Exhibit
10.1
ASSET PURCHASE
AGREEMENT
AMONG
KEY ENERGY
SERVICES, LLC,
KINGS OIL TOOLS,
INC.
AND
THOMAS FOWLER
DECEMBER 7, 2007
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “
Agreement ”) is
entered into as of December 7, 2007, among Key Energy
Services, LLC, a Texas limited liability company (the “
Buyer ”), and Kings
Oil Tools, Inc., a California corporation (the “
Seller ”), and Thomas
Fowler (the “ Shareholder ”).
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business
of drilling, workover, maintenance and production work using rigs,
cranes and hoisting equipment (the “ Business ”);
WHEREAS, the Shareholder owns 100% of the
issued and outstanding capital stock of the Seller;
WHEREAS, the Seller desires to sell to the
Buyer, and the Buyer desires to purchase from the Seller,
substantially all of the assets of the Seller that are used in the
Business on the terms and conditions set forth herein;
and
WHEREAS, in connection with the sale of the
Business, the Seller agreed to enter into a noncompetition
agreement with the Buyer as set forth in Section 3.8
hereof (the “ Noncompetition
Agreement ”) and the Shareholder agreed to enter into
a separate noncompetition agreement dated the date hereof (the
“ Shareholder Noncompetition
Agreement ”);
NOW, THEREFORE, in consideration of the
premises and of the mutual representations, warranties and
agreements, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
Article
1
PURCHASE AND
SALE OF ASSETS
1.1
Purchase and Sale of the Assets . Subject to the terms and
conditions set forth in this Agreement, the Seller hereby agrees to
sell, convey, transfer, assign and deliver to the Buyer the
following assets of the Seller, on an “AS IS/WHERE IS/WITH
ALL FAULTS” basis (all of such assets being sold hereunder
are referred to collectively herein as the “ Assets ”):
(a)
all tangible personal property of the Seller solely used or usable
in the Business (including, without limitation, production/workover
rigs, trucks, transport trailers and oil tools and equipment
associated with the Business), which is more fully described on
Schedule 1.1(a) hereto;
(b)
all of the inventory of the Seller solely used or usable in the
Business (including, without limitation, consumables and spare
parts), which is more fully described on
Schedule 1.1(b) hereto;
(c)
all equipment warranties, if any, of the Seller relating to the
Assets;
(d)
all information, files, books, records and computer data solely
related to the maintenance of the Assets (the “ Books and Records ”); and
(e)
all of the goodwill associated solely with the Business.
EXCEPT FOR THE EXPRESS REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT, THE ASSETS WILL BE
TRANSFERRED “AS IS, WHERE IS,” WITHOUT ANY EXPRESS OR
IMPLIED WARRANTIES OF ANY KIND, INCLUDING AS TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND IN THEIR PRESENT CONDITION
AND STATE OF REPAIR, WITH ALL FAULTS, LIMITATIONS AND
DEFECTS.
1.2
Retained Assets. Notwithstanding Section 1.1 ,
the Seller shall not transfer to the Buyer, and the Assets shall
not include the Seller’s right, title and interest in and to,
the following (collectively, the “ Retained Assets ”):
(a)
all pumps, power swivels and foam units associated with the
Retained Business (as defined in Section 3.5 );
(b)
all fishing and rental tools related to the Retained Business;
(c)
one (1) oil production/workover rig associated with the
Retained Business, as more fully described on Schedule
1.2(c) hereto;
(d)
all of the permits, authorizations, certificates, approvals,
registrations, variances, waivers, exemptions, rights-of-way,
franchises, ordinances, orders, licenses and other rights of every
kind and character of the Seller relating principally to the
operation of the Retained Business; and
(e)
all of the goodwill associated with the Retained Business.
1.3
Liabilities . The Seller shall be responsible for all of its
liabilities and obligations. All of the Seller’s liabilities
are referred to herein as the “ Retained Liabilities ” and
include, without limitation, (i) any obligations arising
before the Closing Date from the Seller’s employment of any
employee, independent contractor, consultant, agent or advisor;
(ii) any failure to pay any Taxes (as defined in
Section 2.1.8 ) owed by the Seller; (iii) any
liabilities, known or unknown, fixed or unfixed, accrued, absolute,
contingent or otherwise, arising out of or related to any Retained
Assets or the Retained Business (as defined in
Section 3.5 ) or any expressed or implied contract of
the Seller; and (iv) any other liabilities or obligations
resulting from the Seller’s operation of the Assets or
conduct of the Business before the Closing Date. The Buyer shall
assume and pay all obligations and liabilities for any sales, use,
vehicle or other Tax that may be imposed by any governmental
authority in connection with the purchase and sale of the Assets
from the Seller to the Buyer.
1.4
Purchase Price. As consideration for the sale of the Assets
and for the other covenants and agreements of the Seller and the
Shareholder contained herein, the Buyer agrees
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to pay, on the
Closing Date (as defined in Section 1.5 ),
(a) $35,395,750 (the “Asset Purchase Price” ) to
the Seller for the Assets and (b) $100,000 (the “Seller Noncompete Amount”
) to the Seller for its agreement not to compete contained in
Section 3.5 (collectively, the Asset Purchase Price and
the Seller Noncompete Amount are referred to herein as the
“Purchase
Price” ) by wire transfer of immediately available
funds to such accounts at a California financial institution as
designated by the Seller in its sole and absolute
discretion.
1.5
Time and Place of Closing . The closing of the transactions
contemplated by this Agreement (the “ Closing ”) shall be at the
offices of Clifford & Brown, a Professional Corporation,
located at 1430 Truxtun Avenue, Suite 900, in Bakersfield,
California, at 5:00 P.M. (PDT) on December 7, 2007 (the
“ Closing Date
”).
1.6
Conditions to Closing .
1.6.1
Deliveries of the Seller and the Shareholder . At the
Closing, in addition to the conveyance of the Assets from the
Seller to the Buyer in exchange for the Purchase Price, the Seller
shall deliver or cause to be delivered to the Buyer:
(a)
a bill of sale in the form of Exhibit A attached hereto (the
“ Bill of Sale
”), executed by the Seller, effectively transferring to the
Buyer the Assets being purchased by the Buyer;
(b)
all required certificates and documents of title relating to the
Assets being purchased by the Buyer duly executed and endorsed for
transfer to the Buyer;
(c)
evidence of releases of all liens to which the Assets were subject
before the Closing Date;
(d)
a secretary’s certificate from the Seller which shall have
all charter documents of the Seller attached thereto and attesting
to: (i) the due organization of the Seller; (ii) the due
authorization of the transactions contemplated by this Agreement;
and (iii) all corporate, shareholder or other resolutions
adopted by the Seller and the Shareholder in connection with the
transactions contemplated by this Agreement;
(e)
the Shareholder Noncompetition Agreement executed by the
Shareholder; and
(f)
all other deliveries reasonably requested by the Buyer to be
delivered by the Seller or the Shareholder.
1.6.2
Deliveries of the Buyer . At the Closing, the Buyer shall
deliver to the Seller:
(a)
the Purchase Price, pursuant to Section 1.4 ;
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(b)
a secretary’s certificate from the Buyer, which certificate
shall have all organizational documents of the Buyer attached
thereto and attesting to: (i) the due organization of the
Buyer; (ii) the due authorization of the transactions
contemplated by this Agreement; (iii) all company resolutions
adopted by the Buyer in connection with the transactions
contemplated by this Agreement;
(c)
the Shareholder Noncompetition Agreement executed by the Buyer;
and
(d)
all other deliveries reasonably requested by the Seller to be
delivered by the Buyer.
1.7
Asset Sale . The parties specifically represent to each
other that this Agreement is for the purchase and sale of assets.
Except as otherwise provided, the Buyer is not assuming any of the
debts, liabilities, obligations or responsibilities of the
Seller.
Article
2
REPRESENTATIONS
AND WARRANTIES
2.1
Representations and Warranties of the Seller . The Seller
makes the following representations and warranties to the Buyer,
each of which is true and correct as of the date hereof and shall
be true and correct as of the Closing Date. Representations and
warranties made to the “best of Seller’s
knowledge,” means to the actual knowledge of Shareholder,
without a duty of independent investigation or inquiry.
2.1.1
Organization, Good Standing and Authority . The Seller 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 entity
authorized to do business in all jurisdictions in which the
character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing
necessary.
2.1.2
Authority to Execute . The execution and delivery of this
Agreement has been authorized by all necessary corporate,
shareholder or other action on the part of the Seller. This
Agreement is the valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its
terms.
2.1.3
Absence of Conflicts . Except as set forth in Schedule
2.1.3 , the execution, delivery and performance of this
Agreement by the Seller, and the consummation of the transactions
contemplated hereby, will not conflict with or result in a
violation or breach of any term or provision of, nor constitute a
default under, (i) the organizational documents of the Seller,
(ii) any obligation, indenture, mortgage, deed of trust,
lease, contract or other agreement to which the Seller is a party
or by which the Seller or any of its properties are bound, or
(iii) any provision of any law, rule, regulation, order,
permit,
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certificate, writ, judgment, injunction,
decree, determination, award or other decision of any court,
arbitrator or other governmental authority to which the Seller or
any of its properties are subject.
2.1.4
Liabilities . The Seller has no liabilities or obligations,
either accrued, absolute, contingent or otherwise, or has any
knowledge of any potential liabilities or obligations that would
adversely affect the value of the Assets or become a liability of
the Buyer as a result of the consummation of the transactions
contemplated by this Agreement, by operation of law or
otherwise.
2.1.5
Litigation . There is no suit, action (equitable, legal,
administrative or otherwise), proceeding or investigation of any
kind pending or, to the best of the Seller’s knowledge,
threatened against the Seller that would materially adversely
affect the value of the Assets, the operation of the Business or
the transactions contemplated by this Agreement, nor does the
Seller know of any reasonably likely basis for any such suit,
action, proceeding or investigation.
2.1.6
Compliance with Laws . The Seller has complied in all
material respects with, is not in violation of, and, except as set
forth on Schedule 2.1.6 , has not received any notices of
violation in any material respect with respect to, any foreign,
federal, state or local statute, law, rule or
regulation.
2.1.7
Books and Records . The Books and Records are complete and
correct.
2.1.8
Taxes . There are (and as of the Closing there will be) no
liens or similar encumbrances on the Assets with respect to taxes
or other governmental charges, obligations or fees, including but
not limited to any income, business, occupation, franchise,
licensing, sales, use, withholding, property, ad valorem, excise or
other similar taxes, or secondary or transferee liability for any
of such taxes, and any related interest or penalties thereon
(“ Tax ” or
“ Taxes ”),
except for liens for real and personal property Taxes not yet due
and payable. No claim with respect to Taxes attributable to or
incurred in connection with the operations of the Seller (other
than real and personal property Taxes not yet due and payable as of
the Closing Date) will result in a lien or similar encumbrance on
the Assets or will otherwise adversely affect the
Buyer.
2.1.9
Warranties; Customers . All of the Warranties are in full
force and effect. The Seller is not, and no other party to any of
the Warranties is, in breach thereunder, and to the best of the
Seller’s knowledge no event has occurred which (with or
without notice, lapse of time, or the happening of any other event)
would constitute a breach thereunder. The Seller has not received
any information that would cause the Seller to conclude that any
customer of the Seller would not become a customer of the Buyer
after the consummation of the transactions contemplated hereby. All
of the Warranties set forth in Schedule 1.1(c) are
assignable (and as of the Closing Date will be validly assigned) to
the Buyer without the consent of any other party thereto, other
than consents obtained no later than the Closing Date.
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2.1.10 Title
to and Condition of Assets . The Assets being transferred to
the Buyer hereunder constitute substantially all of the assets of
the Seller. The Assets, together with the Employees to be hired by
the Buyer under Section 3.3 , constitute all of the
Business. The Seller has good and marketable title to all of the
Assets, free and clear of any Encumbrances (defined below). Seller
has the absolute right to sell, transfer and assign the Assets to
the Buyer, and upon the consummation of the transactions
contemplated hereby, the Buyer will collectively have good and
marketable title to the Assets, free and clear of any Encumbrances.
A true and correct list of all Encumbrances on the Assets, all of
which have been released or are being released at Closing, is
attached hereto as Schedule 2.1.10 . All loans secured by
such Encumbrances have been paid in full. The parties acknowledge
that certificates of title to certain Assets shown on Schedule
2.1.10 as encumbered by GMAC and CSC Logistics will be signed
off and delivered to the Seller by such lenders immediately after
the Closing. The Seller shall deliver all such certificates of
title to the Buyer immediately upon receipt thereof. No notice of
any violation of any law, statute, ordinance or regulation relating
to any of the Assets has been received by the Seller, nor, to the
best of the Seller’s knowledge, is there any basis for any of
the foregoing. For purposes of this Agreement, the term “
Encumbrances ” means
all liens (including Tax liens), security interests, pledges,
mortgages, deeds of trust, claims, rights of first refusal,
options, charges, restrictions or conditions to transfer or
assignment, liabilities, obligations, privileges, equities,
easements, rights of way, limitations, reservations, restrictions
and other encumbrances of any kind or nature.
2.1.11
Employee Benefits . There are no obligations, agreements or
understandings between the Seller and any employee, officer or
director of the Seller under which any such employee, officer or
director are entitled to receive any payment, benefit or service
under any benefit plan maintained by the Seller or any affiliate of
the Seller, including, but not limited to, any employment
agreement, bonus, retention bonus, retirement, severance, job
security or similar benefit.
2.1.12 No
Untrue Statements . This Agreement and all other agreements
executed and delivered by the Seller in connection with the
transactions contemplated hereby do not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
2.1.13
Brokers . All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the
Seller and its counsel directly with the Buyer and its counsel,
without the intervention of any other person in such manner as to
give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder’s fee or any similar payment.
The Seller has not taken any action that would give any third party
a valid claim for any such commission, fee or payment.
2.1.14
Pricing. Attached hereto as Schedule 2.1.14 is a
true, correct and complete copy of the schedule of rates currently
being charged for well services by the Seller to, and paid by, the
customer identified on such Schedule. Such rate schedule
has
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been incorporated in the existing contract
between the Seller and such customer and is binding on such parties
subject to the other terms and conditions of such
contract.
2.2
Representations and Warranties of the Shareholder . The
Shareholder makes the following representations and warranties to
the Buyer, each of which is true and correct as of the date hereof
and shall be true and correct as of the Closing Date:
2.2.1
Authority to Execute . Each of this Agreement and the
Shareholder Noncompetition Agreement is the valid and binding
obligation of the Shareholder, enforceable against the Shareholder
in accordance with its terms.
2.2.2
Absence of Conflicts . The execution, delivery and
performance of this Agreement and the Shareholder Noncompetition
Agreement by the Shareholder, and the consummation of the
transactions contemplated hereby and thereby, will not conflict
with or result in a violation or breach of any term or provision
of, nor constitute a default under, (i) any obligation,
indenture, mortgage, deed of trust, lease, contract or other
agreement to which the Shareholder is a party or by which the
Shareholder or any of his properties are bound, or (ii) any
provision of any law, rule, regulation, order, permit, certificate,
writ, judgment, injunction, decree, determination, award or other
decision of any court, arbitrator or other governmental authority
to which the Shareholder or any of his properties are
subject.
2.2.3
Litigation . There is no suit, action (equitable, legal,
administrative or otherwise), proceeding or investigation of any
kind pending or, to the best of the Shareholder’s knowledge,
threatened against the Shareholder that would materially adversely
affect the value of the Assets, the operation of the Business or
the transactions contemplated by this Agreement or the Shareholder
Noncompetition Agreement, nor does the Shareholder know of any
reasonably likely basis for any such suit, action, proceeding or
investigation.
2.2.4
Brokers . All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the
Seller and its counsel directly with the Buyer and its counsel,
without the intervention of any other person in such manner as to
give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder’s fee or any similar payment.
The Shareholder has not taken any action that would give any third
party a valid claim for any such commission, fee or payment or any
such claim in connection with the Shareholder Noncompetition
Agreement.
2.3
Representations and Warranties of the Buyer . The Buyer
makes the following representations and warranties to the Seller,
each of which is true and correct as of the date hereof and shall
be true and correct as of the Closing Date:
2.3.1
Organization and Good Standing . Buyer is a limited
liability company duly organized, validly existing and in good
standing under the laws of its state of organization, has full
requisite 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
7
limited partnership or corporation, as
applicable, authorized to do business in all jurisdictions in which
the character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing
necessary.
2.3.2
Authority to Execute . The execution and delivery of each of
this Agreement and the Shareholder Noncompetition Agreement has
been authorized by all necessary corporate and other action on the
part of the Buyer, and each of this Agreement and the Shareholder
Noncompetition Agreement is the valid and binding obligation of the
Buyer, enforceable against the Buyer in accordance with its
terms.
2.3.3
Absence of Conflicts . The executi
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