33
STOCK PURCHASE AGREEMENT
by and among
NABORS ACQUISITION CORP. IV, as Seller,
KEY ROCKY MOUNTAIN, INC., as Buyer
and
KEY ENERGY GROUP, INC.
Dated as of July 31, 1997
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS......................................................1
ARTICLE 2. PURCHASE OF STOCK OF THE COMPANY.................................4
2.1 Purchase and Sale of Stock...............................................4
2.2 Purchase Price...........................................................4
2.3 Additional Purchase Price Adjustments and Procedures.....................5
2.4 The Closing..............................................................6
2.5 Deliveries at the Closing................................................6
2.6 Other Agreements.........................................................6
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY.....7
3.1 Organization and Good Standing...........................................7
3.2 Authorization of Transaction.............................................7
3.3 Capital Structure........................................................7
3.4 Subsidiaries and Non-Subsidiary Equity Investments.......................8
3.5 Title to Company Stock...................................................8
3.6 Noncontravention.........................................................8
3.7 Brokers' Fees............................................................8
3.8 Permits..................................................................8
3.9 Financial Information....................................................8
3.10 No Undisclosed Liabilities..............................................9
3.11 Absence of Certain Changes..............................................9
3.12 No Defaults.............................................................9
3.13 Tax Matters.............................................................9
3.14 Real Property...........................................................9
3.15 Intellectual Property...................................................10
3.16 Contracts...............................................................10
3.17 Insurance...............................................................10
3.18 Litigation..............................................................10
3.19 Employees...............................................................11
3.20 Employee Benefit Plans..................................................11
3.21 Powers of Attorney......................................................12
3.22 Guarantees..............................................................12
3.23 No Implied Representations or Warranties................................12
3.24 Accredited Investor; Investment Intent..................................13
3.25 Drilling and Workover Rigs..............................................13
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND KEY ENERGY.......13
4.1 Organization and Good Standing...........................................13
4.2 Authorization of Transaction.............................................13
4.3 Noncontravention.........................................................14
4.4 Brokers' Fees............................................................14
4.5 Financial Capability; No Financing Condition.............................14
4.6 Litigation...............................................................14
4.7 Accredited Investor; Investment Intent...................................14
4.8 Capitalization of Key Energy.............................................14
4.9 SEC Filings of Key Energy................................................15
4.10 Material Adverse Effect.................................................15
ARTICLE 5. COVENANTS........................................................15
5.1 General..................................................................15
5.2 Notices and Consents.....................................................15
5.3 Operation of Business....................................................16
5.4 Preservation of Business, Operations, Properties and Assets oftheCompany.16
5.5 Access; Confidentiality; Etc.............................................16
5.6 Notice of Developments...................................................16
5.7 Insurance................................................................16
5.8 Employee Matters.........................................................16
5.9 Further Assurances.......................................................18
5.10 Litigation Support......................................................18
5.11 Tax Matters.............................................................18
5.12 Inspections.............................................................20
5.13 Acquisition Proposals...................................................20
5.14 Registration Rights.....................................................20
5.15 Books and Records.......................................................25
ARTICLE 6. CONDITIONS TO OBLIGATION TO CLOSE................................25
6.1 Conditions to Obligations of the Buyer and Key Energy....................25
6.2 Conditions to Obligations of the Seller..................................26
ARTICLE 7. TERMINATION......................................................28
7.1 Termination of Agreement.................................................28
7.2 Effect of Termination....................................................28
ARTICLE 8. REMEDIES FOR BREACHES OF THIS AGREEMENT..........................28
8.1 Investigations; Survival of Representations, Warranties and Covenants....28
8.2 Indemnification Provisions for Benefit of the Buyer.....................28
8.3 Indemnification Provisions for Benefit of the Seller....................29
8.4 Matters Involving Third Parties.........................................29
8.5 Matters Involving the Parties...........................................30
8.6 Limitations on Indemnification..........................................30
8.7 Environmental Claims....................................................30
ARTICLE 9. MISCELLANEOUS...................................................31
9.1 Press Releases and Public Announcements.................................31
9.2 No Third-Party Beneficiaries............................................31
9.3 Entire Agreement........................................................31
9.4 Succession and Assignment...............................................31
9.5 Counterparts............................................................31
9.6 Headings................................................................31
9.7 Notices.................................................................31
9.8 Governing Law...........................................................32
9.9 Amendments and Waivers..................................................32
9.10 Severability...........................................................32
9.11 Expenses...............................................................32
9.12 Construction...........................................................32
9.13 Specific Performance...................................................33
9.14 Submission to Jurisdiction.............................................33
EXHIBITS
EXHIBIT A FORM OF WARRANT..........................................A-1
EXHIBIT B ▇▇▇▇▇▇ INDUSTRIES, INC. GUARANTEE........................B-1
EXHIBIT C OPERATING AGREEMENT......................................C-1
EXHIBIT D ESCROW AGREEMENT.........................................D-1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 31,
1997, is entered into by and among Nabors Acquisition Corp. IV, a Delaware
corporation (the "Seller"), Key Rocky Mountain, Inc., a Delaware corporation
(the "Buyer"), and Key Energy Group, Inc., a Maryland corporation and the parent
corporation of Buyer ("Key Energy").
WHEREAS, the Seller owns all of the issued and outstanding shares of
capital stock of ▇.▇. ▇▇▇▇▇▇ Well Service Company, a Delaware corporation (the
"Company"); and
WHEREAS, the Seller desires to sell to the Buyer all of the issued and
outstanding shares of capital stock of the Company, and the Buyer desires to
purchase such shares from the Seller, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, in connection with such purchase and sale, the Seller, the Buyer
and Key Energy desire to make certain representations, warranties, covenants and
agreements and to prescribe various conditions to such purchase and sale;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes (including any Tax on any
indemnity payments), liens, losses, expenses and fees, including court costs and
reasonable attorneys' fees and expenses, in each case after taking into account
the benefits, if any, to the Seller or the Buyer, as the case may be, from the
net tax consequences of the matter as to which it is indemnified.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Buyer" has the meaning specified in the first paragraph of this Agreement.
"Closing" has the meaning set forth in Section 2.4.
"Closing Date" has the meaning set forth in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission or any
successor entity.
"Company" has the meaning specified in the second paragraph of this
Agreement.
"Company Common Stock" has the meaning set forth in Section 3.3.
"Company Stock" means all of the issued and outstanding shares of capital
stock of the Company.
"Disclosure Schedule" has the meaning set forth in the first paragraph of
Section 3.
"Employee Benefit Plans" has the meaning set forth in Section 3.20.
"Environmental Claims" means any Adverse Consequences attributable to the
Company or any successor arising under any Environmental Law.
"Environmental Law" means laws, rules, regulations, statutes, ordinances
and codes of the United States, or any State, local, municipal or other
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment as now in effect.
"Equity Securities" of any Person means the capital or voting stock of such
Person and all other securities convertible into, or exchangeable for, any
shares of such capital or voting stock, all rights to subscribe for or to
purchase, all options and warrants for the purchase of, and all calls,
commitments or claims of any character relating to, any shares of such capital
or voting stock, all equity equivalents, interests in the ownership or earnings
or other similar rights of, or with respect to, such Person, and any securities
convertible into or exchangeable or exercisable for any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business, whether or not incorporated,
which together with the Company would be deemed or treated as a "single
employer" within the meaning of Code Section 414 or ERISA Section 4001.
"Estimated Working Capital" has the meaning set forth in Section 2.2(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Final Determination Date" has the meaning set forth in Section 2.3(a).
"Guarantee " means the Guarantee of ▇▇▇▇▇▇ Industries, Inc. attached hereto
as Exhibit B.
"Indemnified Party" has the meaning set forth in Section 8.4(a).
"Indemnifying Party" has the meaning set forth in Section 8.4(a).
"Industry Material Adverse Event" means the date on which both of the
following events shall occur: if (a) the average of the West Texas Intermediate
crude oil spot market daily closing prices as reported by the New York
Mercantile Exchange for the 45-day period prior to the date is below $15.00 per
barrel and (b) the average of the natural gas prices at ▇▇▇▇▇ Hub, Louisiana as
reported by the New York Mercantile Exchange for the 45-day period prior to the
date is below $1.60 per mmbtu.
"Intellectual Property" has the meaning set forth in Section 3.15.
"July 31 Balance Sheet" has the meaning set forth in Section 2.3.
"Key Energy" has the meaning specified in the first paragraph of this
Agreement.
"Key Energy Common Stock" means the Common Stock, par value $.10 per share,
of Key Energy.
"Key Energy Financial Statements" has the meaning set forth in Section 4.9.
"Key Energy Reports" has the meaning set forth in Section 4.9.
"Knowledge" means the actual knowledge of any director or executive officer
of the named entity, after due inquiry.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, whether due or to become due and whether
based on contract, tort (including negligence), strict liability or other
basis), including any liability for Taxes.
"Material Adverse Effect" means any event that has or is reasonably
expected to have a material adverse effect on the business, operations or
financial condition of the applicable party. If quantifiable, an event of series
of events shall be considered to have a Material Adverse Effect for purposes of
this Agreement if it involves amounts in excess of $1,250,000. A Material
Adverse Effect on the business, operations or financial condition of a party is
sometimes referred to as a "[Name of Party] Material Adverse Effect".
"Operating Agreement" means the Operating Agreement to be entered into by
the Seller, Key Energy and the Buyer with respect to the Company, effective on
or after the date the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, has terminated or been waived, in
substantially the form of Exhibit C, with such changes thereto as the parties
executing the same may mutually agree.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Oxy" means Occidental Oil and Gas Corporation, a California corporation.
"Oxy Purchase Agreement" means the Stock Purchase Agreement between ▇▇▇▇▇▇
Industries, Inc. and Oxy dated as of March 8, 1996.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
or a governmental entity (or any department, agency or political subdivision
thereof).
"Permits" has the meaning set forth in Section 3.8.
"Proceedings" has the meaning set forth in Section 5.11(b).
"Purchase Price" has the meaning set forth in Section 2.2(a).
"Registered Securities" has the meaning specified in Section 5.14(a).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
claim or other security interest of any kind or nature whatsoever, other than
(a) mechanic's, materialmen's and similar liens; (b) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings; and (c) purchase money liens and liens securing rental
payments under capital lease arrangements.
"Seller" has the meaning specified in the first paragraph of this
Agreement.
"Shelf Registration Statement" has the mean specified in Section 5.14(a).
"State Tax Detriment" has the meaning specified in Section 2.3(d).
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including Taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8.4(a).
"Unaudited Balance Sheet" means the unaudited balance sheet of the Company
as of March 31, 1997 as described in Section 3.9.
"Warrants" means warrants, dated the Closing Date and expiring on the
Warrant Expiration Date, to acquire 265,000 shares of Key Energy Common Stock,
subject to adjustment, at the Warrant Exercise Price in the form set forth in
Exhibit A to this Agreement.
"Warrant Exercise Price" means $18 per share.
"Warrant Expiration Date" means the seventh anniversary of the Closing
Date.
"Warrant Shares" means 265,000 shares of the Key Energy Common Stock, as
adjusted pursuant to the provisions of Section 2.2(d).
"Working Capital" means the difference between total current assets and
total current liabilities of the Company as of the July 31, 1997, as set forth
on the July 31 Balance Sheet.
ARTICLE 2. PURCHASE OF STOCK OF THE COMPANY.
2.1 Purchase and Sale of Stock. Upon the terms and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey and deliver to the Buyer, the
Company Stock at the Closing for the Purchase Price.
2.2 Purchase Price.
(a) The aggregate purchase price to be paid for the Company Stock shall be
(i) an amount in cash equal to the sum of (x) $20,000,000 plus (y) the Working
Capital of the Company, plus (ii) 100,000 shares of Key Energy Common Stock,
plus (iii) the Warrants (collectively the "Purchase Price"). On the date the
Operating Agreement becomes effective, the Buyer shall deposit the remaining
$20,000,000 cash portion of the Purchase Price and $3,900,000 Estimated Working
Capital into an escrow account, as specified in the Escrow Agreement attached
hereto as Exhibit D.
(b) On the Closing Date, the Buyer shall pay or cause to be paid to the
Seller an amount equal to the sum of $20,000,000, plus interest, if any, since
the date of deposit of such funds in the escrow account, as specified in the
Escrow Agreement attached hereto as Exhibit D, plus Estimated Working Capital in
cash by wire transfer or delivery of other immediately available funds to an
account or accounts to be designated by the Seller in writing at least one
business day prior to the Closing Date. "Estimated Working Capital" means the
difference between total current assets and total current liabilities of the
Company as shown on a balance sheet of the Company prepared by the Seller in
good faith as of July 31, 1997. The cash portion of the Purchase Price,
including the Estimated Working Capital, shall be subject to post-Closing
adjustment in accordance with Section 2.3.
(c) At the Closing, Key Energy will issue to the Seller 100,000 shares of
Key Energy Common Stock, subject to adjustment as provided below. The number of
the shares shall be adjusted in the event of any change in the Key Energy Common
Stock by reason of stock or other non-cash dividends, extraordinary cash
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchange of shares or the like after the date of this Agreement and
on or before the Closing Date, such that, in each case, the Seller shall receive
the number and class of shares or other securities or property that would have
been received in respect of a share of the Key Energy Common Stock if the
Closing Date had occurred immediately prior to such event, or the record date
therefor, as applicable.
(d) At the Closing, Key Energy will issue to the Seller the Warrants, with
the Warrant Exercise Price, the Warrant Expiration Date and the Warrant Shares
calculated or determined pursuant to the provisions of this Agreement duly
inserted in the appropriate places thereon. The number of the Warrant Shares
shall be adjusted in the event of any change in the Key Energy Common Stock by
reason of stock or other non-cash dividends, extraordinary cash dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchange of shares or the like after the date of this Agreement and on or before
the Closing Date, such that, in each case, the Seller shall receive upon the
payment of the Warrant Exercise Price the number and class of shares or other
securities or property that would have been received in respect of a share of
the Key Energy Common Stock if the Closing Date had occurred immediately prior
to such event, or the record date therefor, as applicable.
2.3 Additional Purchase Price Adjustments and Procedures.
(a) On the Closing Date, the Buyer will prepare and deliver to the Seller a
balance sheet of the Company as of July 31, 1997 (the "July 31 Balance Sheet").
The July 31 Balance Sheet shall include all information necessary to compute the
Working Capital of the Company. The Buyer shall make available to the Seller all
information which may be in the possession of the Buyer or the Company which the
Seller requests in order to verify the accuracy of the July 31 Balance Sheet.
Within 60 days following delivery of the July 31 Balance Sheet, the Seller shall
notify the Buyer whether it agrees with the July 31 Balance Sheet. In the event
that the Seller disagrees with the July 31 Balance Sheet, the Seller shall
provide the Buyer with a written notice specifying the basis for the Seller's
disagreement, and the Seller and the Buyer shall work in good faith to reach
agreement on the composition of the July 31 Balance Sheet, but, in the event
that they shall not agree within 30 days following the date of such written
notice, the matter will be referred to a "Big Six" independent public accounting
firm mutually agreed to by the Buyer and the Seller. The fees and disbursements
of such accounting firm shall be borne equally by the Buyer and the Seller. Such
accounting firm shall examine the records of the Company, and, within 30 days
following the date upon which such matter shall be referred to such accounting
firm, such accounting firm shall determine the disposition of any dispute with
respect to the July 31 Balance Sheet (the date on which the determination is
made, whether by the accounting firm or by agreement of the parties, is referred
to as the "Final Determination Date"). Any such determination shall be final and
binding on the parties, and may be enforced by appropriate judicial or other
proceedings.
(b) In the event that the Working Capital of the Company is less than the
Estimated Working Capital, then the amount of such difference shall be paid by
the Seller to the Buyer within two business days of the Final Determination
Date, plus interest of 8% per annum payable from July 31, 1997 to the Final
Determination Date. In the event that the Working Capital of the Company is more
than the Estimated Working Capital, then the amount of such difference shall be
paid by the Buyer to the Seller within two business days of the Final
Determination Date, plus interest of 8% per annum payable from July 31, 1997 to
the Final Determination Date.
(c) The July 31 Balance Sheet shall be prepared in accordance with
generally accepted accounting principles applied in a manner consistent with the
Company's historical accounting policies and practices; except that all
intercompany balances will be eliminated.
(d) On or prior to 90 days from the Closing Date, the Seller will prepare
and deliver to the Buyer a calculation of the State Tax Detriment (as defined
below) resulting from the sale of the Company, showing all necessary information
for such calculation. The Seller shall make available to the Buyer all
information which may be in the possession of the Seller which the Buyer
reasonable requests in order to verify the accuracy of the State Tax Detriment
calculation. Within 30 days following delivery of the calculation of the State
Tax Detriment, the Buyer shall notify the Seller whether it disagrees with such
calculation and the Buyer shall be deemed to agree with such calculation if no
notice of disagreement is received within such time period. In the event that
the Buyer disagrees with such calculation, the Buyer shall attach to its notice
of disagreement or incorporate therein a written notice specifying the basis for
the Buyer's disagreement, and the Seller and the Buyer shall work in good faith
to reach agreement on the calculation but, in the event that they shall not
agree within 30 days following the date of such written notice, the matter will
be referred to a nationally recognized independent public accounting firm
mutually agreed to by the Buyer and the Seller. The fees and the disbursements
of such accounting firm shall be borne equally by the Buyer and the Seller. Such
accounting firm shall examine the records of the Seller and the Company, and,
within 30 days following the date upon which such matter shall be referred to
such accounting firm, such accounting firm shall determine the disposition of
any dispute with respect to the calculation. Any such determination shall be
final and binding on the parties, and may be enforced by appropriate judicial or
other proceedings. Payment of the amount of the State Tax Detriment shall be
made by the Buyer to the Seller no later than five business days after the date
agreement is reached between the Buyer and the Seller or the decision of the
accounting firm is made. The "State Tax Detriment" equals the difference between
(A) the state Taxes payable by the Seller or any related party as a result of
making the Section 338(h)(10) election contemplated by Section 5.11(c) of this
Agreement and (B) the state Taxes that would have been payable as a result of
the sale pursuant to this Agreement had such a Section 338(h)(10) election not
been made, such calculation to be grossed up for any additional state or other
Taxes payable as a result of the payment to the Seller under this provision.
2.4 The Closing. Except as otherwise set forth herein, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of the Seller in Houston, Texas, commencing at 10:00 a.m., local
time, on (a) the later to occur of (i) a date between October 1 and October 15,
1997 or (ii) the fifth business day following the satisfaction or waiver of all
conditions to the obligations of the parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective parties will take at the Closing itself) or (b) such earlier date as
the Seller may reasonably request and the parties may mutually agree, which
agreement shall not be unreasonably withheld (the "Closing Date").
2.5 Deliveries at the Closing. At the Closing, (a) the Seller will deliver
or cause to be delivered to the Buyer certificates representing the Company
Stock and the various certificates, instruments and documents referred to in
Section 6.1; (b) the Buyer and Key Energy will deliver or cause to be delivered
to the Seller the various certificates, instruments and documents referred to in
Section 6.2; and (c) the Buyer will deliver or cause to be delivered to the
Seller the Purchase Price.
2.6 Other Agreements. Concurrently herewith, (a) ▇▇▇▇▇▇ Industries, Inc. is
entering into the Guarantee, (b) the Seller, the Buyer and Key Energy are
entering into the Operating Agreement and (c) the Seller, the Buyer, Key Energy
and the escrow agent named therein are entering into the Escrow Agreement.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY.
The Seller and the Company represent and warrant to the Buyer and Key
Energy that the statements contained in this Article 3 are correct and complete
as of the date of this Agreement, except as set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
has been arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article 3.
3.1 Organization and Good Standing. Each of the Company and the Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its state of organization, has full, requisite corporate power and authority
to carry on its business as it is currently conducted and to own and operate the
properties currently owned and operated by it, and is duly qualified or licensed
to do business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties owned or
the nature of the business conducted by it would make such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a Material Adverse Effect on the Seller or the Company,
respectively.
3.2 Authorization of Transaction. Each of the Seller and the Company has
full power and authority (including corporate power and authority) to execute
and deliver this Agreement and the Exhibits to which it is a party and to
perform its obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the Board of Directors of the Seller and the
Company and, if required by applicable law, the stockholders of the Seller, have
duly authorized the execution, delivery and performance of this Agreement and
such Exhibits by the Seller and the Company, respectively. This Agreement
constitutes the valid and legally binding obligation of the Seller and the
Company, and each Exhibit to which the Seller is a party constitutes the valid
and legally binding obligation of the Seller, in each case enforceable against
such party in accordance with its terms and conditions, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights and to general principles of equity.
3.3 Capital Structure.
(a) The authorized capital stock of the Company consists of 1,000 shares of
common stock, $1.00 par value per share ("Company Common Stock"). There are
1,000 shares of Company Common Stock which are issued and outstanding and all of
such shares are held by the Seller. All outstanding shares of capital stock of
the Company have been duly authorized and are validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote.
(b) Except for this Agreement, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which either the Seller or the Company is a party or
by which either of them is bound obligating either the Seller to cause the
Company or the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of its capital stock or other voting
securities of the Company or obligating either the Seller to cause the Company
or the Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock of the Company.
3.4 Subsidiaries and Non-Subsidiary Equity Investments. The Company has no
subsidiaries and does not own, directly or indirectly, any voting securities,
other equity interests or partnership interests in any other Person.
3.5 Title to Company Stock. The Seller has good and valid title to the
Company Stock, free and clear of any Security Interest other than claims of the
Buyer pursuant to this Agreement. Upon delivery of the Company Stock hereunder
and payment of the Purchase Price as herein contemplated, the Buyer will receive
good and valid title to the Company Stock, free and clear of any Security
Interest.
3.6 Noncontravention. Except, in each case, where such violations
individually or in the aggregate would not have a Material Adverse Effect on the
applicable party, neither the execution and the delivery of this Agreement and
the Exhibits hereto to which the Seller is a party, nor the consummation of the
transactions contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge or other
restriction of any government, governmental agency or court to which either the
Seller or the Company is subject or any provision of the charter or bylaws of
the Seller or the Company or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which either the Seller or the Company is a party or by which either of them
is bound or to which any of their respective assets or properties is subject (or
result in the imposition of any Security Interest upon any of the assets or
properties of the Company or the Company Stock). Except for any required filings
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, the
Company does not need to give any notice to, make any filing with or obtain any
authorization, consent or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.
3.7 Brokers' Fees. Neither the Seller nor the Company has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
3.8 Permits. The Disclosure Schedule sets forth all material licenses,
permits and authorizations of the Company necessary for the Company to own, use,
operate and maintain its assets and properties (collectively, the "Permits").
The Company has full corporate power and authority to operate its business
pursuant to such Permits, except where the failure to have such Permits,
individually or in the aggregate, would not have a Company Material Adverse
Effect. All of such Permits are in full force and effect and, except for Permits
required to be obtained by the Buyer, as owner of the Company or where the
failure to be or to continue to be in full force and effect would not have a
Company Material Adverse Effect, and assuming the Company is operated in the
same manner after the Closing as before the Closing, then immediately following
the Closing, such Permits will continue to be in full force and effect in
accordance with their respective terms. The Company is in substantial compliance
with all such Permits and with all orders, judgments or decrees applicable to
the ownership, use, maintenance or operation of its assets and properties,
except, in each case, where the failure to be in compliance would not have a
Company Material Adverse Effect.
3.9 Financial Information. Copies of the Company's unaudited balance sheets
dated September 30, 1996, December 31, 1996 and March 31, 1997 together with its
unaudited statements of operations for the five months ended September 30, 1996,
the three months ended December 31, 1996 and the three months ended March 31,
1997 are included in the Disclosure Schedule. Such financial statements are true
and complete in all material respects (except for the omission of notes and
schedules), present fairly the financial condition of the Company as at the
dates indicated, and the results of operations for the respective periods
indicated, and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, except as noted therein and
subject, in the case of interim financial statements, to normal year-end
adjustments and other adjustments described therein. In addition, such financial
statements, though unaudited, include all adjustments which the Seller and the
Company consider necessary for fair presentation, in all material respects, of
the Company's results of operations for each such periods.
3.10 No Undisclosed Liabilities. The Company does not have any liabilities
or obligations, absolute or contingent, nor does the Seller or the Company have
any Knowledge of any potential liabilities or obligations of the Company, which
would be required to be reflected on the Unaudited Balance Sheet in accordance
with generally accepted accounting principles and that would reasonably be
expected to have a Company Material Adverse Effect, other than those (i)
reflected or reserved against in the Unaudited Balance Sheet or (ii) incurred in
the Ordinary Course of Business since March 31, 1997.
3.11 Absence of Certain Changes. Since March 31, 1997, no event has
occurred, or condition exists, which would constitute or cause, individually or
in the aggregate, a Company Material Adverse Effect.
3.12 No Defaults. The Company is not in default under, and no event has
occurred which with notice, lapse of time or, to the Knowledge of the Seller and
the Company, action by a third party could result in a default under, (a) any
outstanding indenture, material contract or agreement to which the Company is a
party or to which it or its assets may be subject, except where such default or
potential default would not have a Company Material Adverse Effect or (ii) under
any provision of the Company's Certificate of Incorporation.
3.13 Tax Matters.
(a) The Seller and the Company have caused, or will have caused by the
Closing Date, to be timely filed with the appropriate federal, foreign, state,
local and other governmental authorities all Tax Returns required to be filed on
or before the Closing Date by or with respect to the Company for any taxable
period ending on or before the Closing Date. The Seller and the Company have
paid, or will have paid by the Closing Date, all Taxes shown to be due from the
Seller on such returns or reports. All Tax Returns filed by or on behalf of the
Company are true and correct. The Company has no direct or indirect liability
for any Taxes of any Affiliate, or any other member of a consolidated group in
which the Company is or, since April 30, 1996 has been, a member, particularly
pursuant to Treasury Regulation Section 1.1502-6.
(b) No Tax Liabilities exist with respect to the Company, except for
Liabilities imposed by law and incurred in the Ordinary Course of Business for
obligations not yet due and except as may relate to the purchase and sale of
Company Stock contemplated hereby. Tax Liabilities not yet due and payable
(except as relates to this transaction) will be fully reserved on the July 31
Balance Sheet to the extent not paid by the Seller.
(c) There are no claims for Taxes presently being asserted in writing for
which the Company may be liable. No extension has been granted by or on behalf
of the Company to any Tax authority of the limitation period during which any
Tax Liability may be asserted. The Company has not received any written notice
of an increase in the assessed value of any of the Company's properties for Tax
purposes.
(d) The Disclosure Schedule includes a copy of the Form 8023-A that was
filed with the Internal Revenue Service in a timely manner following the
acquisition of the Company pursuant to the Oxy Purchase Agreement on April 30,
1996.
3.14 Real Property. The Disclosure Schedule lists and describes briefly all
real property owned, leased or subleased to the Company and all Security
Interests thereon. The Disclosure Schedule also identifies the owned, leased or
subleased properties for which title insurance policies have been procured. Each
lease and sublease listed in the Disclosure Schedule is in full force and
effect, subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights and to general principles of equity.
3.15 Intellectual Property. The Company holds no patents, patent
applications, trademarks (whether registered or not), trademark applications,
service marks, trade names, trade secrets, computer software, copyright
registrations or applications, or patent or know-how licenses (collectively,
"Intellectual Property") relating to or used in connection with its business or
operations, other than computer software and other non-proprietary Intellectual
Property necessary to operate business systems generally, drilling know-how,
patents on equipment used by the Company and the name "▇.▇. ▇▇▇▇▇▇ Well Service
Company" .
3.16 Contracts. The Disclosure Schedule lists all contracts and other
agreements to which the Company is a party that involve amounts in excess of
$250,000 or that continue for a term in excess of six months. Each such
agreement is in full force and effect, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
and to general principles of equity. The Company is not, and to the Knowledge of
the Company and the Seller, no other party to any such agreement is, in material
default thereunder and no event has occurred which (with or without notice,
lapse of time or, to the Knowledge of the Company and the Seller, action by a
third party) would constitute a material default thereunder.
3.17 Insurance. The Disclosure Schedule sets forth the following
information with respect to each insurance policy of the Seller, the Company or
any Affiliate thereof (including policies providing property, casualty,
liability and workers' compensation coverage and bond and surety arrangements)
to which the Company has been a party, a named insured or otherwise the
beneficiary of coverage at any time since April 1, 1995 that covers, affects or
relates to the business, operations, assets or properties of the Company:
(a) the name, address and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder and the name of
each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was on a
claims made, occurrence or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Each such insurance policy is or was in full force and effect for the
period specified therefor in the Disclosure Statement, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights and to general principles of equity and, since April 30, 1996
the assets, properties and personnel of the Company have been covered under one
or more of such policies as noted therein. The Disclosure Schedule describes any
self-insurance arrangements covering, affecting or relating to the business,
operations, assets or properties of the Company.
3.18 Litigation. The Disclosure Schedule sets forth all suits, actions or
legal, administrative or other proceedings or governmental investigations
pending to which the Company is a party. There is no suit, action or legal,
administrative, arbitration or other proceeding or governmental investigation
pending to which the Company is a party that may reasonably be expected to have
a Company Material Adverse Effect. The Company is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge. There are no actions,
suits, proceedings or governmental investigations pending or, to the Knowledge
of the Seller or the Company, threatened, which seek to question, delay or
prevent the consummation of, or would materially impair the ability of the
parties hereto to consummate, the transactions contemplated hereby.
3.19 Employees.
(a) The Disclosure Schedule lists all employees of the Company, the rates
of pay for each such employee and any and all commission, bonus or other
compensation arrangements between the Company and any of such employees.
(b) The Disclosure Schedule lists each management or employment contract or
contract for personal services and a brief description of any understanding or
commitment between the Company and any officer, consultant, director, employee
or independent contractor of the Company.
(c) A copy of each written management or employment contract or contract
for personal services between the Company and any officer, consultant, director,
employee or independent contractor of the Company has been provided to the
Buyer.
(d) The Company is not a party to or bound by any collective bargaining
agreement nor, to the Knowledge of the Seller and the Company, is there any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
3.20 Employee Benefit Plans.
(a) The Disclosure Schedule sets forth a brief description of each bonus,
pension, profit sharing, retirement, severance, termination pay, stock purchase,
incentive or deferred compensation, stock option, medical, hospitalization,
disability, life insurance, accident, insurance or similar plan or practice
(collectively, "Employee Benefit Plans") in effect with respect to the Company's
directors, officers and employees.
(b) With respect to each of the Company's Employee Benefit Plans, the
Seller has made available to the Buyer true and complete copies of: (i) all plan
documents, including any related trust agreements, insurance contracts or other
funding arrangements; (ii) the most recent determination letter received from
the Internal Revenue Service (where applicable); (iii) the most recent IRS
Series 5500 Form, including, where applicable, the most recent financial
statement; and (iv) the most recent summary plan description.
(c) The Company does not maintain, contribute to or have any Liability
under any funded or unfunded medical, health, disability, long-term care or life
insurance plan or arrangement for present or future retirees from the Company,
except as required by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(d) The Company does not maintain or contribute to a trust, organization or
association described in any of Section 501(c)(9), 501(c)(17) or 501(c)(20) of
the Code.
(e) Favorable determination letters have been received from the Internal
Revenue Service with respect to each of the Company's Employee Benefit Plans
that is intended to comply with the provisions of Section 401(a) of the Code,
evidencing compliance with the relevant provisions of the Tax Equity and Fiscal
Responsibility Act of 1982, the Tax Reform Act of 1984, the Retirement Equity
Act of 1984 and the Tax Reform Act of 1986. To the Knowledge of the Seller and
the Company, nothing has occurred since the date of such determination letters
that would adversely affect the qualified status of each such Employee Benefit
Plan or the tax-exempt status of any related trust.
(f) Each of the Company's Employee Benefit Plans that is, or since April
30, 1996 has been, subject to Section 412 of the Code, Section 302 of ERISA or
Title IV of ERISA has been terminated and its assets distributed, and the
Company does not maintain or contribute to any such plan.
(g) Since April 30, 1996, neither the Company nor any ERISA Affiliate of
the Company has maintained, contributed to or had any Liability (including
current or potential withdrawal liability) with respect to any "multiemployer
plan" as such term is defined in Section 3(37) of ERISA.
(h) The Company is not a party to any employment agreement, whether written
or oral, or any of the Company's Employee Benefit Plans which contains any
provision relating to change in control of the Company.
(i) The Company has not made or become obligated to make, or will, as a
result of any event connected with the acquisition of the Company Stock by the
Buyer or any other transaction contemplated herein, make or become obligated to
make, any "excess parachute payment" as defined in section 280G of the Code
(without regard to subsection (b)(4) thereof).
(j) There has been no act or omission by the Company, or by any current
Affiliate of the Company, that would impair in any material respect the right or
ability of the Company to amend or terminate unilaterally any of the Company's
Employee Benefit Plans or to terminate unilaterally, as of the Closing Date, the
accrual of any benefits after the Closing Date with respect to employees or
former employees of the Company.
(k) The ▇.▇. ▇▇▇▇▇▇ Well Service Company Profit Sharing Plan does not fail
to meet the requirements of a "qualified plan" under Section 401 of the Code as
a result of any action, or omission, by the Company prior to the Closing.
(l) Each of the Company's Employee Benefit Plans is, in all material
respects, in compliance, and has been administered, maintained and funded in all
material respects in accordance, with the applicable provisions of ERISA and the
Code and all other applicable laws, rules and regulations. All reports and
information required to be filed or distributed in accordance with ERISA or the
Code with respect to each Employee Benefit Plan have been timely and properly
filed and distributed including, without limitation, IRS Forms 5500.
(m) All contributions or premiums which are or were due between April 30,
1996 and on or prior to the Closing Date with respect to the Employee Benefit
Plans have been or will be timely paid by Company on or prior to the Closing
Date.
(n) Nothing in this Agreement, express or implied, shall be construed to
prevent the Buyer from terminating or modifying to any extent or in any respect
whatsoever any employee benefit or fringe benefit plan, policy or program that
the Buyer sponsors, assumes or maintains, or to which the Buyer may contribute
or have an obligation to contribute.
3.21 Powers of Attorney. There are no outstanding powers of attorney
executed by or on behalf of the Company.
3.22 Guarantees. The Company is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
3.23 No Implied Representations or Warranties. Notwithstanding anything
contained in this Article 3 or any other provisions of this Agreement, it is the
explicit intent of each party hereto that neither the Seller nor the Company is
making any representation or warranty whatsoever beyond those expressly given in
this Agreement. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE ASSETS OF
THE COMPANY WHICH THE BUYER IS INDIRECTLY ACQUIRING THROUGH THE PURCHASE OF THE
COMPANY STOCK ARE BEING ACQUIRED "AS IS, WHERE IS, WITH ALL FAULTS" AND WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY OR ON BEHALF OF THE SELLER OR THE
COMPANY, EXPRESS, IMPLIED OR OTHERWISE, EXCEPT AS OTHERWISE CONTAINED IN THIS
SECTION 3. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NEITHER THE SELLER
NOR THE COMPANY MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR
OTHERWISE, AS TO THE CONDITION, MERCHANTABILITY, SUITABILITY, HABITABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES WITH RESPECT
TO ANY OF THE ASSETS OF THE COMPANY, INCLUDING ANY REPRESENTATIONS OR WARRANTIES
THAT MAY ARISE FROM USAGE OF TRADE OR COURSE OF DEALING.
3.24 Accredited Investor; Investment Intent. The Seller is an "accredited
investor," as such term is defined in Regulation D promulgated under the
Securities Act of 1933, as amended. The Seller is acquiring the shares of Key
Energy Common Stock and the Warrants comprising a portion of the Purchase Price
for investment purposes only and not with a view towards resale or distribution.
3.25 Drilling and Workover Rigs. The Disclosure Schedule lists all of the
drilling and workover rigs owned or leased by the Company and sets forth the
location of such rigs on the date thereof. The Company has good and marketable
title to all rigs owned by it, free and clear of all Security Interests.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND KEY ENERGY.
The Buyer and Key Energy represent and warrant to the Seller that the
statements contained in this Article 4 are correct and complete as of the date
of this Agreement, except as set forth in the Disclosure Schedule. The
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this Article 4.
4.1 Organization and Good Standing. Each of the Buyer and Key Energy is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its organization, has full, requisite corporate power and
authority to carry on its business as it is currently conducted and to own and
operate the properties currently owned and operated by it, and is duly qualified
or licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of the
properties owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a Material Adverse Effect on the Buyer or
Key Energy, respectively.
4.2 Authorization of Transaction. Each of the Buyer and Key Energy has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and each Exhibit to which it is a party and Key
Energy has full power and authority (including full corporate power and
authority) to execute and deliver the Warrants and the Key Energy Common Stock
to be delivered hereunder and thereunder and to perform its obligations
thereunder. Without limiting the generality of the foregoing, the respective
boards of directors of the Buyer and Key Energy and, if required by applicable
law, the stockholders of the Buyer and Key Energy, have duly authorized the
execution, delivery and performance of this Agreement and each Exhibit to which
the Buyer or Key Energy is a party by the Buyer and Key Energy, respectively.
This Agreement and each Exhibit to which the Buyer or Key Energy is a party
constitutes the valid and legally binding obligation of the Buyer and/or Key
Energy, enforceable against the Buyer and/or Key Energy, respectively, in
accordance with its terms and conditions, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
and to general principles of equity. The Warrants, when executed and delivered
by Key Energy, will constitute the legally valid and binding obligations of Key
Energy, enforceable against Key Energy in accordance with their terms, except as
enforceability is limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and equitable
principles.
4.3 Noncontravention. Except, in each case, where such violations
individually or in the aggregate would not have a Material Adverse Effect on the
applicable party, neither the execution and the delivery of this Agreement, the
Exhibits hereto and the Warrants, nor the consummation of the transactions
contemplated hereby and thereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge or other
restriction of any government, governmental agency or court to which the Buyer
or Key Energy is subject or any provision of their respective charter or bylaws
or (b) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which the Buyer or Key Energy is a
party or by which it is bound or to which any of its assets is subject. Except
for (i) any required filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and (ii) filings with federal or state securities
commissions in connection with the transactions contemplated in the Warrants and
the registration rights contemplated in Section 5.14, neither the Buyer nor Key
Energy needs to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement or the Warrants.
4.4 Brokers' Fees. The Buyer has no Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
4.5 Financial Capability; No Financing Condition. The Buyer will have
available on the Closing Date, funds sufficient to pay the Purchase Price. Key
Energy has available and will have available on the Closing Date, and has
reserved for issuance, a sufficient number of shares of Key Energy Common Stock
to pay the stock portion of the Purchase Price and to issue the Warrant Shares
on conversion of the Warrants. Each of the Buyer and Key Energy acknowledges and
understands that its obligations to effect the transactions contemplated hereby
are not subject to the availability to the Buyer or Key Energy of financing
sufficient to pay the Purchase Price.
4.6 Litigation. There are no actions, suits, proceedings or government
investigations pending or, to the Knowledge of the Buyer and Key Energy,
threatened, which seek to question, delay or prevent the consummation of, or
would materially impair the ability of the parties hereto to consummate, the
transactions contemplated hereby.
4.7 Accredited Investor; Investment Intent. The Buyer is an "accredited
investor," as such term is defined in Regulation D promulgated under the
Securities Act. The Buyer is purchasing the Company Stock for investment
purposes only and not with a view towards resale or distribution.
4.8 Capitalization of Key Energy. As of the date hereof, the authorized
capital stock of Key Energy consists solely of 25,000,000 shares of the Key
Energy Common Stock. Other than the Key Energy Common Stock, Key Energy has no
class or series of Equity Securities authorized, issued or outstanding. As of
July 15, 1997, 12,422,964 shares of the Key Energy Common Stock were issued and
outstanding. As of the date hereof, (i) 265,000 shares of the Key Energy Common
Stock were reserved for issuance upon the exercise of Warrants and (ii)
8,177,246 shares of Key Energy Common Stock shares are issuable upon the
conversion of outstanding convertible securities of Key Energy. Pursuant to Key
Energy's Certificate of Incorporation, the board of directors of Key Energy has
the authority, without further shareholder action, to redesignate all of the
authorized and unissued shares of Key Energy Common Stock into one or more
series of preferred stock. No shares of authorized and unissued Key Energy
Common Stock have been so designated or issued. All of the issued and
outstanding shares of the capital stock of Key Energy have been duly authorized
and are validly issued, fully paid and nonassessable, and no shares of the
capital stock of Key Energy are subject to, nor have they been issued in
violation of, preemptive rights. The shares of Key Energy Common Stock
constituting a portion of the Purchase Price when issued and delivered by Key
Energy, the Warrants, when executed and delivered by Key Energy, and the Warrant
Shares, when issued on conversion of the Warrants, will have been duly
authorized and validly issued and will not be subject to, nor issued in
violation of, preemptive rights. Except as referred to above, there are
outstanding (a) no Equity Securities of Key Energy, and (b), except for the
obligations of (1) the parties pursuant to this Agreement, and (2) Key Energy
pursuant to the Warrants, no options or other rights to acquire from Key Energy,
and no obligations of Key Energy to issue or sell, any Equity Securities of Key
Energy. Except as set forth in the Key Energy Reports, there are no outstanding
obligations of Key Energy to repurchase, redeem or otherwise acquire any shares
of its capital stock. Except as set forth in the Key Energy Reports, there is no
agreement or arrangement restricting the voting or transfer of any of the Equity
Securities of Key Energy. Except as described in the Key Energy Reports or as
contemplated hereby and by the Warrants and the registration rights contemplated
in Section 5.14, there are no agreements or arrangements to which Key Energy is
a party pursuant to which Key Energy is or could be required to register shares
of the Key Energy Common Stock under the Securities Act.
4.9 SEC Filings of Key Energy. Key Energy has delivered to the Seller
accurate and complete copies (without exhibits) of (i) the Annual Report on Form
10-K of Key Energy for the fiscal year ended June 30, 1996, (ii) its Quarterly
Reports on Form 10-Q for the quarterly periods ended September 30, 1996,
December 31, 1996 and ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) its Proxy Statement for its last
Annual Meeting of Shareholders, (iv) its Current Reports on Form 8-K as filed
since June 30, 1996, in each case in the form filed by Key Energy with the
Commission and (v) its Registration Statements on Form 8-A dated May 21, 1981,
as amended, and June 6, 1997 (collectively, the "Key Energy Reports"). The Key
Energy Reports are the only reports, schedules, forms, statements and other
documents required by the Exchange Act to be filed by Key Energy with the
Commission since June 30, 1996. None of the Key Energy Reports, including,
without limitation, any financial statements or schedules included therein, at
the time filed, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited consolidated interim financial statements of Key Energy
(collectively, "Key Energy Financial Statements") included in such reports
present fairly, in conformity in all material respects with generally accepted
accounting principles (except as may be indicated in the notes thereto and
except that certain information and disclosure normally included in notes to
consolidated financial statements have been condensed or omitted from the
unaudited consolidated interim financial statements pursuant to rules and
regulations of the Commission, but any resultant disclosures are in accordance
with generally accepted accounting principles as they apply to interim
reporting), the consolidated financial position of Key Energy as of the dates
thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end audit adjustments in the case of
any unaudited interim financial statements).
4.10 Material Adverse Effect. Since March 31, 1997, other than as described
in the Key Energy Reports, no event has occurred, or condition exists, which
would constitute or cause, individually or in the aggregate, a Material Adverse
Effect with respect to Key Energy.
ARTICLE 5. COVENANTS.
The parties agree as follows:
5.1 General. Each of the parties will use its respective reasonable best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Article 6).
5.2 Notices and Consents. The Company will give any required notices to
third parties, and the Company will use its best efforts to obtain any third
party consents required in connection with the matters referred to in Section
3.6. Each of the parties will give any notices to, make any filings with, and
use its best efforts to obtain any authorizations, consents and approvals of
governments and governmental agencies in connection with the matters referred to
in Section 3.6 and Section 4.3.
5.3 Operation of Business. Until the earlier of the Closing or the date of
the Operating Agreement, the Buyer, Key Energy, the Seller and the Company agree
to cooperate with each other to effect an orderly transition of the ongoing
operations of the Company. The Company will operate in the Ordinary Course of
Business.
5.4 Preservation of Business, Operations, Properties and Assets of the
Company. The Seller will, and will cause the Company to, use commercially
reasonable efforts to preserve, maintain and protect the business, operations,
properties and assets of the Company. The Seller will not, and will cause the
Company not to, intentionally take any action to affect in an adverse manner the
present business, operations, assets or properties of the Company or its
relationships with vendors, suppliers, customers and employees related thereto.
5.5 Access; Confidentiality; Etc.. The Seller will, and will cause the
Company to, permit representatives of the Buyer and Key Energy to have
reasonable access from time to time during regular business hours of all
premises, properties, personnel, books, records, contracts and documents of or
pertaining to the Company, as the Buyer or Key Energy may from time to time
reasonably request upon at least two business days notice. Until the Closing
Date and, in the event that this Agreement is terminated, for a period of three
years from the date of this Agreement, each of the Buyer and Key Energy agrees
that it and its Affiliates will treat confidentially and not disclose in any
manner whatsoever any information regarding the Company or the Seller which the
Company or the Seller or any of their officers, directors, employees, agents or
representatives furnish to the Buyer, Key Energy or any person acting on behalf
of the Buyer or Key Energy, except as required by applicable law. Key Energy
will furnish to the Seller, promptly after filing, copies of all annual reports,
quarterly reports and current reports filed by Key Energy with the Securities
and Exchange Commission until the first anniversary of the Closing Date.
5.6 Notice of Developments. Each party will give prompt written notice to
the other parties of the occurrence of any event that has or may reasonably be
expected to have a Material Adverse Effect on such party or any event causing a
breach of any of its own representations and warranties in Article 3 and Article
4.
5.7 Insurance. The Seller will, or will cause the Company to, maintain
appropriate insurance relative to the Company's business operations, assets and
properties, consistent with past practice, from the date hereof through the
Closing Date.
5.8 Employee Matters.
(a) As of the Closing, the Buyer shall, except as otherwise agreed to by
the Seller, or shall cause the Company to, continue the employment of employees
of the Company and shall provide all of the Company's employees with such
benefit plans and arrangements which shall be in effect on the Closing Date with
respect to comparable employees of the Buyer located in the same geographic
region.
(b) Each of the employees of the Company on the Closing Date who are
eligible to participate in the Buyer's Employee Benefit Plans or the Company's
Employee Benefit Plans shall be entitled to participate in such plans as of and
from the Closing Date.
(c) The Buyer shall recognize, or cause the Company to recognize, all
service credited for each of the employees on the Company's records for purposes
of eligibility for participation and vesting under the Buyer's Employee Benefit
Plans or the Company's Employee Benefit Plans and the level of benefits under
such plans but specifically excluding any benefit accrual under any Employee
Benefit Plan of Buyer that is a defined benefit plan.
(d) From and after the Closing, the salaried employees of the Company shall
be entitled to retain and take any paid vacation days accrued but not taken
under the Company's vacation policies prior to the Closing, provided that such
vacation days are taken, or paid in lieu of being taken, on or before December
31, 1997. Such employees shall only accrue vacation under the Buyer's vacation
policies from and after the Closing Date.
(e) The Buyer, the Company and the Seller agree to furnish each other with
appropriate records for each of the employees of the Company as may be necessary
to assist in proper benefit administration.
(f) Nothing expressed or implied in this Agreement shall confer upon any
employee of the Company, or any legal representative thereof, any rights or
remedies, including any right to employment or continued employment for any
specified period, of any nature or kind whatsoever or make such Person third
party beneficiaries of this Agreement. Nothing in this Agreement, express or
implied, shall be construed to prevent the Buyer from terminating, amending or
modifying to any extent any Employee Benefit Plan or other arrangement that the
Buyer may establish or maintain or to which it may contribute or have an
obligation to contribute.
(g) The Buyer, to the extent set forth in Article 8, shall indemnify and
hold the Seller harmless (i) from all claims by any employee of the Company who
shall continue employment with the Company, the Buyer or any of its Affiliates
after the Closing but whom the Buyer or any member of its affiliated group shall
thereafter terminate, or by any spouse, dependent, estate or other beneficiary
or representative of such employee, and (ii) from any claims or charges by, or
relating to, any such employee concerning Employee Benefit Plans of the Company,
wrongful termination, discrimination or harassment, or violation of any law,
including (1) the Fair Labor Standards Act, (2) the Labor Management Relations
Act, (3) the Workers Adjustment and Retraining Notification Act, (4) the
Americans With Disabilities Act, (5) ERISA, (6) the Consolidated Omnibus Budget
Reconciliation Act of 1985, (7) the National Labor Relations Act, (8) the Family
and Medical Leave Act and (9) Title VII of the Civil Rights Act of 1964, all as
attributable to the conduct of the Buyer or any member of its affiliated group
with respect to such employee occurring subsequent to the date hereof.
(h) The Seller, to the extent set forth in Article 8, shall indemnify and
hold the Buyer and its Affiliates harmless, (i) from all claims (other than
those with respect to the Consolidated Budget Reconciliation Act of 1985, as
amended) by any employee or former employee terminated by the Company prior to
the Closing, or by any spouse, dependent, estate or other beneficiary or
representative of such employee or former employee, and (ii) from any claims or
charges by, or relating to, any such employee or former employee concerning
wrongful termination, discrimination or harassment, or violation of any law
(other than the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended), including, without limitation, (1) the Fair Labor Standards Act, (2)
the Labor Management Relations Act, (3) the Workers Adjustment and Retraining
Notification Act, (4) the Americans With Disabilities Act, (5) ERISA, (6) the
National Labor Relations Act, (7) the Family and Medical Leave Act, and (8)
Title VII of the Civil Rights Act of 1964, all as attributable to the conduct of
the Company or any member of its affiliated group with respect to the employees
or former employees of the Company occurring prior to the date hereof.
(i) Notwithstanding anything in this Agreement to the contrary, on and
after the Closing Date, the Buyer and the Company shall be responsible for and
shall assume, indemnify, defend and hold harmless the Seller, ▇▇▇▇▇▇ Industries,
Inc. and their ERISA Affiliates and their employees, former employees, agents
and representatives from and against any and all Liabilities (including, without
limitation, disbursements and reasonable legal fees incurred in connection
therewith and in seeking indemnification therefor and any amounts or expenses
required to be paid or incurred in connection with any action, suit, proceeding,
claim, appeal, demand, assessment or judgment) under the Consolidated Omnibus
Reconciliation Act of 1985, as amended (e.g., Code Section 4980B, ERISA Section
601-8 and 502(c)(1)(A) and any predecessors or successors), regarding the
Company and its employees and former employees and their qualified beneficiaries
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
regardless of whether such Liabilities were omissions, conditions, occurrences,
facts or circumstances for all periods prior to April 30, 1996 and for all
periods on or after the Closing Date, including but not limited to, the
responsibility of the Buyer and the Company to provide any necessary health
coverages to and otherwise satisfy the requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, on and after the Closing Date
with respect to employees and former employees of the Company and their
qualified beneficiaries under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended. The Seller shall similarly indemnify, defend and hold
harmless the Buyer, the Company and their ERISA Affiliates, and their employees,
former employees, agents and representatives with respect to such matters for
the period from April 30, 1996 to the date hereof.
5.9 Further Assurances. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request (including any request as may be required to be made by the Seller on
behalf of Oxy pursuant to the Oxy Purchase Agreement), all at the sole cost and
expense of the requesting party (unless the requesting party is entitled to
indemnification therefor under Article 8 or unless the party subject to the
request is otherwise obligated to take such action pursuant to the terms of this
Agreement). To the extent necessary for Tax, accounting, collection of
receivables assigned to Oxy pursuant to Section 5(b) of the Oxy Purchase
Agreement, benefits administration or other reasonable business purposes
(including as may be required under the Oxy Purchase Agreement), the Buyer shall
provide to the Seller (and, at the Seller's request, Oxy, to the extent provided
in the Oxy Purchase Agreement) access at reasonable times during business hours
to the records of the Company.
5.10 Litigation Support. In the event and for so long as any party (or Oxy,
pursuant to the Oxy Purchase Agreement) actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand in connection with (a) any transaction contemplated under this
Agreement or (b) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving the Company, the other
party will cooperate with the contesting or defending party (or Oxy, as
applicable) and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending party (or Oxy, as applicable)
(unless the contesting or defending party is entitled to indemnification
therefor under Article 8).
5.11 Tax Matters.
(a) The Buyer shall pay all transfer Taxes, including sales, use, excise,
stamp, documentary, filing, recording, permit, license, authorization or other
similar Taxes and filing fees and similar charges resulting from this Agreement
or the transactions contemplated hereby (including, if applicable, an election
under Section 338(h)(10) of the Code), regardless of upon whom such transfer Tax
is levied or imposed by law. The Seller shall be liable for all Taxes relating
to the Company for taxable periods ending on or before the Closing Date. The
Buyer shall be liable for all Taxes imposed with respect to the Company which
are attributable to any taxable periods after the Closing Date. In the event the
Tax year of the Company does not end on the Closing Date for one or more Taxes,
the Seller shall pay such Taxes as are attributable to the period before
Closing, as if such Tax year had ended on the Closing Date. The Seller shall be
responsible for filing, or causing to be filed, all income or franchise Tax
Returns which are required to include the income, deduction and credits, etc. of
the Company for any tax period ending before, on or with the Closing Date. After
the Closing Date, the parties shall cooperate with each other (and, to the
extent required in Section 5(g) of the Oxy Purchase Agreement, with Oxy) in the
preparation of any pre-closing or post-closing Tax Returns.
(b) In the case of any audit, examination or other proceeding
("Proceedings") with respect to Taxes for which the Seller is or may be liable
pursuant to this Agreement, the Buyer shall promptly inform the Seller, and
shall afford the Seller, at the Seller's expense, the opportunity to control the
conduct of such Proceeding. The Buyer shall execute or cause to be executed
powers of attorney or other documents necessary to enable the Seller to take all
actions desired by the Seller with respect to such Proceeding to the extent such
Proceeding may affect amount of Taxes for which the Seller is liable pursuant to
this Agreement. The Seller shall have the right to control any such Proceedings,
and, if there is substantial authority thereof, to initiate any claim for
refund, file any amended return or take any other action which it deems
appropriate with respect to such Taxes. Any Proceeding with respect to Taxes for
a period which includes but does not end on the Closing Date shall be controlled
jointly by the Seller and the Buyer.
Notwithstanding the foregoing, the Seller shall not agree to any settlement
concerning Taxes for any taxable period ending on or before the Closing Date
which may result in a material increase in Taxes for any taxable period ending
after the Closing Date without the prior written consent of the Buyer.
(c) The Seller, the Company and their Affiliates, as of the Closing Date,
shall terminate all Tax allocation agreements or other Tax sharing arrangements
with respect to the Company, shall cause such agreements or arrangements to be
of no further force and effect as regards the Company on and after the Closing
Date and there shall be no further liability of the Company thereunder from and
after the Closing Date.
(d) The Buyer and the Seller shall join in an election to have the
provisions of Section 338(h)(10) of the Code and similar provisions of federal,
state, local or foreign law (where permissible) apply to the acquisition by the
Buyer of the Company Stock whereby (i) the Company will be treated as having
sold all of its assets in a single transaction as of the close of business on
the Closing Date while a member of the Seller's consolidated Tax group and (ii)
no gain or loss will be recognized by the Seller or the Company with respect to
the sale of Company Stock by the Seller. The election will include the execution
and subsequent filing of Internal Revenue Service Form 8023-A pursuant to the
requirements as stated therein. The Buyer shall, within 60 days of the Closing
Date, provide to the Seller an allocation of the deemed purchase price among the
assets of the Company in accordance with Code Sections 338 and 1060 and any
comparable provisions of state, local or foreign law, as appropriate. Such
allocation shall be deemed acceptable to the Seller unless it notifies the Buyer
of any objections within 30 days of receipt of such allocation. If the Seller
and the Buyer are unable to agree on such allocation within 120 days of the
Closing Date, then an independent accounting firm mutually acceptable to the
parties hereto shall make a binding determination with respect to such
allocation, the fees and expenses of which shall the paid equally by the Seller
and the Buyer.
(e) The Buyer, Key Energy and the Seller shall preserve all information,
returns, books, records and documents relating to any liabilities for Taxes of
the Company with respect to a taxable period until the later of expiration of
all applicable statutes of limitation and extensions thereof or a final
determination with respect to Taxes of the Company for such period.
5.12 Inspections. EACH OF THE BUYER AND KEY ENERGY ACKNOWLEDGES AND AFFIRMS
THAT IT HAS HAD THE OPPORTUNITY TO COMPLETE ITS OWN INDEPENDENT INVESTIGATION,
ANALYSIS AND EVALUATION OF THE COMPANY AND ITS ASSETS, THAT IT HAS BEEN AFFORDED
THE OPPORTUNITY TO INSPECT AND HAS INSPECTED THE COMPANY AND ITS ASSETS, THAT IN
MAKING ITS DECISION TO ENTER IN TO THIS AGREEMENT AND TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY IT HAS RELIED SOLELY ON (a) ITS INDEPENDENT
INVESTIGATION, ANALYSIS AND EVALUATION OF THE COMPANY AND ITS ASSETS AND (b) THE
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER AND THE COMPANY
CONTAINED IN THIS AGREEMENT, AND THAT IT HAS MADE ALL SUCH REVIEWS AND
INSPECTIONS OF THE FOREGOING AS ITS HAS DEEMED NECESSARY OR APPROPRIATE. Nothing
in this Section 5.12 shall relieve the Seller or the Company of any liability or
responsibility for its representations, warranties and covenants in this
Agreement.
5.13 Acquisition Proposals. The Seller will not, and will cause the Company
not to, directly or indirectly at any time before termination of this Agreement
(i) solicit, initiate or encourage any inquiries or proposal for a merger,
consolidation or other business combination involving the Company or for the
acquisition or purchase of any equity interest in, or a material portion of the
assets of, the Company, from any Person (other than the transactions with the
Buyer and Key Energy contemplated by this Agreement) or (ii) participate in any
discussions or negotiations regarding, or furnish to any Person, other than the
Buyer, Key Energy or their representatives, any information with respect to, or
otherwise, facilitate or encourage any such proposal by any other Person; it
being understood that proposals relating to a merger, consolidation, business
combination or sale of equity interests or assets involving the Seller or any
Affiliate (other than the Company) shall not be prohibited hereby nor require
notice to the Buyer or Key Energy so long as such proposals permit the
consummation of the transactions contemplated by this Agreement.
5.14 Registration Rights.
(a) Agreement to Register Resales. Key Energy agrees that no later than 90
days following the Closing Date, it will file with the Commission on Form S-3,
or if Form S-3 is not available to Key Energy, on Form S-1, a shelf registration
statement pursuant to Rule 415 of the Securities Act (the "Shelf Registration
Statement") covering the offer and resale by the Seller of (i) the shares of Key
Energy Common Stock delivered to the Seller pursuant to Section 2.2(a)(ii), and
(ii) the Warrant Shares (collectively, the "Registered Securities"), and will
use its best efforts to cause the Shelf Registration Statement to be declared
effective promptly by the Commission, and in any event within 90 days after the
initial filing thereof.
(b) Effectiveness of Shelf Registration Statement. Key Energy agrees to
maintain the Shelf Registration Statement in effect for the maximum period
allowable under the regulations promulgated by the Commission; provided that if
such maximum period is less than two years from the Closing Date and if as of
the end of such maximum period not all of the Registered Securities registered
under the Shelf Registration Statement have been sold or are capable of being
sold under Rule 144 of the Securities Act without application of the volume,
manner of sale or notice restrictions, then within 10 days after the end of such
maximum period Key Energy shall file either a post-effective amendment to the
existing Shelf Registration Statement or a new Shelf Registration Statement
covering the offer and resale by the Seller of all Registered Securities not
previously sold, and Key Energy will use its best efforts to cause the same to
be declared effective promptly by the Commission, and in any event within 90
days after the initial filing thereof.
(c) Blue Sky Qualification. Key Energy will use its best efforts to effect
any qualification and compliance as may be required and as would permit or
facilitate the resale of such Registered Securities, including, without
limitation, registration under the Securities Act, appropriate qualifications
under applicable blue sky or other state securities laws and, appropriate
compliance with any other governmental requirements.
(d) Registration Expenses. All expenses (except for any legal fees for the
Seller's counsel) relating to the registration of the Registered Securities
pursuant to this Agreement (including, but not limited to, the expenses of any
qualifications under the blue-sky or other state securities laws and compliance
with governmental requirements of preparing and filing any post-effective
amendments or prospectus supplements required for the lawful distribution of the
Registered Securities to the public in connection with such registration) will
be paid by Key Energy.
(e) Preparation; Reasonable Investigation. Key Energy will give the Seller
the opportunity to participate in the preparation of the Shelf Registration
Statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and will give the Seller such
access to its books and records and such opportunities to discuss the business
of Key Energy with its officers and the independent public accountants who have
certified its financial statements as shall be reasonably necessary, in the
Seller's judgment, to conduct a reasonable investigation within the meaning of
the Securities Act.
(f) Transfer of Registration Rights. The registration rights provided by
this Section 5.14 are transferable to any Affiliate of the Seller to which the
Registered Securities may be transferred and to any single purchaser of all (but
not less than all) of the Registrable Securities, provided, in each case, that
the Affiliate or the purchaser agrees (in a writing that names the Company as an
explicit third party beneficiary) to be bound by all the terms and provisions of
this Section 5.14.
(g) Undertaking to File Reports and Cooperate in Rule 144 and Rule 145
Transactions. For as long as the Seller is subject to Rule 144 of the Securities
Act with respect to the Registered Securities, Key Energy will use its best
efforts to timely file all annual, quarterly and other reports required to be
filed by it under Section 13 or 15(d) of the Exchange Act and the rules and
regulations of the Commission thereunder, as amended from time to time. If the
Seller proposes to sell any Registered Securities pursuant to Rule 144, Key
Energy shall cooperate with the Seller so as to enable such sales to be made in
accordance with applicable laws, rules and regulations, the requirements of Key
Energy's transfer agent, and the reasonable requirements of the broker through
which the sales are proposed to be executed. Without limiting the generality of
the foregoing, Key Energy shall, upon request, furnish with respect to each such
sale (i) a written statement certifying that Key Energy has complied with the
public information requirements of Rule 144 and (ii) an opinion of Key Energy's
counsel regarding such matters as Key Energy's transfer agent or such
stockholder's broker may reasonably desire to confirm.
(h) Additional Undertakings with Respect to Registration Rights. In
connection with its registration obligations under this Section 5.14, Key Energy
shall:
(i) Delivery of Shelf Registration Statement of Prospectus. Furnish to the
Seller such number of copies of the Shelf Registration Statement, each amendment
and supplement thereto, the prospectus included in such Shelf Registration
Statement (including each preliminary prospectus), any documents incorporated by
reference therein and such other documents as the Seller may reasonably request
in order to facilitate the disposition of the Registered Securities.
(ii) Notice to the Seller. Promptly notify the Seller and (if requested
confirm such notice in writing (A) when a prospectus or any prospectus
supplement or post-effective amendment has been filed and, with respect to the
Shelf Registration Statement or any post-effective amendment, when the same has
become effective, (B) of the issuance by any state securities or other
regulatory authority of any other regulatory authority of any order suspending
the qualification or exemption from qualification of any of the Registered
Securities under state securities or blue sky laws or the initiation of any
proceedings for that purpose, and (C) of the happening of any event that makes
any statement made in the Shelf Registration Statement or related prospectus
untrue or which requires the making of any changes in such Shelf Registration
Statement, prospectus or documents so that they will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and,
as promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter
deliverable to the purchasers of such Registered Securities, such prospectus
will not contain any untrue statement of a material fact or omit a material fact
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading.
(iii) Incorporation of Information. If requested by the Seller, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the Seller reasonably requests to be included therein, including,
without limitation, with respect to the Registered Securities being sold by the
Seller, and promptly make all required filings of such prospectus supplement or
post-effective amendment.
(iv) Delivery of Documents Incorporated by Reference. As promptly as
practicable after filing with the Commission of any document that is
incorporated by reference into the Shelf Registration Statement (in the form in
which it was incorporated), deliver a copy of each such document to the Seller.
(v) Listing. Cause the Registered Securities to be (A) listed on each
securities exchange, if any, on which similar securities issued by Key Energy
are then listed, or (B) authorized to be quoted and/or listed (to the extent
applicable) on the National Association of Securities Dealers, Inc. Automated
Quotation or the NASDAQ National Market System if the Key Energy Common Stock so
qualifies.
(vi) Filing of Exchange Act Reports. During the period when a prospectus is
required to be delivered under the Securities Act, promptly file all documents
required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act.
(vii) Requests for Information by the Commission. Notify the Seller
promptly of any request by the Commission for the amending or supplementing of
such Shelf Registration Statement or prospectus or for additional information.
(viii) Notice of Stop Orders. Advise the Seller, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such Shelf Registration Statement
or the initiation or threatening of any proceeding for such purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
For purposes of this Section 5.14(h), the "Seller" shall include any
Affiliate of the Seller or other Person to which the Registered Securities and
registration rights with respect thereto are transferred. Also for purposes of
this Section 5.14(h), Registered Securities shall refer to any capital stock of
Key Energy or its successors into which Key Energy shares may be exchanged or
converted.
(i) Indemnification.
(i) Key Energy will, and hereby does, indemnify and hold harmless, to the
extent permitted by applicable law, the Seller, its officers and directors, if
any, and each Person, if any, who controls the Seller within the meaning of
Section 15 of the Securities Act, and their respective successors, against all
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses, including legal fees incurred in investigating or defending any such
loss, claim, damage or liability (under the Securities Act or common law or
otherwise) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration Statement or
prospectus (and as amended or supplemented if Key Energy shall have furnished
any amendments or supplements thereto), covering the Registrable Securities or
any preliminary prospectus or other document incident thereto or arising out of
or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities (or
proceedings in respect thereof) or expenses arise out of or are based upon any
untrue statement or alleged untrue statement contained in or by any omission or
alleged omission from information furnished in writing to Key Energy by the
Seller expressly for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Seller, its
officers, directors or any Person, if any, who controls the Seller as aforesaid,
and shall survive the transfer of such securities by the Seller.
(ii) The Seller will and hereby does indemnify and hold harmless, to the
extent permitted by applicable law, Key Energy, its officers and directors and
each Person, if any, who controls Key Energy within the meaning of Section 15 of
the Securities Act, and their respective successors, against all losses, claims,
damages, liabilities (or proceedings in respect thereof) and expenses, including
legal fees incurred in investigating or defending any such loss, claim, damage
or liability (under the Securities Act or common law or otherwise) arising out
of or based upon any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact required to be state
in any Shelf Registration Statement or prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or other document incident thereto
or arising out of or based upon any omission or alleged omission to state
therein a material fact, or necessary to make the statements therein by the
Seller not misleading, but only to the extent that such untrue statement is
contained in, or such omission is in, information furnished in a writing by the
Seller expressly for use therein, provided that the Seller's obligations
hereunder shall be limited to an amount equal to the proceeds to the Seller of
the Registrable Securities sold pursuant to such registration statement.
(iii) Any Person entitled to indemnification under the provisions of this
Section 5.14(i) shall (A) give prompt notice to the indemnifying Person of any
claim with respect to which it seeks indemnification and (B) unless in such
indemnified Person's reasonably judgment a conflict of interest between such
indemnified and indemnifying Persons may exist in respect to such claim, permit
such indemnifying Person to assume the defense of such claim, with counsel
reasonably satisfactory to the indemnified Person; and, if such defense is so
assumed, such indemnifying Person shall not enter into any settlement without
the consent of the indemnified Person if such settlement attributes liability to
the indemnified Person and such indemnified Person shall not be subject to any
liability for any settlement made without such consent (which shall not be
unreasonably withheld). In the event that an indemnifying Person shall not be
entitled, or elects not, to assume the defense of a claim, such indemnifying
Person shall not be obligated to pay the fees and expenses of more than one
counsel or firm of counsel for all parties indemnified by such indemnifying
Person in respect of such claim, unless, in the reasonable judgment of any such
indemnified Person, a conflict of interest may exist between such indemnified
Person and any other of such indemnified Persons in respect of such claim.
(iv) If for any reason the foregoing indemnity is unavailable, then,
subject to the proviso in Section 5.14(i)(ii) in the case of the Seller, the
indemnifying Person shall contribute to the amount paid or payable by the
indemnified Person as a result of such losses, claims, damages, liabilities or
expenses (A) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying Person on the one hand and the indemnified
Person on the other or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnifying Person on the one hand
and the indemnified Person on the other but also the relative fault or the
indemnifying Person and the indemnified Person as well as any other relevant
equitable considerations. The relative fault of the indemnifying Person on the
one hand and of the indemnified Person on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying Person or by the indemnified
Person and by the Persons' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a Person as a result of the losses, claims, damages, liabilities and
expenses shall be deemed to include any legal or other fees or expenses
reasonably incurred by the Person in connection with investigating or defending
any action or claim. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(v) An indemnifying Person shall make payments of all amounts required to
be made pursuant to the foregoing provisions of this Section 5.14(i) to or for
the account of the indemnified Person from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due or payable.
(j) Suspension of Resales. Key Energy shall be entitled to require that the
Seller refrain from effecting any public sales or distributions of the
Registered Securities, pursuant to the Shelf Registration Statement that has
been declared effective by the Commission, if the board of directors of Key
Energy in good faith determines that such public sales or distributions would
interfere in any material respect with any transaction involving Key Energy that
is material to Key Energy. The board of directors shall, as promptly as
practicable, give the Seller written notice of any such development, which
notice also shall contain a general statement of the reasons for such
restriction on use and an estimate of the anticipated length of the period of
the restriction. In the event of a request by the board of directors that the
Seller refrain from effecting any public sales or distributions of the
Registered Securities, Key Energy shall be required to lift such restrictions
regarding effecting public sales or distributions of the Registered Securities
as soon as reasonably practicable after the board of directors shall determine
that public sales or distributions by the Seller of the Registered Securities
shall not interfere with such transaction; provided, that in any event no
requirement that the Seller refrain from effecting public sales or distributions
in the Registered Securities shall extend for more than 15 days at any one time
or more than 30 days over the entire period the Shelf Registration Statement is
required to be in effect.
5.15 Books and Records. Until April 30, 2001 (or for such longer period as
may be required by law), no party or any of its Affiliates shall destroy or give
up possession of an original or any copy of the books and records relative to
any matter for which a party or its Affiliates shall have any continuing
responsibility under this Agreement or the Oxy Purchase Agreement without first
offering the other parties the opportunity, at their expense, to obtain such
original or copy thereof.
ARTICLE 6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1 Conditions to Obligations of the Buyer and Key Energy. The obligation
of the Buyer and Key Energy to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties set forth in Article 3 shall be true
and correct in all material respects at and as of the Closing Date (except for
those representations and warranties that are made as of a date other than the
date of this Agreement shall continue as of such date to be so true and correct
and except as may be modified in the Operating Agreement);
(b) the Seller shall have performed and complied, in all material respects,
with all of its covenants hereunder, except as may be modified in the Operating
Agreement;
(c) no order of any court or administrative agency shall be in effect which
restrains or prohibits the Seller from consummating the transactions
contemplated hereby;
(d) the Seller shall have received all material authorizations, consents
and approvals of governments and governmental agencies required for the Seller
to consummate the transactions contemplated by this Agreement;
(e) the Seller shall have delivered to the Buyer and Key Energy a
certificate to the effect that each of the conditions specified above in
Section 6.1(a)-(d) is satisfied and the Company shall have delivered to the
Buyer and Key Energy a certificate to the effect that the condition specified in
Section 6.1(a) is satisfied with respect to the Company;
(f) the Seller shall have delivered to the Buyer and Key Energy all
certificates representing the Company Stock, duly endorsed for transfer;
(g) from the date this Agreement there shall not have occurred (i) any
suspension or material limitation of trading of any securities on the American
Stock Exchange, (ii) any suspension of trading of any securities by Key Energy,
including the Key Energy Common Stock, by the Commission or (iii) any banking
moratorium which shall have been declared by federal or New York authorities;
(h) the Buyer and Key Energy shall have received a favorable opinion, dated
as of the Closing Date, from ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Seller, in form
and substance satisfactory to Buyer and Key Energy, to the effect that (i) the
Company and the Seller each has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its state of incorporation;
(ii) the Company Stock is validly issued, fully paid and is nonassessable and is
not subject to any statutory preemptive rights; (iii) all corporate action
required to be taken by or on the part of the Seller, the Company or any
Affiliate of the Seller, the Company and ▇▇▇▇▇▇ Industries, Inc., as applicable,
to authorize the execution of this Agreement, the Operating Agreement and the
Guarantee and the implementation of the transactions contemplated hereby have
been taken; and (iv) each of this Agreement, the Operating Agreement and the
Guarantee have been duly executed and delivered by, and is the legal, valid and
binding obligation of the Seller, the Company and ▇▇▇▇▇▇ Industries, Inc., as
applicable, and is enforceable against the Seller, the Company and/or such
Affiliate, as applicable, in accordance with its 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 (whether applied in a court of law
or equity). No opinion need be expressed as to the enforceability of any
indemnification provisions of this Agreement or of the Guarantee. In rendering
such opinion, such counsel may rely upon (i) certificates of public officials
and of officers of the Company or the Seller as to matters of fact and (ii) on
the opinion or opinions of other counsel, which opinions shall be reasonably
satisfactory to the Buyer and Key Energy, as to matters other than federal,
Texas or Delaware corporate law; and
(i) the Seller shall have delivered to the Buyer and Key Energy evidence of
the release of the Seller from the obligations set forth in Schedule 3.6 to the
Disclosure Schedule;
provided, however, that if any representation or warranty set forth in
Article 3 or any covenant of the Seller set forth herein is not true and correct
at and as of the Closing Date due to any action or failure to act of Key Energy
or its Affiliates taken pursuant to the Operating Agreement, then the accuracy
of such representation, warranty or covenant shall not be a condition to the
obligation of Buyer and Key Energy to consummate the transactions contemplated
by this Agreement, nor shall any indemnity obligations of the Seller arise
pursuant to Section 8.2 as a result of any action or failure to act on the part
of Key Energy or its Affiliates from and after the date of the Operating
Agreement.
6.2 Conditions to Obligations of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Article 4 shall be true
and correct in all material respects at and as of the Closing Date (except for
those representations and warranties that are made as of a date other than the
date of this Agreement shall continue as of such date to be so true and
correct);
(b) the Buyer and Key Energy shall have performed and complied, in all
material respects, with all of its covenants under this Agreement, except as may
be modified in the Operating Agreement;
(c) no order of any court or administrative agency shall be in effect which
restrains or prohibits the Buyer or Key Energy from consummating the
transactions contemplated by this Agreement or affect adversely the right of the
Seller to own the stock portion of the Purchase Price or the Warrants;
(d) the Buyer and Key Energy shall have received all material
authorizations, consents and approvals of governments and governmental agencies
required for the Buyer and Key Energy to consummate the transactions
contemplated by this Agreement;
(e) the Buyer shall have delivered to the Seller a certificate to the
effect that each of the conditions specified in Section 6.2(a)-(d) is satisfied;
(f) the Buyer and Key Energy shall have delivered or caused to be delivered
to the Seller the remaining cash portion of the Purchase Price, plus interest,
if any, plus the Estimated Working Capital Amount, duly executed certificates
representing the stock portion of the Purchase Price and the Warrants in the
form of Exhibit A , duly executed by an authorized officer of Key Energy;
(g) from the date this Agreement there shall not have occurred (i) any
suspension or material limitation of trading of any securities on the American
Stock Exchange, (ii) any suspension of trading of any securities by Key Energy,
including the Key Energy Common Stock, by the Commission or (iii) any banking
moratorium which shall have been declared by federal or New York authorities;
(h) each of (i) the Key Energy Common Stock issued as part of the Purchase
Price and (ii) the Warrant Shares shall have been authorized for listing on the
American Stock Exchange, subject to official notice of issuance; and
(i) the Seller shall have received a favorable opinion, dated as of the
Closing Date, from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the Buyer and Key
Energy, in form and substance satisfactory to the Seller, to the effect that (i)
each of the Buyer and Key Energy has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its states of
organization; (ii) all corporate proceedings required to be taken by or on the
part of the Buyer or Key Energy to authorize the execution of this Agreement,
the Warrants and the Operating Agreement and the implementation of the
transactions contemplated hereby and thereby have been taken; (iii) this
Agreement, the Warrants and the Operating Agreement have been duly executed and
delivery by, and each is the legal, valid and binding obligations of each of the
Buyer and Key Energy, as applicable, and each is enforceable against each of the
Buyer and Key Energy, as applicable, in accordance with its 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; and (iv)
(A) the authorized capital stock of Key Energy consists solely of 25,000,000
shares of the Key Energy Common Stock and (B) as of the date of such opinion
265,000 shares of Key Energy Common Stock were reserved for issuance upon the
exercise of the Warrants; and (C) the shares of Key Energy Common Stock
constituting a portion of the Purchase Price, the Warrants and the Warrant
Shares, when issued upon conversion of the Warrants have been duly authorized
and are or will be validly issued and are not subject to, nor have they been
issued in violation of, preemptive rights. No opinion need be expressed as to
the enforceability of any indemnification provisions of this Agreement. In
rendering such opinions, such counsel may rely upon (i) certificates of public
officials and of officers of the Buyer or Key Energy 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.
ARTICLE 7. TERMINATION.
7.1 Termination of Agreement. The parties may terminate this Agreement as
provided below:
(a) the Buyer, Key Energy and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Buyer or Key Energy may terminate this Agreement by giving written
notice to the Seller if the Closing shall not have occurred on or before
December 31, 1997 and as a result of the failure of any condition precedent
under Section 6.1; provided that the Buyer or Key Energy gave written notice of
the failure to Seller and the Seller has not cured such failure within ten
business days of such written notice (and provided further that the failure does
not result primarily from the Buyer or Key Energy breaching any representation,
warranty or covenant applicable to them contained in this Agreement);
(c) the Seller may terminate this Agreement by giving written notice to the
Buyer and Key Energy if the Closing shall not have occurred on or before
December 31, 1997 and as a result of the failure of any condition precedent
under Section 6.2; provided that the Seller gave written notice of the failure
to Buyer and Key Energy and they have not cured such failure within ten business
days of such written notice (and provided further that the failure does not
result primarily from the Seller breaching any representation, warranty or
covenant applicable to it contained in this Agreement); or
(d) the Buyer and Key Energy may elect to terminate this Agreement at any
time within two days following the occurrence of an Industry Material Adverse
Event; provided, however that irrevocable instructions are issued to the escrow
agent under the Escrow Agreement to transfer $5,000,000 in immediately available
funds from the amount deposited under the Escrow Agreement to a bank account
designated by the Seller. Such $5,000,000 payment shall be as liquidated
damages, and not as a penalty, and shall be the Seller's exclusive remedy for
such termination, notwithstanding the provisions of Section 7.2.
7.2 Effect of Termination. In the event of a termination of this Agreement
as a result Section 7.1(b) or (c), at the sole election of the nonbreaching
party, (i) the nonbreaching party shall be entitled to an aggregate of $500,000
in cash from the breaching party or parties; or (ii) the nonbreaching party may
exercise any other right or remedy it may have at law, in equity or pursuant to
this Agreement, including rights to ▇▇▇ for damages or required specific
performance. If the nonbreaching party elects the former remedy, such remedy
shall be exclusive, and shall constitute liquidated damages (and not a penalty)
for all claims the nonbreaching party may have with respect to such breach.
ARTICLE 8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.1 Investigations; Survival of Representations, Warranties and Covenants.
Each and every representation, warranty and covenant in this Agreement, other
than the representations and warranties in Section 3.13 and the covenants
contained in Sections 5.8, 5.9, 5.10, 5.11 and 5.14 and in Article 8, shall
expire, and shall be terminated and extinguished, by the second anniversary of
the Closing Date and thereafter neither the Seller, the Buyer nor Key Energy
shall be under any liability whatsoever with respect to any such representation,
warranty or covenant. The representations and warranties in Section 3.13 and the
covenants in Sections 5.8, 5.9, 5.10 and 5.11 shall expire upon expiration of
the applicable statute of limitation periods therefor and the covenants in
Section 5.14 and Article 8 shall continue indefinitely (unless any provision
thereof is sooner terminated by its terms).
8.2 Indemnification Provisions for Benefit of the Buyer. In the event the
Seller breaches any of its representations, warranties and covenants contained
in this Agreement, if there is an applicable survival period pursuant to Section
8.1, and provided that the Buyer makes a written claim for indemnification
against the Seller pursuant to Section 9.7 within such survival period, then the
Seller agrees to indemnify, defend and hold harmless the Buyer from and against
any Adverse Consequences the Buyer may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of or caused by the breach; upon the terms
and conditions set forth herein.
8.3 Indemnification Provisions for Benefit of the Seller.
(a) In the event the Buyer or Key Energy breaches any of its
representations, warranties or covenants contained in this Agreement, if there
is an applicable survival period pursuant to Section 8.1, and provided that the
Seller makes a written claim for indemnification against the Buyer or Key Energy
pursuant to Section 9.7 within such survival period, then the Buyer and Key
Energy, jointly and severally, agree to indemnify, defend and hold harmless the
Seller from and against any Adverse Consequences the Seller may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences the Seller may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of or caused
by the breach, upon the terms and subject to the conditions set forth herein.
(b) Each of the Buyer and Key Energy agrees to indemnify, defend and hold
harmless the Seller from and against the entirety of any Adverse Consequences
the Seller may suffer resulting from, arising out of, relating to, in the nature
of or caused by the business, operations, assets, properties, employees or
Employee Benefit Plans of the Company and that occurs after the Closing.
8.4 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification against any other Party (the "Indemnifying Party")
under this Article 8, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided that no delay on the part of the
Indemnifying Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder.
(b) Any Indemnifying Party will have the right to assume the defense of the
Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party at any time within 30 days after the Indemnified Party has
given notice of the Third Party Claim; provided, however, that the Indemnifying
Party must conduct the defense of the Third Party Claim actively and diligently
thereafter in order to preserve its rights in this regard; and provided further
that the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim.
(d) So long as the Indemnifying Party has assumed and is conducting the
defense of the Third Party Claim in accordance with Section 8.4(b), (i) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of money damages by
one or more of the Indemnifying Parties and does not impose an injunction or
other equitable relief upon the Indemnified Party and (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
8.5 Matters Involving the Parties. In the event an Indemnified Party should
have a claim against an Indemnifying Party hereunder that does not involve a
Third Party Claim, the Indemnified Party shall transmit to the Indemnifying
Party a written notice describing in reasonable detail the nature of the claim,
an estimate of the amount of damages attributable to such claim and the basis of
the Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within 30 days of its
receipt of such notice that the Indemnifying Party disputes such claim, the
claim shall be deemed a Liability of the Indemnifying Party hereunder and shall
be paid within 30 days of the expiration of the initial 30-day period. If the
Indemnifying Party has timely disputed such claim as provided above, such
dispute shall be resolved by litigation as provided herein.
8.6 Limitations on Indemnification.
(a) No party shall be entitled to indemnification hereunder unless and
until the aggregate of all amounts for which indemnity would otherwise be due to
such party exceeds $100,000, in which case such other parties shall be
responsible for all amounts of such liability excluding such threshold amount;
provided that (i) the Seller shall be indemnified for the full amount of any
Adverse Consequences pursuant to Section 8.3(b) and (ii) each party shall be
indemnified for the full amount of any Taxes for which the other party is liable
pursuant to Section 5.11, in each case without regard to any such threshold
amount.
(b) Notwithstanding anything to the contrary, no party shall be liable for
Adverse Consequences pursuant to this Article 8 in excess of the Purchase Price
(with stock and warrants valued at the Closing Date) except for liabilities for
Adverse Consequences pursuant to Section 8.3(b) and Taxes pursuant to Section
5.11.
8.7 Environmental Claims.
Notwithstanding anything in this Agreement to the contrary, and
notwithstanding the fact that any representation, warranty or covenant in this
Agreement might be interpreted to cover the same, this Section 8.7 shall be the
sole and exclusive provision of this Agreement, and represents the Buyer's and
Key Energy's sole and exclusive remedy against the Seller or any of its current
Affiliates with respect to Environmental Claims. To the extent the Seller or any
of its current Affiliates is (i) an indemnified party for Environmental Claims
under the Oxy Purchase Agreement and (ii) actually receives payment from Oxy
after following the reasonable instructions of the Buyer to prosecute such
Environmental Claims, at the sole expense of the Buyer, in accordance with the
provisions of the Oxy Purchase Agreement, the Seller shall remit any amounts
recovered, less unrecovered costs to prosecute any Environmental Claim, to the
Buyer in full payment for such Environmental Claim. In the event (1) the Seller
or any of its current Affiliates (A) is not an indemnified party for
Environmental Claims under the Oxy Purchase Agreement or (B) is unable to
recover any amount thereunder or (2) any Environmental Claim arises with respect
to the period between April 30, 1996 and the Closing Date, the Buyer and Key
Energy will have no recourse against the Seller or its Affiliates, and shall
indemnify, defend and hold the Seller and its Affiliates harmless therefor.
ARTICLE 9. MISCELLANEOUS.
9.1 Press Releases and Public Announcements. Neither the Buyer nor Key
Energy shall issue any press release or make any public announcement relating to
the subject matter of this Agreement without the prior written approval of the
Seller; provided, however, that the foregoing shall not apply to any
announcement or written statement which, upon written advice of counsel provided
to the Seller, is required by law to be made.
9.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
9.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings, agreements or
representations by or between the parties, written or oral, to the extent they
related in any way to the subject matter hereof, including the ▇.▇. ▇▇▇▇▇▇ Well
Service Company Descriptive Memorandum dated April 1997 prepared by ▇▇▇▇▇▇▇ &
Company International.
9.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other party.
9.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Delivery of a fully signed
counterpart by facsimile to all other Parties shall constitute delivery to such
Parties of a signed original of this Agreement.
9.6 Headings67. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing and addressed to the Buyer, Key
Energy or the Seller as set forth below:
If to the Buyer or Key Energy
c/o Key Energy Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
Nabors Acquisition Corp. IV
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Corporate Services, Inc. ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ andNew ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notice to a "copy to" address shall be provided as a courtesy, but shall
not be deemed to be actual notice received by a party for any purpose. Any party
may send any notice, request, demand, claim or other communication hereunder to
the intended recipient at the address set forth above using registered or
certified mail or any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient. Any party may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving
the other party notice in the manner herein set forth.
9.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF TEXAS OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS.
9.9 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer, Key
Energy and the Seller. 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.
9.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.11 Expenses. Each of the Buyer, Key Energy and the Seller will bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
9.12 Construction. THE PARTIES HAVE PARTICIPATED JOINTLY IN THE NEGOTIATION
AND DRAFTING OF THIS AGREEMENT. IN THE EVENT AN AMBIGUITY OR QUESTION OF INTENT
OR INTERPRETATION ARISES, THIS AGREEMENT SHALL BE CONSTRUED AS IF 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. Each Disclosure Schedule and each document
referred to in such Disclosure Schedule is incorporated by reference in the
representation and warranty to which such schedule relates. No representation or
warranty of a party contained in this Agreement shall be deemed to be untrue or
breached if (a) the inclusion of specific information in the Disclosure Schedule
relating to such representation or warranty or breach would have cured such
representation or warranty or breach and (b) such information is set forth in
the Disclosure Schedule relating to another representation or warranty. As used
in this Agreement, the term "day" means a calendar day, unless otherwise
specified, and the term "including" means including without limitation. All
references herein to Articles, Sections or Exhibits shall be to Articles,
Sections and Exhibits of this Agreement, unless the context requires otherwise.
9.13 Specific Performance. Each of the parties acknowledges and agrees that
the other parties would be damaged irreparably in the event that any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other parties 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 hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it 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 Houston, Texas in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out 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, security, 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 in equity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NABORS ACQUISITION CORP. IV
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Vice President
KEY ROCKY MOUNTAIN, INC.
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
KEY ENERGY GROUP, INC.
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
The undersigned hereby enters into this Agreement for the purpose of making
the representations and warranties of the Company set forth in Article 3 hereof
and the covenant of the Company set forth in Section 6.1(d) hereof.
▇.▇. ▇▇▇▇▇▇ WELL SERVICE COMPANY
By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President and Secretary
k:\word\transact\stocksal\cards\stockag7.doc
