EXHIBIT 10.38
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXX PRODUCTION PARTNERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
("PURCHASER")
XXXXXX PRODUCTION SERVICES, INC.
A TEXAS CORPORATION
("DPS")
AND
XXXXXXX SERVICES II, INC.
SUPERIOR COMPLETION SERVICES, INC.
SOUTH TEXAS DISPOSAL, INC.
ELSIK II, INC.,
ALL TEXAS CORPORATIONS
("SELLERS"),
AND
XXXXX X. XXXXXXX
XXXXXXX X. XXXXXX, XX.
XXXXXX X. XXXXX, XX.
XXXXXX X. XXXXXXX
XXXX X. XXXXX
XXXXXXX XXXXXX
AND
XXXXX X. XXXXX
(THE "SELLER SHAREHOLDERS")
AUGUST 14, 1998
THIS AGREEMENT CONTAINS IMPORTANT INDEMNITY PROVISIONS.
SEE PARTICULARLY ARTICLE VI.
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TABLE OF CONTENTS
PAGE
ARTICLE I - PURCHASE AND SALE................................................1
1.1 Agreement to Sell................................................1
(a) Included Assets............................................2
(b) Excluded Assets............................................3
1.2 Agreement to Purchase............................................3
1.3 The Purchase Price; Tax Basis....................................3
1.4 Assumption of Liabilities........................................4
1.5 Prorations.......................................................4
1.6 Transfer Taxes; Recording Fees...................................5
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS
AND FURTHER ASSURANCES..........................................5
2.1 Closing..........................................................5
2.2 Items to be Delivered at Closing.................................6
2.3 Release of Liens.................................................7
2.4 Third Party Consents.............................................7
2.5 Further Assurances...............................................7
2.6 No Equitable Conversion..........................................8
ARTICLE III - REPRESENTATIONS AND WARRANTIES.................................8
3.1 Representations and Warranties of Seller.........................8
(a) Corporate Existence........................................8
(b) Corporate Power; Authorization; Enforceable Obligations....8
(c) Validity of Contemplated Transactions, Etc.................8
(d) No Third Party Options.....................................9
(e) Financial Statements.......................................9
(f) Taxes; Tax and Other Returns and Reports..................10
(g) Books of Account..........................................10
(h) Existing Condition. ......................................10
(i) Title to Properties.......................................11
(j) Compliance with Laws; Authorizations......................11
(k) Transactions With Affiliates..............................11
(l) Litigation................................................12
(m) Equipment.................................................12
(n) Contracts and Commitments.................................12
(o) Environmental Matters.....................................13
(p) Availability of Documents.................................15
(q) Assets....................................................16
(r) Restrictions..............................................16
(s) Conditions Affecting Seller...............................16
(t) Employee Benefit Plans....................................16
(u) Personnel.................................................17
(v) Legal Compliance; Undisclosed Liabilities.................18
(w) Inventory.................................................18
(x) Warranty..................................................18
(y) Investment................................................18
(z) Disclosure................................................19
3.2 Representations and Warranties of Purchaser.....................19
(a) Partnership...............................................19
(b) Power and Authorization...................................19
(c) Noncontravention..........................................19
3.3 Survival........................................................19
ARTICLE IV - AGREEMENTS PENDING CLOSING.....................................20
4.1 Agreements of Seller Pending the Closing........................20
(a) Business in the Ordinary Course...........................20
(b) Conduct of Business.......................................20
(c) Exclusive Dealing.........................................20
(d) Access....................................................20
(e) Press Release.............................................21
(f) Actions of Directors and Shareholders.....................21
(g) Employee Matters. .......................................21
(h) Actions of Seller.........................................21
4.2 Agreements of Purchaser Pending the Closing.....................21
(a) Press Release.............................................21
(b) Actions of Directors of Purchaser.........................22
(c) Actions of Purchaser......................................22
ARTICLE V - CONDITIONS PRECEDENT TO THE CLOSING.............................22
5.1 Conditions Precedent to Purchaser's Obligations.................22
(a) Representations and Warranties True as of the Closing Date22
(b) Compliance with this Agreement............................22
(c) Closing Certificate.......................................22
(d) Opinion of Counsel for Seller.............................22
(e) No Threatened or Pending Litigation.......................22
(f) Consents and Approvals....................................23
(g) Material Adverse Changes..................................23
(h) Approval of Counsel; Corporate Matters....................23
(i) Physical Inventory........................................23
(j) Employment Contracts......................................23
(k) SWD Lease.................................................23
(l) Frac Tanks................................................23
5.2 Conditions Precedent to the Obligations of Seller...............23
(a) Representations and Warranties True as of the Closing Date23
(b) Compliance with this Agreement............................24
(c) Closing Certificates......................................24
(d) No Threatened or Pending Litigation.......................24
(e) Consent of Shareholders...................................24
ARTICLE VI - INDEMNIFICATION................................................24
6.1 Definitions.....................................................24
6.2 Indemnification by Seller and the Seller Shareholders...........24
6.3 Indemnification by Purchaser....................................25
6.4 Procedure.......................................................26
6.5 Payment and Offset..............................................26
6.6 Failure to Pay Indemnification..................................27
6.7 Express Negligence..............................................27
6.8 Other Rights and Remedies Not Affected..........................27
ARTICLE VII - POST CLOSING MATTERS..........................................27
7.1 Arbitration.....................................................27
(a) Negotiation Period........................................27
(b) Commencement of Arbitration...............................27
(c) Consolidation of Hearings. ...............................28
(d) Discovery.................................................28
(e) Conclusion of Arbitration.................................28
(f) Expenses of Arbitrators. .................................28
7.2 Discharge of Business Obligations...............................28
7.3 Maintenance of Books and Records................................28
7.4 Payments Received...............................................29
7.5 Inquiries.......................................................29
7.6 Covenant Not to Compete.........................................29
7.7 Transition Period...............................................30
(a) Collections...............................................30
(b) Accounting................................................30
(c) Licenses and Permits......................................30
7.8 Accounting Records..............................................30
7.9 Nondisclosure of Proprietary Information........................30
7.10 Contact with Former Employees...................................31
7.11 Registration of Buyer Common Stock..............................31
(a) Registration Obligation...................................31
(b) Blue Sky..................................................31
(c) Suspension Period.........................................31
(d) Registration Expenses.....................................31
7.12 Health Insurance................................................31
ARTICLE VIII - TERMINATION..................................................32
8.1 Events of Termination...........................................32
8.2 Liability Upon Termination......................................32
8.3 Notice of Termination...........................................32
ARTICLE IX - MISCELLANEOUS..................................................32
9.1 Finders' Fees...................................................32
9.2 Expenses........................................................33
9.3 Assignment and Binding Effect...................................33
9.4 Notices.........................................................33
9.5 Governing Law...................................................34
9.6 No Benefit to Others............................................34
9.7 Entire Agreement................................................34
9.8 Headings........................................................34
9.9 Severability....................................................34
9.10 Counterparts....................................................34
9.11 Construction....................................................35
9.12 Waiver..........................................................35
9.13 Specific Performance............................................35
9.14 Submission to Jurisdiction......................................35
9.15 Good Faith......................................................35
9.16 Attorneys' Fees.................................................35
DEFINITIONS:
The definition of "AFFECTED EMPLOYEES" can be found in Section 3.1(t).
The definition of "AGREEMENT" can be found on page 1.
The definition of "ASSETS" can be found in Section 1.1.
The definition of "ASSIGNED CONTRACTS" can be found in Section 1.1(a)(i).
The definition of "ASSUMED LIABILITIES" can be found in Section 1.4(a).
The definition of "AUTHORIZATIONS" can be found in Section 3.1(j).
The definition of "BUSINESS" can be found on page 1.
The definition of "CLOSING" can be found in Section 2.1.
The definition of "CLOSING DATE" can be found in Section 2.1.
The definition of "CONTAMINATION" can be found in Section 3.1(o)(i)(A).
The definition of "CONTRACTS" can be found in Section 3.1(c)(iv).
The definition of "DAMAGES" can be found in Section 6.2.
The definition of "DISPUTE NOTICE" can be found in Section 7.1(a).
The definition of "EFFECTIVE DATE" can be found on page 1.
The definition of "EMPLOYEE BENEFIT PLAN" can be found in Section 3.1(t)(i).
The definition of "ENVIRONMENTAL, HEALTH AND SAFETY LAWS" can be found in
Section 3.1(o)(i)(B).
The definition of "ENVIRONMENTAL LOSS" can be found in Section 3.1(o)(i)(C).
The definition of "EQUIPMENT" can be found in Section 1.1(a)(v).
The definition of "EQUIPMENT LEASES" can be found in Section 1.1(a)(ii).
The definition of "ERISA" can be found in Section 3.1(t).
The definition of "EXCLUDED ASSETS" can be found in Section 1.1(b).
The definition of "FUEL AND INVENTORY" can be found in Section 1.1(a)(ix).
The definition of "GOVERNMENTAL ENTITY" can be found in Section 6.1(a).
The definition of "HAZARDOUS SUBSTANCE" can be found in Section 3.1(o)(i)(D).
The definition of "INDEMNITEE" can be found in Section 6.1(b).
The definition of "INDEMNITOR" can be found in Section 6.1(c).
The definition of "NEGOTIATION PERIOD" can be found in Section 7.1(a).
The definition of "OPERATING ASSETS" can be found in Section 1.1(a)(iii).
The definition of "PERMITS" can be found in Section 1.1(a)(viii).
The definition of "PERMITTED LIENS" can be found in Section 3.1(i).
The definition of "PERSON" can be found in Section 9.11.
The definition of "PERSONAL PROPERTY" can be found in Section 1.1(a)(vii).
The definition of "PROPERTY TAXES" can be found in Section 1.5.
The definition of "PROPRIETARY INFORMATION" can be found in Section 7.9.
The definition of "PURCHASE PRICE" can be found in Section 1.3(a).
The definition of "PURCHASER" can be found on page 1.
The definition of "PURCHASER LOSSES" can be found in Section 6.2.
The definition of "RECORDS" can be found in Section 1.1(a)(vi).
The definition of "REGULATIONS" can be found in Section 3.1(j).
The definition of "RELEASE" can be found in Section 3.1(o)(i)(E).
The definition of "REMEDIATION" can be found in Section 3.1(o)(i)(F).
The definition of "SELLER" can be found on page 1.
The definition of "SELLER LOSSES" can be found in Section 6.3.
The definition of "SELLER SHAREHOLDERS" can be found on page 1.
The definition of "TAX RETURNS" can be found in Section 3.1(f).
The definition of "TAXES" can be found in Section 3.1(f).
The definition of "THIRD PARTY CLAIMS" can be found in Section 6.4(b).
The definition of "TRANSITION PERIOD" can be found in Section 7.7.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated as of August 14,
1998 (the "EFFECTIVE DATE"), is entered into by and among Xxxxxxx Services II,
Inc. ("XXXXXXX"), Superior Completion Services, Inc. ("SUPERIOR"), South Texas
Disposal, Inc. ("SOUTH TEXAS"), and Elsik II, Inc. ("ELSIK"), each of which is a
Texas corporation (together, the "SELLERS"), and Xxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxx, Xx., Xxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, Xxxxxxx
Xxxxxx and Xxxxx X. Xxxxx (together, the "SELLER SHAREHOLDERS"), Xxxxxx
Production Services, Inc., a Texas corporation ("DPS"), and Xxxxxx Production
Partners, L.P., a Delaware limited partnership (the "PURCHASER").
RECITALS:
A. The Sellers are engaged in the following aspects of the oil field
servicing business (collectively, the "BUSINESS"): Xxxxxxx is engaged in the
business of supplying vacuum truck, frac tank, open top tank and related
services; Superior is in workover rig business; South Texas is in the business
of operating salt water disposal xxxxx; and Elsik is in the business of
supplying camp rental equipment, including trailer houses and satellite
antennas.
B. The Seller Shareholders own 79.4% of the outstanding stock of Xxxxxxx
and South Texas; the Seller Shareholders own 84.5% of the outstanding stock of
Elsik; and Xxxxxxx owns 100% of the outstanding stock of Superior;
C. DPS owns all of the issued and outstanding stock of Xxxxxx Production
Management, Inc., a Delaware corporation ("MANAGEMENT"), Xxxxxx Production
Acquisition Corp., a Delaware corporation ("ACQUISITION CORP."), and Xxxxxx
Production Xxxxxx, Inc., a Delaware corporation ("XXXXXX"); Management is the
sole general partner of Purchaser, and Acquisition Corp. and Xxxxxx own all of
the limited partnership interests of Purchaser.
D. Each of the Boards of Directors of the Sellers and DPS, and the General
Partner of Purchaser has approved this Agreement and the transactions
contemplated by this Agreement;
E. Subject to the limitations and exclusions contained in this Agreement
and on the terms and conditions hereinafter set forth, the Sellers desire to
sell and Purchaser desires to purchase, and DPS desires to cause Purchaser to
purchase the Business including all of the oil field servicing operations and
substantially all of the oil field servicing assets of the Sellers.
F. It is the intention of the Purchaser and the Sellers that, unless
otherwise specified in this Agreement, all damages, liabilities and losses not
in the ordinary course of business that result from events or conditions that
occur or exist prior to the Closing (whether or not reported prior to the
Closing) shall be the financial responsibility of the Sellers and subject to the
indemnification provisions provided in Section 6.2 of this Agreement, and that
all such damages, liabilities and losses that result from events or conditions
that occur or first exist after the Closing
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shall be the financial responsibility of the Purchaser and subject to the
indemnification provisions provided in Section 6.3 of this Agreement.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements contained in this
Agreement, and intending to be legally bound by this Agreement, the parties
agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (as defined in Section 2.1), and
except as otherwise specifically provided in this Section 1.1, the Sellers shall
grant, sell, convey, assign, transfer and deliver to Purchaser, upon and subject
to the terms and conditions of this Agreement, all right, title and interest of
the Sellers in and to (a) the Business as a going concern, and (b) all of the
assets, properties and rights of the Sellers constituting the Business or used
therein, of every kind and description, real, personal and mixed, tangible and
intangible, wherever situated (which Business, assets, properties and rights,
together with the Vehicle Sub Stock as hereinafter defined, are herein sometimes
collectively referred to as the "ASSETS"), free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever, except Permitted Liens (as defined in
Section 3.1(i)).
(a) INCLUDED ASSETS. The Assets shall include, without limitation,
the following assets, properties and rights of the Sellers used directly or
indirectly in the conduct of, or generated by or constituting the Business:
(i) all Contracts (as hereinafter defined) to which any one or
more of the Sellers is a party all of which are described in SCHEDULE 1.1(A)(I)
(collectively, the "ASSIGNED CONTRACTS");
(ii) all of the Sellers' rights in and to operating leases of
personal property including vehicles, all of which are described in SCHEDULE
1.1(A)(II) (the "EQUIPMENT LEASES"), subject to the consents of lessors, if
required;
(iii) all of Sellers' interest in equipment material to the
operation of the Business, all of which is described on SCHEDULE 1.1(A)(III)
(the "OPERATING ASSETS");
(iv) all of the issued and outstanding stock of Xxxxxxx
Vehicle Corporation, a Texas corporation (the "VEHICLE SUB STOCK"), which, as of
the Closing Date, will own all of the vehicles of the Sellers (the "VEHICLES")
all of which are listed in SCHEDULE 1.1(A)(IV);
(v) all office furniture, fixtures and equipment owned by the
Sellers and all other equipment, parts, materials, supplies, furniture and
fixtures owned by the Sellers including, without limitation, the equipment,
furniture, fixtures, computers, servers, local area network systems, intranet
systems, financial accounting equipment, and systems described on SCHEDULE
1.1(A)(V) (collectively, the "EQUIPMENT");
2
(vi) all books, records, correspondence, files, plans and
other documents and instruments of the Sellers, including but not limited to
customer and supplier information and sales information relating to the Business
or to the Assets (collectively, the "RECORDS") subject to a continuing right of
the Sellers and the Seller Shareholders to access and copy the Records for tax
reporting purposes;
(vii) all other intangible and tangible personal property, all
technologies, methods, formulations, data bases, trade secrets, customer lists,
know-how, inventions and other intellectual property used in the Business or
under development, and owned, leased or licensed by the Sellers, all of which is
described on SCHEDULE 1.1(A)(VII) (collectively, the "PERSONAL PROPERTY");
(viii)all permits, authorizations, certificates, approvals,
registrations, or other approvals and licenses granted by any federal, state,
local or foreign court, arbitrator or administrative or Governmental Entity (as
hereinafter defined) in connection with the Business, which are described on
SCHEDULE 1.1(A)(VIII) (collectively, the "PERMITS") to the extent that they may
be legally assigned by the Sellers; and
(ix) all motor fuel and inventory on hand on the Closing Date,
including without limitation, all motor fuel, oil, lubricants, drilling mud and
other items of tangible personal property of similar character (collectively,
the "FUEL AND INVENTORY");
(x) all other personal property not listed in this Section
1.1(a) or excluded by Section 1.1(b), which is owned by any of the Seller or the
Seller Shareholders and is reasonably necessary to operate the Business.
(b) EXCLUDED ASSETS. The Assets shall not include the corporate
seals, certificates of incorporation, minute books, stock books, or other
records having to do with the corporate organization of the Sellers, cash, the
Sellers' prepaid items and the deposits not subject to proration under Section
1.5; the Assets additionally shall not include the rights which accrue or will
accrue to the Sellers under this Agreement, the Sellers' customers' accounts
receivable and un-invoiced work relating to the Business in existence on the
Closing Date (whether billed or unbilled as of the Closing), the rights to any
of the Sellers' claims for any federal, state, local, or foreign tax refunds,
the Sellers' financial and accounting records not relating to the Business,
Sellers' tax returns, or any items listed on SCHEDULE 1.1(B) all of which are
referred to in this Agreement as the "EXCLUDED ASSETS."
1.2 AGREEMENT TO PURCHASE. At the Closing, Purchaser shall purchase the
Assets from the Sellers upon and subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants of
the Sellers contained herein, in exchange for the Purchase Price (as defined in
Section 1.3). In addition, Purchaser shall assume, and DPS shall cause Purchaser
to assume, at the Closing and agree to pay, discharge or perform, as
appropriate, certain liabilities and obligations of the Sellers, but only to the
extent expressly provided in Section 1.4. Except as expressly provided in
Section 1.4, Purchaser shall not assume or be responsible for any liabilities or
obligations based on events occurring prior to Closing relative to the Assets,
the Business or the Sellers.
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1.3 THE PURCHASE PRICE; TAX BASIS.
(a) THE PURCHASE PRICE. In consideration of the transfer to
Purchaser of the Assets and the undertakings of the Seller Shareholders, and
subject to adjustment as provided below, Purchaser shall pay (and DPS shall
cause Purchaser to pay) Forty-Six Million Dollars ($46,000,000) (the "PURCHASE
PRICE"), as follows: (i) Thirty-Nine Million Eight Hundred Twenty Thousand
Dollars ($39,820,000) shall be paid to the individual Sellers in the amounts
set forth on Schedule 1.3(a) by wire transfer at the Closing, and (ii) Six
Million One Hundred Eighty Thousand Dollars ($6,180,000) shall be delivered
into escrow (together, the "CASH") to be held pursuant to the escrow agreement
in the form of EXHIBIT A (the "ESCROW AGREEMENT").
The foregoing form of payment of the Purchase Price is predicated on the
presumption that DPS shall be merged with Key Energy Group, Inc., a Maryland
corporation ("KEY"), or its wholly owned subsidiary (the "MERGER"). If, at the
time of the Closing, Key has not completed the Merger, or, in the reasonable
judgment of Purchaser, it is unlikely that the Merger will be completed, then
Purchaser shall have the right to pay Eleven Million Dollars ($11,000,000) of
the Purchaser Price by delivering 880,000 shares of unregistered common stock,
$0.01 par value per share, of DPS in the names and in the amounts set forth on
Schedule 1.3(a) (the "SHARES"). The Shares shall be subject to a Registration
Rights Agreement in the form of EXHIBIT B (the "REGISTRATION RIGHTS AGREEMENT").
Notwithstanding the foregoing, the Purchase Price shall be reduced (by a
reduction in the amount wire transferred to the Sellers at the Closing) by the
amount, if any, (i) determined in accordance with Section 1.5 of this Agreement
and (ii) by the amount of accrued vacation shown on SCHEDULE 3.1(U). In
addition, the Purchaser Price shall be adjusted after the Closing in accordance
with Sections 1.3(b) and 1.3(c).
(b) SELLER TAX BASIS AND FAIR MARKET VALUE OF ASSETS. The fair
market value and the tax basis for federal income tax purposes of the Assets of
the Sellers being transferred to Purchaser shall be set forth on SCHEDULE
1.3(B). The Sellers and Purchaser each hereby covenant and agree that such
amounts reflect the fair market value of the Assets and that none of them,
directly or indirectly, through a subsidiary or affiliate or otherwise, will
take a position on any income tax return, before any governmental agency charged
with the collection of any income tax, or in any judicial proceeding that is in
any way inconsistent with the tax basis and fair market value of the Assets set
forth on SCHEDULE 1.3(B). Such allocations will be reflected in Forms 8594 to be
signed and filed by Seller and Purchaser in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "CODE"). In addition, the
Purchase Price payable under Section 1.2 shall be allocated in the manner set
forth on SCHEDULE 1.3(B).
1.4 ASSUMPTION OF LIABILITIES.
(a) At the Closing and except as otherwise specifically provided in
this Section 1.4, Purchaser shall assume and agree to pay, discharge or perform,
as appropriate, the liabilities and obligations of the Sellers set forth on
SCHEDULE 1.4(A) (the "ASSUMED LIABILITIES"); provided, however, that the
aggregate amount of any debt and leases included in the Assumed Liabilities
shall not exceed $150,000.
4
(b) Notwithstanding Section 1.4(a), it is expressly understood that,
other than obligations and liabilities expressly assumed in Section 1.4(a),
Purchaser shall not be liable for, and shall not assume, any of the Sellers' or
the Seller Shareholders' obligations or liabilities, whether known or unknown,
matured or unmatured, or fixed or contingent, including but not limited to
liabilities relating to events occurring prior to the Closing, any Taxes (as
hereinafter defined, other than those pro rated as of the Closing Date), or any
liabilities under any Employee Benefit Plans of the Sellers. The Sellers shall
remain obligated to pay and discharge any liabilities and obligations not
expressly assumed by Purchaser hereby. The Sellers and the Seller Shareholders
hereby agree that they will indemnify Purchaser for any liabilities of the
Sellers not expressly assumed pursuant to Section 1.4(a) by Purchaser and
Purchaser and DPS agree that they will indemnify the Sellers and the Seller
Shareholders with respect to the Assumed Liabilities.
1.5 PRORATIONS. All annual or periodic ad valorem fees, taxes and
assessments, licensing fees and vehicle use fees, and similar charges imposed by
taxing authorities on the Assets (collectively, "PROPERTY TAXES") shall be borne
and paid (a) by Seller for all full tax years or periods ending before the date
of the Closing and for that portion of any tax year or period ending on or after
the effective date of Closing from the date of commencement of such year or
period to the date immediately preceding the effective date of the Closing and
(b) by Purchaser for all full tax years or periods beginning on or after the
effective date of Closing and for that portion of any tax year or period ending
on or after the effective date of the Closing from and including the effective
date of Closing to the final date of such year or period, regardless of when or
by which party such Property Taxes are actually paid to the applicable taxing
authority. In addition, all rents and other lease charges, power and utility
charges, license or other fees, Assigned Contracts, and similar items shall be
allocated between Purchaser and the Sellers effective as of 12:01 a.m. on the
effective date of the Closing. Such allocations shall be determined and payment
accordingly made from one party to the other, as the case may be, on the date of
the Closing to the extent they are known and agreed to by Purchaser and Seller;
otherwise such allocations shall be determined and payment made (effective as of
12:01 a.m. on the effective date of the Closing) as soon as practicable but not
later than the date 30 days thereafter.
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
THIRD PARTY CONSENTS AND FURTHER ASSURANCES
2.1 CLOSING. Subject to the terms and conditions of this Agreement, the
execution of documents relative to the sale and purchase of the Assets shall be
held at Jenkens & Xxxxxxxxx, A Professional Corporation, in Austin, Texas on or
about the date of the closing of the Merger. The effective date and time of the
Closing (referred to herein as the "CLOSING" or "CLOSING DATE") shall be 12:01
a.m., the Closing Date, and all risk of loss shall be borne by the Sellers until
the Closing, and thereafter all such risk of loss shall be borne by Purchaser.
2.2 ITEMS TO BE DELIVERED AT CLOSING. At the Closing and subject to the
terms and conditions contained in this Agreement,
(a) the Sellers shall deliver to Purchaser the following:
5
(i) bills of sale with covenants of warranty of title and
assignments of contracts in a form reasonable acceptable to the parties, stock
certificates representing the Vehicle Sub Stock, together with executed stock
powers, and other good and sufficient instruments and documents of conveyance
and transfer, in a form reasonably satisfactory to Purchaser and its counsel, as
shall be necessary and effective to transfer and assign to and vest in Purchaser
all of the Sellers' right, title and interest in and to the Assets;
(ii) all of the certificates, certificates of title,
Contracts, customer lists, supplier lists, Equipment Leases assumed by
Purchaser, all correspondence, files, plans and other documents and instruments,
books, Records, and data belonging to the Sellers which are part of the Assets;
(iii) a Closing and Secretary's Certificate from each of the
Sellers, dated as of the Closing Date, certifying, among other items, that all
representations and warranties of the Sellers and the Seller Shareholders
contained in this Agreement or in any Schedule, certificate or document
delivered by the Sellers to Purchaser pursuant to the provisions of this
Agreement are true on the Closing Date and that the applicable Seller has
performed and complied in all material respects with all of its obligations
under this Agreement to be performed or complied with by it prior to or at the
Closing and certifying that the Sellers and the Seller Shareholders have
obtained all consents and approvals required with respect to the Sellers or the
Business except as otherwise set forth on a Schedule hereto;
(iv) a certificate of existence issued by the Secretary of
State of the State of Texas, and a certificate of good standing issued by the
Comptroller of Public Accounts of the State of Texas, as of a date not more than
ten calendar days prior to the Closing Date;
(v) Employment Agreements, Non-Competition Agreements and
Mutual Agreements to Arbitrate Claims in substantially the form attached hereto
as EXHIBIT C executed by each of the Selling Shareholders (the "EMPLOYMENT,
NON-COMPETITION AND ARBITRATION AGREEMENT"); and
(vi) the Escrow Agreement; and
(vii) a Form P-4 executed by the applicable Sellers showing a
change in the operator of each of the Assets that is a salt water disposal well;
simultaneously with such delivery, the Sellers shall take all steps as may be
reasonably required to put Purchaser in actual possession and operating control
of the Assets.
(b) Purchaser shall deliver (and DPS shall cause Purchaser to
deliver) to the Sellers the following:
(i) the wire transfer of the Cash less adjustments, if any, in
accordance with Section 1.3 and less the amount delivered into escrow;
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(ii) the Escrow Agreement;
(iii) the Non-Competition Payment (defined below);
(iv) a copy of a letter addressed to the DPS transfer agent
providing for the issuance of the Shares to the Sellers; and
(v) the Registration Rights Agreement.
In addition, Purchaser shall deliver (and DPS shall cause Purchaser to deliver)
that portion of the Cash subject to the Escrow Agreement to the escrow agent.
2.3 RELEASE OF LIENS. The Sellers shall cause all liens and other
encumbrances other than Permitted Liens affecting the Assets to be released and
discharged prior to Closing and shall provide Purchaser with proof thereof
including but not limited to copies of UCC-3 filings.
2.4 THIRD PARTY CONSENTS. To the extent that any of the Sellers' rights
under any Contracts, Authorizations (as defined in Section 3.1(j)), Permits or
Equipment Leases assumed by Purchaser, or other Assets to be assigned to
Purchaser may not be assigned without the consent of another person, which
consent has not been obtained prior to the Closing, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and the applicable Seller, at such
Seller's expense, shall use reasonable commercial efforts to obtain any such
required consent(s) as promptly as possible after Closing. If any consent is not
obtained or if any attempted assignment would be ineffective or would impair
Purchaser's rights under or to the Asset in question so that Purchaser would not
acquire the benefit of all such rights, the applicable Seller, to the maximum
extent permitted by law and by the terms of any documents affecting the Asset,
at such Seller's expense, shall act for one year after the Closing as
Purchaser's agent in order to obtain for Purchaser the benefits thereunder and
shall cooperate, to the maximum extent permitted by law and by the terms of any
document affecting the Asset, with Purchaser in any other reasonable arrangement
designed to provide such benefits to Purchaser.
2.5 FURTHER ASSURANCES. Each Seller from time to time after the Closing,
at Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably request in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets, or to better enable Purchaser to complete, perform or discharge any of
the liabilities or obligations assumed by Purchaser at the Closing pursuant to
Section 1.4. Each of the parties will cooperate with the other and execute and
deliver to the other parties such other instruments and documents and take such
other actions as may be reasonably requested from time to time by any other
party as necessary to carry out, evidence and confirm the intended purposes of
this Agreement. If any of the Sellers dissolves within one year following the
Closing Date, effective as of the dissolution of such Seller, such Seller hereby
irrevocably appoints Purchaser or Purchaser's substitute as its attorney-in-fact
coupled with an interest and with full power of substitution to carry out the
provisions of this Section 2.5.
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2.6 NO EQUITABLE CONVERSION. Prior to the Closing, neither the execution
of this Agreement nor the performance of any provision contained herein shall
cause Purchaser to become liable for any aspect or obligation of relating to the
Assets or the Business.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE SELLER
SHAREHOLDERS. Each of the Sellers and the Seller Shareholders, jointly and
severally, hereby represent and warrant to Purchaser and to DPS that the
following statements are true and correct, except as set forth on the Schedules,
each of which scheduled exceptions shall specifically identify the relevant
section of this Agreement to which it relates and shall be deemed to be
representations and warranties as if made hereunder; provided, however, that the
representations and warranties made regarding the Seller Shareholders (as
opposed to the Sellers) shall be deemed to be made by each Seller Shareholder
severally and not jointly, wholly with respect to such Seller Shareholder
individually.
(a) CORPORATE EXISTENCE. Each of the Sellers is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Each of the Sellers is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the conduct of the
Business requires it to be so qualified, all of which jurisdictions are listed
on SCHEDULE 3.1(A). None of the Sellers is nor has ever been an investment
company within the meaning of the Investment Company Act of 1940.
(b) CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each of
the Sellers has the corporate power, authority and legal right to execute,
deliver and perform this Agreement. The execution, delivery and performance of
this Agreement by each of the Sellers has been duly authorized by all necessary
corporate action as of the Closing Date. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by the Sellers in
accordance with the provisions hereof (collectively, the "SELLER DOCUMENTS")
will be duly executed and delivered on behalf of each Seller by duly authorized
officers or directors of each Seller and this Agreement constitutes, and the
Seller Documents when executed and delivered will constitute, the legal, valid
and binding obligation of each of the Sellers enforceable against each of the
Sellers in accordance with their respective terms except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, or other laws
affecting the enforcement of creditors' rights generally and the application of
general principles of equity. The Board of Directors of each of the Sellers has
approved this Agreement and the transactions contemplated hereby.
(c) VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. Except as identified
on SCHEDULE 3.1(C), the execution, delivery and performance of this Agreement by
each of the Sellers and the Seller Shareholders does not and will not violate,
conflict with or result in the breach of any material term, condition or
provision of, require notice to or the consent of any other person, result in
the acceleration of or give any party a right to terminate, modify, accelerate
or change the terms, rights or obligations under any of the following:
(i) any Regulation (as hereinafter defined);
8
(ii) any judgment, order, writ, injunction, decree or award of
any court, arbitrator or Governmental Entity;
(iii) the charter documents of any of the Sellers or any
securities issued by any Seller; or
(iv) any material mortgage, indenture, undertaking, note,
bond, debenture, letter of credit, commitment, agreement, contract, lease,
Authorization, Assigned Contract (including but not limited to Vehicle Operating
Leases and Equipment Leases) or other instrument, or understanding, whether or
not assigned hereby (collectively, the "CONTRACTS"), by which any of the Sellers
may have rights or by which any of the Assets may be bound or affected.
As of the Effective Date and as of the Closing Date, no fact or condition
exists or will exist which would result in the termination of or give any party
to a Contract the right to terminate, modify, accelerate or otherwise change the
existing rights or obligations of the Sellers in or to the Assets or the
Business. Except as otherwise identified on SCHEDULE 3.1(C), no Authorization,
approval or consent of, and no registration or filing with, any Governmental
Entity is required in connection with the execution, delivery or performance of
this Agreement by any of the Sellers or by any Seller Shareholder.
(d) NO THIRD PARTY OPTIONS. No person has any existing agreements,
options, commitments or rights to acquire any of the Assets or any interest
therein.
(e) FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 3.1(E) are the
following financial statements (collectively, the "FINANCIAL STATEMENTS") for
the Sellers: (i) unaudited consolidated and consolidating balance sheet and
statement of income, changes in shareholders' equity and cash flows, and
unaudited earnings before interest, taxes, depreciation and amortization
("ADJUSTED EBITDA") as of and for the fiscal years ended December 31, 1995, and
December 31, 1996, and December 31, 1997 (the "MOST RECENT FISCAL YEAR END") and
as of and for the 12 month period ended June 30, 1998; and (ii) the unaudited
consolidated balance sheet and statement of income, changes in shareholders'
equity and cash flow and Adjusted EBITDA (the "MOST RECENT FINANCIAL
STATEMENTS") as of and for the six month period ended June 30, 1998 (the "MOST
RECENT FISCAL MONTH END") for the Sellers. The Financial Statements (including
the notes thereto) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Sellers as of
such dates and the results of operations of the Sellers for such periods, are
correct and complete, and are consistent with the books and records of the
Sellers (which books and records are correct and complete); provided, however,
that the Most Recent Financial Statements are subject to normal year-end
adjustments (which will not be material, individually or in the aggregate) and
lack footnotes. The Financial Statements fairly present all of the activities of
the Sellers that will be part of the operations and Business of the Sellers at
Closing, and all assets, tangible or intangible, and all Contracts, formal or
informal whether or not in writing, necessary to conduct the Business, as
actually operating as of the Effective Date and as set forth in the Financial
Statements, will be owned by the Sellers (in the case of such assets) and will
be in full force and effect (in the case of such Contracts) immediately prior to
the Closing.
9
(f) TAXES; TAX AND OTHER RETURNS AND REPORTS. All federal, state,
local and foreign tax returns, reports, statements and other similar filings
required to be filed by the Sellers and affecting the Assets or the Business
(the "TAX RETURNS") with respect to any federal, state, local or foreign taxes,
assessments, interest, penalties, deficiencies, fees, duties and other
governmental charges or impositions (including without limitation all income
tax, unemployment compensation, social security, payroll, sales and use, excise,
gross receipts, value-added, privilege, property, ad valorem, franchise,
license, school transfer, mortgage recording, customs, withholding, estimated
and other tax or similar governmental charge or imposition under laws of the
United States or any state, county, or municipal entity, agency or
instrumentality or political subdivision thereof or any foreign country or
political subdivision thereof) insofar as same may affect the Assets or the
Business (the "TAXES") have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns properly reflect the liabilities of Sellers for
Taxes for the periods, property and events covered thereby. All Taxes, including
without limitation, those which are called for by the Tax Returns, have been
properly accrued or timely paid. Purchaser will have no liability to any person
or taxing authority for Taxes relating to actions or events occurring prior to
12:01 a.m. on the Closing Date, except as otherwise provided by Section 1.5. The
Sellers' warranties and representations under this Section 3.1(f) shall be
construed consistently with Section 1.5.
(g) BOOKS OF ACCOUNT. The books, records and accounts of the Sellers
maintained with respect to the Business and the Assets fairly reflect, in all
material respects and in reasonable detail, the transactions and the assets and
liabilities of each of the Sellers with respect to the Business.
(h) EXISTING CONDITION. Except as set forth on SCHEDULE 3.1(H), and
except for such changes as have affected the oil field services business
generally, since December 31, 1997, there has not been, and through the date of
the Closing there will not have been, any material adverse change in the Assets
or the Business or the financial condition, operations, results of operations,
or future prospects of the Business. Without limiting the generality of the
foregoing, since that date, except as otherwise stated on SCHEDULE 3.1(H), none
of the Sellers has (i) entered into any transaction or agreement affecting the
Business or the Assets except in the ordinary course of business, consistent
with past practice; (ii) encumbered, leased, licensed or transferred any
tangible or intangible assets which would have been included in the Assets if
the Closing had been held on December 31, 1997 or on any date since then; (iii)
subjected any of the Assets to any lien or other encumbrance of any nature
whatsoever, except in the ordinary course of business, consistent with past
practices, and except for Permitted Liens (defined in Section 3.1(i)); (iv)
entered into any agreement, Contract, lease, or license (or series of related
agreements, Contracts, leases, and licenses) outside the ordinary course of
business, made any amendment to or terminated any material agreement affecting
the Business or the Assets, or canceled, modified or waived any rights affecting
the Business or the Assets, whether or not in the ordinary course of business;
(v) changed any of the accounting principles followed by it or the methods of
applying such principles; (vi) increased the compensation of any employee other
than in the ordinary course of business, entered into any employment Contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing Contract or agreement, made any other change in employment terms for
any of its directors, officers, or employees outside the ordinary course of
business, or adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, retirement, employee benefit plan,
employee pension benefit plan, or other plan, Contract, or
10
commitment relating to its directors, officers, and employees; (vii) suffered
any damage, destruction or loss to its property or other loss, whether or not
covered by insurance, (a) materially and adversely affecting the Business or
Assets or (b) of any items which amount to $20,000 or more in the aggregate;
(vii) granted any license or sublicense of any rights under or with respect to
any of Seller's intellectual property or other proprietary rights; (viii)
canceled, compromised, waived, or released any right or claim (or series of
related rights and claims) outside of the ordinary course of business; (ix)
delayed or postponed the payment of accounts payable or any other liabilities
outside the ordinary course of business; or (x) committed to any of the
foregoing. In addition, no party (including the Sellers) has accelerated,
terminated, modified, or canceled any agreement, Contract, lease, or license (or
series of related agreements, Contracts, leases, and licenses) to which any of
the Sellers is or was a party or by which any of them is or was bound.
(i) TITLE TO PROPERTIES. Notwithstanding anything herein to the
contrary, each of the Sellers has good, valid and marketable title (or in the
case of real property, indefeasible title) to all of its assets, real, personal
and mixed, which would be included in the Assets if the Closing took place on
the Effective Date, which it purports to own, including without limitation all
assets reflected on the Schedules hereto, free and clear of all liens (including
but not limited to tax liens), claims, restrictions and other encumbrances and
defects of title of any nature whatsoever, except for (i) liens for current real
or personal property taxes not yet due and payable; (ii) Personal Properties as
to which the applicable Seller is the lessee; and (iii) liens and other
exceptions to title as disclosed in SCHEDULES 3.1(I) (collectively, "PERMITTED
LIENS").
(j) COMPLIANCE WITH LAWS; AUTHORIZATIONS. Each of the Sellers has
complied in all material respects with each, and is not in material violation of
any, law, ordinance or governmental or regulatory rule or regulation, whether
federal, state, local or foreign, to which the Business or Assets is subject
("REGULATIONS"). Each of the Sellers owns, holds, possesses or lawfully uses in
the operation of the Business all permits, franchises, licenses, easements,
rights, applications, filings, registrations and other authorizations
("AUTHORIZATIONS") which are in any material respect necessary for it to conduct
the Business as now conducted or for the ownership and use of the Assets in the
conduct of the Business. Each of the Sellers is in compliance with all
Regulations related to the Authorizations. All such Authorizations are listed
and described in SCHEDULE 3.1(J). None of the Sellers is not in default, nor has
any of the Sellers received any notice of any claim of default, with respect to
any such Authorization. None of the Sellers has received any notice that any of
the Authorizations used by a Seller in the operation of the Business would not
or cannot be renewed or continued in the ordinary course of business, and all
such Authorizations are renewable by the Sellers by their terms or in the
ordinary course of business. No person other than the Sellers owns or has any
proprietary, financial or other interest (direct or indirect) in any
Authorization.
(k) TRANSACTIONS WITH AFFILIATES. Any and all material transactions
between each of the Sellers and its Affiliates (as defined herein) affecting the
Business or the Assets have been upon terms substantially comparable to those
that would have been available to such Seller from third parties in arms length
transactions.
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(l) LITIGATION. Except as set forth on SCHEDULE 3.1(L), no
litigation or administrative proceeding, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
Governmental Entity is pending or, to the best knowledge of the Sellers,
threatened against any Seller, which relates to the Business or Assets or the
transactions contemplated by this Agreement, nor do the Sellers know of any
reasonably likely basis for any such litigation, arbitration, investigation or
proceeding, the result of which could reasonably be expected to adversely affect
the Assets or Business, or the transactions contemplated hereby. None of the
Sellers is a party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or Governmental Entity
which may materially adversely affect the Assets or Business, or the
transactions contemplated hereby. The Sellers shall reimburse and indemnify
Purchaser for any damages, liabilities or other losses incurred by Purchaser in
connection with any and all matters identified on SCHEDULE 3.1(L).
(m) EQUIPMENT. The Operating Assets are at the execution of this
Agreement, and will be at Closing, in good working condition and sufficient to
maintain the operation of the Business.
(n) CONTRACTS AND COMMITMENTS. Except as set forth on SCHEDULE
3.1(N), none of the Sellers is a party to any written or oral:
(i) lease under which it is either lessor or lessee relating
to the Assets or any property at which the Assets are located other than those
set forth on the Schedules to this Agreement;
(ii) Contract or agreement for any capital expenditure or
leasehold improvement relating to the Assets or Business;
(iii) Contract or agreement limiting or restraining such
Seller, its successor or assigns, from engaging or competing in any manner in
the Business, or any agreement concerning confidentiality, nor is any employee
of any Seller subject to any such Contract;
(iv) agreement (or group of related agreements) for the
purchase or sale of raw materials, supplies, products, or other personal
property or for the furnishing or receipt of services, the performance of which
will extend over a period of one year or result in a material loss to such
Seller;
(v) collective bargaining agreement;
(vi) agreement for the employment of any individual on a
full-time, part-time, consulting or other basis, other than an oral Contract for
employment at will; or
(vii) agreement under which the consequences of a default or
termination could have a material adverse effect on the Business or the
financial condition, operations, results of operations, or future prospects of
any Seller.
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Each of the Contracts and agreements listed in SCHEDULE 3.1(N), and each other
Assigned Contract, including but not limited to Equipment Leases under which
Purchaser is to acquire rights or obligations, is valid and enforceable in
accordance with its terms; each of the Sellers is, and to each Seller's
knowledge all other parties thereto are, in compliance with the provisions
thereof; none of the Sellers is, and to each of the Seller's knowledge, no other
party is, in default in the performance, observance or fulfillment of any
material obligation, covenant or condition contained therein; and to each of the
Seller's knowledge, no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder.
Furthermore, no such Contract or agreement, in the reasonable opinion of the
Sellers contains any requirement with which there is a reasonable likelihood a
Seller or, to the Sellers' knowledge, any other party thereto will be unable to
comply.
(o) ENVIRONMENTAL MATTERS.
(i) DEFINITIONS. For purposes of this Agreement the following
terms shall have the following meanings:
A. "CONTAMINATION" shall mean the Release, in violation
of Environmental, Health and Safety Laws, of Hazardous Substances in, on,
underlying or surrounding (including into air, soils, surface water or
groundwater) any real property, including migration of or depositing of
Hazardous Substances onto or from adjoining or neighboring properties or the
Release or presence of Hazardous Substances from or associated with the
operations conducted on any real property when such Hazardous Substances have
been transported to any other offsite location.
B. "ENVIRONMENTAL, HEALTH AND SAFETY LAWS" shall mean
any and all federal, state or local laws (including common law), rules,
Regulations, orders, agreements, ordinances, writs, judgments, injunctions,
decrees or determinations, or similar requirements, whether issued by a court or
a Governmental Entity, relating to the protection of the environment, the
Release of any Hazardous Substances into the environment, the generation,
management, transportation, storage, treatment and disposal of Hazardous
Substances, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, Releases, or threatened releases of
pollutants, Contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, soils, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes (including,
without limitation, the Clean Air Act, the Toxic Substance Control Act, the
Clean Water Act, the Oil Pollution Act of 1990, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, and the Occupational Safety and Health Act of 1970, all as amended,
including similar state or local laws).
C. "ENVIRONMENTAL LOSS" shall mean any and all claims,
damages, losses, expenses, costs, deficiencies, penalties, liens, interests,
fines, assessments, charges, compensation, obligations and liabilities of any
kind, whether known or unknown,
13
imposed by private parties or Governmental Entities in civil, criminal or
administrative proceedings, and which are incurred by, under or pursuant to
Environmental, Health and Safety Laws, whether based on negligence, strict
liability or otherwise, under any theory or process of recovery or relief, at
law or at equity, including Remediation, restoration, abatement, investigation,
testing, monitoring, personal injury, death and property damage costs,
contribution for, or recovery of such costs under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, or similar
state or federal laws, and reasonable attorneys' fees, court costs and interest
paid or accrued, related to Contamination or the presence of Hazardous
Substances at offsite locations arising from Seller's operations or activities,
including but not limited to transportation or disposal activities.
D. "HAZARDOUS SUBSTANCE" shall mean any toxic or
hazardous substance, material or waste, pollutant, petroleum or petroleum
derived substance or waste, salt water, oil and gas waste, radioactive
substance, material or waste, asbestos containing materials, or any constituent
of any such substance or waste regulated under or pursuant to any Environmental,
Health and Safety Law.
E. "RELEASE" shall mean any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the environment or into or out of any real property, including
the movement of Hazardous Substances through or in the air, soil, surface water
or groundwater of any real properties or adjoining properties.
F. "REMEDIATION" shall mean all actions, whether
undertaken pursuant to judicial or administrative order or otherwise, reasonably
necessary to comply with applicable Environmental, Health and Safety Laws, (a)
to investigate, clean up, remediate, remove, treat, cover or in any other way
adjust the levels of Hazardous Substances in or around the real properties; or
(b) to prevent or control the Release of Hazardous Substances so that they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment.
(ii) REPRESENTATIONS AND WARRANTIES. The parties agree that
the following representations and warranties shall govern in the event of any
conflict between the provisions of this Section 3.1(o) and any other provision
of this Agreement or of the other agreements or conveyance instruments
contemplated hereby. The Sellers and the Seller Shareholders, jointly and
severally, represent and warrant that, except as otherwise set forth on SCHEDULE
3.1(O), the following statements are true and correct in all material respects:
A. Each of the Sellers has obtained all Authorizations,
including permits, which are required in connection with the conduct of the
Business under Environmental, Health and Safety Laws;
B. Each of the Sellers is in compliance in all material
respects in the conduct of the Business with all terms and conditions of the
required Authorizations, and is also in compliance in all material respects with
all Environmental, Health and Safety Laws and
14
with any plan required by law, order, decree, judgment, or injunction entered,
promulgated or approved thereunder, and, with any notice or demand letter issued
thereunder;
C. None of the Sellers is aware of, nor has any Seller
received notice of, any past or present circumstances that, if continued, are
reasonably likely to interfere with or prevent compliance or continued
compliance in the conduct of the Business with any Environmental, Health and
Safety Laws or with any plan required by law, order, decree, judgment or
injunction entered, promulgated or approved thereunder, or, with any notice or
demand letter, or which may otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any Hazardous Substance;
D. There is no civil, criminal or administrative action,
suit, order, demand, claim, hearing, notice or demand letter, notice of
violation, investigation, or proceeding pending or, to the Sellers' knowledge,
threatened against any Seller in connection with the conduct of the Business
relating in any way to any Environmental, Health and Safety Laws;
E. Each of the Sellers agrees to cooperate with
Purchaser, both prior to and following the Closing, in connection with
Purchaser's application for the transfer, renewal or issuance of any
Authorizations or Purchaser's efforts to satisfy any Environmental, Health and
Safety Laws involving the Business, (provided, however, that the Sellers shall
not be required to incur any material expense in connection therewith);
F. None of the Sellers, in connection with the operation
of the Business, has handled or disposed of any Hazardous Substance in violation
of Environmental, Health and Safety Laws, arranged for the disposal of any
Hazardous Substance in violation of Environmental, Health and Safety Laws,
exposed any employee or other individual to any Hazardous Substance or condition
in violation of Environmental, Health and Safety Laws, or operated any Assets in
any manner that could form the basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand for
damage to, or for investigation and Remediation of, any site, location, or body
of water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental, Health
and Safety Laws or Authorizations;
G. Each of the Sellers has provided Purchaser all
material information in such Seller's control or possession relating to: (1) the
existence of Contamination on or affecting all Assets; (2) compliance with all
Environmental, Health and Safety Laws; and (3) any alleged or actual
Environmental Losses; and
H. No oral or written agreements, including but not
limited to indemnity or cleanup agreements, exist between the Sellers or the
Seller Shareholders and any third parties, relating to or concerning the
environmental, safety or health conditions of the Assets.
15
(p) AVAILABILITY OF DOCUMENTS. Each of the Sellers has provided
Purchaser with copies of all material documents, including without limitation
all of the Contracts, permits, licenses, patents, trademarks, copyrights and
applications therefor listed in the Schedules. Each of the Sellers will use its
best efforts to obtain any such documents not in its possession and promptly
deliver same to Purchaser. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
thereunder.
(q) ASSETS. Except as set forth in SCHEDULE 3.1(Q), the Assets
include all rights and property, other than real property, reasonably necessary
for the conduct of the Business by Purchaser in the manner in which it has been
conducted by the Sellers for the period of time reflected in the Financial
Statements and for the conduct of the Business as presently conducted by each of
the Sellers, and no property excluded from the Assets under Section 1.1(b),
other than real property, constitutes property or rights material to the
Business. Each such tangible Asset is structurally sound, has been maintained in
accordance with normal industry practice, is in good operating condition and
repair, subject to normal wear and tear, is suitable for the purposes for which
it presently is used and for use in the continued conduct of the Business in
substantially the same manner as conducted prior to the Closing. None of the
tangible Assets is in need of maintenance or repairs except for ordinary routine
maintenance and repairs that are not material in nature or cost. Any
modifications that have been made to any of the tangible Assets prior to
Closing, have been made in accordance with normal industry practice.
(r) RESTRICTIONS. None of the Sellers is a party to any material
agreement, license, Permit, Authorization or other instrument or any
understanding or oral agreement, and none of the Sellers is subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award, which materially adversely affects or materially restricts the
Business or Assets.
(s) CONDITIONS AFFECTING THE SELLERS. Except as provided in this
Agreement or disclosed in the Schedules, and except for conditions that affect
as a whole the oil field servicing industry generally, there is no fact known to
the Sellers which may reasonably be expected to materially adversely affect the
Business considered as a whole. Notwithstanding the foregoing, the Sellers and
the Seller Shareholders shall not be deemed to have made to Purchaser or DPS any
representation or warranty other than as expressly made in this Article II.
Without limiting the generality of the foregoing, the Sellers and the Seller
Shareholders make no representations or warranties to Purchaser or DPS with
respect to (i) any projections, estimates or budgets heretofore delivered to or
made available to Purchaser or DPS of future revenues, expenses or expenditures
or future results of operations; or (ii) except as expressly covered by a
representation and warranty contained in this Article II, any other information
or documents (financial or otherwise) made available to Purchaser or DPS or its
counsel, accountants or other advisors with respect to the Sellers, the Business
or the Assets.
(t) EMPLOYEE BENEFIT PLANS. SCHEDULE 3.1(T) lists all of the
Sellers' Employee Benefit Plans. None of the Sellers is now and for the
preceding five years has not been, a party to any "employee pension benefit
plan" as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). None of the Sellers is under any legal
16
obligation to create a new Employee Benefit Plan, or amend an existing Employee
Benefit Plan, that would affect any of the employees of the Sellers who are
employed or otherwise compensated for activities involving the Assets or the
Business ("AFFECTED EMPLOYEES").
(i) Purchaser shall have no responsibility or liability with
respect to benefits which may have accrued or been promised to any Affected
Employee under any "Employee Benefit Plan" of the Sellers or any member of a
Seller's control group as determined under Sections 414(b) or (c) of the Code,
or which form an affiliated service group with any of the Sellers or the Seller
Shareholders within the meaning of Section 414(m) of the Code. The term
"EMPLOYEE BENEFIT PLAN" includes, but is not limited to any profit sharing,
stock, bonus, 401(k), nonqualified deferred compensation, medical, dental,
workers' compensation, life insurance, incentive, vacation benefits, and fringe
benefits plan or program and each "employee benefit plan" described in Section
3(3) of ERISA. The Sellers shall indemnify Purchaser as provided in Section VI
of this Agreement against and in respect of any Damages (as hereinafter defined)
which arise directly or indirectly with respect to an Employee Benefit Plan.
None of the Sellers contributes to any "multiemployer plan" as defined in
Section 3(37) or 4001(o)(3) of ERISA.
(ii) The Sellers shall pay and be liable to Purchaser, and
shall indemnify Purchaser as provided in Section VI of this Agreement, from and
against and in respect of any and all Damages that arise under section 4980B of
the Code, imposed upon, incurred by, or assessed against Purchaser or any of its
employees arising by reason of or relating (x) to any failure to comply with the
continuation health care coverage requirements of section 4980B of the Code,
which failure occurred with respect to any current or prior employee of Seller
or any "qualified beneficiary" of such employee (as defined in section
4980B(g)(I) of the Code) on or prior to the Closing Date, and (y) to the extent,
if any, of any amounts paid by Purchaser under its health plan to any current or
prior employee of the Sellers as a result of a "qualifying event" (as defined in
Section 4980B(f)(3) of the Code) which occurred prior to the Closing Date, over
the amount of the "applicable premium" (as defined in section 4980B(f)(4) of the
Code) paid to Purchaser or Purchaser's health plan, by such current or prior
employee. References to the Code include any amendments that may be made to the
Code from time to time.
(u) PERSONNEL. SCHEDULE 3.1(U) lists the names and monthly or, as
applicable, hourly rates of compensation (including base salary, bonus,
commissions, and incentive pay) of the Affected Employees and summarizes the
bonus, profit sharing, percentage compensation, auto mobile, club membership and
other benefits, if any, paid or payable to the Affected Employees during the
Sellers' 1997 fiscal year and from the beginning of each of the Seller's current
fiscal year to the Effective Date and identifies all accrued vacation relating
to the Affected Employees. SCHEDULE 3.1(U) also contains a brief description of
all material terms of all written or oral employment agreements, severance
agreements, confidentiality agreements, noncompete agreements or similar
agreements to which any Affected Employee is or may be subject. The Sellers have
delivered to Purchaser accurate and complete copies of all such agreements, and
all other agreements, plans and other instruments to which any of the Sellers is
a party and under which the Affected Employees are entitled to receive benefits
of any nature. To the Sellers' knowledge, and except as set forth on SCHEDULE
3.1(U), the employee relations of each of the
17
Sellers are good and there is no pending or threatened controversy, labor
dispute or union organization campaign between any Seller and any of its
employees or former employees. None of the Affected Employees are represented by
any labor union or organization nor is any Seller a party to any collective
bargaining agreement. Except as set forth on SCHEDULE 3.1(U), each of the
Sellers is in compliance in all material respects with all federal and state
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours and is not engaged in any unfair labor practices.
There is no unfair labor practices complaint or charge of employment
discrimination pending, or threatened with respect to an Affected Employee
before the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any other state, federal or local court or Governmental Entity,
or any strike, labor dispute, work slowdown or work stoppage pending or, to the
Sellers' knowledge, threatened against or involving any Seller, and none of the
Sellers has experienced any material labor difficulty during the last three
years. Except as otherwise specifically provided in this Agreement, Purchaser
shall have no liability for any severance or termination expenses of any Seller
or Seller Shareholder, including accrued vacation and sick leave time, in
connection with the termination of employment by Seller of any Affected
Employee, whether or not such person is employed by Purchaser. None of the
Sellers nor any Seller Shareholder shall have any such liability in connection
with the termination of employment by Purchaser of any Affected Employee who has
been employed by Purchaser and subsequently terminated by Purchaser after the
Closing.
(v) LEGAL COMPLIANCE; UNDISCLOSED LIABILITIES. Each of the Sellers
and each of their predecessors and "AFFILIATES" (as defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934) has complied with all
applicable laws (including rules, Regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply. None of the Sellers has any liability and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Seller), except for (i) liabilities set
forth on the face of the Financial Statements, (ii) liabilities which have
arisen in the ordinary course of business (none of which results from, arises
out of, relates to, is in the nature of, or was caused by any breach of
Contract, breach of warranty, tort, infringement, or violation of law), and
(iii) liabilities listed on SCHEDULE 3.1(L).
(w) INVENTORY. All inventory of the Sellers, whether or not
reflected in the balance sheets, consists of a quality and quantity usable and
where applicable, salable in the ordinary course of business.
(x) WARRANTY. SCHEDULE 3.1(X) includes copies of the standard terms
and conditions of sale or lease for each of the products and services of the
Sellers (containing applicable guaranty, warranty, and indemnity provisions).
The products and services provided by the Sellers have, in each case, been in
conformity with all applicable contractual commitments and all express and
implied warranties, and none of the Sellers has any liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any liability) for replacement or repair or other damages in connection
18
therewith, subject only to the reserve for warranty claims set forth on the face
of the Financial Statements (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Sellers. No service provided by any of the Sellers is
subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease listed in SCHEDULE 3.1(X).
(y) INVESTMENT. The Sellers and the Seller Shareholders understand
that the Shares have not been, nor will be, registered under the Securities Act
of 1933 or under any state securities laws and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering. Each of the Sellers is acquiring the Shares solely for its own
account for investment purposes, and not with a view to the distribution
thereof. The Sellers and Seller Shareholders are sophisticated investors, with
knowledge and experience in business and financial matters, and are able to bear
the economic risk and lack of liquidity inherent in holding the Shares. The
Sellers and Seller Shareholders acknowledge and agree that (i) they have fully
reviewed all periodic reports filed with the Securities and Exchange Commission
by DPS within the past 12 months, (ii) they have had the opportunity to ask
questions of and receive information from representatives of DPS and have
received all information necessary for each of them to evaluate the merits and
risks inherent in holding the Shares, (iii) the stock certificates issued to
each Seller shall bear a restrictive legend indicating that the Shares have not
been registered under the Securities Act or any other state securities laws.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser and DPS,
jointly and severally, represent and warrant to the Sellers and the Seller
Shareholders as follows:
(a) EXISTENCE. Purchaser is a limited partnership validly existing
and in good standing under the laws of the State of Delaware. DPS is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas.
(b) POWER AND AUTHORIZATION. Purchaser and DPS each has the power,
authority and legal right to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Purchaser and by DPS
have been duly authorized by all necessary corporate and partnership action.
This Agreement has been duly executed and delivered by Purchaser and DPS and
constitutes the legal, valid and binding obligation of Purchaser and DPS,
enforceable against Purchaser and DPS in accordance with its terms except as the
same may be limited by applicable bankruptcy, insolvency, reorganization, or
other laws affecting the enforcement of creditors' rights generally and the
application of general principles of equity.
(c) NONCONTRAVENTION. The execution, delivery and performance of
this Agreement by Purchaser and DPS does not and will not violate, conflict with
or result in the breach of any material term, condition or provision of, or
require the consent of any other party which has not already been obtained
under, (i) any existing law, ordinance, or governmental rule or regulation to
which Purchaser or DPS is subject, (ii) any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which is applicable to Purchaser or DPS, (iii) the Limited
Partnership Agreement, Articles of Incorporation or Bylaws or equivalent
organizational documents, or any securities issued by Purchaser, its general
partner, or DPS as the case may be, or (iv) any Contract to which Purchaser or
DPS is a party or by which
19
Purchaser or DPS is otherwise bound. Except as otherwise contemplated by this
Agreement, no Authorization, approval or consent of, and no registration or
filing with, any Governmental Entity is required in connection with the
execution, delivery and performance of this Agreement by Purchaser or DPS.
(d) SHARES. The Shares, if issued and delivered in accordance with
the terms of this Agreement for the consideration expressed herein, will be duly
and validly issued, fully paid and nonassessable and will be free of
restrictions on transfer other than restrictions on transfer set forth in this
Agreement and under applicable state and federal securities laws.
(e) NO MATERIAL MISSTATEMENTS. The documents filed by DPS pursuant
to the Securities Exchange Act of 1934 do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading.
3.3 SURVIVAL. All statements of fact contained in any written statement
(including financial statements), certificate, instrument or document delivered
by or on behalf of any party hereto pursuant to this Agreement shall be deemed
representations and warranties of such party. All covenants, agreements,
representations and warranties of the parties to this Agreement shall survive
and remain in full force and effect after the Closing Date and shall not be
affected by any investigation heretofore or hereafter made by and on behalf of
any of them or be deemed merged into any instruments or agreements delivered in
connection with this Agreement or otherwise in connection with the transactions
contemplated hereby. Subject to the limitations on indemnification obligations
set forth in Article VI, the representations and warranties set forth in this
Article III and in any schedule, certificate or instrument delivered by or on
behalf of any party hereto in connection with this Agreement, shall terminate on
the close of business on the fifth anniversary of the Closing Date, following
which all the parties shall cease to have any right to bring any action or
present any claim for a breach of such representations and warranties; provided
that there shall be no termination of any such representation and warranty as to
which a bona fide claim has been asserted and notice of such claim has been
delivered prior to such termination date. Nothing in this Section 3.3 shall at
any time relieve any party hereto from the performance of such party's
agreements, covenants and undertakings set forth in the Agreement or in any
other agreement executed and delivered by or on behalf of any party hereto at or
prior to the Closing pursuant to this Agreement.
ARTICLE IV - AGREEMENTS PENDING CLOSING
4.1 AGREEMENTS OF THE SELLERS AND THE SELLER SHAREHOLDERS PENDING THE
CLOSING. The Sellers and the Seller Shareholders covenant and agree that,
pending the Closing and except as otherwise agreed to in writing by Purchaser,
they shall take the following actions:
(a) BUSINESS IN THE ORDINARY COURSE. The Business shall be conducted
solely in the ordinary course consistent with past practice. The Sellers shall
continue to maintain and service the physical Assets used in the conduct of the
Business in good working condition consistent with past practices. The Sellers
shall not cause or permit to occur any of the events or occurrences described in
Section 3.1(h) (Existing Condition). Each of the Sellers shall use its
reasonable
20
commercial efforts to maintain in full force and effect all Authorizations
currently in effect and used in the conduct of the Business, and shall comply
with all Regulations applicable to the Business, the noncompliance with which
might materially and adversely affect the Business or the Assets. The Sellers
shall not (i) sell, lease, license, assign or otherwise transfer any of the
Assets, (ii) enter into any Contract outside of the ordinary course of business,
(iii) amend, modify, terminate, waive any material provision of, or breach any
material Contract, or (iv) cancel, terminate or cause or allow to lapse any
insurance coverage affecting the Business or the Assets.
(b) CONDUCT OF BUSINESS. Each of the Sellers shall use its best
efforts to conduct the Business in such a manner that on the Closing Date the
representations and warranties contained in this Agreement shall be true, except
as specifically contemplated by this Article IV, as though such representations
and warranties were made on and as of such date. Furthermore, each of the
Sellers shall cooperate with Purchaser and use its reasonable commercial efforts
to cause all of the conditions to the obligations of Purchaser under this
Agreement to be satisfied on or prior to the Closing Date.
(c) EXCLUSIVE DEALING. Until such time, if any, as this Agreement is
terminated pursuant to Article VIII, none of the Sellers shall (nor shall any
Seller cause its representatives and agents directly or indirectly, through any
third party or otherwise to), sell or encumber any part of the Assets, or
solicit, initiate, encourage or entertain any inquiries, proposals or offers
from, discuss or negotiate with, provide any non-public information to or
consider the merits of any inquiries or proposals from any person (other than
Purchaser) relating to any transaction involving the sale of the Business or
Assets, in whole or in part (other than sales of inventory in the ordinary
course of business), or any of the capital stock of the Sellers, or any merger,
consolidation, business combination or similar transaction involving any of the
Sellers.
(d) ACCESS. Each of the Sellers shall give to Purchaser's officers,
employees, counsel, accountants and other representatives free and full access
to and the right to inspect, during normal business hours, all of the premises,
properties, assets, records, Contracts and other documents relating to the
Business and the Assets and shall permit them to consult with the officers,
employees, accountants, counsel and agents of Seller for the purpose of making
such investigation of the Business and the Assets as Purchaser shall desire to
make, provided that such investigation shall be at Purchaser's sole cost and
expense and shall not unreasonably interfere with the Sellers' business
operations. Furthermore, each Seller shall furnish to Purchaser all such
documents and copies of documents and Records and information with respect to
the Business and the Assets and copies of any internal financial records
relating thereto as Purchaser shall from time to time reasonably request and
shall permit Purchaser and its agents to make such physical inventories and
inspections of the Assets as Purchaser may reasonably request from time to time.
(e) PRESS RELEASE. Except for such press release and discussions
with employees and customers as mutually agreed to by the Sellers and Purchaser
and except as required by applicable law, the Sellers shall not give notice to
third parties or otherwise make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except for such written
information as shall have been approved in writing as to form and content by
Purchaser, which approval shall not be unreasonably withheld.
21
(f) ACTIONS OF DIRECTORS AND SHAREHOLDERS. Each of the Sellers shall
promptly and diligently take all action necessary in accordance with law and its
Articles of Incorporation, Bylaws and other organizational documents to approve
this Agreement and to consummate the transactions contemplated hereby.
(g) EMPLOYEE MATTERS. Each of the Sellers shall give its employees
all notices required by law, including but not limited to notices of their
rights under the Comprehensive Omnibus Budget Reconciliation Act of 1986. Each
of the Sellers shall terminate all of such Seller's Employee Benefit Plans, as
listed on SCHEDULE 3.1(U), as of the Closing.
(h) ACTIONS OF SELLERS AND SELLER SHAREHOLDERS. None of the Sellers
or the Seller Shareholders will intentionally take any action which would result
in a breach of any of its representations and warranties.
(i) REQUIRED APPROVALS; HSR. As promptly as practicable after the
Effective Date, the Sellers and the Seller Shareholders will make all filings
required to be made by them in order to consummate the transactions contemplated
by this Agreement, including any filings required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX XXX") and will use reasonable
commercial efforts to cause the early termination of any applicable waiting
period under the HSR Act.
4.2 AGREEMENTS OF PURCHASER PENDING THE CLOSING. Purchaser and DPS
covenant and agree that, pending the Closing and except as otherwise agreed to
in writing by the Sellers, they shall take the following actions:
(a) PRESS RELEASE. Except for such press release and discussions
with employees and customers as mutually agreed to by the Sellers and Purchaser
and except as required by applicable law, Purchaser will not give notice to
third parties or otherwise make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except for such written
information as shall have been approved in writing as to form and content by
Seller, which approval shall not be unreasonably withheld.
(b) ACTIONS OF DPS AND PURCHASER. Each of DPS and Purchaser shall
promptly and diligently take all action necessary in accordance with law and its
Articles of Incorporation, Bylaws, Limited Partnership Agreement, or other
organizational documents, as the case may be, to approve this Agreement and to
consummate the transactions contemplated hereby.
(c) ACTIONS OF PURCHASER AND DPS. Neither Purchaser nor DPS will
intentionally take any action which would result in a breach of any of its
representations and warranties hereunder.
(d) REQUIRED APPROVALS; HSR. As promptly as practicable after the
Effective Date, Purchaser and DPS will make all filings required to be made by
them in order to consummate the transactions contemplated by this Agreement,
including any filings required by the HSR Act and will use reasonable commercial
efforts to cause the early termination of any applicable waiting period under
the HSR Act.
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ARTICLE V - CONDITIONS PRECEDENT TO THE CLOSING
5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF PURCHASER AND DPS. All
obligations of Purchaser and DPS under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE. The
representations and warranties of the Sellers and the Seller Shareholders
contained in this Agreement or in any Schedule, certificate or document
delivered by the Sellers to Purchaser pursuant to the provisions hereof shall
have been true on the date hereof and shall be true on the Closing Date as
though such representations and warranties were made as of such date.
(b) COMPLIANCE WITH THIS AGREEMENT. Each of the Sellers shall have
performed and complied in all material respects with all of its obligations
under this Agreement to be performed or complied with by it prior to or at the
Closing.
(c) NO THREATENED OR PENDING LITIGATION. Except as otherwise
provided on SCHEDULE 5.1(C), on the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, shall be
threatened or be pending before any Governmental Entity in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
(d) CONSENTS AND APPROVALS. The Sellers and the Seller Shareholders
shall have obtained all third party consents required for the assignment or
transfer of the Assets from the Sellers to Purchaser which are material to the
continued operations of the Business after the Closing, all of which are listed
on SCHEDULE 5.1(D).
(e) MATERIAL ADVERSE CHANGES. Neither the Assets nor the Business in
the aggregate shall have been or shall be threatened to be materially adversely
affected in any way as a result of any event or occurrence other than such
conditions as may affect the well servicing industry as a whole.
(f) CLOSING CERTIFICATE. Purchaser shall have received certificates
from the Sellers, dated the Closing Date, certifying in such detail as Purchaser
may reasonably request that the conditions specified in Sections 5.1(a) through
5.1(e) have been fulfilled.
(g) APPROVAL OF COUNSEL; CORPORATE MATTERS. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on the Closing Date by Jenkens & Xxxxxxxxx, A Professional
Corporation, counsel for Purchaser, in the exercise of its reasonable judgment.
The Sellers also shall have delivered to Purchaser such other documents,
instruments, certifications and further assurances as such counsel may
reasonably require.
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(h) PHYSICAL INVENTORY. Purchaser shall be entitled to conduct an
inventory of the Assets immediately prior to Closing to determine, among other
matters, whether a Purchase Price adjustment will be required.
(i) EMPLOYMENT CONTRACTS. The Selling Shareholders shall have
executed and delivered to Purchaser the Employment, Non-Competition and
Arbitration Agreements.
(j) XXXX-XXXXX-XXXXXX APPROVAL. The waiting period (including any
extension thereof) applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act shall have expired or
terminated or the transaction shall have been approved thereunder.
(k) EBITDA. Purchaser's auditors shall have confirmed that Sellers'
EBITDA for the 12-month period beginning June 1, 1997 through May 31, 1998 is
not less than $9,400,000 determined on a basis consistent with that certain
report dated July 24, 1998 prepared by Xxxxxxx & Co. for Purchaser attached as
SCHEDULE 5.1(K) and that Sellers' EBITDA for each of the months of June 1998 and
July 1998 is not less than $800,000 for each such month.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS AND THE SELLER
SHAREHOLDERS. All obligations of the Sellers and the Seller Shareholders under
this Agreement are subject to the fulfillment or satisfaction, prior to or at
the Closing, of each of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE. The
representations and warranties of Purchaser and DPS contained in this Agreement
or in any list, certificate or document delivered by Purchaser or DPS to the
Sellers pursuant to the provisions of this Agreement shall be true on the
Closing Date as though such representations and warranties were made as of such
date.
(b) COMPLIANCE WITH THIS AGREEMENT. Purchaser and DPS shall have
performed and complied with all obligations required by this Agreement to be
performed or complied with by it prior to or at the Closing.
(c) NO THREATENED OR PENDING LITIGATION. Except as otherwise
provided on SCHEDULE 5.1(C), on the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, shall be
threatened or be pending before any Governmental Entity in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigations that might result in any such suit, action or proceeding shall
be pending or threatened.
(d) CLOSING CERTIFICATES. The Sellers shall have received a
certificate from Purchaser and DPS, dated the Closing Date, certifying in such
detail as the Sellers may reasonably request that the conditions specified in
Sections 5.2(a) through 5.2(c) have been fulfilled.
(e) CONSENT OF SHAREHOLDERS. If required, the requisite percentage
of each of the Seller's shareholders shall have approved the consummation of the
transactions contemplated in accordance with the requirements of applicable law.
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(f) APPROVAL OF COUNSEL; CORPORATE MATTERS. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on the Closing Date by Xxxxx & Xxxxx, L.L.P., counsel for the
Sellers, in the exercise of its reasonable judgment. Purchaser and DPS also
shall have delivered to the Sellers such other documents, instruments,
certifications and further assurances as such counsel may reasonably require.
(g) EMPLOYMENT CONTRACTS. Purchaser shall have executed and
delivered to the Selling Shareholders, the Employment, Non-Competition and
Arbitration Agreements, and DPS shall have executed and delivered to the Sellers
the Registration Rights Agreement.
(h) XXXX-XXXXX-XXXXXX APPROVAL. The waiting period (including any
extension thereof) applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act shall have expired or
terminated or the transaction shall have been approved thereunder.
ARTICLE VI - INDEMNIFICATION
THE FOLLOWING SECTIONS ARE IMPORTANT
AND SHOULD BE READ CAREFULLY.
6.1 DEFINITIONS.
(a) "GOVERNMENTAL ENTITY" shall mean any arbitrator, court,
administrative or regulatory agency, commission, department, board or bureau or
body or other government or authority or instrumentality or any entity or person
exercising, executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
(b) "INDEMNITEE" shall mean the person or persons indemnified, or
entitled or claiming to be entitled to be indemnified, pursuant to the
provisions of Article VI.
(c) "INDEMNITOR" shall mean the person or persons having the
obligation to indemnify pursuant to the provisions of Article VI.
6.2 INDEMNIFICATION BY THE SELLERS AND THE SELLER SHAREHOLDERS. Except as
otherwise limited by this Article VI, (and subject to the limitations set forth
in Section 3.1 regarding the several, as opposed to joint, liability of the
Seller Shareholders for representations and warranties made regarding the Seller
Shareholders), the Sellers and the Seller Shareholders, jointly and severally,
agree to indemnify, defend and hold harmless DPS, Purchaser and each of their
officers, directors, employees, agents, shareholders and controlling persons,
and their respective successors and assigns (the "PURCHASER INDEMNIFIED
PARTIES"), separate consideration for which is hereby acknowledged, of, from and
against and in respect of any and all liabilities, losses, damages, demands,
assessments, claims, costs and expenses (including interest, awards, judgments,
penalties, settlements, fines, costs of Remediation, costs and expenses incurred
in connection with investigating and defending any
25
claims or causes of action including attorneys' fees and expenses and all fees
and expenses of consultants and other professionals) ("DAMAGES") actually
suffered, incurred or realized by the Purchaser Indemnified Parties
(collectively, "PURCHASER LOSSES") arising out of or resulting from or relating
to any of the following:
(a) any misrepresentation, breach of warranty or breach of any
covenant or agreement made or undertaken by the Sellers or the Seller
Shareholders in this Agreement or any misrepresentation in or omission from any
other agreement, certificate, exhibit or writing delivered to Purchaser pursuant
to this Agreement, including the Schedules;
(b) any liability other than the Assumed Liabilities relating to the
Assets or the Business, whether known or unknown, now existing or hereafter
arising, contingent or liquidated, including without limitation, any Tax
liabilities of the Sellers prior to the Closing;
(c) any products manufactured, sold or distributed or services
provided by or on behalf of the Sellers on or prior to the Closing or with
respect to any claims made pursuant to warranties to third persons in connection
with products manufactured, sold or distributed or services provided by or on
behalf of the Sellers on or prior to the Closing;
(d) any Environmental Losses in connection with, relating to, or
arising from acts or omissions of any of the Sellers or Seller Shareholders or
conditions in existence on or prior to the Closing which relate to the Assets or
the operations of the Business; and
(e) any claims arising from, in connection with, or relating to, any
breach of this Agreement by any of the Sellers or Seller Shareholders.
6.3 INDEMNIFICATION BY PURCHASER AND DPS. Except as otherwise limited by
this Article VI, Purchaser and DPS, jointly and severally, agree to indemnify,
defend and hold each of the Sellers and the Seller Shareholders and each of
their officers, directors, employees, agents, shareholders and controlling
persons and their successors and assigns (the "SELLER INDEMNIFIED PARTIES")
harmless, separate consideration for which is hereby acknowledged, of, from and
against and in respect of Damages actually suffered, incurred or realized by the
Seller Indemnified Parties (collectively, "SELLER LOSSES") arising out of or
resulting from any of the following:
(a) any misrepresentation, breach of warranty or breach of any
covenant or agreement made or undertaken by Purchaser or DPS in this Agreement
or any misrepresentation in or omission from any other agreement, certificate,
exhibit or writing delivered to the Sellers pursuant to this Agreement;
(b) (i) any Assumed Liability and (ii) any other liability relating
to the Assets or the Business that arises out of the operation of the Business
by Purchaser or DPS after the Closing, whether contingent or liquidated,
including without limitation, any Tax liabilities of Purchaser or DPS pertaining
to the Assets or the Business arising subsequent to the Closing;
(c) any products manufactured, sold or distributed or services
provided by or on behalf of Purchaser after the Closing or with respect to any
claims made pursuant to warranties to
26
third persons in connection with products manufactured, sold or distributed or
services provided by or on behalf of Purchaser after the Closing;
(d) any Environmental Losses in connection with, relating to, or
arising from acts or omissions of Purchaser or DPS subsequent to the Closing
which relate to the Assets or the operations of the Business; and
(e) any claims arising from, in connection with, or relating to, any
breach of this Agreement by Purchaser or DPS.
6.4 PROCEDURE. All claims for indemnification pursuant to Article VI of
this Agreement shall be asserted and resolved as follows:
(a) An Indemnitee promptly shall give the Indemnitor notice of any
matter that an Indemnitee has determined has given or could give rise to a right
of indemnification under this Agreement, stating the amount of the Damages, if
known, and method of computation thereof, all with reasonable particularity, and
stating with particularity the nature of such matter. Failure to provide such
notice shall not affect the right of an Indemnitee to indemnification except to
the extent such failure shall have resulted in liability to the Indemnitor that
actually could have been avoided had such notice been provided.
(b) The obligations and liabilities of an Indemnitor with respect to
Damages arising from claims of any third party that are subject to the
indemnification provided for in this Article VI ("THIRD PARTY CLAIMS") shall be
governed by and contingent upon the following additional terms and conditions.
If an Indemnitee receives notice of any Third Party Claim, the Indemnitee shall
give the Indemnitor written notice of such Third Party Claim and the Indemnitor
may, at its option, assume and control the defense of such Third Party Claim at
the Indemnitor's expense and through counsel of the Indemnitor's choice
reasonably acceptable to the Indemnitee. If the Indemnitor assumes the defense
against any such Third Party Claim as provided above, the Indemnitee shall have
the right to participate at its own expense in the defense of such asserted
liability, shall cooperate with the Indemnitor in such defense and will attempt
to make available on a reasonable basis to the Indemnitor all witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as reasonably required by the Indemnitor. If the
Indemnitor does not elect to conduct the defense against any such Third Party
Claim, the Indemnitor shall pay all reasonable costs and expenses of such
defense as incurred and shall cooperate with the Indemnitee (and be entitled to
participate) in such defense and attempt to make available to it on a reasonable
basis all such witnesses, records, materials and information in its possession
or under its control relating thereto as reasonably required by the Indemnitee.
Except for the settlement of a Third Party Claim that involves the payment of
money only and for which the Indemnitee is totally indemnified by the
Indemnitor, no Third Party Claim may be settled without the written consent of
the Indemnitee.
6.5 SURVIVAL; LIMITATIONS ON AMOUNT. All of the representations and
warranties of the parties contained in this Agreement shall survive until the
fifth anniversary of the Closing (even if the damaged party knew or had reason
to know of any misrepresentation or breach of warranty at the time of Closing
except as disclosed on the Schedules). No party who is a Purchaser Indemnified
Party shall make a claim for indemnification with respect to a claim based upon
a breach of a
27
representation or warranty until the aggregate amount of the Purchaser Losses
attributable to claims for breach of representations or warranties is at least
$50,000, at which time, all such amounts may be claimed. No party who is Seller
Indemnified Party shall make a claim for indemnification with respect to a claim
based upon a breach of a representation or warranty until the aggregate amount
of the Seller Losses attributable to claims for breach of representations or
warranties is at least $50,000 at which time, all such amounts may be claimed.
However, neither the Sellers and the Seller Shareholders on the one hand, nor
Purchaser or DPS on the other hand, shall be required to pay in the aggregate
more than $25,000,000 to satisfy claims made pursuant to this Article 6 for
claims based upon breaches of the representations and warranties.
6.6 PAYMENT; FAILURE TO PAY INDEMNIFICATION. Payment of any amount due
pursuant to this Article VI shall be made by the Indemnitor within 30 business
days after notice is sent by the Indemnitee. If and to the extent an Indemnitee
makes written demand upon an Indemnitor for indemnification pursuant to this
Article VI and the Indemnitor refuses or fails to pay in full within 30 business
days of such written demand, then the Indemnitee after arbitration of the matter
may use any legal or equitable remedy to collect from the Indemnitor the amount
of its Damages. Nothing contained herein is intended to limit or constrain an
Indemnitee's rights against an Indemnitor for indemnity, the remedies herein
being cumulative and in addition to all other rights and remedies of the
Indemnitee.
6.7 EXPRESS NEGLIGENCE. THE FOREGOING INDEMNITIES ARE INTENDED TO BE
ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE
THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE
THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE NEGLIGENCE
(WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY
OF ANY OF THE INDEMNIFIED PARTIES.
6.8 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The indemnification rights of
the parties under this Agreement are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including without limitation
the right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby.
ARTICLE VII - POST CLOSING MATTERS
7.1 ARBITRATION.
(a) NEGOTIATION PERIOD. All disputes arising under this Agreement
(other than a suit for injunctive relief) or arising with respect to any
transaction contemplated hereby will be subject to binding arbitration in
accordance with this Section 7.1 If such a dispute exists, the parties shall
attempt for a thirty-day period (the "NEGOTIATION PERIOD") from the date any
party gives any one or more of the other parties notice (the "DISPUTE NOTICE")
pursuant to this Section, to negotiate in good faith, a resolution of the
dispute. The Dispute Notice shall set forth with specificity the basis
28
of the dispute and shall be delivered to each party to this Agreement to whom
the dispute relates. During the Negotiation Period, representatives of each
party involved in the dispute who have authority to settle the dispute shall
meet at mutually convenient times and places and use their best efforts to
resolve the dispute.
(b) COMMENCEMENT OF ARBITRATION. If a resolution is not reached by
the parties prior to the end of the Negotiation Period, the parties agree to
submit to binding arbitration in San Antonio, Texas with an arbitrator or
arbitrators experienced in the arbitration of complex commercial disputes.
(c) CONSOLIDATION OF HEARINGS. If more than one party delivers a
Dispute Notice to one or more other parties pursuant to this Section 7.1, the
arbitrators selected with respect to each such Dispute Notice may elect, in
their sole discretion, to combine the matters set forth in one or more, but not
necessarily all, of the Dispute Notices into one or more hearings, in which
case, the arbitrators shall adjust the time deadlines set forth herein as they
determine appropriate, and shall decide which one of them will hear the evidence
and render a final determination with respect to each hearing.
(d) CONCLUSION OF ARBITRATION. The arbitrator shall make the final
decision as to the parties' respective rights and obligations. The arbitrator
may determine that a party is entitled to damages hereunder from one or more
other parties, and the manner in which such damages shall be assessed against
the other parties. However, the arbitrator may not award emotional distress or
punitive damages.
(e) EXPENSES OF ARBITRATORS. The expenses of the arbitrator(s) shall
be shared equally by the parties to the arbitration.
7.2 DISCHARGE OF BUSINESS OBLIGATIONS. Following the Closing Date, the
Sellers shall pay and discharge, in accordance with past practice but not more
than 30 days within receipt of an invoice, all obligations and liabilities
incurred prior to the Closing Date relating to the Business and the Assets
(except for those expressly assumed by Purchaser hereunder and except to the
extent prorated pursuant to Section 1.5), including without limitation any
liabilities or obligations to employees, trade creditors and clients of the
Business. The Sellers, Seller Shareholders, Purchaser and DPS shall each use
commercially reasonable efforts following the Closing to ensure a smooth
transition of the Business to Purchaser.
7.3 MAINTENANCE OF BOOKS AND RECORDS. The Sellers and Purchaser shall each
preserve all records possessed by such party relating to the Business or Assets
prior to the Closing Date for a period of at least six years following the
fiscal year to which the records relate. After the Closing Date, where there is
a legitimate purpose, such party shall provide the other parties and their
representatives with access, upon prior reasonable written request specifying
the need therefor, during regular business hours, to (a) the officers, employees
and other duly appointed representatives of such party and (b) the books of
account and records of such party, but, in each case, only to the extent
relating to the Assets or Business prior to the Closing Date, and the other
parties and their representatives shall have the right to make copies of such
books and records; provided, however, that the foregoing right of access shall
not be exercisable in such a manner
29
as to interfere unreasonably with the normal operations and business of such
party; and further, provided that, as to so much of such information as
constitutes trade secrets or confidential business information of such party,
the requesting party and its officers, directors and representatives will use
due care to not disclose such information except (x) as required by law, (y)
with the prior written consent of such party, which consent shall not be
unreasonably withheld, or (z) where such information becomes available to the
public generally, or becomes generally known to competitors of such party
through sources other than the requesting party, its Affiliates or its officers,
directors or representatives. Such records may nevertheless be destroyed by a
party if such party sends to the other parties written notice of its intent to
destroy the records, specifying with particularity the contents of the records
to be destroyed. Such records may then be destroyed after the 30th day after
such notice is given unless another party objects to the destruction in which
case the party seeking to destroy the records shall deliver such records to the
objecting party.
7.4 PAYMENTS RECEIVED. The Sellers and Purchaser after the Closing shall
hold and will promptly transfer and deliver to the other, from time to time as
and when received by them, any cash, checks with appropriate endorsements (using
their best efforts not to convert such checks into cash), or other property that
they may receive on or after the Closing which properly belongs to the other
party, including without limitation any insurance proceeds, and will account to
the other for all such receipts. Following the Closing, Purchaser shall have the
right and authority to endorse without recourse the name of the Sellers on any
check or any other evidences of indebtedness received by Purchaser on account of
the Business and the Assets transferred to Purchaser hereunder, for the sole
purpose of depositing such items into accounts over which the Sellers have
signatory authority.
7.5 INQUIRIES. Following the Closing Date, the Sellers will promptly refer
all inquiries with respect to ownership of the Assets or the Business to
Purchaser. The Sellers will execute such documents and financing statements as
Purchaser may reasonably request from time to time to evidence the transfer of
the Assets to Purchaser, including any necessary assignments of financing
statements. In addition, the Sellers shall take all reasonable steps necessary
to convey to Purchaser any Assets used in the normal course of the Business
which are not listed in the Schedules set forth in Section 1.1(a) of this
Agreement.
7.6 COVENANT NOT TO COMPETE. In exchange for the payment by Purchaser to
the Seller Shareholders of Two Million Dollars ($2,000,000) in immediately
available funds (the "NON- COMPETITION PAYMENT") in accordance with SCHEDULE
7.6, and as part of the transactions described in this Agreement, the Sellers
and the Seller Shareholders each separately agree, for a period of five years
after the Closing Date, not to, directly or indirectly, own, manage, operate,
join or control, or participate in ownership, management, operation or control
of, any business whether in corporate, proprietorship or partnership form or
otherwise as more than a one percent owner in such business where such business
is competitive with the Business and is within a 300-mile radius of the Sellers'
facilities used in the Business or in the operation of the Assets as of the
Closing Date. The parties hereto specifically acknowledge and agree that the
remedy at law for any breach of the foregoing will be inadequate and that
Purchaser, in addition to any other relief available to it, shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damage. The Seller and the Seller Shareholders acknowledge that this
covenant not to
30
compete is being provided as an inducement to Purchaser to acquire the Business
and the Assets and that this Section 7.6 contains reasonable limitations as to
time, geographical area and scope of activity to be restrained that do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of Purchaser in the Business. Whenever possible, each
provision of this Section 7.6 shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Section
7.6 is prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Section 7.6. If any provision of
this Section 7.6 is, for any reason, judged by any court of competent
jurisdiction to be invalid or unenforceable, such judgment shall not affect,
impair or invalidate the remainder of this Section 7.6 but shall be confined in
its operation to the provision of this Section 7.6 directly involved in the
controversy in which such judgment has been rendered. If the provisions of this
Section 7.6 are ever deemed to exceed the time or geographic limitations
permitted by applicable laws, then such provisions shall be reformed to the
maximum time or geographic limitations permitted by applicable law.
7.7 TRANSITION PERIOD. During the six-month period following the Closing
(the "TRANSITION PERIOD"), the parties shall operate the Business in the
following manner:
(a) COLLECTIONS. Purchaser's employees shall issue invoices for work
in process as of the Closing Date for both the portion of the work completed by
the Sellers prior to the Closing and the portion of the work completed by
Purchaser thereafter.
(b) ACCOUNTING. Purchaser's employees will assist Seller as
reasonably necessary to close out the Sellers' books and records relating to the
Business.
(c) LICENSES AND PERMITS. The Sellers will continue to cooperate
with Purchaser in connection with Purchaser's applications for the transfer,
renewal or issuance of any permits, licenses, approvals or other Authorizations
and as required to satisfy any regulatory requirements arising as a result of
the sale of the Business pursuant to this Agreement, provided that all
out-of-pocket expenses incurred in connection therewith shall be paid by
Purchaser.
7.8 ACCOUNTING RECORDS. For a five year period following the Closing, each
of the Sellers will use commercially reasonable efforts to take all action
necessary or appropriate to allow Purchaser to obtain access to audit work
papers of the Sellers' accountants for the immediately preceding five years, if
Purchaser requests such access in connection with the audit by Purchaser of the
Business for periods preceding the Closing.
7.9 NONDISCLOSURE OF PROPRIETARY INFORMATION. The Sellers and the Seller
Shareholders agree that, from and after the Closing Date, they and all of their
Affiliates shall hold in confidence and will not directly or indirectly at any
time reveal, report, publish, disclose or transfer to any person other than
Purchaser any proprietary information relating to the Business or the Assets
(the "PROPRIETARY INFORMATION") that is not generally known to the public or use
any Proprietary Information for any purpose. The Sellers and the Seller
Shareholders acknowledge that all documents and objects containing or reflecting
any Proprietary Information whether developed by any of the
31
Sellers or by a third party for any of the Sellers, will after the Closing Date
become the exclusive property of Purchaser and be delivered to Purchaser.
7.10 CONTACT WITH FORMER EMPLOYEES. The Sellers and the Seller
Shareholders agree that for a period of five years following the Closing Date,
they will not solicit for employment, directly or indirectly, any of Purchaser's
employees, or employees of Purchaser's Affiliates or related companies, or any
person who has been so employed within one year prior to such solicitation.
ARTICLE VIII - TERMINATION
8.1 EVENTS OF TERMINATION. The obligation to close the transactions
contemplated by this Agreement may be terminated as follows:
(a) by mutual agreement of Purchaser and Sellers;
(b) by Purchaser, if a material default is made by the Sellers or
the Seller Shareholders in the observance or in the due and timely performance
by the Sellers or the Seller Shareholders of any agreements and covenants of the
Sellers or the Seller Shareholders herein contained, or if there has been a
breach by the Sellers or the Seller Shareholders of any of the warranties and
representations of the Sellers or the Seller Shareholders herein contained, and
such default or breach has not been cured or waived within 20 days of written
notice thereof;
(c) by the Sellers, if a material default is made by Purchaser or
DPS in the observance or in the due and timely performance by Purchaser or DPS
of any agreements and covenants of Purchaser or DPS herein contained, or if
there has been a breach by Purchaser or DPS of any of the warranties and
representations of Purchaser or DPS herein contained, and such default or breach
has not been cured or has not been waived within 20 days of written notice
thereof;
(d) by Purchaser or the Sellers (provided the terminating party has
not materially breached any of its agreements, covenants or representations and
warranties), if the Closing has not occurred on or before October 15, 1998.
8.2 LIABILITY UPON TERMINATION. If the obligation to consummate the
transactions contemplated by this Agreement is terminated pursuant to any
provision of this Article VIII, then this Agreement shall forthwith become void
and there shall not be any liability or obligation with respect to this
Agreement on the part of Seller or Purchaser except and to the extent such
termination results from the willful breach by a party of any of its
representations, warranties or agreements hereunder.
8.3 NOTICE OF TERMINATION. The parties hereto may exercise their
respective rights of termination under this Article VIII only by delivering
written notice to that effect to the other party on or before the Closing Date,
specifically describing the factual basis and provisions of this Agreement
relied upon for such termination.
32
ARTICLE IX - MISCELLANEOUS
9.1 FINDERS' FEES. Neither the Sellers nor the Seller Shareholders have
engaged any person to act on their behalf in connection with the transactions
contemplated by this Agreement who would have any claim against Purchaser or DPS
or any of their respective Affiliates for brokerage or finders' fees or agent
commissions or similar payments.
9.2 EXPENSES. Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
9.3 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other party; provided, however, Purchaser and DPS may assign their rights
but not their obligations hereunder to any other entity that is controlling,
controlled by or under common control with Purchaser or DPS. Purchaser shall
give Sellers prompt written notice of any such assignment. Subject to the
foregoing, all of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of the Sellers, the Seller Shareholders, Purchaser and DPS.
9.4 NOTICES. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telegram,
facsimile, first class mail, postage prepaid, or overnight courier as follows:
If to Purchaser or DPS, to: With a copy to:
Xxxxxx Production Partners, X.X. Xxxxxxx & Xxxxxxxxx,
000 X. Xxxxx Xxxxxx, Xxxxx 0000 A Professional Corporation
Xxx Xxxxxxx, Xxxxx 00000 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
ATTN: Xxxxxxx X. Xxxxxx Xxxxxx, Xxxxx 00000
Facsimile Number: (000) 000-0000 ATTN: X. Xxxxxxx Xxxx
Facsimile Number: (000) 000-0000
If to the Sellers or
the Seller Shareholders, to: With a copy to:
Xx. Xxxxx Xxxxxxx Xxxxx & Xxxxx, L.L.P.
P.O. Drawer 000 Xxx Xxxxx Xxxxx
Xxxxx, Xxxxx 00000 000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
ATTN: L. Xxxxxxx Xxxxxx, III
Facsimile Number: (000) 000-0000
33
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or faxed or five business days after the date
so mailed, or on the day after the date delivered to Federal Express or another
similar courier marked for next day delivery if delivered within the continental
United States, and, if delivered overseas, two business days after the date so
delivered to DHL, Federal Express or another similar overseas delivery service.
9.5 GOVERNING LAW. This Agreement shall be governed by, interpreted and
enforced in accordance with the laws of the State of Texas (without regard to
the choice or conflicts of law provisions of Texas law).
9.6 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article VI hereof, certain other indemnified parties,
and their heirs, executors, administrators, legal representatives, successors
and assigns, and they shall not be construed as conferring any rights on any
other persons.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof. All Exhibits and Schedules referred to herein are incorporated herein in
full and are specifically made a part of this Agreement.
9.8 HEADINGS. All Section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
9.9 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or enforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction; provided if any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the effective period of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each illegal, invalid, or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and be legal,
valid, and enforceable.
9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and
34
the same instrument. This Agreement shall become binding when all counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement as to a party to produce or
account for any of the other counterparts signed by another party not joined in
the action.
9.11 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
Regulations promulgated thereunder, unless the context requires otherwise. The
word "INCLUDING" shall mean including without limitation. Words used herein,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires. Any reference to a
"PERSON" herein shall include an individual, firm, corporation, partnership,
trust, Governmental Entity, association, unincorporated organization and any
other entity. Any references to a Section, Article, Schedule or Exhibit are to
sections, articles, schedule and exhibits to this Agreement, unless otherwise
specifically stated.
9.12 WAIVER. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
9.13 SPECIFIC PERFORMANCE. The Sellers and the Seller Shareholders
acknowledge and agree that Purchaser and DPS would be damaged irreparably if any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, the Sellers agree that
Purchaser and DPS shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions of this Agreement in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter (subject to the provisions set
forth in Section __), in addition to any other remedy to which they may be
entitled, at law or in equity.
9.14 SUBMISSION TO JURISDICTION. Each of the parties submits to the
jurisdiction of any state or federal court sitting in San Antonio, Texas, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims or proceedings will be heard and determined in any such court.
Each party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other party with respect thereto. Each party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or at equity.
9.15 GOOD FAITH. The parties agree to act in good faith in the performance
and enforcement of this Agreement.
35
9.16 ATTORNEYS' FEES. If any arbitration or action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and costs from the other party; provided,
however, that no party shall be a prevailing party unless such party has
recovered more or paid less as a result of arbitration or a final order
resulting from judicial proceedings than the amount offered in writing by an
opposing party to settle the dispute.
9.17 APPOINTMENT OF SELLER SHAREHOLDERS' REPRESENTATIVE. Each of the
Seller Shareholders hereby constitutes and appoints Xxxxx X. Xxxxxxx as such
Seller Shareholder's duly authorized representative and attorney-in-fact (the
"REPRESENTATIVE") for all purposes of this Agreement, the Escrow Agreement, the
Registration Rights Agreement and all actions to be taken hereunder and
thereunder, having the power and authority, without limitation, (i) to execute
and deliver, for and on behalf of such Seller Shareholder, the Escrow Agreement,
the Registration Rights Agreement and any other documents, certificates or
instruments required to be executed in connection with the transactions
contemplated by this Agreement; (ii) to act for and on behalf of such Seller
Shareholder with respect to any dispute arising under this Agreement, the Escrow
Agreement or the Registration Rights Agreement; (iii) to exercise any investment
authority conferred upon any of the Seller Shareholders individually or as a
group by the Escrow Agreement; and (iv) to execute and deliver, for and on
behalf of such Seller Shareholder, all certificates, confirmations and other
documents as shall be necessary and appropriate to consummate the transactions
provided for in this Agreement and to fulfill any and all of such Seller
Shareholder obligations hereunder. Such power and authority of the
Representative shall be irrevocable. Each Seller Shareholder expressly
acknowledges and agrees that the Representative shall have no liability to such
Seller Shareholder for error in judgment or acts or omissions in connection
herewith, whether or not disclosed and whether or not due to his negligence,
unless caused by his willful misconduct.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first written.
* * * * * *
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PURCHASER:
XXXXXX PRODUCTION PARTNERS, L.P.
By: Xxxxxx Production Management, Inc.
its General Partner
By: /s/ P. XXXX XXXXX
P. Xxxx Xxxxx, Vice President
DPS:
XXXXXX PRODUCTION SERVICES, INC.
By: /s/ P. XXXX XXXXX
P. Xxxx Xxxxx, Chief Financial Officer
SELLERS:
XXXXXXX SERVICES II, INC.
By: /s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx, President
SUPERIOR COMPLETION SERVICES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx, President
37
SOUTH TEXAS DISPOSAL, INC.
By: /s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx, President
ELSIK, II, INC.
By: /s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx, President
SELLER SHAREHOLDERS:
/s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXX, XX.
Xxxxxxx X. Xxxxxx, Xx.
/s/ XXXXXX X. XXXXX, XX.
Xxxxxx X. Xxxxx, Xx.
/s/XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
/s/ XXXX X. XXXXX
Xxxx X. Xxxxx
/s/ XXXXXXX XXXXXX
Xxxxxxx Xxxxxx
/s/ XXXXX X. XXXXX
Xxxxx X. Xxxxx
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SCHEDULES
Schedule 1.1(a)(i) Assigned Contracts
Schedule 1.1(a)(ii) Equipment Leases
Schedule 1.1(a)(iii) Operating Assets
Schedule 1.1(a)(iv) Vehicles
Schedule 1.1(a)(v) Equipment
Schedule 1.1(a)(vii) Personal Property
Schedule 1.1(a)(viii) Permits
Schedule 1.1(b) Excluded Assets
Schedule 1.3(a) Purchase Price
Schedule 1.3(b) Seller Tax Basis and Fair Market Value of Assets
Schedule 1.4(a) Assumed Liabilities
Schedule 3.1(a) Corporate Jurisdiction
Schedule 3.1(c) Validity of Contemplated Transactions
Schedule 3.1(e) Financial Statements
Schedule 3.1(h) Existing Condition
Schedule 3.1(i) Permitted Liens
Schedule 3.1(j) Compliance with Laws; Authorizations
Schedule 3.1(l) Litigation
Schedule 3.1(n) Contracts and Commitments
Schedule 3.1(o) Environmental Matters
Schedule 3.1(q) Assets
Schedule 3.1(t) Employee Benefit Plans
Schedule 3.1(u) Personnel
Schedule 3.1(x) Warranty
Schedule 5.1(c) No Threatened or Pending Litigation
Schedule 5.1(f) Consents and Approvals
Schedule 7.6 Covenant Not to Compete
Schedule 9.1 Finders' Fees
EXHIBITS:
Exhibit A Escrow Agreement
Exhibit B Registration Rights Agreement
Exhibit C Employment Agreement, Non-Competition Agreement and Mutual
Agreement to Arbitrate Claims
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