Second Amendment to Stock and Membership Interest Purchase Agreement
Exhibit 10.31
Second Amendment to Stock and Membership Interest Purchase Agreement
This second amendment (“Amendment”) is entered into effective September 30, 2008, pursuant to that
certain Stock and Membership Interest Purchase Agreement (“Agreement”) between Key Energy Services,
LLC (“Key”) and L. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ Family Partnership, Ltd., L. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Charitable Remainder Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Well Service, Inc., ▇▇▇▇▇▇ Marine, L.L.C., ▇▇▇▇▇▇ Marine Operations, L.L.C., ▇▇▇▇▇▇ Marine Vessel
▇▇. ▇, ▇.▇.▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇, L.L.C., ▇▇▇▇▇▇ Marine Vessel ▇▇. ▇, ▇.▇.▇., ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇, L.L.C., ▇▇▇▇▇▇ Marine Vessel ▇▇. ▇, ▇.▇.▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇,
L.L.C., ▇▇▇▇▇▇ Marine Vessel No. 8, L.L.C., ▇▇▇▇▇▇ Marine Vessel No. 9, L.L.C., ▇▇▇▇▇▇ Marine Crew
Boats, L.L.C., Brothers Oilfield Service & Supply, L.L.C., 4M Equipment & Leasing, L.L.C., L C M
Industries, L.L.C., ▇▇▇▇▇▇ Drilling, L.L.C., and Petroleum Well Service, Inc. (“Sellers”),
(collectively the “Parties”) dated September 19, 2007. Capitalized terms not otherwise defined
herein shall have the meanings given them in the Agreement.
Whereas, under that Agreement, the Parties agreed to an Earnout, payable in accordance with
the terms of Article 1.5 of the Agreement; and
Whereas, the Parties desire to amend various dates set out in Article 1.5 governing the
Earnout provision of Agreement.
Now, therefore, in consideration of the premises and mutual agreements contained herein, the
Parties agree as follows:
1. Section 1.5(A) of the Agreement is hereby amended and restated in its entirety to
read as follows:
“(A) The Earnout amount (“Earnout Amount”) shall not exceed
Twenty-Five Million and No/100 Dollars ($25,000,000.00) (the “Maximum
Earnout Amount”), calculated as the sum of:
(1) The aggregate of the following amounts (the “Revenue Earnout
Amount”), based on the annual performance of the Earnout Business as
follows:
| (a) | $2,500,000.00 if the Earnout Business achieves revenue of $160,000,000.00 for the year ended October 31, 2008; | ||
| (b) | $ 2,500,000.00 if the Earnout Business achieves revenue of $165,000,000.00 for the year ended October 31, 2009; | ||
| (c) | $ 2,500,000.00 if the Earnout Business achieves revenue of $170,000,000.00 for the year ended October 31, 2010; | ||
| (d) | $ 2,500,000.00 if the Earnout Business achieves revenue of $170,000,000.00 for the year ended October 31, 2011; and | ||
| (e) | $ 2,500,000.00 if the Earnout Business achieves revenue of $170,000,000.00 for the year ended October 31, 2012. |
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The Revenue Earnout Amount is independent of the EBITDA Earnout
Amount (defined below). If the above revenue thresholds are achieved
for any year the Revenue Earnout Amount for such year will be due
regardless of whether the EBITDA Margin (defined below) for such year
has been achieved.
(2) The aggregate of the following amounts (the “EBITDA Earnout
Amount”) based on the annual performance of the Earnout Business as
follows: Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00) for each year (years ended October 31, 2008 through
October 31, 2012) the Earnout Business achieves an EBITDA Margin
(defined below) of thirty-one percent (31%).
The EBITDA Earnout Amount is independent of the Revenue Earnout
Amount. If an EBITDA Margin of thirty-one percent (31%) is achieved
for any year the EBITDA Earnout Amount for such year will be due
regardless of the level of revenue for such year.
(3) The following amounts based on the cumulative performance of
the Earnout Business during the five years ended October 31, 2012, as
follows:
| (a) | If the Earnout Business has not achieved any of the annual revenue thresholds established in Section 1.5(A) above but the cumulative revenue of the Earnout Business for the five years ended October 31, 2012, was Eight Hundred Thirty-Five Million and No/100 Dollars ($835,000,000.00) or greater, Purchaser shall pay an amount equal to Twelve Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00) less the total Revenue Earnout Amount payments previously paid to the Sellers. | ||
| (b) | If the Earnout Business has not achieved an EBITDA margin of thirty-one percent (31%) in any of the five years ending October 31, 2012 but the cumulative EBITDA Margin of the Earnout Business for the five years ended October 31, 2012, was thirty-one percent (31%) or greater, Purchaser shall pay an amount equal to Twelve Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00) less the total EBITDA Earnout Amount payments previously paid to the Sellers.” |
2. Section 1.5(C) of the Agreement is hereby amended and restated in its entirety to
read as follows:
“(C) Subject to the terms and conditions of this Agreement, the
Purchaser shall provide to the Payment Agent (as defined below):
1. Beginning on December 31, 2008, and for each December
31st thereafter through December 31, 2012: (a) a detailed
written statement showing the calculation of the Revenue Earnout
Amount and the EBITDA Earnout Amount owing in respect of the
immediately preceding year ending October 31st,
and (b) a check or wire transfer representing payment of each of the
Revenue Earnout Amount and the EBITDA Earnout Amount
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owing in respect of the immediately preceding year ended October
31st. Payment Agent shall be solely responsible for
disbursing such amounts to the Sellers.
2. On December 31, 2012, (a) a detailed written statement showing
the calculation of the cumulative Revenue Earnout Amount and the
cumulative EBITDA Earnout Amount each of which shall be calculated in
accordance with Section 1.5(A)3, and (b) a check or wire transfer
representing payment of each of the Revenue Earnout Amount and the
EBITDA Earnout Amount owing in respect of the five (5) years ending
October 31, 2012. Payment Agent shall be solely responsible for
disbursing such amounts to the Sellers.”
3. Except as otherwise set forth in this Amendment, all provisions, terms and conditions in
the Agreement remain unmodified and in full force and effect, and are hereby in all respects
ratified and confirmed.
4. This Amendment may be executed in duplicate counterparts, each of which shall be deemed to
be an original and all of which, taken together, shall constitute one agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of October 28, 2008.
| SELLERS: | PURCHASER: | |||||
| KEY ENERGY SERVICES, LLC | ||||||
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| Chairman, President and Chief | ||||||
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▇▇▇▇▇▇ FAMILY PARTNERSHIP
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| General Partner | ||||
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CHARITABLE REMAINDER TRUST |
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