Asset Purchase Agreement
among
Brooks Well Servicing, Inc.
Lundy Vacuum Service, Inc.
and
Peyton E. Lundy
March 3, 1998
Asset Purchase Agreement
This Asset Purchase Agreement (this "Agreement") is entered into as of March 3,
1998, among Brooks Well Servicing, Inc., a Delaware corporation ("Buyer"); Lundy
Vacuum Service, Inc., a Texas corporation ("Seller") and Peyton E. Lundy
("Lundy").
Article 1
Purchase and Sale of Assets
1.1. Purchase and Sale of the Assets. Subject to the terms and conditions set
forth in this Agreement, the Seller hereby agrees to sell, convey,
transfer, assign and deliver to Buyer the operating Assets (defined below)
of the Seller, whether real, personal, tangible or intangible, including,
without limitation, the following assets of the Seller relating to or used
or useful in the operation of the Seller's vacuum service business (the
"Business"):
(a) all of the Seller's tangible personal property (such as machinery,
equipment, leasehold improvements, furniture and fixtures, and vehicles),
including, without limitation, that which is more fully described on
Schedule 1.1(a) hereto (collectively, the "Tangible Personal Property");
(b) all of the Seller's inventory relating to or used in the Business,
including without limitation, that which is more fully described on
Schedule 1.1(b) hereto (collectively, the "Inventory");
(c) all of the Seller's intangible assets relating to or used in the Business,
including without limitation, (i) all of the Seller's rights to the names
under which it is incorporated or under which it currently conducts its
Business, (ii) all of the Seller's rights to any patents, patent
applications, trademarks and service marks (including registrations and
applications therefor), trade names, and copyrights and written know-how,
trade secrets, licenses and sublicenses and all other similar proprietary
data and the goodwill associated therewith (collectively, the "Intellectual
Property") used or held in connection with the Business, including without
limitation, that which is more fully described on Schedule 1.1(c) hereto
(the "Seller's Intellectual Property") and (iii) the Seller's phone numbers
(other than 800-873-9175), sales and promotional literature, computer
software, books, records, files and data (including customer and supplier
lists), and all other records of the Seller relating to the Assets or the
Business (collectively, the "Intangibles");
(d) those leases, subleases, contracts, contract rights, and agreements of the
Seller relating to the Assets or the operation of the Business listed on
Schedule 1.1(d) hereto (collectively, the "Contracts");
(e) to the extent assignable under applicable law, all of the permits,
authorizations, certificates, approvals, registrations, variances, waivers,
exemptions, rights-of-way, franchises, ordinances, orders, licenses and
other rights of every kind and character, other than the permits listed on
Schedule 1.1(e), relating to the BMD Facility (defined below) and the HMD
Facility (defined below) (collectively, the "Permits") of the Seller
relating principally to all or any of the Assets or to the operation of the
Business, including, but not limited to, those that are more fully
described on Schedule 1.1(e) hereto (collectively, the "Seller's Permits");
(f) the goodwill and going concern values of the Seller relating to the
Business; and
(g) all other or additional privileges, rights, interests, properties and
assets of the Seller of every kind and description and wherever located
that are used in the Business or intended for use in the Business in
connection with, or that are necessary for the continued conduct of, the
Business.
The assets purchased and sold pursuant to this Agreement are collectively
referred to herein as the "Assets."
1.2. Payment of Purchase Price. As consideration for the sale of the Assets and
for the other covenants and agreements of Seller contained herein, Buyer
agrees to pay to Seller on the date hereof $1,500,000 (the "Purchase
Price"). The Purchase Price shall be adjusted (i) upward to the extent that
the Seller has purchased additional capital assets used in the Business
since July 31, 1997; (ii)downward to the extent that the Seller no longer
owns the assets it owned and used in the Business as of July 31, 1997;
(iii) upward to the extent that the inventory listed on Schedule 1.1(b)
hereto exceeds $40,000 in value; and (iv) downward to the extent that the
inventory listed on Schedule 1.1(b) hereto has a value of less than
$40,000. Payment of the Purchase Price shall be made by personal check of
the Company or one of its affiliates to the persons and in the amounts set
forth on Schedule 1.2.
1.3. No Assumption of Liabilities. Buyer shall not assume any liabilities and
obligations of the Seller.
1.4. Time and Place of Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be on the date hereof at the offices
of Porter & Hedges, L.L.P. located at 700 Louisiana, Houston, Texas 77002
(the "Closing Date").
1.5. Closing Deliveries. At the Closing, in addition to the conveyance of the
Assets to the Buyer in exchange for the Purchase Price: (i) the Buyer and
CBBP, L.L.C., a Texas limited liability company ("BBC") will enter into a
lease in the form of Exhibit A hereto with respect to the Company's main
yard, mud mixing plant and storage facilities (the "Primary Lease"); (ii)
the Buyer and Seller shall enter into an assignment of leases in the form
of Exhibit B hereto with respect to the land on which the Company's Beasley
Mud Disposal facility (the "BMD Facility") and the Company's Humphrey Mud
Disposal Facility (the "HMD Facility") are located (the "Lease
Assignment"); (iii) the Buyer, Seller and D.B. Lundy, Jr., Rebecca Fitts
and Peyton E. Lundy will enter into a Purchase and Sale Agreement in the
form of Exhibit C hereto (the "Purchase Agreement"); (iv) the Company and
each of its shareholders will enter into noncompetition agreements in the
form of Exhibit D hereto (the "Noncompetition Agreements"); and (v) the
Buyer and Seller will deliver to one another the opinions of counsel
described below:
1.5.1. Opinion of Buyer's Counsel. The Seller shall have received a favorable
opinion, dated as of the Closing Date, from Porter & Hedges, L.L.P.,
counsel for Buyer, in form and substance satisfactory to the Seller, to the
effect that (i) Buyer has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Delaware; (ii) all
corporate proceedings required to be taken by or on the part of the Buyer
to authorize the execution of this Agreement, the Lease, the Assignment and
the Purchase Agreement (collectively, the "Transaction Documents"), and the
implementation of the transactions contemplated hereby and thereby, have
been taken; and (iii) each of the Transaction Documents have been duly
executed and delivered by, and are the legal, valid and binding obligations
of Buyer and are enforceable against Buyer in accordance with their
respective terms, except as enforceability may be limited by (a) equitable
principles of general applicability or (b) bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws affecting the rights
of creditors generally. In rendering such opinion, such counsel may rely
upon (i) certificates of public officials and of officers of Buyer as to
matters of fact and (ii) the opinion or opinions of other counsel, which
opinions shall be reasonably satisfactory to the Seller, as to matters
other than federal or Texas law.
1.5.2. Opinion of Seller's Counsel. The Buyer shall have received a favorable
opinion, dated as of the Closing Date, from Wesley & Herzog, P.C., counsel
to Seller, in form and substance satisfactory to Buyer, to the effect that
(i) the Seller and CBBP have been duly organized and are validly existing
in good standing under the laws of Texas; (ii) all corporate proceedings
required to be taken by or on the part of Seller and CBBP to authorize the
execution of the Transaction Documents to which they are a Party, and the
implementation of the transactions contemplated thereby have been taken;
(iii) to the best of such counsel's knowledge, the Company owns all of its
Assets free and clear of any Encumbrances other than those Encumbrances
listed on the Schedules to this Agreement; and (iv) each of the Transaction
Documents have been duly executed and delivered by, and are the legal,
valid and binding obligations of the parties thereto other than the Buyer,
and are enforceable against the parties thereto other than the Buyer, in
accordance with their respective terms, except as the enforceability may be
limited by (a) equitable principles of general applicability or (b)
bankruptcy, insolvency, reorganization, fraudulent conveyance or similar
laws affecting the rights of creditors generally. In rendering such
opinion, such counsel may rely upon (i) certificates of public officials
and of officers of the Seller and CBBP as to matters of fact and (ii) on
the opinion or opinions of other counsel, which opinions shall be
reasonably satisfactory to Buyer, as to matters other than federal or Texas
law.
Article 2
Representations and Warranties
2.1. Representations and Warranties of the Seller. Except as disclosed on
Schedule 2.1 (which shall identify the applicable Section reference of this
Agreement to which such disclosure relates), each of the Seller and Lundy,
represent and warrant to Buyer as follows:
2.1.1. Organization and Good Standing. Seller and CBBP are duly organized,
validly existing and in good standing under the laws of Texas, have full
requisite power and authority to carry on their respective businesses as
currently conducted, and to own and operate their respective properties
currently owned and operated by them, and are duly qualified or licensed to
do business and are in good standing and authorized to do business in all
jurisdictions in which the character of the properties owned or the nature
of the business conducted by them would make such qualification or
licensing necessary.
2.1.2. Agreements Authorized and their Effect on Other Obligations. The
execution and delivery of the Transaction Documents have been authorized by
all necessary corporate, shareholder and other action on the part of the
parties thereto other than the Buyer, and the Transaction Documents are the
valid and binding obligations of the parties thereto other than the Buyer,
enforceable against each of such parties in accordance with its terms. The
execution, delivery and performance of the Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in a violation or breach of any term or provision
of, nor constitute a default under (i) the charter or bylaws (or other
organizational documents) of the Seller or CBBP, (ii) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement to
which the parties thereto other than the Buyer or by which the parties
thereto other than the Buyer or their respective properties are bound; or
(iii) any provision of any law, rule, regulation, order, permit,
certificate, writ, judgment, injunction, decree, determination, award or
other decision of any court, arbitrator, or other governmental authority to
which the parties thereto other than the Buyer or any of their respective
properties are subject.
2.1.3. Subsidiaries. The Seller does not have any subsidiary corporations or any
interest in any other organization, incorporated or unincorporated,
partnership or any other entity of any type.
2.1.4. Liabilities. The Seller does not have any liabilities or obligations,
either accrued, absolute, contingent, or otherwise, and neither Seller nor
Lundy have any knowledge of any potential liabilities or obligations that
would materially and adversely affect the value and conduct of the Business
by the Buyer or the Assets, other than those (i) reflected or reserved
against in the July 31, 1997 unaudited balance sheet of the Seller or (ii)
incurred in the ordinary course of business since July 31, 1997.
2.1.5. Contracts. Schedule 1.1(d) hereto sets forth a true, complete and
accurate list of all Contracts of the Seller, including leases under which
the Seller is lessor or lessee, which relate to the Assets or the Business
and are to be performed in whole or in part after the date hereof. All of
the Contracts are in full force and effect, and constitute valid and
binding obligations of the Seller. The Seller is not, and no other party to
any of the Contracts is, in default thereunder, and no event has occurred
which (with or without notice, lapse of time, or the happening of any other
event) would constitute a default thereunder. No Contract has been entered
into on terms that could reasonably be expected to have an adverse effect
on the use of the Assets or the Business by Buyer. Neither the Seller or
Lundy has received any information that would cause either of such parties
to conclude that any customer of the Seller will (or is likely to) cease
doing business with Buyer (or its successors) as a result of the
consummation of the transactions contemplated hereby. All of the Contracts
set forth on Schedule 1.1(d), are assignable and have been validly assigned
to Buyer pursuant to this Agreement without the consent of any other party
thereto, other than consents that have been obtained and delivered to
Buyer.
2.1.6. Title to and Condition of Assets. The Seller has good and indefeasible
title to all of the Assets, free and clear of any Encumbrances (defined
below). All of the Assets are in a state of good operating condition and
repair, ordinary wear and tear excepted, and are free from any defects
except as may be repaired by routine maintenance and such minor defects as
to not substantially interfere with the continued use thereof in the
conduct of normal operations. All of the Assets conform to all applicable
laws governing their use. No notice of any violation of any law, statute,
ordinance, or regulation relating to any of the Assets has been received by
the Seller or Lundy, except such as have been disclosed in writing to Buyer
and fully complied with. For purposes of this Agreement, the term
"Encumbrances" means all liens, security interests, pledges, mortgages,
deeds of trust, claims, rights of first refusal, options, charges,
restrictions or conditions to transfer or assignment, liabilities,
obligations, privileges, equities, easements, rights of way, limitations,
reservations, restrictions, and other encumbrances of any kind or nature.
2.1.7. Licenses and Permits. Schedule 1.1(e) hereto sets forth a true, complete
and accurate list of all Permits material to the Business and the
operation, maintenance and use of the Assets in the manner in which they
are now being operated, maintained and used. Each of the Seller's Permits
and the Seller's rights with respect thereto is valid and subsisting, in
full force and effect, and enforceable by the Seller subject to
administrative powers of regulatory agencies having jurisdiction. The
Seller is in compliance in all respects with the terms of each of the
Seller's Permits. None of the Seller's Permits have been, or to the
knowledge of the Seller or Lundy, are threatened to be, revoked, canceled,
suspended or modified. All of the Seller's Permits, to the extent
assignable under applicable law, have been assigned to the Buyer pursuant
to this Agreement.
2.1.8. Intellectual Property. Schedule 1.1(c) hereto sets forth a true, complete
and accurate list of all Intellectual Property material to the continued
conduct of the Business. The Seller's Intellectual Property is owned or
licensed by the Seller free and clear of any Encumbrances. The Seller has
not granted to any other person any license to use any Seller's
Intellectual Property. All of the Seller's Intellectual Property has been
assigned to the Buyer pursuant to this Agreement. Neither the Seller nor
Lundy has received any notice of infringement, misappropriation, or
conflict with the intellectual property rights of others in connection with
the use by the Seller of the Seller's Intellectual Property.
2.1.9. Financial Statements. The Seller has delivered to Buyer copies of certain
unaudited financial statements of the Sellers, copies of which are attached
hereto as Schedule 2.1.9 (collectively, the "Sellers' Financial
Statements") as of and for the period ending July 31, 1997 (the "Balance
Sheet Date"). The Seller's Financial Statements are true, correct and
complete in all material respects and present fairly and fully the
financial condition of the Seller as of the dates and for the periods
indicated thereon. Each of the Seller's Financial Statements include all
adjustments that are necessary for a fair presentation of the Seller's
results for that period. The inventories of the Seller reflected in the
Seller's Financial Statements, or which have thereafter been acquired by
the Seller, consist of items of a quality and quantity salable in the
normal course of the Business. The values at which such inventories are
carried and are consistent with the normal inventory level and practices of
the Seller with respect to the Business.
2.1.10. Additional Information. Attached as Schedule 2.1.10.1 through and
including Schedule 2.1.10.7 are true, complete and correct lists of the
following items:
2.1.10.1. Real Estate. All real property and structures thereon relating to or
used in the Business currently owned or leased or subject to a contract of
purchase and sale, or lease commitment, by the Seller, with a description
of the nature and amount of any Encumbrance thereto;
2.1.10.2. Machinery and Equipment. All machinery, transportation equipment,
tools, equipment, furnishings and fixtures (excluding such items as did not
have a cost basis of $500 or more at their respective dates of acquisition
by the Seller) owned, leased or subject to a contract of purchase and sale,
or lease commitment, by the Seller, with a description of the nature and
amount of any Encumbrances thereon;
2.1.10.3. Inventory. All Inventory items or groups of Inventory items owned by
the Seller relating to or used in the Business, together with the amount of
any Encumbrances thereon;
2.1.10.4. Insurance. All insurance policies or bonds, including title insurance
policies, with respect to the Seller, including those covering its
properties (real or personal), buildings, machinery, equipment, fixtures,
employees and operations relating to or used in the Business;
2.1.10.5. Employee Compensation Plans. All bonus, incentive compensation,
deferred compensation, profit-sharing, retirement, pension, welfare, group
insurance, death benefit, or other fringe benefit plans, arrangements or
trust agreements of the Seller (collectively, the "Employee Plans");
2.1.10.6. Employee Agreements. Any collective bargaining agreements of the
Seller with employees, including amendments, supplements, and written or
oral understandings, and all employment, compensation or consulting
agreements, whether written or oral, of the Seller with any person;
2.1.10.7. Trade Names. All trade names and fictitious names used or held by the
Seller, whether and where such names are registered and where such names
are used;
2.1.11. Assets; Necessary Consents. The Assets constitute all of the assets
necessary to conduct the Business as historically conducted by the Seller.
The Seller has obtained and delivered to Buyer all consents to assignment
or waivers thereof required to be obtained from any governmental authority
or from any other third party to validly transfer the Assets hereunder,
including, without limitation, any consents required to assign the
Contracts and, to the extent assignable under applicable law, the Seller's
Permits.
2.1.12. Environmental Matters. None of the current or past operations of the
Business or any of the Assets is being or has been conducted or used in
such a manner as to constitute a violation of any Environmental Law
(defined below). Neither the Seller nor Lundy has received any notice
(whether formal or informal, written or oral) from any entity, governmental
agency or individual regarding any existing, pending or threatened
investigation or inquiry related to violations of any Environmental Law or
regarding any claims for remedial obligations or contribution for removal
costs or damages under any Environmental Law. There are no writs,
injunction decrees, orders or judgments outstanding, or lawsuits, claims,
proceedings or investigations pending or, to the knowledge of the Seller or
Lundy, threatened, relating to the ownership, use, maintenance or operation
of the Assets or the conduct of the Business, nor, to the knowledge of the
Seller or Lundy, is there any basis for any of the foregoing. Other than as
set forth on Schedule 2.1.12, Buyer will not be required to obtain any
permits, licenses or similar authorizations pursuant to any Environmental
Law after the Closing Date to operate and use any of the Assets for their
current or proposed purposes and uses. The Assets include all environmental
and pollution control equipment necessary for material compliance with
applicable Environmental Law. Except as disclosed on Schedule 2.1.12 (i) no
Hazardous Materials (defined below) have been or are currently being used
by any of the Seller in the operation of the Assets, (ii) except as set
forth on Schedule 2.1.12, no Hazardous Materials are or have ever been
situated on or under any of the Seller's properties, whether owned or
leased, or incorporated into any of the Assets, (iii) there are no, and
there have never been any, underground storage tanks (as defined under
Environmental Law) located under any of the Sellers' properties, whether
owned or leased, and (iv) there are no environmental conditions or
circumstances, including the presence or release of any Hazardous
Materials, on any property presently or previously owned or leased by any
of the Seller, or on any property on which Hazardous Materials generated by
the Seller's operations or the use of the Assets were disposed of. The term
"Environmental Law" means any and all laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, and other legally enforceable
requirements (including, without limitation, common law) of the United
States, or any state, regional, city, local, municipal or other
governmental authority or quasi-governmental authority, regulating,
relating to, or imposing environmental standards of conduct concerning
protection of the environment or human health, or employee health and
safety as from time to time has been or is now in effect. The term
"Hazardous Materials" means (x) asbestos, polychlorinated biphenyls, urea
formaldehyde, lead based paint, radon gas, petroleum, oil, solid waste,
pollutants and contaminants, and (y) any chemicals, materials, wastes or
substances that are defined, regulated, determined or identified as toxic
or hazardous in any Environmental Law.
2.1.13. Employee Benefit Plans; Labor Issues. Schedule 2.1.13 hereto sets forth
all of the Seller's Employee Plans and any other health, dental and life
insurance plans, bonus, deferred compensation, pension, profit sharing and
retirement plans and all other employee benefit plans, programs or
arrangements providing benefits for employees of the Seller (the "Benefit
Plans"). Each of the Benefit Plans has been administered and maintained in
material compliance with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and, if applicable, the
Internal Revenue Code of 1986, as amended (the "Code"), and all other
applicable laws. There is no "accumulated funding deficiency" (as such term
is defined in Section 302 of ERISA or Section 412 of the Code) with respect
to a Benefit Plan that is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), and there has been no application for waiver of the
minimum funding standards imposed by Code Section 412 with respect to any
such plan. There are no pending or, to the knowledge of any of the Seller
or Lundy, threatened claims by or on behalf of the Benefit Plans, the
United States Department of Labor, the Internal Revenue Service, or by any
current or former employee of the Seller or beneficiary of such current or
former employee alleging a breach of any fiduciary duties or a violation of
applicable state or federal law which could result in a material liability
on the part of any of the Sellers or a Benefit Plan under ERISA or any
other law (other than benefit claims and funding obligations in the
ordinary course of business). The Seller has not suffered or otherwise
caused a "complete withdrawal" or "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, from any
Multiemployer Pension Plan, as such term is defined in Section 3(37) of
ERISA. The Seller has not engaged in any unfair labor practices which could
reasonably be expected to result in an adverse effect on the Business or
the Assets. The Seller does not have any dispute with any of its existing
or former employees, and there are no labor disputes or, to the knowledge
of the Seller or Lundy, any disputes threatened by current or former
employees of the Seller.
2.1.14. Investigations; Litigation. No investigation or review by any
governmental entity with respect to the Seller or any of the transactions
contemplated by this Agreement is pending or, to the knowledge of the
Seller or Lundy, threatened, nor has any governmental entity indicated to
the Seller or Lundy an intention to conduct the same. There is no suit,
action, or legal, administrative, arbitration, or other proceeding or
governmental investigation pending to which the Seller or Lundy is a party
or, to the knowledge of the Seller or Lundy, might become a party.
2.1.15. Absence of Certain Businesses Practices. Neither the Seller nor Lundy,
nor any officer, employee or agent of any of the Seller, nor any other
person acting on behalf of any of the Seller or Lundy, has, directly or
indirectly, within the past five years, given or agreed to give any gift or
similar benefit to any customer, supplier, government employee or other
person who is or may be in a position to help or hinder the profitable
conduct of the Business or the profitable use of the Assets (or to assist
the Seller in connection with any actual or proposed transaction) that if
not given in the past, may more likely than not have had an adverse effect
on the profitable conduct of the Business or the profitable use of the
Assets, or if not continued in the future, may more likely than not
adversely affect the profitable conduct of the Business or the profitable
use of the Assets.
2.1.16. Solvency. The Seller is not presently insolvent, nor will the Seller be
rendered insolvent by the occurrence of the transactions contemplated by
this Agreement. The term "insolvent" means that the sum of the present fair
and saleable value of the Seller's assets does not and will not exceed its
debts and other probable liabilities, and the term "debts" includes any
legal liability whether matured or unmatured, liquidated or unliquidated,
absolute fixed or contingent, disputed or undisputed or secured or
unsecured.
2.1.17. Untrue Statements. None of the Transaction Documents contains any untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2.1.18. Compliance with Other Laws. The Seller is not in violation of or in
default with respect to, or in alleged violation of or alleged default with
respect to the Occupational Safety and Health Act (29 U.S.C.ss651 et seq.,
as amended), or any applicable law or any applicable rule, regulation, or
any writ or decree of any court or any governmental commission, board,
bureau, agency, or instrumentality, or delinquent with respect to any
report required to be filed with any governmental commission, board,
bureau, agency or instrumentality.
2.1.19. Taxes. The federal income tax returns of the Seller for the years 1995
and 1996 have been provided to the Buyer before the date hereof. Proper and
accurate federal, state and local income, sales, use, franchise, gross
revenue, turnover, excise, payroll, property, employment, customs duties
and any and all other tax returns, reports, and estimates have been filed
with appropriate governmental agencies, domestic and foreign, by the Seller
for each period for which any returns, reports, or estimates were due. All
taxes shown by such returns to be payable have been paid. All sales taxes
have been properly collected and accounted for through the date hereof by
the Seller, and the Seller has made all required deposits of such taxes
with all taxing authorities. The tax provision reflected in the Seller's
financial statements as of July 31, 1997 is adequate to cover liabilities
of the Seller at the date thereof for all taxes of any character whatsoever
applicable to the Seller or its assets or business. No waiver of any
statute of limitations executed by the Seller with respect to federal or
state income or other tax is in effect for any period. No deficiencies for
any taxes have been proposed, asserted or assessed against the Seller, and
no requests or waivers of the time to assess any such tax are pending. The
federal income tax returns of the Seller has not been audited by the
Internal Revenue Service. No audit of any federal or state or other tax
return of the Seller is presently in process nor has an appointment for or
notice of any such audit been requested or given by any taxing authority.
2.1.20. Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Seller and
Lundy and their respective counsel directly with Buyer and its counsel,
without the intervention of any other person in such manner as to give rise
to any valid claim against any of the parties hereto for a brokerage
commission, finder's fee or any similar payment.
2.2. Representations and Warranties of Buyer. Buyer represents and warrants to
each of the Seller and Lundy as follows:
2.2.1. Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and operate the
properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of
the properties owned or the nature of the business conducted by it would
make such qualification or licensing necessary.
2.2.2. Agreements Authorized and its Effect on Other Obligations. The execution
and delivery of the Transaction Documents have been authorized by all
necessary corporate, shareholder and other action on the part of Buyer, and
the Transaction Documents are the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms. The execution,
delivery and performance of the Transaction Documents, and the consummation
of the transactions contemplated hereby and thereby, will not conflict with
or result in a violation or breach of any term or provision of, nor
constitute a default under (i) the charter or bylaws (or other
organizational documents) of Buyer, (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which Buyer
is a party or by which Buyer or its properties are bound; or (iii) any
provision of any law, rule, regulation, order, permits, certificate, writ,
judgment, injunction, decree, determination, award or other decision of any
court, arbitrator, or other governmental authority to which Buyer or any of
its properties are subject.
Article 3
Additional Agreements
3.1. Employees. Schedule 6.1 hereto is a complete and accurate listing of all
employees of the Seller that devote their full time and effort in the
operation of the Assets and the conduct of the Business (the "Employees").
The Seller and Lundy will use their best efforts to make all of the
Employees available for hire by the Buyer or its affiliates, and the Buyer
agrees to hire all of such Employees, subject to such Employees meeting
Buyer's standard employment eligibility requirements and mutual agreement
between such Employees and Buyer as to their compensation levels. Buyer
shall have no liability or obligation with respect to any employee benefits
of any Employee except those benefits that accrue pursuant to such
Employees' employment with Buyer on or after the date hereof. The Seller
and Lundy shall cooperate with Buyer in connection with any offer of
employment from Buyer to the Employees and use their best efforts to cause
the acceptance of any and all such offers. All Employees hired by Buyer
shall be at-will employees of Buyer. All Employees hired by Buyer shall be
entitled to participate in the Buyer's benefit plans, including the Buyer's
medical plan, and shall receive full credit thereunder for all purposes for
the years of service at Seller. Notwithstanding any other provisions of
this Agreement, this Section 3.1 shall not be deemed to create any right or
claim for the benefit of, and shall not be enforceable by, any person which
is not a party to this Agreement.
3.2. Allocation of Purchase Price. The parties hereto agree to allocate the
purchase price paid by Buyer for the Assets hereunder as set forth on
Schedule 3.2 hereto, and shall report this transaction for federal income
tax purposes in accordance with the allocation so agreed upon. The parties
hereto for themselves and for their respective successors and assigns
covenant and agree that they will file coordinating Form 8594's in
accordance with Section 1060 of the Internal Revenue Code of 1986, as
amended, with their respective income tax returns for the taxable year that
includes the date hereof.
3.3. Use of Lundy Name; Name Change. Notwithstanding any other provision of this
Agreement, the Buyer shall be entitled to use the name "Lundy Vacuum
Service, Inc." and all of trade names, trademarks and logos used in the
business for a period of six months from the date hereof, after which time
the Buyer will cease using the "Lundy" name for any purpose in the
operation of the Business. From and after the date hereof, Lundy shall not
use the name "Lundy Vacuum Service, Inc." or any derivative thereof for any
purpose with respect to any business or other enterprise. The Seller shall,
within ten days of a request in writing from Buyer, cause to be filed (i)
with the applicable agency of the Seller's state of organization an
amendment to its charter (or other applicable organization documents) of
the Seller changing the name of the Seller from its current name to a name
that is not similar to such names, and (ii) with the appropriate
authorities of the Seller's state of organization and any other states such
documents as are required to effect such name change. The Seller shall,
within five days from the date of its receipt of confirmation of such
filings from the applicable state authorities, cause to be delivered to
Buyer copies of all such confirmations.
3.4. Further Assurances. From time to time, as and when requested by any party
hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or
cause to be taken, such further or other actions as may be reasonably
necessary to effect the transactions contemplated hereby. In that regard,
Buyer and Lundy agree to use their best efforts during the term of the
Primary Lease, the BMD Facility Lease and the HMD Facility Lease to keep
all of the Permits listed on Schedule 1.1(e) in full force and effect.
Article 4
Indemnification
4.1. Indemnification by the Sellers and Lundy. In addition to any other remedies
available to Buyer under this Agreement, or at law or in equity, each of
the Seller and Lundy shall, jointly and severally, indemnify, defend and
hold harmless Buyer and its officers, directors, employees, agents and
stockholders, against and with respect to any and all claims, costs,
damages, losses, expenses, obligations, liabilities, recoveries, suits,
causes of action and deficiencies, including interest, penalties and
reasonable attorneys' fees and expenses (collectively, the "Damages") that
such indemnitee shall incur or suffer, which arise, result from or relate
to any breach of, or failure by the Seller or Lundy to perform their
respective representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument
furnished or delivered to Buyer by the Seller under this Agreement.
4.2. Indemnification by Buyer. In addition to any other remedies available
to the Seller and Lundy under this Agreement, or at law or in equity,
Buyer shall indemnify, defend and hold harmless the Seller and Lundy
against and with respect to any and all Damages that such indemnitees
shall incur or suffer, which arise, result from or relate to (i) any
breach of, or failure by Buyer to perform, any of its representations,
warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or
delivered to Seller Lundy by or on behalf of Buyer under this
Agreement and (ii) the operation of the Assets and conducting of the
Business that arise out of actions of the Buyer or any of its
affiliates after the date hereof.
4.3. Indemnification Procedure. If any party hereto discovers or otherwise
becomes aware of an indemnification claim arising under Section 4.1 or
4.2 of this Agreement, such indemnified party shall give written
notice to the indemnifying party, specifying such claim, and may
thereafter exercise any remedies available to such party under this
Agreement; provided, however, that the failure of any indemnified
party to give notice as provided herein shall not relieve the
indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. Further,
promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Article
4, such indemnified party shall, if a claim in respect thereof is to
be made against any indemnifying party, give written notice to the
latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of any obligations hereunder,
to the extent the indemnifying party is not materially prejudiced
thereby. In case any such action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified, to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the
defense thereof unless the indemnifying party has failed to assume the
defense of such claim and to employ counsel reasonably satisfactory to
such indemnified person. An indemnifying party who elects not to
assume the defense of a claim shall not be liable for the fees and
expenses of more than one counsel in any single jurisdiction for all
parties indemnified by such indemnifying party with respect to such
claim or with respect to claims separate but similar or related in the
same jurisdiction arising out of the same general allegations.
Notwithstanding any of the foregoing to the contrary, the indemnified
party will be entitled to select its own counsel and assume the
defense of any action brought against it if the indemnifying party
fails to select counsel reasonably satisfactory to the indemnified
party, the expenses of such defense to be paid by the indemnifying
party. No indemnifying party shall consent to entry of any judgment or
enter into any settlement with respect to a claim without the consent
of the indemnified party, which consent shall not be unreasonably
withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability with respect to
such claim. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action, the defense
of which has been assumed by an indemnifying party, without the
consent of such indemnifying party, which consent shall not be
unreasonably withheld or delayed.
Article 5
Miscellaneous
5.1. Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements made by the
parties hereto shall survive until the second anniversary of the date
hereof, notwithstanding any investigation made by or on behalf of any
of the parties hereto. All statements contained in any certificate,
schedule, exhibit or other instrument delivered pursuant to this
Agreement shall be deemed to have been representations and warranties
by the respective party or parties, as the case may be, and shall also
survive as provided as provided above despite any investigation made
by any party hereto or on its behalf.
5.2. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior
agreements between the parties with respect thereto are hereby
superseded in their entirety.
5.3. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but
one instrument.
5.4. Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by
facsimile transmission or first class registered or certified mail,
postage prepaid, return receipt requested:
If to Buyer
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Addressed to: With a copy to:
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Key Energy Group, Inc. Porter & Hedges, L.L.P.
Two Tower Center, 20th Floor 700 Louisiana
East Brunswick, New Jersey 08816 Houston, Texas 77210-4744
Attn: General Counsel Attn: Samuel N. Allen
Facsimile: (732) 247-5148 Facsimile: (713)
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If to any of the Seller or Lundy
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Addressed to: With a copy to:
- --------------------------------------------------------------------------------
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Peyton E. Lundy Wesley & Herzog, P.C.
[ADDRESS TO COME] 25025 I-45 North, Suite 400
Facsimile: The Woodlands, Texas 77380
Attn: James Wesley
Facsimile: (281) 367-9044
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Any communication so addressed and mailed by first-class registered or certified
mail, postage prepaid, with return receipt requested, shall be deemed to be
received on the third business day after so mailed, and if delivered by courier
or facsimile to such address, upon delivery during normal businesses hours on
any business day.
5.5. Captions. The captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any article, section, or paragraph hereof.
5.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto.
5.7. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such which may be hereafter
declared invalid, void or unenforceable.
5.8. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Texas.
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