxxx, P.C., counsel for Buyer, in form and
substance satisfactory to the Seller, to the effect that (i) Buyer has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware and is qualified to do business in the State of
Texas; (ii) all corporate proceedings required to be taken by or on the part of
the Buyer to authorize the execution of this Agreement and the consummation of
the transaction contemplated hereby have been taken; and (iii) this Agreement
has been duly executed and delivered by, and is the legal, valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as enforceability may be limited by (a) equitable principals of
general applicability or (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally. In
rendering such opinion, such counsel may rely upon (x) certificates of public
officials and of officers or Buyer as to the matters of fact and (y) the opinion
or opinions of other counsel, which opinions shall be reasonably satisfactory to
the Seller, as to matters other than federal or Texas law.
1.6.2 Opinion of Seller's Counsel
The Buyer shall have received a favorable opinion, dated as of the Closing Date,
from Hinkle, Cox, Xxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., counsel to Seller and the
Shareholders, in form and substance satisfactory to Buyer, to the effect that
(i) Seller has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Nebraska and is qualified to do
business in the States of Texas and New Mexico and each other state in which the
conduct of its business requires it to be qualified to do business; (ii) all
proceedings required to be taken by or on the part of the Seller and the
Shareholders to authorize the execution of this Agreement and the consummation
of the transaction contemplated hereby have been taken; (iii) the Seller owns
all of the Assets free and clear of any Encumbrances; and (iv) this Agreement
has been duly executed and delivered by, and is the legal, valid and binding
obligation of the Seller and each of the Shareholders and is enforceable against
the Seller and each of the Shareholders in accordance with its terms, except as
the enforceability may be limited by (a) equitable principles of general
applicability or (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally. In
rendering such opinion, such counsel may rely upon (x) certificates of public
officials and of officers of the Seller as to the matters of fact and (y) on the
opinion or opinions of other counsel, which opinions shall be reasonably
satisfactory to Buyer, as to matters other than federal or Texas law.
ARTICLE II
Representations and Warranties"
2.1 Representations and Warranties of the Seller and the Shareholders
The Seller and each of the Shareholders jointly and severally represent and
warrant to Buyer as follows:
2.1.1 Organization and Good Standing
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nebraska, is qualified to do
business in the States of Texas and New Mexico and in each other state in
which the nature and conduct of its business requires it to be qualified to
do business, has full requisite corporate power and authority to carry on
its businesses as it is currently conducted, and to own and operate the
properties currently owned and operated by it. The Shareholders
collectively own all of the issued and outstanding shares of the Seller's
capital stock and have the sole right to vote the same.
2.1.2 Agreement Authorized and Effect on Other Obligations.
The execution and delivery of this Agreement and all instruments to be
executed by Seller and the Shareholders hereunder have been authorized by
all necessary corporate, shareholder and other action on the part of the
Seller and each of the Shareholders, and this Agreement and all instruments
to be executed by the Seller and the Shareholders hereunder are the valid
and binding obligations of the Seller and each of the Shareholders
enforceable (subject to normal equitable principals) against each of such
parties in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, debtor relief or similar
laws affecting the rights of creditors generally. The execution, delivery
and performance of this Agreement and all instruments to be executed by the
Seller and the Shareholders hereunder and the consummation of the
transactions contemplated hereby and thereby, will not conflict with or
result in a violation or breach of any term or provision of, nor constitute
a default under (i) the Articles of Incorporation or Bylaws (or other
organizational documents) of the Seller, (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which the
Seller or any of the Shareholders are a party or by which the Seller or any
of the Shareholders or their respective properties are bound; or (iii) to
the best of their knowledge, any provision of any law, rule, regulation,
order, permits, certificate, writ, judgment, injunction, decree,
determination, award or other decision of any court, arbitrator or other
governmental authority to which the Seller or any of the Shareholders or
any of their respective properties are subject.
2.1.3 Contracts
Schedule 1.1(d) hereto sets forth a complete list of all contracts,
including leases under which the Seller is lessor or lessee, which relate
to the Assets and are to be performed in whole or in part after the date
hereof. In addition, (a) all of the Contracts are in full force and effect,
and constitute valid and binding obligations of the Seller, (b) the Seller
is not, and no other party to any of the Contracts 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, (c) no Contract has been entered into on terms which could
reasonably be expected to have an adverse effect on the use of the Assets
by Buyer, (d) neither the Seller nor any of the Shareholders have received
any information which would cause any of such parties to conclude that any
customer of the Seller will (or is likely to) cease doing business with
Buyer (or its successors) as a result of the consummation of the
transactions contemplated hereby.
2.1.4 Title to Assets
The Seller has good, indefeasible and marketable title to all of the
Assets, free and clear of any Encumbrances (defined below). Except as set
forth in Schedule 2.1.4 hereto, all of the Assets are (a) in a state of
good repair generally experienced in the oil and gas well drilling
industry, ordinary wear and tear excepted, (b) are free from any known
defects except as may be repaired by routine maintenance and such minor
defects as do not substantially interfere with the continued use thereof in
the conduct of normal operations and (c) conform to all applicable laws
governing their use. No notice of any violation of any law, statute,
ordinance or regulation relating to any of the Assets has been received by
the Seller or any of the Shareholders, except such as have been fully
complied with. The term Encumbrances means all liens, security interests,
pledges, mortgages, deeds of trust, claims, rights of first refusal,
options, charges, restrictions or conditions to transfer or assignment,
liabilities, obligations, taxes, privileges, equities, easements, rights of
way, limitations, reservations, restrictions and other encumbrances of any
kind or nature.
2.1.6 2.1.5 Licenses and Permits
Schedule 1.1(e) hereto sets forth a complete list of all Permits necessary
under law or otherwise for the operation, maintenance and use of the Assets
in the manner in which they are now being operated, maintained and used;
each of the Permits and the Seller's rights with respect thereto is valid
and subsisting, in full force and effect, and enforceable by the Seller;
the Seller is in compliance in all material respects with the terms of each
of the Permits; none of the Permits have been, or to the knowledge of the
Seller or any of the Shareholders, are threatened to be, revoked, canceled,
suspended or modified.
2.1.6 Intellectual Property
Schedule 1.1(c) hereto sets forth a complete list of all Intellectual
Property material or necessary for the continued use of the Assets; the
Seller Intellectual Property is owned or licensed by the Seller free and
clear of any Encumbrances; the Seller has not granted to any other person
any license to use any Seller Intellectual Property and use of the Seller
Intellectual Property will not, and the conduct of the Business did not,
infringe, misappropriate or conflict with the Intellectual Property rights
of others. Neither the Seller nor any of the Shareholders has received any
notice of infringement, misappropriation or conflict with the Intellectual
Property rights of others in connection with the use by Seller of the
Seller Intellectual Property.
2.1.7 Financial Statements
The Seller has delivered to Buyer a copy of Seller's audited statement of
income for the three (3) month period ended March 31, 1998, a copy of which
is attached hereto as Schedule 2.1.7 (the Seller's Statement of Income);
the Seller's Statement of Income is true, correct and complete in all
material respects and presents fairly and fully the income and expenses of
the Seller as at the date and for the periods indicated thereon, and has
been prepared in accordance with generally accepted accounting principles
as promulgated by the American Institute of Certified Public Accountants
(GAAP) applied on a consistent basis and the Seller's Statement of Income
includes all adjustments which are necessary for a fair presentation of the
Seller's income and expenses for the period indicated.
2.1.8 Absence of Certain Changes and Events
Since March 31, 1998, there has not been:
(a) Financial Change
Any adverse change in the Assets, the Business or the financial condition,
operations, liabilities or prospects of the Seller;
(b) Property Damage Any damage, destruction, or loss to any of the Assets
or the Business (whether or not covered by insurance);
(c) Waiver
Any waiver or release of a material right of or claim held by the Seller;
(d) Change in Assets
Any acquisition, disposition, transfer, encumbrance, mortgage, pledge or
other encumbrance of any asset of the Seller other than in the ordinary
course of business;
(e) Labor Disputes
Any labor disputes between the Seller and its employees; or
(f) Other Changes
Any other event or condition known to the Seller or the Shareholders that
particularly pertains to and has or might have an adverse effect on the
Assets, the operations of the Business or the financial condition or
prospects of the Seller.
2.1.9 Necessary Consents
The Seller has obtained and delivered to Buyer all consents to assignment
or waivers thereof required to be obtained from any governmental authority
or from any other third party in order to validly transfer the Assets
hereunder, including, without limitation, the Contracts and the Seller
Permits.
2.1.10 Environmental Matters
None of the current or past operations of the Business or any of the Assets
are being or have been conducted or used in such a manner as to constitute
a violation of any Environmental Law (defined below); neither the Seller
nor any of the Shareholders has received any notice (whether formal or
informal, written or oral) from any entity, governmental agency or
individual regarding any existing, pending or threatened investigation or
inquiry related to violations of any Environmental Law or regarding any
claims for remedial obligations or contribution for removal costs or
damages under any Environmental Law; there are no writs, injunction
decrees, orders or judgments outstanding, or lawsuits, claims, proceedings
or investigations pending or, to the knowledge of the Seller or any of the
Shareholders, threatened relating to the ownership, use, maintenance or
operation of the Assets or the conduct of the Business, nor, to the
knowledge of the Seller or any of the Shareholders, is there any basis for
any of the foregoing; Buyer is not required to obtain any permits, licenses
or similar authorizations pursuant to any Environmental Law in effect as of
the date hereof to operate and use any of the Assets for their current or
proposed purposes and uses; to the knowledge of the Seller or any of the
Shareholders, the Assets include all environmental and pollution control
equipment necessary for compliance with applicable Environmental Law; no
Hazardous Materials (defined below) have been or are currently being used
by the Seller in the operation of the Assets, except as set forth on
Schedule 2.1.10 hereto; no Hazardous Materials are or have ever been
situated on or under any of the Seller's properties, whether owned or
leased, or incorporated into any of the Assets; there are no, and there
have never been any, underground storage tanks (as defined under
Environmental Law) located under any of the Seller's properties, whether
owned or leased; and there are no environmental conditions or
circumstances, including the presence or release of any Hazardous
Materials, on any property presently or previously owned or leased by the
Seller, or on any property on which Hazardous Materials generated by the
Seller's operations or the use of the Assets were disposed of, which would
result in an adverse change in the Assets, Business or business prospects
of the Seller. The term Environmental Law means any and all laws, rules,
orders, regulations, statutes, ordinances, codes, decrees, and other
legally enforceable requirements (including, without limitation, common
law) of the United states, or any state, regional, city, local, municipal
or other governmental authority or quasi-governmental authority,
regulating, relating to, or imposing environmental standards of conduct
concerning protection of the environment or human health, or employee
health and safety as from time to time has been or is now in effect. The
term Hazardous Materials means (x) asbestos, polychlorinated biphenyls,
urea formaldehyde, lead based paint, radon gas, petroleum, oil, solid
waste, pollutants and contaminants, and (y) any chemicals, materials,
wastes or substances that are defined, regulated, determined or identified
as toxic or hazardous in any Environmental Law.
2.1.11 No ERISA Plans or Labor Issues
No employee benefit plan of the Seller, whether or not subject to any
provisions of the Employee Retirement Income Security Act of 1974, as
amended, will by its terms or applicable law, become binding upon or an
obligation of Buyer; (b) the Seller has not engaged in any unfair labor
practices which could reasonably be expected to result in an adverse effect
on the Assets; (c) the Seller does not have any dispute with any of its
existing or former employees, and (d) there are no labor disputes or, to
the knowledge of the Seller or any of the Shareholders, any disputes
threatened by current or former employees of the Seller.
2.1.12 Investigations; Litigation
No investigation or review by any governmental entity with respect to the
Seller or any of the transactions contemplated by this Agreement is pending
or threatened, nor has any governmental entity indicated to the Seller or
any of the Shareholders an intention to conduct the same; and there is no
suit, action, or legal, administrative, arbitration or other proceeding or
governmental investigation pending, or any other unasserted claims, to
which the Seller or any of the Shareholders is a party or which would have
an adverse effect on any of the Assets or the Business, except as set forth
on the Schedule 2.1.12 hereto.
2.1.13 Absence of Certain Businesses Practices
Neither the Seller, nor any of the Shareholders, nor any officer, employee
or agent of the Seller, or any other person acting on behalf of the Seller
or any of the Shareholders, has, directly or indirectly, within the past
five years, given or agreed to give any gift or similar benefit to any
customer, supplier, government employee or other person who is or may be in
a position to help or hinder the profitable conduct of the Business or the
profitable use of the Assets (or to assist the Seller in connection with
any actual or proposed transaction) which if not given in the past, might
have had an adverse effect on the profitable conduct of the Business or the
profitable use of the Assets, or if not continued in the future, might
adversely affect the profitable conduct of the Business or the profitable
use of the Assets.
2.1.14 Solvency
The Seller is not presently insolvent, nor will the Seller be rendered
insolvent by the occurrence of the transactions contemplated by this
Agreement. The term insolvent, with respect to the Seller, means that the
sum of the present fair and saleable value of the 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.
2.1.15 Finder's Fee
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by the Seller, the Shareholders
and their counsel directly with Buyer and its counsel, without the
intervention of any other person in such manner as to give rise to any
valid claim against Buyer for a brokerage commission, finder's fee or any
similar payment.
2.1.16 Taxes
All federal, state and local taxes assessed or assessable against the
Assets for periods prior to January 1, 1998 have been paid by Seller and
the Assets will be conveyed to Buyer free and clear of any such taxes or
claims therefor. All taxes assessed against the Assets for the period
commencing January 1, 1998 will be prorated through the Closing Date (based
on 1997 assessed values) with Seller paying to Buyer at Closing an amount
equal to the portion of such taxes applicable to the period between January
1, 1998 and the Closing Date. Buyer shall be responsible for the payment of
any sales taxes due as a result of the sale of the Assets by Seller to
Buyer.
2.2 Representations and Warranties of Buyer
Buyer represents and warrants to the Seller and the Shareholder as follows:
2.2.1 Organization and Good Standing
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has full requisite
corporate power and authority to carry on its businesses 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 businesses and is
in good standing as a foreign corporation authorized to do business in the
State of Texas.
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 Buyer,
and this Agreement is a valid and binding obligation of Buyer enforceable
(subject to normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of
creditors generally. The execution, delivery and performance of this
Agreement by Buyer will not conflict with or result in a violation or
breach of any term or provision of, or constitute a default under (a) the
Certificate of Incorporation or Bylaws of Buyer or (b) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement to
which Buyer or any of its property is bound.
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 Buyer 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 Buyer and its counsel directly
with the Seller and the Shareholders and their counsel, without the
intervention by any other person as the result of any act of Buyer in such
a manner as to give rise to any valid claim against the Seller of any of
the Shareholders hereto for any brokerage commission, finder's fee or any
similar payments.
ARTICLE III
Additional Agreements
3.1 Noncompetition.
Except as set forth below or as otherwise consented to or approved in
writing by Buyer, the Seller and each of the Shareholders agree that for a
period of 60 months following the date hereof, such party will not,
directly or indirectly, acting alone or as a member of a partnership or as
an officer, director, employee, consultant, representative, advisor, lender
(including gifts used for capitalization or collateral), a holder of, or
investor in as much as 3% of any security of any class of any corporation
or other business entity (a) engage in any business in competition with the
business or businesses conducted by the Seller on or before the date hereof
or by Buyer on or after the date hereof, or in any service business the
services of which were provided and marketed by the Seller on or before the
date hereof or by Buyer on or after the date hereof in the states of Texas
or New Mexico; (b) request any present customers or suppliers of the Seller
or any customers of Buyer or with Yale E. Key, Inc., T.S.T. Paraffin
Service Company, Inc., Ram Oil Well Service, Inc., Xxxxxxx Trucking Co.,
Inc., WellTech Eastern, Inc. or Key Four Corners, Inc. (Buyer's
Affiliates) to curtail or cancel their business with Buyer (or Buyer's
Affiliates); (c) disclose to any person, firm or corporation any trade,
technical or technological secrets of Buyer (or Buyer's Affiliates) or of
the Seller or any details of their organization or business affairs or (d)
induce or actively attempt to influence any employee of Buyer (or Buyer's
Affiliates) to terminate his or her employment. The Seller and each of the
Shareholders agree that if either the length of time or geographical area
as 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 Seller and
the Shareholders 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. The Seller
and the Shareholders further agree and acknowledge that Buyer does not have
any adequate remedy at law for the breach or threatened breach by the
Seller or the Shareholders of the covenants contained in this Section 3.1,
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 the Seller or
the Shareholders 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. The Seller and the
Shareholders acknowledge that the covenants set forth in this Section 3.1
are being executed and delivered by such party in consideration of (i) the
covenants of Buyer contained in this Agreement, (ii) additional
consideration in the amount of $50,000 payable by Buyer on the date hereof
by wire transfer of immediately available funds to the Seller and the
Shareholders, in those amounts and to those accounts specified in Schedule
3.1 hereto and (iii) for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged.
3.2 Hiring Employees
Schedule 3.2 hereto is a complete and accurate listing of all employees of
the Seller who devote their full time in the operation of the Assets and
the conduct of the Business (the Employees). Effective as of the date of
Closing, substantially all of the Employees shall be offered employment by
Buyer, subject to such Employees meeting Buyer's standard employment
eligibility requirements. Buyer shall have no liability or obligation with
respect to any employee benefits of any Employee except those benefits that
accrue pursuant to such Employees' employment with Buyer on or after the
date hereof. The Seller and the Shareholders shall cooperate with Buyer in
connection with any offer of employment from Buyer to the Employees and use
its best efforts to cause the acceptance of any and all such offers.
3.3 Allocation of Purchase Price
The parties hereto agree to allocate the Purchase Price payable by Buyer
for the Assets hereunder as set forth on Schedule 3.3 hereto, and shall
report this transaction for federal income tax purposes in accordance with
the allocation so agreed upon. The parties hereto for themselves and for
their respective successors and assigns covenant and agree that they will
file coordinating Form 8594's in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended, with their respective income tax
returns for the taxable year that includes the date hereof.
3.4 Name Change
The Seller and the Shareholders shall, within ten (10) days from the date
of Closing, cause to be filed with the Secretary of State of Nebraska an
amendment to the Articles of Incorporation of the Seller changing the names
of the Seller from its current name to a name that is not similar to such
name. The Seller and the Shareholders shall, within five (5) days from the
date of its receipt of confirmation of such filings from the Secretary of
State of Nebraska, cause the same to be filed with the appropriate office
of each state in which the Seller is qualified to do business and deliver
to Buyer a copy of such filings.
ARTICLE IV
Indemnification
4.1 Indemnification by the Seller and the Shareholders
In addition to any other remedies available to Buyer under this Agreement,
or at law or in equity, the Seller and each of the Shareholders owning ten
percent (10%) or more of the capital stock of Seller as of the date hereof
(being Xxxx Xxxxxxx, Xxxxxxxxx Xxxxxxx, X. X. Xxxxxx and Xxxxx X. Xxxxxxxx)
shall, jointly and severally, indemnify, defend and hold harmless Buyer and
its officers, directors, employees, agents and stockholders (collectively,
the Buyer Indemnified Parties), against and with respect to any and all
claims, costs, damages, losses, expenses, obligations, liabilities,
recoveries, suits, causes of action and deficiencies, including interest,
penalties and reasonable attorneys' fees and expenses (collectively, the
Damages) a Buyer Indemnified Party shall incur or suffer (whether the
damages are suffered or incurred by such Buyer Indemnified Party directly
or as a result of a third party claim against such Buyer Indemnified
Party), which arise, result from or relate to (a) any material breach of,
or failure by the Seller or any of the Shareholders to perform, their
respective representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument
furnished or delivered to Buyer by the Seller or the Shareholders under
this Agreement or (b) the Retained Liabilities. In addition, each
Shareholder owning less than ten percent (10%) of the capital stock of
Seller as of the date hereof (being M. Xxxx Xxxxxxx, Xx., Xxxxxxx X.
Xxxxxx, Xxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxx) shall indemnify, defend and
hold the Buyer Indemnified Parties harmless against and with respect to any
and all Damages a Buyer Indemnified Party shall incur or suffer which
arise, result from or relate to any material breach of, or failure by such
Shareholder to perform his or her representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or
other instrument furnished or delivered by such Shareholder to Buyer.
4.2 Indemnification by Buyer
In addition to any other remedies available to the Seller or the
Shareholders under this Agreement, or at law or in equity, Buyer shall
indemnify, defend and hold harmless the Seller and its officers, directors,
employees, agents and stockholders and each of the Shareholders against and
with respect to any and all Damages that such indemnitees shall incur or
suffer, which arise, result from or relate to (a) any material breach of,
or failure by Buyer to perform, any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or delivered to the Seller or the
Shareholders by or on behalf of Buyer under this Agreement or (b) the
Assumed Liabilities.
4.3 Indemnification Procedure
If any party hereto discovers or otherwise becomes aware of an
indemnification claim arising under Section 4.1 or 4.2 of this Agreement,
such indemnified party shall give written notice to the indemnifying party,
specifying such claim, and may thereafter exercise any remedies available
to such party under this Agreement; provided, however, that the failure of
an indemnified party to give notice as provided herein shall not relieve
the indemnifying party of any obligation hereunder to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly
after receipt by an indemnified party hereunder of written notice of the
commencement of any third party action or proceeding against such
indemnified party with respect to which a claim for indemnification may be
made pursuant to this Article IV, such indemnified party shall, if a claim
in respect thereof is to be made against any indemnifying party, give
written notice to the latter of the commencement of such third party
action; provided, however, that the failure of an indemnified party to give
notice as provided herein shall not relieve the indemnifying party of any
obligation hereunder to the extent the indemnifying party is not materially
prejudiced thereby. In case any such third party action is brought against
an indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof
unless the indemnifying party has failed to assume the defense of such
third party claim and to employ counsel reasonably satisfactory to such
indemnified person. An indemnifying party who elects not to assume the
defense of a third party claim shall not be liable for the fees and
expenses of more than one counsel in any single jurisdiction for all
parties indemnified by such indemnifying party with respect to such third
party claim or with respect to third party claims separate but similar or
related in the same jurisdiction arising out of the same general
allegations. Notwithstanding any of the foregoing to the contrary, the
indemnified party will be entitled to select its own counsel and assume the
defense of any third party action brought against it if the indemnifying
party fails to select counsel reasonably satisfactory to the indemnified
party, the expenses of such defense to be paid by the indemnifying party.
No indemnifying party shall consent to entry of any judgment or enter into
any settlement with respect to a third party claim without the consent of
the indemnified party, which consent shall not be unreasonably withheld, or
unless such judgment or settlement includes as an unconditional term
thereof the giving by the third party claimant or plaintiff to such
indemnified party of a release from all liability with respect to such
third party claim. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such third party action, the
defense of which has been assumed by an indemnifying party, without the
consent of such indemnifying party, which consent shall not be unreasonably
withheld, delayed or continued.
ARTICLE V
Miscellaneous
5.1 Survival of Representations, Warranties and Covenants
All representations and warranties made by the parties hereto shall survive
indefinitely without limitation, notwithstanding any investigation made on
the part 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, notwithstanding any investigations
made by any party hereto or on its behalf. All covenants and agreements
contained herein shall survive as provided herein.
5.2 Entirety
This Agreement embodies the entire agreement among the parties with respect
to the subject matter hereof, and all prior agreements between the parties
with respect thereto are hereby superseded in their entirety.
5.3 Counterparts.
Any number of counterparts of this Agreement may be executed and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one instrument.
5.4 Notices and Waivers.
Any notice or waiver to be given to any party hereto shall be in writing
and shall be delivered by courier, sent by facsimile transmission or first
class registered or certified mail, postage prepaid, return receipt
requested:
If to Buyer
Addressed to:
With a copy to:
Key Energy Drilling, Inc.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
Xxxxx, Xxxxxxxx & Xxxxx, P.C.
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to the Seller or the Shareholders
Addressed to:
With a copy to:
Lakota Drilling Company
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. X. X. Xxxxxx
Facsimile: _______________
Hinkle, Cox, Xxxxx, Xxxxxxxx & Xxxxxxx
000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be
deemed to be received on the fifth (5th) businesses day after so mailed,
and if delivered by courier or facsimile to such address, upon delivery
during normal businesses hours on any businesses day.
5.5 Captions.
The captions contained in this Agreement are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation
of any article, section, or paragraph hereof.
5.6 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of and
be enforceable by the successors and assigns of the parties hereto.
5.7 Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable,
the remainder of the terms, provisions, covenants and restrictions shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which may be
hereafter declared invalid, void or unenforceable.
5.8 Applicable Law.
This Agreement shall be governed by and construed and enforced in
accordance with the applicable laws of the State of Texas.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Shareholders have executed this Agreement and the
other parties hereto have caused this Agreement to be executed in their
respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
BUYER:
KEY ENERGY DRILLING, INC.
a Delaware corporation
By:
Xxx Xxx Xxxxxx, President
SELLER:
LAKOTA DRILLING COMPANY
By:
Name:_____________________________________
Title:______________________________________
SHAREHOLDERS:
___________________________________________
Xxxx Xxxxxxx
__________________________________________
Xxxxxxxxx Xxxxxxx
___________________________________________
M. Xxxx Xxxxxxx, Xx.
____________________________________________
Xxxxxxx X. Xxxxxx
____________________________________________
Xxxx X. Xxxxxxxxx
____________________________________________
Xxxxx X. Xxxxxxx
____________________________________________
X. X. Xxxxxx
____________________________________________
Xxxxx X. Xxxxxxxx
