Exhibit 10.1

ASSET PURCHASE AGREEMENT

BETWEEN

KEY ENERGY SERVICES, LLC

as Seller

AND

TRI-STATE WATER LOGISTICS, LLC

as Purchaser

 

 

Dated as of October 21, 2020

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TABLE OF CONTENTS

 

         Page  

Article I Definitions

     1  

1.1

  Certain Definitions      1  

1.2

  Terms Defined Elsewhere in this Agreement      8  

1.3

  Other Definitional and Interpretive Matters      10  

Article II Purchase and Sale of Assets; Assumption of Liabilities

     11  

2.1

  Purchase and Sale of Assets      11  

2.2

  Excluded Assets      12  

2.3

  Assumption of Liabilities      13  

2.4

  Excluded Liabilities      14  

2.5

  Further Conveyances and Assumptions; Consent of Third Parties      15  

2.6

  Bulk Sales Laws      16  

2.7

  Withholding      16  

2.8

  Purchase Price Allocation      17  

Article III Consideration

     17  

3.1

  Consideration      17  

3.2

  Payment of Purchase Price      17  

Article IV Closing

     17  

4.1

  Closing      17  

4.2

  Closing Deliveries of Seller      18  

4.3

  Closing Deliveries of Purchaser      18  

Article V Representations and Warranties of Seller

     19  

5.1

  Generally      19  

5.2

  Organization and Good Standing      19  

5.3

  Authorization of Agreement      19  

5.4

  Conflicts; Consents of Third Parties      20  

5.5

  No Other Agreements to Purchase      20  

5.6

  Title to Purchased Assets      20  

5.7

  Books and Records      20  

5.8

  Financial Statements      20  

5.9

  Business Carried on in Ordinary Course      21  

5.10

  Customer and Supplier Relations      21  

 

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5.11

  Employees      21  

5.12

  Collective Agreements      22  

5.13

  Employee Benefit Matters      22  

5.14

  Real Property Leases and Real Property Agreements      23  

5.15

  Condition of Facilities      23  

5.16

  Real Property      24  

5.17

  SWDs      24  

5.18

  Contracts      24  

5.19

  Proceedings      25  

5.20

  Compliance with Laws; Permits      25  

5.21

  Condition of Purchased Assets      25  

5.22

  Environmental      25  

5.23

  Insurance      26  

5.24

  Taxes      26  

5.25

  Financial Advisors      27  

5.26

  Disclaimers      27  

Article VI Representations and Warranties of Purchaser

     29  

6.1  

 

Generally

     29  

6.2  

 

Organization and Good Standing

     29  

6.3  

 

Authorization of Agreement

     29  

6.4  

 

Conflicts; Consents of Third Parties

     29  

6.5  

 

Financial Advisors

     30  

6.6  

 

Condition of the Business

     30  

6.7  

 

Legal Proceedings

     30  

6.8  

 

Financial Ability

     30  

6.9  

 

Regulatory

     30  

6.10

 

Independent Evaluation

     31  

6.11

 

Securities Law Compliance; Accredited Investor

     31  

Article VII Covenants

     31  

7.1  

 

Further Assurances

     31  

7.2  

 

Noncompetition and Non-solicitation.

     31  

7.3  

 

Confidentiality

     32  

7.4  

 

Publicity

     33  

7.5  

 

Disclosure Schedules

     33  

 

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7.6  

  Employees and Employee Benefits      33  

7.7  

  Books and Records      36  

7.8  

  Use of Name; Access to Vehicles      36  

7.9  

  Replacement of Bonds, Letters of Credit and Guaranties; Subject Wells      37
 

Article VIII Indemnification

     37  

8.1  

  Survival      37  

8.2  

  Indemnification by Seller      38  

8.3  

  Indemnification by Purchaser      38  

8.4  

  Procedures      39  

8.5  

  Limitation on Liability      42  

8.6  

  Payment of Indemnification Claims      43  

8.7  

  No Consequential Damages      43  

8.8  

  Exclusive Remedy      44  

8.9  

  Express Negligence      44  

Article IX Miscellaneous

     45  

9.1  

  Taxes      45  

9.2  

  Expenses      46  

9.3  

  Submission to Jurisdiction; Waiver of Jury Trial; Consent to Service of
Process      46  

9.4  

  Entire Agreement; Amendments and Waivers      47  

9.5  

  Governing Law      47  

9.6  

  Notices      47  

9.7  

  Severability      48  

9.8  

  Binding Effect; Assignment      48  

9.9  

  Counterparts      48  

9.10

  Recording      48  

9.11

  Conspicuous      49  

9.12

  Construction      49  

9.13

  Time of Essence      49  

 

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SCHEDULES

 

Schedule 1.1    Permitted Liens and Claims Schedule 2.1(a)    Equipment Schedule
2.1(b)    Vehicles Schedule 2.1(d)    SWDs Schedule 2.1(e)    Frac Tanks
Schedule 2.1(f)    Assumed Contracts Schedule 2.1(g)    Assigned Permits
Schedule 2.3    Assumed Liabilities Schedule 2.5(b)    Nonassignable Assets
Schedule 5.4    Consents Schedule 5.9    Absence of Changes Schedule 5.10(a)   
Major Customers Schedule 5.10(b)    Major Suppliers Schedule 5.10(c)    Changes
to Major Customer or Major Supplier Relationships Schedule 5.11(a)    Employees
Schedule 5.11(c)    Independent Contractors Schedule 5.11(e)    Proceedings
Schedule 5.13    Business Benefit Plans Schedule 5.14(a)    Real Property Leases
Schedule 5.14(b)    Real Property Agreements Schedule 5.14(c)    Real Property
Defaults Schedule 5.16    Owned Real Property and Other Real Property Matters
Schedule 5.17    SWD Exceptions Schedule 5.19    Proceedings Schedule 5.20(b)   
Excluded Permits Schedule 5.22    Environmental Schedule 5.23    Insurance
Schedule 7.9(b)    Subject Wells

EXHIBITS

Exhibit A    Form of Bill of Sale and Assignment and Assumption Agreement
Exhibit B    Form of Special or Limited Warranty Deed Exhibit C    Form of Real
Property Assignment and Assumption Agreement Exhibit D-1    Form of Seller Note
Documents Exhibit D-2    Form of Deed of Trust

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the “Agreement”), dated as of October 21, 2020
(the “Execution Date”), is entered into between Key Energy Services, LLC, a
Texas limited liability company (“Seller”), and Tri-State Water Logistics, LLC,
a Texas limited liability company (“Purchaser”).

BACKGROUND

WHEREAS, Seller presently conducts the Business; and

WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and Purchaser
desires to purchase, acquire and assume from Seller, all of the Purchased Assets
and Assumed Liabilities, all as more specifically provided herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified in this Section 1.1:

“Actual Fraud” means an intentional and willful misrepresentation by a Party
with respect to the making of any representation or warranty set forth in
Article V of this Agreement; provided, that (a) the Party making such
representation or warranty had actual knowledge that the applicable
representation or warranty, as may be qualified in this Agreement, (i) was false
at the time it was made, (ii) was made with the intention that the other Party
rely thereon to its detriment, and (iii) was relied upon by the other Party to
such other Party’s detriment, and (b) “Actual Fraud” does not include
constructive fraud or other claims based upon constructive knowledge, negligent
misrepresentation, recklessness, or other similar theories.

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.

“Books and Records” means the books and records, including books of account,
ledgers and general, financial and accounting records, machinery and equipment
maintenance files, customer lists, customer purchasing histories, price lists,
distribution lists, supplier lists, production data, quality control records and
procedures, customer complaints and inquiry files, research and development
files, records and data (including all correspondence with any Governmental
Body), sales material and records, strategic plans, internal financial
information and marketing and promotional surveys, material and research, of
Seller relating to the Business or the Purchased Assets up to and including the
Closing Date; provided, however, that the term “Books

 

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and Records” shall not include any of the foregoing items that are Excluded
Records or relate to the Excluded Liabilities and any information that cannot,
without unreasonable effort or expense that Purchaser does not agree to
undertake or pay, as applicable, be separated from any files, records,
information, and data related to the Excluded Assets.

“Business” means the fluids hauling, disposal and other fluids management
services of Seller in the Specified Territories, excluding Seller’s coiled
tubing line of business, fishing and rental line of business, and rigs line of
business.

“Business Day” means any day of the year (other than Saturday or Sunday) on
which national banking institutions in Houston, Texas are open to the public for
conducting business and are not required or authorized to close.

“Claims” means claims, actions, causes of action, demands, filings,
investigations, arbitrations, mediations, suits or other legal or administrative
Proceedings, whether civil or criminal or based on contract, negligence,
trespass, intentional tort, strict liability, contribution or indemnification,
common or decisional law, federal or state statute or local ordinance or
otherwise, and whether any of the foregoing is the result of a third-party
claim, Governmental Body claim, or a claim by either Purchaser or Seller.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidential Information” means (a) any and all trade secrets of Seller which
relate primarily to the Business, whether or not documented, that is a trade
secret under applicable Law; (b) any and all non-public confidential information
of Seller exclusively concerning the Business or the Purchased Assets (which
includes, but is not limited to, such non-public information regarding
historical financial information, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, personnel training
methods and materials, techniques and materials and purchasing methods and
techniques), whether or not documented; and (c) any and all notes, analyses,
compilations, studies, summaries and other materials prepared by or for Seller
containing or based, in whole or in part, upon any information included in the
foregoing.

“Contract” means any legally binding contract, agreement, commitment,
instrument, lease, license, bond, evidence of indebtedness for borrowed money,
mortgage, indenture, purchase order, binding bid, letter of credit, security
agreement or other legally binding arrangement.

“Deed of Trust” means the Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Fixture Filing and Financing Statement in the form set forth
on Exhibit D-2 hereto.

“Employee Plan” means any “employee benefit plan” (within the meaning of
Section 3(3) of ERISA), any plans, agreements, arrangements, programs, practices
or policies that would be “employee benefit plans” if they were subject to ERISA
(such as plans for directors), and any equity or equity-based compensation,
change-in-control, incentive, employment, employee loan, deferred compensation,
pension, profit-sharing, retirement, bonus, retention bonus, severance,

 

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vacation, holiday or other paid time-off, hospitalization or other medical,
dental, vision, accident, disability, or life insurance, executive compensation
or other employee benefit, compensation or fringe benefit plan, agreement,
program, policy, practice, understanding or other arrangement, regardless of
whether subject to ERISA, whether formal or informal, oral or written, legally
binding or not, providing compensation or benefits to any employee or other
individual service provider.

“Employees” means all full-time employees of Seller or any Affiliate of Seller
whose duties primarily relate to the Business listed on Schedule 5.11(a).

“Environmental Law” means any Law in effect at the Closing of this Agreement
pertaining to (a) the protection of worker health, safety, or the environment;
(b) the conservation, management, protection, or use of natural resources and
wildlife; (c) the protection or use of source water and groundwater; (d) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement, removal,
remediation, or handling of, or exposure to, any Hazardous Material; or
(e) pollution (including any release to air, land, surface water and
groundwater), and includes the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act,
as amended by the Resource Conservation Act of 1976 and Hazardous and Solid
Waste Amendments of 1984, 42 USC 6901 et seq., Federal Water Pollution Control
Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air
Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of
1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App.
1801, Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et
seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC App. 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act
of 1974, as amended by 42 USC 300(f) et seq., and any similar, implementing or
successor law, and any amendment, rule, regulation, Order or directive, issued
thereunder.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means all employers (whether or not incorporated) that would
be treated together with Seller as a “single employer” within the meaning of
Section 414 of the Code or Section 4001 of ERISA.

“Excluded Records” means (a) all corporate and financial Tax and legal records
of Seller that relate to Seller’s business generally (whether or not relating to
the Purchased Assets), (b) any records to the extent disclosure or transfer is
restricted by any Third Party license agreement, other Third Party agreement or
applicable Law, (c) computer software, (d) all legal records and legal files of
Seller and all other work product of and attorney-client communications with any
of Seller’s legal counsel (other than copies of Contracts and records and files
with respect to any previous litigation matters), (e) employee and personnel
records, (f) records relating to the sale of the Purchased Assets, including
bids received from and records of negotiations with Third Parties, and (g) any
records with respect to the other Excluded Assets.

 

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“Facility” or “Facilities” means the Real Property and any building,
improvements and facilities located thereon.

“Fair Labor Standards Act” means the Fair Labor Standards Act of 1938, as
amended.

“Financial Information” means the historical financial statements related to the
Purchased Assets, copies of which have been made available to Purchaser.

“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, federal, state, or
local, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).

“Hazardous Materials” means any substance, waste or materials whether solid,
liquid, or gaseous: (a) which is listed, defined, or regulated as a “hazardous
material,” “hazardous waste,” “solid waste,” “hazardous substance,” “toxic
substance,” “pollutant,” or “contaminant,” or otherwise classified as hazardous
or toxic, in or pursuant to any Environmental Law; or (b) which is or contains
asbestos, polychlorinated biphenyls, petroleum or petroleum-derived substance or
waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, whether liquid, solid, semi-solid,
sludge or gaseous.

“Income Taxes” means any income, capital gains, franchise and similar Taxes.

“Intellectual Property” means any and all intellectual property rights, under
the law of any jurisdiction, including: (a) utility models, supplementary
protection certificates, patents and applications for same, and extensions,
divisions, continuations, continuations-in-part, reexaminations, and reissues
thereof; (b) trademarks, service marks, trade names, slogans, domain names,
logos, trade dress and other identifiers of source, and registrations and
applications for registrations thereof (including all goodwill associated with
the foregoing); (c) copyrights, moral rights, database rights, proprietary
computer software, other rights in works of authorship and registrations and
applications for registration of the foregoing; and (d) trade secrets, know-how,
and rights in confidential information, including designs, formulations,
methods, techniques, procedures, and processes.

“IRS” means the Internal Revenue Service.

“Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of
Brett Warfield, Area Director, Turner Phipps, Vice President—Permian Basin,
Stephen Stevens, Supervisor, and Jill Best, Environmental Specialist, in each
case, after reasonable inquiry with direct reports.

“Law” means any foreign, federal, state, local law, statute, code, ordinance,
rule or regulation.

“Leased Real Property” means the real property used or occupied by Seller
pursuant to a Real Property Lease described on Schedule 5.14(a).

“Liability” or “Liabilities” means any debt, retention, delayed payment, loss,
damage, adverse claim, fine, penalty, liability or obligation (whether direct or
indirect, known or unknown,

 

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asserted or unasserted, absolute or contingent, accrued or unaccrued, matured or
unmatured, determined or determinable, disputed or undisputed, liquidated or
unliquidated, or due or to become due, and whether in contract, tort, strict
liability or otherwise), and including all reasonable costs and expenses
relating thereto (including all reasonable fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and costs of investigation).

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude or transfer restriction.

“Losses” means any and all payments, judgments, liabilities, amounts paid in
settlement, charges, assessments, deficiencies, damages, fines, penalties,
losses and expenses (including removal costs, remediation costs and interest,
court costs, reasonable fees of attorneys, accountants and other experts or
other reasonable expenses of investigation, litigation, or other Proceedings or
of any Claim, default or assessment).

“Material Adverse Effect” means (a) a fact, occurrence, event or circumstance
that results, individually or in the aggregate, in a material adverse effect on
the use, ownership or operation of the Business, Purchased Assets or Assumed
Liabilities or (b) a material adverse effect on the ability of Seller to
consummate the Transactions, other than an effect resulting from an Excluded
Matter. “Excluded Matter” means any one or more of the following, but only to
the extent reasonably demonstrated by Seller: (i) the effect of any change in
general in the United States or foreign economies or securities or financial
markets in general; (ii) the effect of any change arising in connection with
hostilities, acts of war, sabotage or terrorism or military actions or any
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing or underway as of the date hereof; (iii) civil
unrest, any outbreak of disease (including the COVID-19 pandemic), epidemics or
pandemics (including the COVID-19 pandemic), or the escalation of any of the
foregoing; (iv) any Law, pronouncement or guideline issued by a Governmental
Body, the Centers for Disease Control and Prevention, the World Health
Organization or industry group providing for business closures,
“sheltering-in-place” or other restrictions that relate to, or arise out of, an
epidemic, pandemic or disease outbreak (including the COVID-19 pandemic) or any
change in such Law, pronouncement or guideline or interpretation thereof
(including any changes following the date of this Agreement); (v) the effect of
any action taken by Purchaser or its Affiliates with respect to the Transactions
or with respect to Seller; (vi) the effect of any changes in applicable Laws or
accounting rules; (vii) any effect resulting from the public announcement of
this Agreement, compliance with terms of this Agreement or the consummation of
the Transactions; excluding, however, any matter described in clauses (i) – (ii)
or (vi) that, individually or together, has or have had a disproportional effect
(as compared to similarly situated businesses, assets or liabilities) on any of
the Business, Purchased Assets, Assumed Liabilities or the ability of Seller to
consummate the Transactions.

“Order” means any order, preliminary or final injunction, judgment, decree,
ruling, writ, assessment or arbitration award of a Governmental Body.

“Ordinary Course of Business” means the ordinary and usual course of normal
day-to-day operations of the Business, consistent with past practice.

“OSHA” means the Occupational Safety and Health Act of 1970, as amended.

 

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“Other Real Property” means the real property used or occupied by Seller
pursuant to a Real Property Agreement described on Schedule 5.14(b).

“Owned Real Property” means the real property owned by Seller or Property
Company and described on Schedule 5.16.

“Parties” means the parties to this Agreement, being Seller and Purchaser; and
“Party” means any one of them.

“Permits” means any approvals, authorizations, registrations, consents,
licenses, permits or certificates of a Governmental Body.

“Permitted Exceptions” means (a) all defects, exceptions, restrictions,
easements, rights-of-way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser; (b) the Liens and Claims
disclosed on Schedule 1.1; (c) statutory Liens for current Taxes, assessments or
other governmental charges not yet due or delinquent or the amount or validity
of which is being contested in good faith by appropriate Proceedings provided an
appropriate reserve is established therefor; (d) mechanics’, carriers’,
workers’, repairers’ and similar Liens arising or incurred in the Ordinary
Course of Business or which are not yet due in the Ordinary Course of Business;
(e) zoning, entitlement and other land use and environmental regulations by any
Governmental Body, provided that such regulations have not been violated;
(f) Liens created under Assumed Contracts in respect of obligations that are not
yet due; (g) Liens which are discharged or released simultaneously with the
Closing; and (h) Liens created by Purchaser or its successors or assigns,
including pursuant to the Seller Note Documents.

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.

“Proceeding” means any case, lawsuit, action, arbitration, mediation,
litigation, suit, investigation, hearing or other proceeding at Law or in
equity, in each case by or before any Governmental Body or arbitral tribunal.

“Property Company” means Key Property Holding Company LLC, a Delaware limited
liability company.

“Real Property” means the Owned Real Property, Leased Real Property, and Other
Real Property.

“Real Property Agreement(s)” means the easements, rights-of-way, permits,
consents, licenses and other similar rights and interests relating to Seller’s
right to use real property (other than Real Property Leases) and set forth and
described in Schedule 5.14(b).

“Real Property Lease(s)” means the real property leases or other rights of
occupancy relating to Seller’s right to use real property, whether as lessor,
lessee, or licensee, and set forth and described in Schedule 5.14(a).

 

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“Seller Benefit Plan” means any Employee Plan established, sponsored,
maintained, contributed to or required to be contributed to by Seller or any of
its Affiliates, or with respect to which Seller or any of its Affiliates is a
party, is subject or may have Liabilities.

“Seller Note Documents” means (a) the Seller Note and (b) the Deeds of Trust, in
sufficient counterparts for recording in all applicable jurisdictions,
evidencing the financing by Seller of a portion of the Purchase Price as
contemplated herein.

“Seller Taxes” means (a) any and all Income Taxes imposed on Seller, any of its
respective direct or indirect owners or Affiliates, or any combined, unitary, or
consolidated group of which Seller is or was a member, (b) all Taxes imposed on
or relating to the Purchased Assets allocable to Seller pursuant to
Section 9.1(b), and (c) any and all Taxes imposed on or with respect to the
Excluded Assets.

“Specified Territories” means the following areas: (i) in Texas, Marion,
Harrison, Panola, Shelby, Sabine, Newton, Jasper, San Augustine, Tyler, Polk,
Angelina, Nacogdoches, Cherokee, Smith, Wood, Rusk, Gregg, Upshur and Trinity
Counties; (ii) in Arkansas, Columbia County; and (iii) in Louisiana, Caddo,
Claiborne and De Soto Parishes.

“Tax Authority” means any state or local government, or agency, instrumentality
or employee thereof, charged with the administration of any Law or regulation
relating to Taxes.

“Tax Contest” means any audit, litigation or other Proceeding with respect to
Taxes.

“Tax Return” means all returns, declarations, reports, estimates, information
returns and statements or other document relating to Taxes, including any
schedule, attachment or exhibits thereto, and any amendment thereof, required to
be filed in respect of any Taxes.

“Taxes” means (a) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments from any Tax Authority, including all net
income, gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, whether disputed or not, (b) all interest, penalties,
fines, additions to tax or additional amounts imposed by any Tax Authority in
connection with any item described in clause (a), and (c) any Liability in
respect of any items described in clauses (a) and (b) payable by reason of
contract, assumption, transferee or successor liability, operation of Law
(including by reason of participating in a consolidated, combined or unitary Tax
Return), or otherwise.

“Third Party” means any Person other than a Party to this Agreement or an
Affiliate of a Party to this Agreement.

“Third Party Claim” means any Claim asserted against the Indemnified Person,
other than any Claim brought by a Party to this Agreement or an Affiliate of a
Party to this Agreement.

“Title Company” means (a) with respect to any Owned Real Property located in the
State of Texas or the State of Louisiana, Fidelity National Title Insurance
Company, and (b) with respect to any Owned Real Property located in the State of
Arkansas, Chicago Title Insurance Company.

 

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“Transactions” means the transactions contemplated by this Agreement, including
the purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities as provided for in Article II.

“Treasury Regulations” means the regulations promulgated by the United States
Department of the Treasury pursuant to and in respect of the Code. All
references herein to sections of the Treasury Regulations shall include any
corresponding provision or provisions of succeeding, similar, substitute,
temporary or final Treasury Regulations.

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act
of 1988, and similar state, local and foreign laws related to plant closings,
relocations, mass layoffs and employment losses.

“Workplace Statutes” means all Laws and Orders relating to labor, employment, or
employment practices, including those relating to wages, hours of work, labor
relations, collective bargaining, occupational health and safety, employment
standards, privacy, anti-discrimination, pay equity, and workers’ compensation.

1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have meanings set forth in the sections indicated:

 

Term

  

Section

Agreement    Preamble Alternative Recovery    8.5(d) Asset Allocation    2.8
Assigned Permits    2.1(g) Assumed Claims    2.1(k) Assumed Contracts    2.1(f)
Assumed Liabilities    2.3 Assumption Notice    8.4(b)(i) Business Benefit Plan
   5.13(a) Cash Consideration    3.1 Closing    4.1(a) Closing Date    4.1(a)
Confidentiality Agreement    7.3(a) Equipment    2.1(a) Excluded Assets    2.2
Excluded Claims    2.1(k) Excluded Liabilities    2.4

 

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Execution Date    Preamble Hire Date    7.6(a) Indemnified Person    8.4(a)
Indemnifying Person    8.4(a) Indemnity Notice    8.4(a) Interim Period   
2.5(c) Investigation Period    8.4(b)(i) Loss Threshold    8.5(a) Major
Customers    5.10(a) Major Suppliers    5.10(b) Nonassignable Asset Refund Date
   2.5(b) Nonassignable Assets    2.5(b) Purchase Price    3.1 Purchased Assets
   2.1 Purchaser    Preamble Purchaser Documents    6.3 Purchaser Employer   
7.6(a) Purchaser Indemnified Persons    8.2 Purchaser Savings Plan    7.6(c)
Purchaser Welfare Benefit Plans    7.6(d) Seller    Preamble Seller Documents   
5.3 Seller Fundamental Representations    8.1 Seller Indemnified Persons    8.3
Seller Marks    7.8 Seller Note    3.1 Seller Savings Plan    7.6(c) Subject
Wells    7.9(b) SWDs    2.1(d) Transfer Taxes    9.1(a) Transferred Employee   
7.6(a) Union    5.12 Vehicles    2.1(b)

 

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1.3 Other Definitional and Interpretive Matters.

(a) Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:

(i) Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.

(ii) Dollars. Any reference in this Agreement to “$” shall mean U.S. dollars.

(iii) Exhibits/Schedules. The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Disclosure of any item or matter on any Schedule shall not constitute or
imply an admission or indication that such item or matter is, or may be,
material or would have a Material Adverse Effect, and the information set forth
on the Schedules shall not be used as a basis for interpreting the terms
“material,” “materially,” “materiality,” “Material Adverse Effect,” or any
similar qualification in this Agreement. Likewise, the inclusion of a matter on
a Schedule to this Agreement in relation to a representation or warranty shall
not be deemed an indication that such matter necessarily would, or may, breach
such representation or warranty absent its inclusion on such Schedule. Matters
may be set forth on a Schedule for information purposes only and matters
reflected in the Schedules are not limited to matters required by this Agreement
to be reflected in the Schedules. Neither the Schedules nor any disclosure made
in or by virtue of them (A) constitutes or implies any representation, warranty,
or covenant by Seller not expressly set out in this Agreement, or (B) has the
effect of, or may be construed as, adding to, broadening, deleting from, or
revising the scope of any of the representations, warranties, or covenants of
Seller in this Agreement. No disclosure on a Schedule relating to a possible
breach or violation of any Contract, Law or Order shall be construed as an
admission or indication that a breach or violation exists or has actually
occurred. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein shall be defined as set forth in this Agreement.
Headings have been inserted in the Schedules for reference only and do not amend
the descriptions of the disclosed items set forth in this Agreement.

(iv) Gender and Number. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa (except with respect to the Parties).

 

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(v) Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any “Section” are to the corresponding Section of this Agreement
unless otherwise specified.

(vi) Herein. The words such as “herein,” “hereinafter,” “hereof,” and
“hereunder” refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.

(vii) Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

(viii) Made Available. The phrase “made available” or any variation thereof
means included in the electronic data room hosted by Energy Capital Solutions,
LLC related to the Transactions to which Purchaser has full access as of the
date hereof.

(ix) Accounting Terms. Each accounting term not defined herein will have the
meaning given to it under GAAP as interpreted as of the Execution Date, and, as
applicable, as consistently applied by Seller.

(b) Except as otherwise specifically provided in this Agreement, any agreement,
instrument, or writing defined or referred to herein means such agreement,
instrument, or writing, as from time to time amended, supplemented, or modified
prior to the Execution Date.

(c) The Parties hereto have participated jointly in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by
the Parties hereto, and no presumption or burden of proof shall arise favoring
or disfavoring any Party by virtue of the authorship of any provision of this
Agreement.

ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale of Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Purchaser shall purchase, pay for,
acquire, and accept from Seller and Seller shall, or shall cause Property
Company to, sell, transfer, assign, convey and deliver to Purchaser, all of
Seller’s and Property Company’s right, title and interest in, to and under the
Purchased Assets, free and clear of all Liens, except for Permitted Exceptions.
“Purchased Assets” shall mean the following assets of Seller and Property
Company, as applicable (less and except the Excluded Assets):

(a) all equipment, machinery, parts, fixtures, materials, supplies, tools,
leasehold improvements, telephone systems and furniture owned by Seller or
Property Company located at the Facilities and solely related to the Business,
including all assets set forth on Schedule 2.1(a) (the “Equipment”), which, for
the avoidance of doubt, excludes leased equipment or assets for which Purchaser
is not assuming the lease with respect to such equipment or assets;

 

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(b) the vehicles set forth on Schedule 2.1(b) (the “Vehicles”);

(c) the Real Property;

(d) the saltwater disposal wells set forth on Schedule 2.1(d), including the
wellbore, casing of the well, tanks, pipelines, electrical equipment and pumps
and all other associated fixtures, facilities and tangible personal property
owned by Seller or Property Company located at such wells (collectively, the
“SWDs” and each, a “SWD”);

(e) the frac tanks set forth on Schedule 2.1(e);

(f) (i) those Contracts set forth on Schedule 2.1(f) (the “Assumed Contracts”),
and (ii) all accounts receivable generated from and after the Closing arising
from services provided or goods sold by Seller pursuant to the Assumed
Contracts, and any security, claim, cause of action, remedy or other right to
receive payment of the foregoing;

(g) subject to Section 2.5(b), the Permits related to the Business or the
Purchased Assets listed on Schedule 2.1(g) (the “Assigned Permits”);

(h) copies of any Books and Records relating primarily to the Business;

(i) all prepaid expenses, credits, advance payments, claims, security, refunds,
rights of recovery, rights of set-off, rights of recoupment, deposits, charges,
sums and fees related to the Assumed Contracts;

(j) goodwill to the extent attributable to the other Purchased Assets; and

(k) any rights, claims or causes of action of Seller or Property Company against
third parties relating to any of the Purchased Assets, Assumed Liabilities and
the Business (the “Assumed Claims”), including all rights under any express or
implied warranty by the manufacturers or sellers of any of the Equipment,
machinery or Vehicles or component part thereof, except in each case under this
clause (k), to the extent such rights, claims or causes of action are, or relate
to, the Excluded Assets or Excluded Liabilities (the “Excluded Claims”).

2.2 Excluded Assets. Nothing herein contained shall be deemed to sell, transfer,
assign or convey the Excluded Assets to Purchaser, and Seller shall retain all
right, title and interest to, in and under the Excluded Assets. “Excluded
Assets” shall mean all assets, properties, interests and rights of Seller or
Property Company other than the Purchased Assets, including each of the
following assets:

(a) all cash, cash equivalents, certificates of deposit, bank deposits, surety
bonds, cash on deposit or similar cash items or performance bonds of Seller;

 

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(b) except as set forth in Section 2.1(f), all accounts receivable arising from
the Purchased Assets or Business, whether current or past due, and any security,
claim, cause of action, remedy or other right to receive payment of the
foregoing;

(c) all equipment, machinery, parts, fixtures, materials, supplies, tools,
leasehold improvements, telephone systems and furniture of Seller not set forth
on Schedule 2.1(a);

(d) except for the Vehicles, all trucks, cars, vehicles, and other rolling
stock;

(e) all real property of Seller other than the Real Property;

(f) all right, title and interest in all Intellectual Property of Seller;

(g) all Contracts of Seller that are not Assumed Contracts;

(h) all information management systems of Seller;

(i) any claim in or to any refund of Seller Taxes;

(j) all insurance policies or rights to proceeds thereof relating to the assets,
properties, business or operations of Seller, including the Purchased Assets;

(k) any rights, claims or causes of action of Seller (i) under any bond or
security instrument, (ii) against third parties not expressly part of the
Purchased Assets, including the Excluded Claims or (iii) for which Seller is
otherwise required to provide indemnification to Purchaser hereunder;

(l) all Excluded Records, including any employment records of Seller or its
Affiliates and Employee Plans and assets attributable thereto; and

(m) any other assets of Seller that are not Purchased Assets.

2.3 Assumption of Liabilities. On the terms and subject to the conditions set
forth in this Agreement, at the Closing Purchaser shall assume, effective as of
the Closing, and shall timely fulfill, perform, pay and discharge in accordance
with their respective terms, the following Liabilities (collectively, the
“Assumed Liabilities”):

(a) all Liabilities arising, or obligations of Seller to be performed, under the
Assumed Contracts for periods after the Closing, but, for the avoidance of
doubt, excluding any Liability in connection with any actual or alleged breach,
default or other failure to perform by Seller under any Assumed Contract,
occurring or alleged to have occurred prior to the Closing;

(b) all Liabilities arising out of or relating to Purchaser’s ownership, use or
operation of the Purchased Assets after the Closing, including Liabilities and
Claims arising under Environmental Law, but, for the avoidance of doubt,
excluding any Liability in connection with any violation of Environmental Law
that existed or occurred prior to the Closing;

 

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(c) all Taxes imposed on or with respect to the Purchased Assets for any taxable
period (or portion thereof) beginning after the Closing Date as determined in
Section 9.1(c);

(d) all Liabilities arising out of Purchaser’s employment of any Transferred
Employee, to the extent that such Liabilities arise after the Transferred
Employee’s commencing employment with Purchaser Employer;

(e) all Liabilities relating to amounts required to be paid by Purchaser
hereunder;

(f) all Liabilities for plug and abandonment obligations relating to the SWDs,
but, for the avoidance of doubt, excluding any Liability in connection with any
violation of Environmental Law that existed or occurred prior to the Closing;

(g) all Liabilities with respect to the Purchased Assets set forth on Schedule
2.3, regardless of whether such Liabilities arose prior to, at or after the
Closing, including obligations and liabilities relating in any manner to the
condition, use, ownership, or operation of such Purchased Assets; and

(h) all other Liabilities with respect to the Business or the Purchased Assets
arising on or after the Closing Date.

2.4 Excluded Liabilities. Purchaser will not assume or be liable for any
Excluded Liabilities. “Excluded Liabilities” shall mean all Liabilities of
Seller other than the Assumed Liabilities, including the following Liabilities
(without duplication):

(a) all Liabilities or Claims (other than Assumed Claims) arising out of or
relating to Seller’s ownership or operation of the Business and the Purchased
Assets prior to the Closing Date, including Seller’s ownership and operation of
the Real Property and SWDs, including any Liabilities or Claims arising under
Environmental Law based upon any incident, action, condition or circumstance to
the extent occurring or existing at the Real Property on or prior to the Closing
Date;

(b) all Liabilities arising out of or relating to the Excluded Assets;

(c) accounts payable and accounts receivable to the extent constituting an
Excluded Asset;

(d) all Seller Taxes;

(e) all Liabilities of Seller relating to or arising out of (i) the employment
by Seller, or termination of employment with Seller (including any and all
Liabilities relating to any alleged non-compliance with the WARN Act), of any
employee of Seller, (ii) workers’ compensation claims of any employee of Seller
which relate to events occurring during such individual’s employment with
Seller, (iii) Seller’s debts and loans (if any), (iv) Seller’s insurance and any
Seller Benefit Plans, or (v) Claims arising or asserted under Environmental Laws
based upon events occurring, or conditions existing, at or prior to the Closing;

 

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(f) all Liabilities incurred by Seller in connection with the Transactions
(including, for the purpose of clarification, any broker’s fees, finder’s fees,
advisor’s fees, commissions, or any other transaction expenses of Seller);

(g) all other Liabilities of Seller that are not Assumed Liabilities; and

(h) all Liabilities relating to amounts required to be paid by Seller hereunder.

2.5 Further Conveyances and Assumptions; Consent of Third Parties.

(a) From time to time following the Closing, Seller and Purchaser shall, and
shall cause their respective Affiliates to, execute, acknowledge and deliver all
such further documents, conveyances, notices, assumptions, releases and
acquaintances and such other instruments, and shall take such further actions,
as may be reasonably necessary or appropriate to assure fully to Purchaser and
its successors or assigns, all of the properties, rights, titles, interests,
estates, remedies, powers and privileges intended to be conveyed to Purchaser
under this Agreement and the Seller Documents and to assure fully to Seller and
its successors and assigns, the assumption of the liabilities and obligations
intended to be assumed by Purchaser under this Agreement and the Seller
Documents, and to otherwise make effective the Transactions.

(b) Nothing in this Agreement nor the consummation of the Transactions shall be
construed as an attempt or agreement to assign any Purchased Asset, including
any approval, authorization or other right, which by its terms or by Law is
nonassignable without the consent of a Governmental Body or is cancelable by a
third party in the event of an assignment (the “Nonassignable Assets”) unless
and until such consent shall have been obtained. Each of Seller and Purchaser
shall use commercially reasonable efforts, to obtain, or cause to be obtained,
any consent, substitution, approval or amendment required to assign the
Nonassignable Assets; provided, however, that such efforts shall not require
Seller or any of its Affiliates to incur any expenses or Liabilities or provide
any financial accommodation or to remain secondarily or contingently liable for
any Assumed Liability to obtain any such consent. A list of Nonassignable Assets
(including a description of the reasons for each such Nonassignable Asset’s
nonassignability) that are known as of the Execution Date is set forth on
Schedule 2.5(b). For the purpose of clarification, upon obtaining such consent
with respect to any portion of a Purchased Asset, such asset shall no longer be
considered to be part of the Nonassignable Assets. Purchaser and Seller shall
use their respective commercially reasonable efforts to obtain, or cause to be
obtained, any consent, substitution, approval or amendment required to novate
all Liabilities under any and all Assumed Contracts or other Liabilities that
constitute Assumed Liabilities or to obtain in writing the unconditional release
of Seller so that, in any such case, Purchaser shall be solely responsible for
such Liabilities. In the event that any such consent with respect to a
Nonassignable Asset was not obtained prior to Closing is obtained following the
Closing Date, then, on the tenth Business Day after such consent is obtained,
Seller shall assign the applicable Nonassignable Asset to Purchaser pursuant to
an instrument in substantially the same form as the Bill of Sale and Assignment
and Assumption Agreement set forth on Exhibit A hereto. In the event that any
Nonassignable Asset shall remain unassigned to Purchaser as of the ninetieth
(90th) day after the Closing Date (the “Nonassignable Asset Refund Date”),
Seller shall retain such asset and refund the portion of the Purchase Price
allocated by the Parties to such asset.

 

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(c) To the extent permitted by applicable Law, in the event consents to the
assignment thereof cannot be obtained by the Closing Date, such Nonassignable
Assets shall be held, as of and from the Closing Date until the Nonassignable
Asset Refund Date (the “Interim Period”), by Seller in trust for Purchaser and
the covenants and obligations thereunder shall be performed by Purchaser during
such period in Seller’s name and all benefits and obligations existing
thereunder shall accrue during such period for Purchaser’s account and Purchaser
shall be responsible for all Liabilities associated therewith (including by way
of Seller holding title to such Nonassignable Asset in trust for Purchaser).
During the Interim Period, Seller shall take or cause to be taken at Purchaser’s
expense such actions in its name or otherwise as Purchaser may reasonably
request so as to provide Purchaser with the benefits of the Nonassignable Assets
and to effect collection of money or other consideration that becomes due and
payable for Purchaser’s account under the Nonassignable Assets, and Seller shall
promptly pay over to Purchaser all money or other consideration received by it
in respect of all Nonassignable Assets during the Interim Period. During the
Interim Period, Seller authorizes Purchaser, to the extent permitted by
applicable Law and the terms of the Nonassignable Assets, at Purchaser’s
expense, to perform all the obligations and receive all the benefits of Seller
under the Nonassignable Assets and appoints Purchaser its attorney-in-fact to
act in its name on its behalf, and Purchaser agrees to indemnify and hold Seller
and its Affiliates, agents, successors and assigns harmless from and against any
and all Liabilities and Losses based upon, arising out of or relating to
Purchaser’s performance of, or failure to perform, such obligations under the
Nonassignable Assets during the Interim Period.

(d) With respect to any Purchased Asset subject to a consent to assign other
than a Nonassignable Asset, in the event such consent is not obtained prior to
Closing, the Purchased Asset subject to such un-obtained consent shall
nevertheless be assigned by Seller to Purchaser at Closing as part of the
Purchased Assets, and, any Liability that arises due to the failure to obtain
such consent shall be borne by Seller (and Seller shall be obligated to
indemnify Purchaser with respect to such Liabilities). Each of Seller and
Purchaser shall use commercially reasonable efforts, to obtain, or cause to be
obtained, any such unobtained consent following Closing; provided, however, that
such efforts shall not require Seller or any of its Affiliates to incur any
expenses or Liabilities to any Third Party to obtain any such consent.

2.6 Bulk Sales Laws. Purchaser hereby waives compliance by Seller with the
requirements and provisions of any “bulk-transfer” Laws of any jurisdiction that
may otherwise be applicable with respect to the sale of any or all of the
Purchased Assets to Purchaser; it being understood that any Liabilities arising
out of the failure of Seller to comply with the requirements and provisions of
any “bulk-transfer” Laws of any jurisdiction which would not otherwise
constitute Assumed Liabilities shall be treated as Excluded Liabilities.

2.7 Withholding. Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable to Seller pursuant to this Agreement such
amounts as may be required to be deducted or withheld by applicable Law and
shall timely pay the full amount deducted or withheld to the relevant
Governmental Body in accordance with applicable Law. Any amounts so deducted and
withheld shall be treated for all purposes under this Agreement as having been
paid to Seller. As soon as practicable after any payment of withholding Taxes by
Purchaser to a Governmental Body, Purchaser shall deliver to Seller the original
or a certified copy of a receipt issued by such Governmental Body evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably requested by Seller.

 

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2.8 Purchase Price Allocation. Seller and Purchaser shall, until thirty
(30) days after the Closing, use commercially reasonable efforts to agree to
allocate the Purchase Price, Assumed Liabilities, and any other items
constituting consideration for applicable Income Tax purposes among the
Purchased Assets in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder (the “Asset Allocation”). The Asset Allocation, if agreed
upon, shall be reflected on a completed IRS Form 8594, which form will be timely
filed separately by Seller and Purchaser with the IRS pursuant to the
requirements of Section 1060(b) of the Code. Each Party agrees not to take any
position inconsistent with the allocations set forth in such Asset Allocation,
including on any Tax Returns, unless required by a final determination as
defined in section 1313 of the Code.

ARTICLE III

CONSIDERATION

3.1 Consideration. The aggregate consideration for the Purchased Assets shall be
(collectively, the “Purchase Price”): (a) an amount in cash equal to $6,000,000
(the “Cash Consideration”), (b) a $940,000 secured seller promissory note issued
by Purchaser to Seller in the form of Exhibit D-1 attached hereto (the “Seller
Note”), and (c) the assumption of the Assumed Liabilities.

3.2 Payment of Purchase Price(a) . Purchaser shall pay the Purchase Price as
follows:

(a) by paying the Cash Consideration by wire transfer at Closing of immediately
available funds into an account or accounts designated by Seller;

(b) by assuming the Assumed Liabilities at Closing; and

(c) by delivering to Seller the Seller Note payable to Seller in the original
principal amount of $940,000, in the form attached hereto as Exhibit D-1. The
Seller Note shall (i) bear interest from the Closing to maturity at the rate of
6.5% per annum, (ii) provide for the payment of all principal and any accrued
interest on April 30, 2022, (iii) be secured by the Purchased Assets pursuant to
the Seller Note Documents, and (iv) provide for prepayments, without penalty, at
any time by Purchaser.

ARTICLE IV

CLOSING

4.1 Closing.

(a) Subject to the terms and conditions of this Agreement, the consummation of
the Transactions (the “Closing”) shall take place electronically simultaneously
with the execution of this Agreement (the “Closing Date”), or at such other time
and date and/or at such other location as the Parties may mutually designate in
writing.

(b) On the Closing Date, substantially all of the Purchased Assets will be
physically present at one or more of the Facilities or at customers’ locations.

 

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4.2 Closing Deliveries of Seller. At Closing, Seller shall deliver, or cause
Property Company to deliver, the following to Purchaser:

(a) the Bill of Sale and Assignment and Assumption Agreement in the form set
forth on Exhibit A hereto, duly executed by Seller;

(b) titles to the Vehicles, duly endorsed by Seller to Purchaser or its
designee;

(c) a special warranty deed (as customary in the applicable jurisdiction) for
each parcel of the Owned Real Property, in the form set forth on Exhibit B, duly
executed by Seller or Property Company, as applicable;

(d) assignments and assumption agreements of each of the Real Property Leases
and Real Property Agreements, in the form set forth on Exhibit C, duly executed
by Seller or Property Company, as applicable;

(e) to the extent obtained prior to Closing, the consents and approvals
identified on Schedule 5.4, if any, duly executed by the Persons from which such
consents and approvals are required;

(f) certificate of non-foreign status that complies with Treasury Regulation
Section 1.1445-2(b)(2) and certifying that each of Seller and Property Company
is not a foreign person within the meaning of Section 1445(a) of the Code;

(g) a certificate by the Secretary of Seller, dated the Closing Date, as to the
effectiveness of the resolutions of the governing body of Seller authorizing the
execution, delivery and performance hereof by Seller;

(h) commitments from the applicable Title Company to issue to and in favor of
Purchaser an extended coverage owner’s policy of title insurance with respect to
the Owned Real Property in the amount of the portion of the Purchase Price
allocated to the Owned Real Property, effective on the Closing Date, insuring
fee simple title to the Owned Real Property in Purchaser subject only to the
Permitted Exceptions, the base premium costs of which shall be paid by Seller
and (i) the premiums and charges applicable to any endorsements of which desired
by Purchaser shall be paid by Purchaser (including any additional premium for
any “survey/area and boundary deletion” in any title insurance policy, if the
deletion is requested by Purchaser, and the Title Company’s inspection fee to
delete the exception for parties in possession, if applicable), and
(ii) Purchaser and Seller shall each bear fifty percent (50%) of all other fees
and expenses charged by the Title Companies;

(i) appropriate change of operator forms designating Purchaser as operator of
the SWDs; and

(j) all other documents required to be entered into by Seller or Property
Company pursuant hereto or reasonably requested by Purchaser to convey the
Purchased Assets to Purchaser in accordance with the terms hereof, or to
otherwise consummate the Transactions.

 

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4.3 Closing Deliveries of Purchaser. At Closing, Purchaser shall deliver, or
cause to be delivered, the following to Seller:

(a) the Bill of Sale and Assignment and Assumption Agreement in the form set
forth on Exhibit A hereto, duly executed by Purchaser;

(b) assignment and assumption agreements of each of the Real Property Leases and
Real Property Agreements, in the form set forth on Exhibit C, duly executed by
Purchaser;

(c) the Seller Note Documents, duly executed by Purchaser;

(d) a certificate by an officer of Purchaser, dated the Closing Date, as to the
effectiveness of the resolutions of the governing body of Purchaser authorizing
the execution, delivery and performance hereof by Purchaser;

(e) the Purchase Price in accordance with Section 3.2;

(f) appropriate change of operator forms designating Purchaser as operator of
the SWDs;

(g) evidence of replacement bonds, guaranties, and letters of credit pursuant to
Section 7.9; and

(h) all other documents required to be entered into by Purchaser pursuant hereto
or reasonably requested by Seller to convey the Purchased Assets to Purchaser in
accordance with the terms hereof, or to otherwise consummate the Transactions.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

5.1 Generally. Subject to the disclaimers and waivers contained in and the other
terms and conditions of this Agreement, Seller hereby represents and warrants to
Purchaser the matters set forth in Section 5.2 through Section 5.25 as of the
Execution Date (except for the representations and warranties that refer to a
specified date, which will be deemed made as of such date).

5.2 Organization and Good Standing. Each of Seller and Property Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was incorporated and has all
requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now conducted. Each of
Seller and Property Company is qualified to conduct business in each
jurisdiction in which ownership of the Purchased Assets or operation of the
Business makes such qualification necessary.

5.3 Authorization of Agreement. Seller has all requisite power, legal capacity
and authority to execute and deliver this Agreement and each of Seller and
Property Company has all requisite power, authority and legal capacity to
execute and deliver each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by Seller or

 

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Property Company in connection with the consummation of the Transactions (the
“Seller Documents”), to perform its respective obligations hereunder and
thereunder, and to consummate the Transactions. The execution and delivery of
this Agreement and the Seller Documents and the consummation of the Transactions
have been duly authorized by all requisite limited liability company action on
the part of Seller and Property Company. This Agreement has been, and each of
the Seller Documents will be at or prior to the Closing, duly and validly
executed and delivered by Seller or Property Company, as applicable, and
(assuming the due authorization, execution and delivery by the other Parties
hereto and thereto) this Agreement constitutes, and each of the Seller Documents
when so executed and delivered will constitute, legal, valid and binding
obligations of Seller and Property Company, enforceable against Seller and
Property Company, in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws
affecting creditors’ rights and remedies generally.

5.4 Conflicts; Consents of Third Parties. Except as set forth on Schedule 5.4:

(a) none of the execution and delivery by Seller and Property Company of this
Agreement or the Seller Documents, the consummation of the Transactions, or
compliance by Seller and Property Company with any of the provisions hereof or
thereof will conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination or cancellation under any provision of (i) the certificate of
formation and limited liability company agreement or comparable organizational
documents of Seller or Property Company; (ii) any Contract or Permit to which
Seller or Property Company is a party or by which any of the Purchased Assets
are bound; (iii) any Order of any Governmental Body applicable to Seller or
Property Company or by which any of the Purchased Assets are bound; or (iv) any
applicable Law, other than, in case of clauses (ii) and (iv), such conflicts,
violations, defaults, terminations or cancellations that would not have a
Material Adverse Effect; and

(b) no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Seller or Property Company in connection with the
execution and delivery of this Agreement or the Seller Documents, the compliance
by Seller and Property Company with any of the provisions hereof or thereof, or
the consummation of the Transactions, or the taking by Seller or Property
Company of any other action contemplated hereby or thereby.

5.5 No Other Agreements to Purchase. No Person, other than Purchaser under this
Agreement, has any agreement or option or any right to purchase from Seller the
Business or any of the Purchased Assets.

5.6 Title to Purchased Assets. Except with respect to the Real Property, which
is separately addressed in this Article V, Seller owns and has good title to, or
a valid leasehold interest in, each of the Purchased Assets, free and clear of
all Liens other than Permitted Exceptions.

5.7 Books and Records. The Books and Records are being maintained and, to the
Knowledge of Sellers, have been maintained in accordance with all applicable Law
in all material respects and in the Ordinary Course of Business with past
practices.

 

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5.8 Financial Statements. The Financial Information was prepared from the books
and records regularly maintained and used by the management of Seller and its
Affiliates to operate the Business, and is accurate in all material respects as
of the respective dates they were prepared, subject to adjustments between
periods.

5.9 Business Carried on in Ordinary Course. Except as expressly contemplated by
this Agreement or as set forth on Schedule 5.9, since December 31, 2019, Seller
has conducted the Business in the Ordinary Course of Business in all material
respects and there has not been, with respect to the Business, any event,
change, occurrence or circumstance that has had, or could be reasonably
anticipated to result in, a Material Adverse Effect.

5.10 Customer and Supplier Relations.

(a) Schedule 5.10(a) includes a complete and correct list of all customers of
the Business who have made aggregate purchases in excess of $113,182.00 in
services from the Business in the past calendar year (the “Major Customers”),
which list indicates, with respect to each such Major Customer, the type of
product or service purchased or subscribed to by such customer, and the
aggregate amount of product or services sold to each such customer in such
calendar year.

(b) Schedule 5.10(b) includes a complete and correct list of all suppliers of
the Business from whom Seller has purchased in excess of $20,505.16 in equipment
or supplies with respect to the Business in the past calendar year (the “Major
Suppliers”), including the aggregate amount paid to each such Major Supplier by
Seller in such calendar year.

(c) Except as set forth in Schedule 5.10(c), to the Knowledge of Seller, none of
the Major Customers or Major Suppliers has canceled, terminated, or otherwise
materially altered or notified Seller in writing of any intention to cancel,
terminate, or materially alter its relationship with Seller.

5.11 Employees.

(a) Schedule 5.11(a) sets forth the names of all Employees, and for each such
Employee lists: (i) years of service with Seller or its Affiliates, (ii) current
job title, base salary or hourly rate of pay (as applicable), (iii) full or
part-time status, (iv) exempt or non-exempt classification under the Fair Labor
Standards Act, and (v) primary job location. Unless otherwise indicated on
Schedule 5.11(a), all Employees are (i) active and not on leave on the date
hereof and (ii) employed by Seller.

(b) There are no employment contracts between Seller and an Employee.

(c) Except as set forth in Schedule 5.11(c), no individuals working in the
capacity of an independent contractor are engaged, nor have for the past one
(1) year been engaged, by Seller or its Affiliates to provide material services
to the Business. With respect to the Business or the Purchased Assets, there are
no Proceedings pending or, to the Knowledge of Seller, threatened against Seller
or any Affiliate of Seller related to the alleged misclassification of any
individual as an independent contractor instead of as an employee.

 

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(d) To the Knowledge of Seller, all Employees are legally authorized to work in
the United States.

(e) With respect to the Business and the Purchased Assets, Seller and its
Affiliates are, and within the past three (3) years have been, in material
compliance with all applicable Workplace Statutes. Within the last three
(3) years, Seller has, to the extent required by Workplace Statutes,
investigated all formal allegations of sexual harassment that have been made by
or against any Employees. Except as set forth on Schedule 5.11(e), there are no
Proceedings against Seller or its Affiliates pending, or to Seller’s Knowledge,
threatened to be brought or filed, in connection with labor or employment
matters, that individually or in the aggregate would reasonably be expected to
result in material Liability for the Business or the Purchased Assets.

(f) Except as would not reasonably be expected to result in material Liability
to the Business or the Purchased Assets, all compensation, including wages,
commissions, bonuses, fees and other compensation, payable to all employees,
independent contractors or consultants who primarily provide, or provided,
services to the Business or the Purchased Assets for services performed on or
prior to the date hereof, have been paid in full or properly accrued.

(g) With respect to the Business or the Purchased Assets, there has been no
action, during the ninety (90) day period preceding the date hereof, that
triggered notice or other obligations by Seller or any Affiliate of Seller under
the WARN Act.

5.12 Collective Agreements. With respect to the Business and the Purchased
Assets, neither Seller nor any Affiliate of Seller, is or has been, for the past
three (3) years, a party to, bound by, or negotiating any collective bargaining
agreement or other Contract with a union, works council or labor organization
(collectively, “Union”) respecting Employees. To the Knowledge of Seller, there
is not, and has not been for the past three (3) years, any (i) Union
representing or purporting to represent any Employees, and (ii) no Union or
group of Employees seeking to organize Employees for the purpose of collective
bargaining. There is, and within the past three (3) years there has been, no
pending, or, to the Knowledge of Seller, threatened material labor strike,
slowdown, work stoppage, lockout, concerted refusal to work overtime or other
similar material labor disruption by Employees. With respect to the Business and
the Purchased Assets, neither Seller nor any Affiliate of Seller has a duty to
bargain with any Union.

5.13 Employee Benefit Matters.

(a) Schedule 5.13 contains a true and complete list of each material Seller
Benefit Plan in which one (1) or more Employees participates (each a “Business
Benefit Plan”).

(b) There are no liabilities, breaches, violations or defaults under Seller
Benefit Plans which would subject the Purchased Assets, Purchaser or any of its
employee benefit plans to any material Taxes, penalties or other Liabilities.
Each Business Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has received a favorable determination or opinion letter from the
Internal Revenue Service. None of Seller nor any of its ERISA Affiliates
currently maintains, sponsors, or contributes to, or has Liability with respect
to, an employee benefit plan that is subject to Section 302 or Title IV of ERISA
or Section 412 of the Code (including a “multiemployer plan” as defined in
Section 3(37) of ERISA), and no event has occurred and no

 

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condition exists that would subject the Purchased Assets, Purchaser or any of
its employee benefit plans to any Liability (including Liability on account of
an ERISA Affiliate) with respect to any such plan. None of the Purchased Assets
are or are currently expected to be subject to any Lien arising under
Section 430(k) of the Code or Section 303(k) of ERISA. Except to the extent as
would not result in Liability to Purchaser, each Seller Benefit Plan has been
established, administered and maintained in all material respects in accordance
with its terms and in compliance with all applicable Laws (including ERISA and
the Code).

(c) Except as set forth on Schedule 5.13, neither the execution of this
Agreement nor the consummation of any of the Transactions will (either alone or
upon the occurrence of any additional or subsequent events): (i) entitle any
Employee to severance pay or any other payment; (ii) accelerate the time of
payment, funding or vesting, or increase the amount of compensation due to any
Employee; (iii) increase the amount payable to any Employee under or result in
any other material obligation pursuant to any Seller Benefit Plan; (iv) result
in “excess parachute payments” within the meaning of Section 280G(b) of the
Code; or (v) require a “gross-up” or other payment to any “disqualified
individual” within the meaning of Section 280G(c) of the Code.

5.14 Real Property Leases and Real Property Agreements.

(a) Except as set forth on Schedule 5.14(a), Seller has a valid leasehold
interest in the Leased Real Property, free and clear of all Liens other than
Permitted Exceptions.

(b) Except as set forth on Schedule 5.14(b), Seller has a valid and enforceable
right to occupy and use the Other Real Property as operated as of the Closing
Date, free and clear of all Liens other than Permitted Exceptions.

(c) Except as set forth on Schedule 5.14(c), Seller has not received written
notice of, and to Seller’s Knowledge, there are no existing, defaults or events
that with notice or lapse of time, or both, would constitute a default by Seller
or any other party under any Real Property Lease or Real Property Agreement, in
each case that has not been cured. True, accurate, and complete copies of all
Real Property Leases and Real Property Agreements have been made available to
Purchaser.

5.15 Condition of Facilities. To the Knowledge of Seller, (a) none of the
Facilities, or the operation or maintenance thereof, violates any restrictive
covenant or any applicable law, by-law, zoning restriction or regulation, the
violation of which would have, individually or in the aggregate, a financial
impact in excess of $50,000 on the Business, and (b) without limiting the
generality of the foregoing:

(i) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Facilities (except for current accounts the
payment dates of which have not yet passed) have been fully paid and satisfied
in all material respects; and

(ii) there is no material amount owing by Seller in respect of the Facilities
for the supply to or use by any of them of water, gas, electrical power or
energy, steam or hot water, or other utilities or in respect of municipal,
school or other Taxes or relating to the Business (except for current accounts
the payment dates of which have not yet passed).

 

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5.16 Real Property.

(a) Except as set forth on Schedule 5.16, Seller or Property Company, as
applicable, has good and indefeasible fee simple title to the Owned Real
Property, free and clear of all Liens other than Permitted Exceptions.

(b) Seller has not received any written notice of, and to Seller’s Knowledge,
there are no existing, pending or threatened (i) condemnation proceedings
affecting the Real Property, or (ii) zoning, building code or other moratorium
proceedings, or similar matters, in each case that would reasonably be expected
to materially and adversely affect the ability to operate the Real Property as
currently operated. Neither the whole nor any material portion of any Real
Property has been damaged or destroyed by fire or other casualty.

(c) Except as set forth on Schedule 5.16, Seller has not leased, subleased or
otherwise granted to any Person the right to use or occupy the Real Property or
any portion thereof.

5.17 SWDs. Except as set forth on Schedule 5.17, to the Knowledge of Seller
(a) as of the Closing, each SWD is capable of discharging its contents at the
depths, in each case, up to the maximum capacity stated in its respective
Permit, (b) the wellbore, casing of the well, tanks, pipelines, electrical
equipment and pumps of each SWD are structurally sound, in good operating
condition (subject to normal wear and tear), (c) each SWD is, and during the
time Seller has owned the SWD has been, used only for the disposal of materials
permitted pursuant to the applicable Permit, and (d) each SWD is located within
the boundaries of the Owned Real Property or located on Real Property to which
Seller or Property Company, as applicable, has the exclusive right, pursuant to
a Real Property Lease, Real Property Agreement, or otherwise, to operate the
applicable SWD.

5.18 Contracts.

(a) Seller has made available to Purchasers true, accurate and complete copies
of all Assumed Contracts.

(b) Each of the Assumed Contracts is in full force and effect and constitutes a
legal, valid and binding obligation of Seller and, to Seller’s Knowledge, the
other Parties thereto, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium and other similar
Laws relating to or affecting the rights of creditors generally, and general
equitable principles.

(c) (i) Neither Seller nor, to Seller’s Knowledge, any other party to any
Assumed Contract, is in breach or default in any material respect under any
Assumed Contract, and (ii) there are no Proceedings pending nor, to Seller’s
Knowledge, threatened in writing under or relating to any Assumed Contract. None
of the Assumed Contracts have been cancelled, terminated, amended or modified
(except for change orders and similar modifications made available to Purchaser
or occurring after the date hereof in the Ordinary Course of Business and
promptly provided to Purchaser following execution thereof), and Seller has
neither provided nor received any written notice of any intention to cancel,
terminate, amend or modify any Assumed Contract.

 

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5.19 Proceedings. Except as set forth and described in Schedule 5.19, there is
no Proceeding in progress, pending or, to the Knowledge of Seller, threatened in
writing against or otherwise affecting Seller or Property Company relating to
the Business or the Purchased Assets at Law or in equity or before or by any
Governmental Body.

5.20 Compliance with Laws; Permits.

(a) Neither Seller nor Property Company is in violation of or in default under,
any Law or Order (other than Environmental Laws, which are exclusively addressed
in Section 5.22) applicable to Seller or Property Company in respect to their
ownership or operation of the Purchased Assets.

(b) Except for the Permits listed on Schedule 5.20(b), the Assigned Permits
constitute all Permits that are required under Law (other than Environmental
Laws, which are exclusively addressed in Section 5.22) for the ownership of the
Purchased Assets and operation of the Purchased Assets in the manner in which
they are currently owned and operated. All of the Assigned Permits are in full
force and effect in all material respects, and there are no Proceedings pending
or, to Seller’s Knowledge, threatened in writing that seek the suspension,
revocation or material adverse modification of any such Assigned Permit. Seller
is in compliance in all material respects with each Assigned Permit (other than
those under Environmental Laws, which are exclusively addressed in
Section 5.22).

5.21 Condition of Purchased Assets. Except as expressly set forth in this
Agreement, the Purchased Assets are being conveyed to Purchaser on an “AS IS,
WHERE IS” basis.

5.22 Environmental. Except as set forth on Schedule 5.22 hereto, as of the
Execution Date:

(a) the operations of Seller and Property Company related to the Business or the
Purchased Assets are, and for the past three (3) years have been, in compliance
in all material respects with Environmental Laws;

(b) there are no Orders relating to the Business or the Purchased Assets,
pending under or pursuant to, or to the Knowledge of Seller, threatened against
the Seller or Property Company alleging a violation of, any Environmental Laws
by Seller or Property Company;

(c) to Seller’s Knowledge, there has not been any reportable release or disposal
of any Hazardous Materials during the past three (3) years concerning any land,
facility, asset or property included in the Purchased Assets that:
(i) interferes with or prevents compliance by Seller with any Environmental Law
or the terms of any license or permit issued pursuant thereto; or (ii) gives
rise to or results in any common Law or other liability of Seller to any Person
that, in the case of either clause (i) or (ii) hereof, could reasonably be
expected to result in the imposition of any material liability to Seller or
Property Company.

 

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(d) Seller has made available to Purchaser copies of all material,
non-privileged Third Party environmental audits, evaluations, assessments,
studies or tests relating to the Facilities, the Purchased Assets or the
Business that are in Seller’s custody and were received by Seller during the
past three (3) years.

(e) Notwithstanding any other provision of this Agreement to the contrary, this
Section 5.22 contains the sole and exclusive representations and warranties of
Seller with respect to applicable Environmental Laws, proceedings relating to
Environmental Laws, Hazardous Materials and any other environmental matters.

5.23 Insurance. Seller maintains insurance with reputable insurers covering the
Purchased Assets and protecting the Business in such amounts and against such
losses and claims as are generally maintained for comparable businesses and
properties and sufficient to comply in all material respects with applicable
Laws, Orders and Permits. Schedule 5.23 sets forth and describes all insurance
policies currently maintained by Seller relating to the Purchased Assets or the
Business (including policy type, coverage, and date of expiry), and details of
any claims relating to the Purchased Assets or the Business within the last
three (3) years. Each of such insurance policies is binding and in good
standing, and, to the Knowledge of Seller, there is no default thereunder
(including with respect to the payment of premiums) and Seller is entitled to
all rights and benefits under its insurance policies. Except as set forth on
Schedule 5.23, no material claim under any of such insurance policies has been
made by Seller with respect to the Purchased Assets or the Business (or remains
outstanding) within the last three (3) years.

5.24 Taxes.

(a) Seller has duly and timely filed or caused to be filed all material Tax
Returns required to be filed by it with respect to the Purchased Assets (taking
into account any valid extension of the due date for filing).

(b) Seller has duly and timely paid all material Taxes required to be paid by it
attributable to the Purchased Assets that have become due and payable.

(c) There are no Liens for Taxes (other than for Taxes not yet due and payable)
currently existing or pending with respect to any Purchased Assets attributable
to any unpaid Taxes.

(d) No extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of Seller related to the Purchased Assets.

(e) All material deficiencies asserted, or assessments made, against Seller or
Property Company as a result of any examinations by any Tax Authority related to
the Purchased Assets have been fully paid. There is no outstanding claim,
assessment, proposed assessment, or deficiency for Taxes with respect to the
Purchased Assets against Seller or Property Company that has been asserted by
any Tax Authority.

 

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(f) Neither Seller nor Property Company is a party to any Tax Contest related to
the Purchased Assets by any Tax Authority. There are no pending or, to the
Knowledge of Seller, threatened Tax Contests related to the Purchased Assets by
any Tax Authority.

(g) Neither Seller nor Property Company is a “foreign person” as that term is
used in Treasury Regulations Section 1.1445-2.

(h) No claim has been made by any Tax Authority in a jurisdiction where Seller
or Property Company does not pay Taxes or file Tax Returns with respect to the
Purchased Assets asserting that Seller or Property Company is or may be subject
to Taxes or required to file Tax Returns in such jurisdiction with respect to
the Purchased Assets.

(i) Neither Seller nor Property Company has requested or received any ruling
from any Tax Authority, or signed any binding agreement (including any advance
pricing agreement) with any Tax Authority that could affect the Purchased
Assets.

(j) There are no Tax rulings or closing agreements relating to Taxes with
respect to the Purchased Assets that would be binding upon Purchaser following
the Closing Date.

5.25 Financial Advisors. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for Seller in connection with the
Transactions and no Person is entitled to any fee or commission or like payment
in respect thereof. Seller is solely responsible for any such fees, commission,
or like payment payable to such broker, finder, or financial advisor, if any.

5.26 Disclaimers.

(a) EXCEPT AS AND TO THE EXTENT EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE
V, SELLER DOES NOT MAKE, SELLER EXPRESSLY DISCLAIMS, AND PURCHASER WAIVES AND
REPRESENTS AND WARRANTS THAT PURCHASER HAS NOT RELIED UPON, ANY REPRESENTATION,
WARRANTY, OR OTHER STATEMENT, EXPRESS, STATUTORY, OR IMPLIED, IN THIS OR ANY
OTHER INSTRUMENT, AGREEMENT, OR CONTRACT DELIVERED HEREUNDER OR IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER, INCLUDING ANY
REPRESENTATION, WARRANTY, OR OTHER STATEMENT, ORAL OR WRITTEN, AS TO (I) TITLE
TO ANY OF THE PURCHASED ASSETS, (II) ANY ESTIMATES OF THE VALUE OF THE PURCHASED
ASSETS OR FUTURE REVENUES GENERATED BY THE PURCHASED ASSETS, (III) THE
MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN, OR MARKETABILITY
OF THE PURCHASED ASSETS, (IV) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT,
OR (V) ANY OTHER RECORD, FILES, OR MATERIALS OR INFORMATION (INCLUDING AS TO THE
ACCURACY, COMPLETENESS, OR CONTENTS OF THE BOOKS AND RECORDS) THAT MAY HAVE BEEN
MADE AVAILABLE OR COMMUNICATED TO THE PURCHASER INDEMNIFIED PERSONS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
DISCUSSION OR PRESENTATION RELATING THERETO (INCLUDING ANY ACCOUNTING MATERIALS
OR OTHER ITEMS PROVIDED PRIOR TO THE EXECUTION DATE); AND SELLER FURTHER
DISCLAIMS, AND PURCHASER

 

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WAIVES, ANY REPRESENTATION, WARRANTY, OR OTHER STATEMENT, EXPRESS OR IMPLIED, OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS OR ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED
BY THE PARTIES HERETO THAT, EXCEPT AS AND ONLY TO THE EXTENT EXPRESSLY
REPRESENTED OTHERWISE IN THIS ARTICLE V, THE PURCHASED ASSETS ARE BEING
TRANSFERRED “AS IS, WHERE IS,” WITH ALL FAULTS AND DEFECTS, AND THAT PURCHASER
HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.
PURCHASER SPECIFICALLY DISCLAIMS ANY OBLIGATION OR DUTY BY SELLER OR ANY MEMBER
OF THE SELLER INDEMNIFIED PERSONS TO MAKE ANY DISCLOSURES OF FACT NOT REQUIRED
TO BE DISCLOSED PURSUANT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH
HEREIN AND PURCHASER EXPRESSLY ACKNOWLEDGES AND COVENANTS THAT PURCHASER DOES
NOT HAVE, WILL NOT HAVE, AND WILL NOT ASSERT ANY CLAIM, DAMAGES, OR EQUITABLE
REMEDIES WHATSOEVER AGAINST ANY MEMBER OF THE SELLER INDEMNIFIED PERSONS EXCEPT
FOR CLAIMS, DAMAGES, AND EQUITABLE REMEDIES AGAINST SELLER FOR BREACH OF AN
EXPRESS REPRESENTATION, WARRANTY, OR COVENANT OF SELLER UNDER THIS AGREEMENT OR
AS OTHERWISE EXPRESSLY ALLOWED PURSUANT TO THIS AGREEMENT.

(b) EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN SECTION 5.22, SELLER HAS
NOT AND WILL NOT MAKE (AND HEREBY DISCLAIMS) ANY REPRESENTATION, WARRANTY, OR
OTHER STATEMENT REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL
LAWS, ENVIRONMENTAL DEFECTS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF HAZARDOUS
MATERIALS OR HAZARDOUS SUBSTANCES, HYDROCARBONS, OR NORM INTO THE ENVIRONMENT,
OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES, OR THE
ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN
THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION,
WARRANTY, OR OTHER STATEMENT, AND PURCHASER SHALL BE DEEMED TO BE TAKING THE
PURCHASED ASSETS “AS IS, WHERE IS” FOR PURPOSES OF THEIR ENVIRONMENTAL
CONDITION. PURCHASER SHALL HAVE INSPECTED, OR WAIVED (AND UPON CLOSING SHALL BE
DEEMED TO HAVE WAIVED) ITS RIGHT TO INSPECT, THE PURCHASED ASSETS FOR ALL
PURPOSES, AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,
BOTH SURFACE AND SUBSURFACE, INCLUDING CONDITIONS SPECIFICALLY RELATING TO THE
PRESENCE, RELEASE, OR DISPOSAL OF HAZARDOUS MATERIALS OR HAZARDOUS SUBSTANCES,
SOLID WASTES, ASBESTOS, OTHER MAN-MADE FIBERS, AND NORM. PURCHASER IS RELYING
SOLELY UPON THE TERMS OF THIS AGREEMENT AND ITS OWN INSPECTION OF THE PURCHASED
ASSETS. AS OF CLOSING, PURCHASER HAS MADE ALL SUCH REVIEWS AND INSPECTIONS OF
THE PURCHASED ASSETS AND THE RECORDS AS PURCHASER HAS DEEMED NECESSARY OR
APPROPRIATE TO CONSUMMATE THE TRANSACTION AND THAT, AT CLOSING, PURCHASER SHALL
BE DEEMED TO HAVE KNOWLEDGE OF ALL FACTS CONTAINED IN THE RECORDS OR THAT WOULD
HAVE BEEN DISCOVERED BY PURCHASER’S AND PURCHASER’S REPRESENTATIVES’ EXERCISE OF
REASONABLE CARE AND DUE DILIGENCE IN THE COURSE OF SUCH INVESTIGATION,
VERIFICATION, ANALYSIS, AND EVALUATION.

 

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(c) PURCHASER ACKNOWLEDGES THAT IT SHALL ASSUME ALL RISK OF LOSS WITH RESPECT TO
DEPRECIATION OF ANY PURCHASED ASSETS THAT CONSTITUTE PERSONAL PROPERTY THROUGH
ORDINARY WEAR AND TEAR.

(d) SELLER AND PURCHASER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO
BE EFFECTIVE OR ENFORCEABLE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS ARTICLE V AND THE REST OF THIS AGREEMENT ARE
“CONSPICUOUS” DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

6.1 Generally. Purchaser hereby represents and warrants to Seller the matters
set forth in Section 6.2 through Section 6.11 as of the Execution Date (except
for representations and warranties that refer to a specified date which will be
deemed made as of such date).

6.2 Organization and Good Standing. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Texas and has all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. Purchaser is qualified to conduct business in each
jurisdiction in which ownership of the Purchased Assets or operation of the
Business makes such qualification necessary.

6.3 Authorization of Agreement. Purchaser has all requisite power, legal
capacity and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by Purchaser in connection with the consummation of the
Transactions (the “Purchaser Documents”), to perform its obligations hereunder
and thereunder, and to consummate the Transactions. The execution, delivery and
performance by Purchaser of this Agreement, each Purchaser Document and the
consummation of the Transactions have been duly authorized by all requisite
organizational action on behalf of Purchaser. This Agreement has been, and each
Purchaser Document will be at or prior to the Closing, duly and validly executed
and delivered by Purchaser and (assuming the due authorization, execution and
delivery by the other Parties hereto and thereto) this Agreement constitutes,
and each Purchaser Document when so executed and delivered will constitute, the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights and
remedies generally.

6.4 Conflicts; Consents of Third Parties.

(a) None of the execution and delivery by Purchaser of this Agreement or the
Purchaser Documents, the consummation of the Transactions, or the compliance by
Purchaser with

 

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any of the provisions hereof or thereof will conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of (i) the certificate of formation or the company agreement of
Purchaser, (ii) any Contract, Permit to which Purchaser is a party or by which
Purchaser or its properties or assets are bound, (iii) any Order of any
Governmental Body applicable to Purchaser or by which any of the properties or
assets of Purchaser are bound or (iv) any applicable Law.

(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Purchaser in connection with the execution and
delivery of this Agreement or the Purchaser Documents, the compliance by
Purchaser with any of the provisions hereof or thereof, the consummation of the
Transactions or the taking by Purchaser of any other action contemplated hereby,
or for Purchaser to conduct the Business.

6.5 Financial Advisors. Except for Energy Capital Solutions, LLC, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Purchaser in connection with the Transactions and no Person is entitled to any
fee or commission or like payment in respect thereof. Purchaser is solely
responsible for any such fees, commission, or like payment payable to such
broker, finder, or financial advisor.

6.6 Condition of the Business. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser acknowledges and agrees that Seller is not
making any representations or warranties whatsoever, express or implied, beyond
those expressly given by Seller in Article V hereof (as modified by the
Schedules hereto), and Purchaser acknowledges and agrees that, except for the
representations and warranties contained therein, the Purchased Assets and the
Business are being transferred on a “where is” and, as to condition, “as is”
basis.

6.7 Legal Proceedings. There are no actions pending or, to Purchaser’s
knowledge, threatened against, relating to or affecting Purchaser or any
Affiliate of Purchaser or any of Purchaser’s assets or properties that could
reasonably be expected to (a) result in the issuance of an order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the Transactions or (b) individually or in the aggregate, materially impair or
delay the ability of Purchaser to consummate the Transactions.

6.8 Financial Ability. Purchaser has funds sufficient to (a) pay the Purchase
Price (including the Seller Note) and any other expenses incurred by Purchaser
in connection with this Agreement; (b) fund the consummation of the Transactions
contemplated by this Agreement; and (c) satisfy all other costs and expenses
arising in connection herewith and therewith, each without encumbrance or delay
and without causing Purchaser to become insolvent or declare insolvency.

6.9 Regulatory. Purchaser is now, and hereafter shall continue to be, qualified
per all regulations of the applicable Governmental Body and other applicable
Laws to own the Purchased Assets; and the consummation of the Transactions
contemplated in this Agreement. To the extent required by any applicable Laws,
Purchaser will have (a) all bonds as may be required by or in accordance with
all applicable Laws governing the ownership and operation of the Purchased
Assets and (b) filed or will file within ten (10) Business Days after Closing
any and all currently required reports necessary for such ownership with all
Governmental Bodies having jurisdiction over such ownership. To the extent
required by any Laws, Purchaser currently has those bonds, area-wide bonds, any
other surety bonds or other financial security devices as may be required by,
and in accordance with, all Laws governing the ownership or operation of the
Purchased Assets.

 

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6.10 Independent Evaluation. Purchaser is sophisticated and knowledgeable in the
evaluation, purchase, ownership and operation of water disposal assets and the
customary practices in the Business, including those in the areas where the
Purchased Assets are located. In making its decision to enter into this
Agreement and to consummate the Transactions contemplated hereby, except for its
reliance on Seller’s representations and warranties in Article V, Purchaser
(a) has relied or shall rely solely on its own independent investigation and
evaluation of the Purchased Assets and the advice of its own legal, Tax,
economic, environmental, engineering, geological and geophysical advisors and
the express provisions of this Agreement and not on any comments, statements,
projections or other materials made or given by Seller or any of its Affiliates
or representatives, and (b) has satisfied itself through its own due diligence
as to the environmental and physical condition of and contractual arrangements
and other matters affecting the Purchased Assets.

6.11 Securities Law Compliance; Accredited Investor. Purchaser is an “accredited
investor,” as such term is defined in Regulation D of the Securities Act of
1933, as amended, and is acquiring the Purchased Assets for its own account for
use in its trade or business, and not with a view toward or for sale associated
with any distribution thereof, nor with any present intention of making a
distribution thereof within the meaning of the Securities Act of 1933, as
amended, and applicable state securities Laws.

ARTICLE VII

COVENANTS

7.1 Further Assurances. The Parties hereto agree to use their best efforts to
make, do, execute, deliver, or cause to be made, done, executed, and delivered,
all such further acts, instruments, assurances, and things, including
certificates or powers of attorney, as may be necessary or appropriate to carry
out the provisions of this Agreement and to give effect to the Transactions. In
the event that after the Closing, Seller or any of its Affiliates receives any
payment related to any Purchased Asset, Seller agrees to use commercially
reasonable efforts to remit any such payment within ten (10) Business Days (or
cause to be remitted within ten (10) Business Days) such funds to Purchaser, but
in any event such funds shall be remitted to Purchaser as soon as possible
thereafter. In the event that Purchaser or any of its Affiliates receives any
payment related to any Excluded Assets after the Closing, Purchaser agrees to
use commercially reasonable efforts to remit any such payment within ten
(10) Business Days (or cause to be remitted within ten (10) business days) such
funds to Seller, but in any event such funds shall be remitted to Seller as soon
as possible thereafter.

7.2 Noncompetition and Non-solicitation.

(a) During the period commencing on the Closing Date until the third anniversary
of the Closing Date and subject to Section 7.2(c), without the express, prior
written consent of Purchaser, Seller agrees not to, and shall cause it
Affiliates not to, directly or indirectly, including as partner, member,
stockholder, or investor or in any other capacity, own, control,

 

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manage, operate or participate in, the Business in the Specified Territories;
provided, however, notwithstanding anything in this Section 7.2 to the contrary,
the restrictions set forth in this Section 7.2(a) shall not apply to any assets
(other than the Purchased Assets) or business owned or conducted by Seller or
its Affiliates as of the Closing Date in the Specified Territories.

(b) During the period commencing on the Closing Date until the third anniversary
of the Closing Date, Seller shall not, and shall cause it Affiliates not to, in
any way, directly or indirectly, solicit, recruit, hire or interfere with or
attempt to interfere with any employee of Purchaser in the Business; provided,
however, that the foregoing will not prohibit Seller from hiring, soliciting or
offering employment to any person (i) who responds to a general solicitation or
advertisement that is not specifically directed to employees of Purchaser,
(ii) responding to or hiring any such employee who contacts Seller at his or her
own initiative, without any prior direct or indirect encouragement or
solicitation by Seller or on Seller’s behalf (other than as permitted by clause
(i) of this Section 7.2(b)), or (iii) who has ceased to be employed or retained
by Purchaser or its Affiliates for more than six (6) months.

(c) Notwithstanding the foregoing, (i) nothing contained in Section 7.2(a) or
Section 7.2(b) shall prohibit Seller from acquiring (or owning or operating
after its acquisition), merging or combining businesses with any diversified
business that engages in the Business so long as such business’ revenues derived
from the Business in the Specified Territories for its fiscal year prior to when
the acquisition occurs constitute no more than 10% of such business’ revenues
for such fiscal year, and (ii) if Seller is directly or indirectly acquired by,
acquires, merges or enters into a business combination with a Third Party that,
immediately prior to the closing of such acquisition, is not an Affiliate of
Seller, then none of the acquiring Third Party or its Affiliates shall become
subject to this Section 7.2.

(d) Seller acknowledges that a breach or threatened breach of Section 7.2(a)
would give rise to irreparable harm to Purchaser, for which monetary damages
would not be an adequate remedy, and hereby agrees that in the event of a breach
or a threatened breach by Seller of any such obligations, Purchaser shall, in
addition to any and all other rights and remedies that may be available to it in
respect of such breach, be entitled to equitable relief, including a temporary
restraining order, an injunction, specific performance and any other relief that
may be available from a court of competent jurisdiction (without any requirement
to post bond).

(e) Seller acknowledges and agrees that the terms of the covenants in this
Section 7.2 are fair and reasonable with respect to its duration, geographical
area and scope, are necessary to accomplish the full transfer of the goodwill
and other intangible assets contemplated hereby, protect Purchaser’s legitimate
business interests, and were a material and necessary inducement for Purchaser
to agree to the Transactions herein contemplated. In the event that any
provision contained in this Section 7.2 shall be determined by any court of
competent jurisdiction or any Governmental Body to be unenforceable for any
reason whatsoever (including in relation to duration or the scope of the
activities covered thereby), then the Parties agree that the court should
redefine such covenant so as to comply with applicable Law, it being
specifically agreed by the Parties that it is each of their continuing desire
that each covenant in this Section 7.2 be enforced to the full extent of its
terms and conditions.

 

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7.3 Confidentiality.

(a) Effective as of the date hereof, the confidentiality agreement between
Purchaser and Seller dated July 3, 2019 (the “Confidentiality Agreement”) shall
terminate with respect to information relating exclusively to the Business or
otherwise included in the Purchased Assets; provided, however, that Purchaser
acknowledges that any and all other Confidential Information provided to it by
Seller or its representatives concerning Seller or any of its Affiliates shall
remain subject to the terms and conditions of the Confidentiality Agreement
after the date hereof.

(b) Seller agrees not to disclose to any unauthorized Persons any Confidential
Information that is related exclusively to and included in the Purchased Assets,
whether or not such information is embodied in writing or other physical form,
without Purchaser’s prior written consent, unless such Confidential Information
(i) is or became generally known to and available for use by the public other
than as a result of its or its Affiliate’s, as the case may be, fault or the
fault of any other Person bound by a duty of confidentiality to Purchaser or
(ii) is disclosed as required by any applicable Law (including in connection
with legal Proceedings or pursuant to a subpoena, Order or a requirement or an
official request issued by a court of competent jurisdiction or by a judicial,
administrative, legislative, regulatory or self-regulating authority or body) or
by the applicable rules of any stock exchange on which Purchaser or Seller lists
securities; provided that, to the extent not prohibited, Seller gives reasonable
prior notice to Purchaser of such disclosure and makes a reasonable effort to
obtain, or to assist Purchaser in obtaining, a protective order preventing or
limiting the disclosure.

7.4 Publicity.

(a) None of Seller, Purchaser or any Affiliate of either of them shall issue any
press release or public disclosure concerning this Agreement or the Transactions
without obtaining the prior written approval of the other Parties hereto, which
approval will not be unreasonably withheld or delayed, unless, disclosure is
otherwise required by applicable Law or by the applicable rules of any stock
exchange on which Purchaser or Seller lists securities, provided that, to the
extent required by applicable Law, the Party intending to make such release or
disclosure shall use its best efforts consistent with such applicable Law to
consult with the other Party with respect to the text thereof.

(b) Each of Purchaser and Seller agree that the terms of this Agreement shall
not be disclosed or otherwise made available to the public and that copies of
this Agreement shall not be publicly filed or otherwise made available to the
public, except where such disclosure, availability or filing is required by
applicable Law and only to the extent required by such Law.

7.5 Disclosure Schedules. Seller may, at its option, include in the Schedules
items that are not material in order to avoid any misunderstanding, and such
inclusion, or any references to dollar amounts, shall not be deemed to be an
acknowledgement or representation that such items are material, to establish any
standard of materiality or to define further the meaning of such terms for
purposes of this Agreement. Information disclosed in any Schedule shall be
deemed to be disclosed with respect to any other Schedule to the extent that it
is reasonably apparent on the face of such disclosure that such disclosure is
applicable notwithstanding the omission of a reference or cross-reference
thereto.

 

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7.6 Employees and Employee Benefits.

(a) Purchaser, an Affiliate of Purchaser, or a third party designated by
Purchaser (as applicable, the “Purchaser Employer”) shall have the right, but
not the obligation, to make offers of employment to any Employee on such terms
and conditions as determined by Purchaser in its sole discretion. Seller shall
(i) notify Purchaser as soon as reasonably practicable of any changes to the
list of Employees reflected on Schedule 5.11(a) and (ii) permit Purchaser
Employer to interview any Employees. An Employee who accepts Purchaser
Employer’s employment offer, passes Purchaser Employer’s applicable
pre-employment screening processes, and timely commences employment with
Purchaser Employer is referred to as a “Transferred Employee”. Seller shall not,
and shall cause its Affiliates not to, interfere with any negotiations by
Purchaser Employer to employ any Employee or discourage any Employee from
accepting employment with Purchaser Employer. Seller shall, and shall cause its
Affiliates to, (A) accept the resignation of each Transferred Employee
immediately preceding the Closing Date and (B) waive any restrictive covenants
or other obligations to which Transferred Employee may be subject pursuant to an
agreement with Seller or its Affiliates that would interfere with Transferred
Employee’s employment with Purchaser Employer. The date on which a Transferred
Employee commences employment with Purchaser Employer is referred to as such
Transferred Employee’s “Hire Date.”

(b) Subject to compliance with the terms and conditions of Purchaser’s relevant
plans and policies, each Transferred Employee shall receive credit for all
periods of employment and/or service with Seller and its Affiliates (including
service with predecessor employers, where such credit was provided by Seller or
its Affiliates) prior to such Transferred Employee’s Hire Date for purposes of
eligibility and vesting (but not for benefit accrual, except for accrual of
vacation and severance benefits under the Purchaser’s relevant plans and
policies, and as set forth in this Agreement), including for purposes of
satisfying any service requirements for early retirement under any pension plan
adopted by the Purchaser or its Affiliates with respect to Transferred
Employees.

(c) With respect to any defined contribution plan or plans with a salary
reduction arrangement, the terms of which meet the requirements of Sections
401(a) and 401(k) of the Code (such plan or plans, the “Purchaser Savings Plan”)
that Purchaser maintains, Purchaser shall allow each Transferred Employee to
participate in accordance with Purchaser’s standard policies. Subject to the
terms and conditions of the Purchaser Savings Plan, (i) each Transferred
Employee who is eligible to contribute to Seller’s contribution plan (the
“Seller Savings Plan”) on the Closing Date shall be eligible to contribute to
the Purchaser Savings Plan commencing on such Transferred Employee’s Hire Date,
and (ii) each Transferred Employee shall be permitted to roll over his or her
account balances (including loan balances) from the Seller Savings Plan accrued
through such Transferred Employee’s Hire Date into his or her new accounts under
the Purchaser Savings Plan promptly after such Transferred Employee’s Hire Date,
but in no event later than ninety (90) days after such Transferred Employee’s
Hire Date or in contravention of ERISA or the Code.

(d) Subject to the terms and conditions of the applicable plans, effective as of
the applicable Transferred Employee’s Hire Date, Purchaser or its Affiliate
shall offer each Transferred Employee and his or her eligible dependents
participation in the medical plans of

 

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Purchaser or its Affiliate. With respect to other welfare benefit plans,
including dental, life insurance, and short- and long-term disability (all of
such welfare plans, including Purchaser’s medical plan described in the previous
sentence, the “Purchaser Welfare Benefit Plans”), Purchaser or its Affiliate
shall offer such other welfare benefit plans to each Transferred Employee as
soon as practicable after such Transferred Employee’s Hire Date, but in no event
more than the later of thirty (30) days after such Transferred Employee’s Hire
Date or the earliest date permitted pursuant to the applicable Purchaser Welfare
Benefit Plans. To the extent permitted by the terms of the Purchaser Welfare
Benefit Plans, (i) all waiting periods, actively at work requirements, and
pre-existing condition clauses shall be waived under the Purchaser Welfare
Benefit Plans for each Transferred Employee and his or her eligible dependents
who were participating in the welfare benefits plans and programs of Seller and
its Affiliates before such Transferred Employee’s Hire Date, and (ii) Purchaser
shall cause the Purchaser Welfare Benefit Plans to recognize any out-of-pocket
medical and dental expenses incurred by each Transferred Employees and his or
her eligible dependents prior to such Transferred Employee’s Hire Date and
during the calendar year in which such Transferred Employee’s Hire Date occurs
for purposes of determining deductibles and out-of-pocket maximums under the
Purchaser Welfare Benefit Plans. Seller shall provide such information as
necessary to comply with this Section 7.6(d) to Purchaser at or as soon as
practicable following the Closing.

(e) Seller shall be solely responsible for, and Purchaser shall have no
obligations whatsoever for, any compensation or other amounts payable to any
current or former employee of Seller, including Transferred Employees, or
consultant of the Business, including hourly pay, commission, bonus, salary,
fringe, accrued vacation or paid time off, pension or profit sharing benefits,
welfare benefits or severance pay, in each case for any period relating to
service with Seller or its Affiliates, and Seller shall pay all such amounts to
all entitled persons in accordance with Seller’s regular pay practices and
applicable Law. Purchaser shall be solely responsible for, and Seller shall have
no obligations whatsoever for, any compensation or other amounts payable to any
employee or independent contractor or consultant of the Business, including
hourly pay, commission, bonus, salary, fringe, pension or profit sharing
benefits or severance pay for any period relating to the service with Purchaser,
its Affiliates or other Purchaser Employer.

(f) Subject to applicable Law, Seller shall, and shall cause its Affiliates, as
applicable, to pay out to any Transferred Employee, such Transferred Employee’s
accrued, unused vacation/paid time off as of such Transferred Employee’s last
day of employment with Seller or its Affiliate with the individual’s final
paycheck with Seller or its Affiliate, as applicable.

(g) Seller’s or a Seller Affiliate’s benefit plans will remain responsible, in
accordance with Seller’s or Seller Affiliate’s benefit plans, policies and
programs, for all claims for health, accident, sickness, death and disability
benefits deemed incurred while the Transferred Employee is employed by Seller or
Seller’s Affiliate. Seller also shall remain responsible for all workers’
compensation claims of any current or former employees, officers, directors,
independent contractors or consultants of the Business, in each case, which
relate to service to Seller or the Business or with respect to the Purchased
Assets occurring prior to the Closing Date.

 

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(h) Effective as of each Transferred Employee’s Hire Date, Purchaser shall
assume all responsibilities and obligations for COBRA continuation coverage
(within the meaning of Section 4980B of the Code and the Treasury Regulations
thereunder) and any state continuation coverage requirements with respect to
such Transferred Employee and his or her beneficiaries. Seller agrees that it
shall retain responsibility for all COBRA continuation coverage to all qualified
beneficiaries of covered employees for whom a “qualifying event” under COBRA
occurs prior to the Closing.

(i) Following the Closing, Seller or its Affiliate shall cooperate with
Purchaser, in accordance with applicable Law, to provide any OSHA records or
other employment records related to Transferred Employees that Purchaser
Employer is obligated by Law to maintain if deemed a successor employer.

(j) Nothing herein, expressed or implied, shall confer upon any Employees (or
any of their legal representatives, beneficiaries or alternate payees) any
rights or remedies (including any right to employment or continued employment,
or any right to compensation or benefits for any period) of any nature or kind
whatsoever, under or by reason of this Agreement or otherwise. In addition, the
provisions of this Section 7.6, are for the sole benefit of the Parties to this
Agreement and are not for the benefit of any third party.

7.7 Books and Records.

(a) Seller, at Purchaser’s cost and expense, shall deliver the Books and Records
to Purchaser within thirty (30) days following Closing. Seller may retain copies
of the Books and Records.

(b) For a period of seven (7) years after the Closing, Seller and Purchaser
shall each:

(i) retain copies of the Books and Records which relate to the Purchased Assets,
the Assumed Liabilities, the Business or its operations for the period beginning
four (4) years prior to the Closing and ending as of the Closing; and

(ii) upon reasonable notice, afford the other Party’s representatives reasonable
access (including the right to make, at the requesting Party’s expense,
photocopies), during normal business hours, to such Books and Records.

(c) Seller shall not be obligated to provide Purchaser with access to any Books
and Records pursuant to this Section 7.7 where such access would violate any
Law.

7.8 Use of Name; Access to Vehicles(a) . Purchaser agrees that it shall (a) as
soon as practicable after the Closing Date and in any event (i) within sixty
(60) days following the Closing Date with respect to any Vehicles, and
(ii) within thirty (30) days following the Closing Date with respect to all
other Purchased Assets, cease to make any use of, remove, strike over or
otherwise obliterate the name “Key” or “Key Energy Services” or any variants
thereof, including any service marks, trademarks, trade names, identifying
symbols, logos, emblems, signs, identification numbers, placards, or insignia
related thereto or containing or comprising the foregoing, including any name or
mark confusingly similar thereto (collectively, the “Seller Marks”), and
(b) immediately after the Closing, cease to hold itself out as having any
affiliation with Seller or any

 

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of its Affiliates. In furtherance thereof, as promptly as practicable but in no
event later than thirty (30) days following the Closing Date, Purchaser shall
remove, strike over or otherwise obliterate the Seller Marks from all materials
including business cards, schedules, stationery, packaging materials, placards,
displays, signs, promotional materials, manuals, forms, computer software and
other materials. Following the Closing Date, Purchaser and Seller shall
cooperate in good faith to allow Seller access to the Vehicles to remove any of
Seller’s vehicle tracking devices from the Vehicles. Seller shall use its best
efforts to schedule and conduct the removal of the vehicle tracking devices in a
manner to minimize disruption of Purchaser’s use of the Vehicles.

7.9 Replacement of Bonds, Letters of Credit and Guaranties; Subject Wells.

(a) The Parties understand that none of the bonds, letters of credit and
guaranties, if any, posted by Seller with Governmental Bodies and relating to
the Purchased Assets will be transferred to Purchaser. Purchaser shall obtain,
or cause to be obtained in the name of Purchaser, replacements for such bonds,
letters of credit and guaranties, to the extent such replacements are necessary
to permit the cancellation of the bonds, letters of credit and guaranties posted
by Seller or to consummate the transactions contemplated by this Agreement. In
the event that any counterparty to any such bonds, letters of credit or
guaranties posted by Seller does not release Seller and its Affiliates, then,
from and after Closing, Purchaser shall indemnify Seller or its relevant
Affiliate against all amounts incurred by Seller or its relevant Affiliate under
such bond, letter or credit or guaranty, as applicable, to the extent such
amounts arise out of or relate to the ownership or operation of the Purchased
Assets from and after the Closing.

(b) With respect to each SWD set forth on Schedule 7.9(b) (collectively, the
“Subject Wells”), (i) Purchaser shall not, and shall not permit any person to,
operate, repair, or abandon, or cause to be operated, repaired, or abandoned,
any Subject Well until Purchaser (or Purchaser’s Affiliate operator) is
designated and approved by the applicable Governmental Bodies as the operator of
record for such Subject Well, and (ii) Seller shall reasonably assist Purchaser
with respect to any actions required by law of by any applicable Governmental
Bodies with respect to the Subject Wells until such time as Purchaser (or
Purchaser’s Affiliate operator) is designated and approved by the applicable
Governmental Bodies as the operator of record for such Subject Well. Purchaser
agrees to indemnify and hold Seller and its Affiliates, agents, successors and
assigns harmless from and against any and all Liabilities and Losses based upon,
arising out of or relating to Purchaser’s performance of, or failure to perform,
such obligations under this Section 7.9(b).

ARTICLE VIII

INDEMNIFICATION

8.1 Survival. All of the representations and warranties of the Parties contained
in Article V and Article VI shall survive the Closing hereunder until twelve
(12) months after the Closing Date; provided, however, that: (a) the
representations and warranties of Seller set forth in Section 5.2 (Organization
and Good Standing), Section 5.3 (Authorization of Agreement), Section 5.4(a)
(Conflicts), Section 5.5 (No Other Agreements to Purchase), Section 5.6 (Title
to Purchased Assets), Section 5.24 (Taxes) and Section 5.25 (Financial Advisors)
(collectively, the “Seller Fundamental Representations”); (b) the
representations and warranties of Seller set forth in Section 5.13 (Employee
Benefit Maters) and Section 5.22 (Environmental); and (c) the

 

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representations and warranties of Purchaser set forth in Section 6.2
(Organization and Good Standing), Section 6.3 (Authorization of Agreement),
Section 6.4(a) (Conflicts), Section 6.5 (Financial Advisors), Section 6.10
(Independent Evaluation) and Section 6.11 (Securities Law Compliance) shall
survive the Closing hereunder until eighteen (18) months after the Closing Date.
The disclaimers and acknowledgements in Section 5.26 shall survive the Closing
without limitation. All covenants and agreements of the Parties made in this
Agreement shall survive until fully discharged in accordance with this
Agreement. For the avoidance of doubt, (A) Seller’s indemnification obligations
contained in Section 8.2(c), Section 8.2(d) and Section 8.2(e) shall survive
without limitation; (B) Seller’s indemnification obligations contained in
Section 8.2(a) and Section 8.2(b) shall survive the Closing until the
termination date of each respective representation, warranty, covenant, or
agreement that is subject to indemnification thereunder; (C) Purchaser’s
indemnification obligations contained in Section 8.3(c) and Section 8.3(d) shall
survive without limitation; and (D) Purchaser’s indemnification obligations
contained in Section 8.3(a) and Section 8.3(b) shall survive the Closing until
the termination date of each respective representation, warranty, covenant, or
agreement that is subject to indemnification thereunder. For greater certainty,
no claim for indemnification for breaches of any representation or warranty may
be asserted after the expiration of the applicable survival period set forth in
this Section 8.1. So long as an Indemnified Person asserts a claim for
indemnification under and in accordance with this Article VIII prior to the
expiration of the applicable survival period set forth in this Section 8.1, such
Indemnified Person shall be deemed to have preserved its rights to
indemnification under this Section 8.1 regardless of when such claim is
ultimately liquidated or resolved.

8.2 Indemnification by Seller. Subject to the limitations set forth in this
Article VIII, Seller unconditionally, absolutely and irrevocably agrees to and
shall defend, indemnify and hold harmless Purchaser and its Affiliates and their
respective managers, directors, officers, members, partners, Affiliates,
controlling persons and representatives and their successors and assigns
(collectively, the “Purchaser Indemnified Persons”) from and against, and shall
reimburse the Purchaser Indemnified Persons for, any and all Losses resulting
from, or arising directly out of:

(a) any inaccuracy or breach of any representation or warranty made by Seller in
Article V of this Agreement;

(b) any non-performance or non-fulfillment of any covenant or agreement on the
part of Seller contained in this Agreement;

(c) Claims arising under Environmental Law based upon any incident, action,
condition or circumstance to the extent occurring or existing at the Real
Property on or prior to the Closing Date, in each case, except for and excluding
any Claims or Liabilities attributable to the Assumed Liabilities;

(d) the Excluded Liabilities; and

(e) the Excluded Assets.

Purchaser shall take and shall cause its Affiliates to use commercially
reasonable efforts to mitigate any Loss upon becoming aware of any event which
would reasonably be expected to, or does, give rise thereto, including incurring
costs only to the minimum extent necessary to remedy the breach which gives rise
to the Loss.

 

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8.3 Indemnification by Purchaser. Subject to the limitations set forth in this
Article VIII, Purchaser hereby unconditionally, absolutely and irrevocably
agrees to and shall defend, indemnify and hold harmless Seller and its
Affiliates and their respective managers, directors, officers, members,
partners, Affiliates, controlling persons and representatives and their
successors and assigns (collectively, the “Seller Indemnified Persons”) from and
against, and shall reimburse the Seller Indemnified Persons for, any and all
Losses resulting from, or arising directly out of:

(a) any inaccuracy or breach of any representation or warranty made by such
Purchaser in Article VI of this Agreement;

(b) any non-performance or non-fulfillment of any covenant or agreement on the
part of such Purchaser contained in this Agreement;

(c) Claims arising under Environmental Law based upon any incident, action,
condition or circumstance to the extent first occurring or existing at the Real
Property after the Closing Date; or

(d) any Assumed Liability.

Subject to the terms, conditions and other limitations set forth in this Article
VIII, Seller acknowledges and agrees that Purchaser shall not have any liability
under any provision of this Agreement for any Loss to the extent that such Loss
is caused by Seller or any other Person (other than Purchaser in breach of this
Agreement) prior to the Closing Date. Seller shall take and cause its Affiliates
to use commercially reasonable efforts to mitigate any Loss upon becoming aware
of any event which would reasonably be expected to, or does, give rise thereto,
including incurring costs only to the minimum extent necessary to remedy the
breach which gives rise to the Loss.

8.4 Procedures.

(a) If any Person entitled to indemnification under this Article VIII (an
“Indemnified Person”) asserts a claim for indemnification for, or receives
notice of the assertion or commencement of, any Third Party Claim, such
Indemnified Person shall as soon as practicable give written notice (“Indemnity
Notice”) of such claim to the Party from whom indemnification is to be sought
(an “Indemnifying Person”), describing in reasonable detail (i) the facts giving
rise to the Third Party Claim hereunder, (ii) the amount or method of
computation of the amount of such claim, (iii) each individual item of Loss
included in the amount so stated, to the extent known, (iv) the date such item
was paid or properly accrued, and (v) the nature of the breach of
representation, warranty, covenant or agreement with respect to which such
Indemnified Person claims to be entitled to indemnification hereunder, and shall
provide any other information with respect thereto as the Indemnifying Person
may reasonably request. The failure to notify the Indemnifying Person promptly
of a Third Party Claim shall not relieve the Indemnifying Person from its
indemnification obligation hereunder, except to the extent that such failure
results in insufficient time being available to permit the Indemnifying Person
to effectively defend against the Third Party Claim or otherwise materially
prejudices the Indemnifying Person’s ability to defend against such Third Party
Claim.

 

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(b) Investigation; Assumption.

(i) In the event that the Indemnified Person gives an Indemnity Notice to the
Indemnifying Person, such notice shall set forth the facts known to the
Indemnified Person pertaining to the Claim (and shall enclose a copy of all
papers (if any) served with respect to the Third Party Claim) and shall specify
the manner in which the Indemnified Person proposes to respond to the Claim.
Within thirty (30) days of receipt of such notice (the “Investigation Period”),
the Indemnifying Person shall state in writing (the “Assumption Notice”):
(A) whether the Indemnified Person may proceed to respond to the Claim in the
manner set forth in its notice; and (B) whether the Indemnifying Person shall
assume responsibility for and conduct the negotiation, defense or settlement of
the Claim, and if so, the specific manner in which the Indemnifying Person
proposes to proceed; provided, however, that during the Investigation Period
(prior to the Indemnified Person’s receipt of the applicable Assumption Notice),
the Indemnified Person shall be permitted to take any and all actions it deems
reasonably necessary to protect its rights and defenses with respect to such
Third Party Claim and that is not prejudicial to the Indemnifying Person.

(ii) If the Indemnifying Person does elect to assume responsibility and such
control, its defense against the Third Party Claim shall be conducted by the
Indemnifying Person and counsel selected by the Indemnifying Person and
reasonably satisfactory to the Indemnified Person at its expense. The
Indemnifying Person shall have full control of such defense and Proceedings,
including any compromise or settlement thereof; provided that the Indemnifying
Person shall not consent to the entry of any judgment or enter into any
settlement agreement without the written consent of the Indemnified Person
(which consent shall not be unreasonably withheld, conditioned or delayed);
provided, further, that such consent shall not be required if (A) the settlement
agreement contains a complete and unconditional general release by the third
party asserting the Claim to all Indemnified Persons affected by the Claim,
(B) the settlement agreement does not contain any sanction or restriction upon
the conduct of any business by, and does not contain an injunction or other
equitable relief upon, the Indemnified Person or its Affiliates, (C) the
settlement agreement does not impose any equitable or other non-monetary
remedies or obligations on the Indemnified Person but involves solely the
payment of money damages for which the Indemnified Person will be indemnified
hereunder, and (D) the settlement agreement does not involve a finding or
admission of wrongdoing or any violation of Law or any violation of the rights
of any Person by the Indemnified Person.

(iii) Notwithstanding Section 8.4(b)(ii),

(A) the Indemnified Person shall have the right at all times to participate in
the defense of any Third Party Claim hereunder with its own counsel and at its
own expense; and

 

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(B) if:

(1) the Indemnified Person is advised by its outside counsel that a conflict of
interest exists;

(2) the court in which such Third Party Claim is pending determines that a
conflict of interest exists such that the Indemnifying Person’s counsel is
prohibited by such court or otherwise unable to represent the Indemnified Person
with respect to such Third Party Claim, or

(3) there is one or more defenses that could be asserted by the Indemnified
Person that could not be asserted by the Indemnifying Person or the Indemnifying
Person’s counsel (on the Indemnified Person’s behalf),

then the Indemnified Person shall have the right at all times to take over and
assume control over the defense, settlement, negotiations or litigation relating
to any such Third Party Claim at the sole cost of the Indemnifying Person.

(c) Unless and until an Indemnifying Person assumes the defense of the Third
Party Claim as provided in Section 8.4(b) above or fails to defend such Third
Party Claim to the extent required hereunder, the Indemnified Person may defend
against the Third Party Claim in any manner it reasonably may deem appropriate,
on behalf of and for the risk of the Indemnifying Person and shall be reimbursed
for its reasonable cost and expense (but only if the Indemnified Person is
actually entitled to indemnification hereunder) in regard to the Third Party
Claim with counsel selected by the Indemnified Person, by all appropriate
Proceedings, which Proceedings shall be prosecuted diligently by the Indemnified
Person. The Indemnifying Person may participate in, but not control, any defense
or settlement controlled by the Indemnified Person pursuant to this
Section 8.4(c), and the Indemnifying Person shall bear its own costs and
expenses with respect to such participation.

(d) The Party assuming the defense under this Section 8.4 shall keep the other
Party reasonably informed regarding the progress and status thereof.

(e) In the event any Indemnified Person should have a Claim against any
Indemnifying Person hereunder which does not involve a Third Party Claim, the
Indemnified Person shall promptly transmit to the Indemnifying Person an
Indemnity Notice describing in reasonable detail the nature of the claim and the
basis of the Indemnified Person’s request for indemnification under this
Agreement; provided, however, that failure of the Indemnified Person to give the
Indemnity Notice will not relieve the Indemnifying Person from liability
hereunder unless and solely to the extent that the Indemnifying Person did not
otherwise learn of such claim and such failure results in the forfeiture by the
Indemnifying Person of substantial rights and defenses, and will not in any
event relieve the Indemnifying Person from any obligations to the Indemnified
Person other than the indemnification obligation provided herein. In the event
that the Claim for indemnification is based upon an inaccuracy or breach of a
representation, warranty, covenant, or agreement, the Indemnity Notice shall
specify the representation, warranty, covenant,

 

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or agreement that was inaccurate or breached. In the event that the Indemnifying
Person disputes the validity or scope of the claim set forth in the Indemnity
Notice, the Parties will, in good faith, use commercially reasonable efforts to
resolve such matter within thirty (30) days of receipt of the Indemnity Notice,
and the Indemnified Person shall reasonably cooperate and assist the
Indemnifying Person in determining the validity of any such claim. Such
assistance and cooperation shall include providing reasonable access to and
copies of information, records and documents relating to such matters,
furnishing employees to assist in the investigation, defense and resolution of
such matters and providing legal and business assistance with respect to such
matters.

(f) All provisions of this Agreement requiring a Party to indemnify another
Person shall be deemed to incorporate this Section 8.4 by reference, and all
notices and actions relating to Claims thereunder shall be made in the manner
set forth in, and subject to the terms and conditions of this Section 8.4. For
the avoidance of doubt, this Section 8.4 shall not apply with respect to any Tax
Contests.

8.5 Limitation on Liability.

(a) Notwithstanding anything herein to the contrary, no Purchaser Indemnified
Person shall be entitled to indemnification from Seller pursuant to
Section 8.2(a) (i) for any individual Loss unless the amount of such Liability
exceeds $5,000, and (ii) unless and until the aggregate of all Losses for which
indemnification would (but for the limitation of this sentence) be required to
be paid by Seller under Section 8.2(a) exceeds $160,000 (the “Loss Threshold”),
and then only to the extent such Losses exceed the Loss Threshold; provided,
however, that the Loss Threshold shall not apply to indemnification claims:
(i) based on Actual Fraud; (ii) relating to any inaccuracy or breach of the
Seller Fundamental Representations or (iii) relating to the indemnification
obligations contained in Section 8.2(b), Section 8.2(c), Section 8.2(d) or
Section 8.2(e).

(b) Furthermore, the maximum aggregate amount of all Losses for which Seller
shall be liable under Section 8.2(a) of this Agreement shall not, collectively,
exceed $1,200,000; provided, however, that such limit, in each case, will not
apply to: (i) Actual Fraud, (ii) Losses relating to any inaccuracy or breach of
the Seller Fundamental Representations or (iii) relating to the indemnification
obligations contained in Section 8.2(b), Section 8.2(c), Section 8.2(d) or
Section 8.2(e). Notwithstanding anything to the contrary contained elsewhere in
this Agreement, Seller shall not be required to indemnify the Purchaser
Indemnified Persons under this Article VIII for aggregate Losses in excess of
one hundred percent (100%) of the Cash Consideration.

(c) Seller’s indemnity obligation with respect to any remediation or cleanup
obligation shall be limited to such cost effective action that is required by
Environmental Law to attain compliance with minimum applicable remedial
standards for continued industrial or commercial use of the relevant property or
Facility, employing, where applicable, risk-based remedial standards, deed
restrictions and institutional controls, where such standards, deed restrictions
or controls would not unreasonably interfere with ongoing operations at the
relevant property or facility.

 

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(d) For purposes of this Article VIII, Losses shall be determined without regard
to any materiality, Material Adverse Effect or other similar qualification
contained in or otherwise applicable to such representation or warranty. The
amount of any and all Losses under this Article VIII shall be determined net of
any insurance, indemnity, reimbursement arrangement, contract or other recovery
actually received by the Indemnified Person or its Affiliates in connection with
the facts giving rise to the right of indemnification (each, an “Alternative
Recovery”). The Indemnified Person will use commercially reasonable efforts to
seek full recovery under all such Alternative Recoveries with respect to any
Loss to the same extent as such Indemnified Person would if such Loss were not
subject to indemnification hereunder, so long as seeking such Alternative
Recoveries do not directly result in a material premium increase for Purchaser’s
insurance policies or otherwise negatively change the insurability of
Purchaser’s activities. Each party hereby waives, to the extent permitted under
its applicable insurance policies, any subrogation rights that its insurer may
have with respect to any indemnifiable Losses. In the event that the Indemnified
Person receives recovery of any amount pursuant to an Alternative Recovery for
which it has already been indemnified by the Indemnifying Person hereunder, the
Indemnified Person will promptly refund an equal amount to the Indemnifying
Person.

(e) In no event shall (i) any Purchaser Indemnified Person be entitled to
duplicate compensation with respect to the same Loss, liability, cost, expense,
claim, award, or judgment under more than one provision of this Agreement, and
(ii) any Person be entitled to indemnification hereunder with respect to a
breach by Seller or Property Company of the representations, warranties, or
covenants made or agreed to hereunder of which Purchaser had actual knowledge
prior to the Closing Date.

8.6 Payment of Indemnification Claims. Any Losses payable to a Purchaser
Indemnified Person pursuant to this Article VIII shall be satisfied: (i) by
first reducing the outstanding principal and accrued interest on the Seller
Note; and (ii) to the extent (and only to the extent) the amount of Losses
exceeds the total outstanding principal and accrued interest on the Seller Note,
from Seller. Any Losses payable to a Seller Indemnified Person pursuant to this
Article VIII shall be satisfied from Purchaser. All indemnification payments
made under this Agreement shall be treated by the Parties as an adjustment to
the Purchase Price for Tax purposes, unless otherwise required by Law.

8.7 No Consequential Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY ELSEWHERE
IN THIS AGREEMENT, NO PARTY SHALL, IN ANY EVENT, BE LIABLE TO ANY OTHER PERSON
FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY
DAMAGES OF SUCH OTHER PERSON, INCLUDING LOSS OF FUTURE REVENUE, INCOME OR
PROFITS, DIMINUTION OF VALUE OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY
RELATING TO THE BREACH OR ALLEGED BREACH HEREOF OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, EXCEPT TO THE EXTENT OF A PARTY’S INDEMNIFICATION OBLIGATION
WITH RESPECT TO A THIRD PARTY CLAIM. EXCEPT AS OTHERWISE PROVIDED IN THIS
SECTION 8.7, EACH OF PURCHASER AND SELLER, FOR ITSELF AND ON BEHALF OF ITS
AFFILIATES, HEREBY EXPRESSLY WAIVES ANY RIGHT TO ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING LOSS OF FUTURE
REVENUE, INCOME OR PROFITS, DIMINUTION OF VALUE OR LOSS OF BUSINESS REPUTATION
OR OPPORTUNITY) IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

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8.8 Exclusive Remedy. Notwithstanding anything to the contrary contained in this
Agreement, the Parties’ sole and exclusive remedies against each other with
respect to the transactions contemplated by this Agreement, including for any
breach or inaccuracy, or alleged breach or inaccuracy, of any representation or
warranty in this Agreement or any covenant or agreement to be performed on or
prior to the Closing Date, shall be indemnification in accordance with this
Article VIII. In furtherance of, and to the extent limited by, the foregoing,
PURCHASER, ON ITS OWN BEHALF AND ON BEHALF OF THE PURCHASER INDEMNIFIED PARTIES,
AND SELLER, ON ITS OWN BEHALF AND ON BEHALF OF THE SELLER INDEMNIFIED PERSONS,
EACH HEREBY WAIVE, RELEASE, REMISE AND FOREVER DISCHARGE THE OTHER AND ITS
AFFILIATES AND ALL SUCH PARTIES’ OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ADVISORS, AND OTHER REPRESENTATIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL OTHER SUITS, LEGAL OR ADMINISTRATIVE PROCEEDINGS,
DEMANDS, LOSSES, COSTS, LIABILITIES, RIGHTS, CLAIMS AND CAUSES OF ACTION
(INCLUDING RIGHTS OF CONTRIBUTIONS, IF ANY) WHATSOEVER, IN LAW OR IN EQUITY,
KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, WHICH EXIST OR MAY ARISE IN THE
FUTURE, THAT SUCH PARTIES MAY HAVE AGAINST SELLER OR PURCHASER, AS THE CASE MAY
BE, ARISING UNDER OR BASED UPON ANY FEDERAL, STATE OR LOCAL LAW (INCLUDING WITH
RESPECT TO ANY MATTERS RELATING TO THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OR ANY SUCH LAW RELATING TO ENVIRONMENTAL
MATTERS, INCLUDING ENVIRONMENTAL LAW, OR ARISING UNDER OR BASED UPON ANY
SECURITIES LAW, COMMON LAW OR OTHERWISE); PROVIDED, HOWEVER, NOTHING IN THIS
SECTION 8.8 SHALL BE CONSTRUED AS A LIMITATION ON A PARTY’S REMEDIES FOR CLAIMS
ARISING FROM FRAUD CLAIMS IN CONNECTION WITH THE TRANSACTIONS. The indemnity of
each Party provided in this Article VIII shall be for the benefit of and extend
to each Person included in the Seller Indemnified Persons and the Purchaser
Indemnified Persons, as applicable. Any claim for indemnity under this
Article VIII by any Third Party must be brought and administered by a Party to
this Agreement. No Indemnified Person (including any Person within the Seller
Indemnified Persons and the Purchaser Indemnified Persons) other than the
Parties shall have any rights against Seller or Purchaser under the terms of
this Article VIII except as may be exercised on its behalf by Purchaser or
Seller, as applicable, pursuant to this Section 8.8. The Parties may elect to
exercise or not exercise indemnification rights under this Article VIII on
behalf of the other Indemnified Persons affiliated with it in its sole
discretion and shall have no liability to any such other Indemnified Person for
any action or inaction under this Article VIII.

8.9 Express Negligence. THE PROVISIONS IN THIS ARTICLE VIII SHALL BE ENFORCEABLE
REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS,
CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE
ENVIRONMENTAL LAW, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY,
SECURITIES OR OTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON
(INCLUDING THE

 

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PERSON FROM WHOM RELIEF IS SOUGHT) ALLEGES OR PROVES THE GROSS, SOLE, ACTIVE,
PASSIVE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON
SEEKING RELIEF, OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE
PERSON SEEKING RELIEF. THE FOREGOING IS A SPECIFICALLY BARGAINED FOR ALLOCATION
OF RISK AMONG THE PARTIES, WHICH THE PARTIES AGREE AND ACKNOWLEDGE SATISFIES THE
EXPRESS NEGLIGENCE RULE AND CONSPICUOUSNESS REQUIREMENT UNDER TEXAS LAW.

ARTICLE IX

MISCELLANEOUS

9.1 Taxes.

(a) To the extent that any sales, purchase, use, stamp, documentary, filing,
recording, transfer or similar fees or Taxes or governmental charges (“Transfer
Taxes”) are payable by reason of the sale of the Purchased Assets under this
Agreement, (i) except with respect to the Vehicles, Purchaser and Seller shall
each bear fifty percent (50%) all such Transfer Taxes, and (ii) with respect to
the Vehicles, Purchaser shall bear all such Transfer Taxes. Purchaser shall, at
its own expense, file all necessary documents (including all Tax Returns and
other documentation with respect to the Transfer Taxes) with respect to all such
amounts in a timely manner and, if required by applicable Law, Seller will, and
will cause its Affiliates to, join in the execution of any such Tax Returns.

(b) Seller shall be responsible for (and shall indemnify and hold harmless
Purchaser against) all Taxes imposed on or with respect to the Purchased Assets
attributable to any taxable period (or portion thereof) ending on or prior to
the Closing Date. Purchaser shall be responsible for (and shall indemnify and
hold harmless Seller against) all Taxes imposed on or with respect to the
Purchased Assets attributable to any taxable period (or portion thereof)
beginning after the Closing Date. All Taxes imposed on or with respect to the
Purchased Assets attributable to a taxable period that includes the Closing
Date, shall be allocated between Purchaser and Seller as of the end of the day
on the Closing Date pursuant to Section 9.1(c).

(c) For purposes of allocating Taxes for a taxable period that includes the
Closing Date, Taxes relating to the Purchased Assets shall be allocated to the
portion of the period before and including the Closing Date and to the portion
of the period after the Closing Date as follows: (i) in the case of Taxes that
are property, ad valorem, and other Taxes imposed on a periodic basis, such
Taxes shall be allocated to the portion of the period before and including the
Closing Date based on the amount of such Taxes for such taxable period
multiplied by a fraction, the numerator of which is the number of days in such
taxable period ending on and including the Closing Date and the denominator of
which is the total number of days in such taxable period and (ii) in the case of
Taxes based on net or gross income, or transactional Taxes such as sales Taxes
(excluding, for the avoidance of doubt, any Transfer Taxes, which shall be borne
in accordance with Section 9.1(a)), such Taxes shall be determined based on the
closing of the books as of the end of the day on the Closing Date.

(d) (i) Purchaser shall prepare and timely file all Tax Returns due after the
Closing Date with respect to the Purchased Assets and (ii) Seller shall pay to
Purchaser, no later than ten (10) days after the date on which such Tax Return
is filed, the amount of Seller Taxes shown as due on any such Tax Return.

 

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(e) Seller and Purchaser shall cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax Returns with
respect to the Purchased Assets pursuant to this Agreement and any audit,
litigation or other proceeding with respect to Taxes related to the Purchased
Assets. Such cooperation shall include the retention and (upon the other Party’s
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided (or made available) hereunder. Seller and Purchaser
agree to retain all books and records with respect to Tax matters pertinent to
the Purchased Assets until the expiration of the statute of limitations of the
respective taxable period and to abide by all record retention agreements
entered into with any Governmental Body.

9.2 Expenses. Except as otherwise provided in this Agreement, each of the
Parties shall bear its own expenses incurred in connection with the negotiation
and execution of this Agreement and each other agreement, document and
instrument contemplated by this Agreement and the consummation of the
Transactions.

9.3 Submission to Jurisdiction; Waiver of Jury Trial; Consent to Service of
Process.

(A) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN HARRIS COUNTY, TEXAS OVER ANY DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS, AND
EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
PROCEEDING RELATED THERETO MAY BE HEARD AND DETERMINED IN SUCH COURTS. THE
PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH DISPUTE BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM
FOR THE MAINTENANCE OF SUCH DISPUTE. EACH OF THE PARTIES HERETO AGREES THAT A
JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE DOCUMENTS
EXECUTED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD

 

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NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION,
(B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.3(b).

(c) Each of the Parties hereto hereby consents to process being served by any
Party to this Agreement in any Proceeding by the delivery of a copy thereof in
accordance with the provisions of Section 9.6.

9.4 Entire Agreement; Amendments and Waivers. This Agreement (including the
Schedules and Exhibits hereto) represents the entire understanding and agreement
between the Parties hereto with respect to the subject matter hereof. This
Agreement can be amended, supplemented or changed, and any provision hereof can
be waived, only by written instrument making specific reference to this
Agreement signed by the Party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant to this
Agreement shall be deemed to constitute a waiver by the Party taking such action
of compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any Party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any Party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such Party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.

9.5 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); PROVIDED, HOWEVER, THAT ANY MATTER RELATED TO TITLE TO
ANY REAL PROPERTY INCLUDED IN THE PURCHASED ASSETS SHALL BE GOVERNED BY THE LAWS
OF THE STATE WHERE SUCH PURCHASER ASSETS ARE LOCATED.

9.6 Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given (a) when delivered personally by hand (with
written confirmation of receipt), (b) when sent by email (with confirmation of
transmission) or (c) one Business Day following the day sent by overnight
courier (receipt requested), in each case at the following addresses and
facsimile numbers (or to such other address or facsimile number as a Party may
have specified by notice given to the other Party pursuant to this provision):

If to Seller, to:

Key Energy Services, LLC

1301 McKinney, Suite 1800

Houston, Texas 77010

Attention: Katherine I. Hargis

Email: khargis@keyenergy.com

 

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If to Purchaser, to:

Tri-State Water Logistics, LLC

12267 US Highway 84

Joaquin, Texas 75954

Attention: Troy Massey Email: troy.massey@tristateoilfield.com

With a copy to (which shall not constitute notice):

Gray Reed & McGraw LLP

1300 Post Oak Blvd., Suite 2000

Houston, Texas 77056

Attention:    Brock Niezgoda

Email: bniezgoda@grayreed.com

9.7 Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any Law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the Transactions is not
affected in any manner materially adverse to any Party. Upon such determination
that any term or other provision is invalid, illegal, or incapable of being
enforced, the Parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the Transactions are consummated
as originally contemplated to the greatest extent possible.

9.8 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any
third-party beneficiary rights in any Person not a Party to this Agreement
except as provided below and pursuant to Section 8.8. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either Seller
or Purchaser without the prior written consent of the other Parties hereto and
any attempted assignment without the required consents shall be void; provided,
however, that Purchaser may assign certain or all of its rights and obligations
under this Agreement to one or more Affiliates without Seller’s consent;
provided that to the extent Purchaser assigns any or all of its obligations to
such Affiliates without Seller’s consent, Purchaser shall remain jointly and
severally liable with respect to such obligations and Purchaser hereby agrees to
guarantee the payment and performance by such Affiliates of Purchaser’s
obligations hereunder. No assignment of any obligations hereunder shall relieve
the Parties hereto of any such obligations. Upon any such permitted assignment,
the references in this Agreement to Purchaser shall also apply to any such
assignee unless the context otherwise requires.

9.9 Counterparts. This Agreement may be executed in one or more counterparts and
delivered as originals, scanned PDF copies by email or other electronic means,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.

 

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9.10 Recording. As soon as practicable after Closing, Purchaser shall record the
deeds, assignments, and/or conveyances of Real Property and any other
assignments, if any, delivered at Closing in the appropriate counties as well as
with any appropriate Governmental Bodies and provide Seller with copies of all
recorded or approved instruments.

9.11 Conspicuous. THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE
LAW TO BE EFFECTIVE OR ENFORCEABLE, THE PROVISIONS IN THIS AGREEMENT IN
BOLD-TYPE OR ALL-CAPS FONT ARE “CONSPICUOUS” FOR THE PURPOSE OF ANY APPLICABLE
LAW.

9.12 Construction. The Parties acknowledge that (a) the Parties have had the
opportunity to exercise business discretion in relation to the negotiation of
the details of the transaction contemplated hereby, (b) this Agreement is the
result of arms-length negotiations from equal bargaining positions, and (c) the
Parties and their respective counsel participated in the preparation and
negotiation of this Agreement. Any rule of construction that a contract be
construed against the drafter shall not apply to the interpretation or
construction of this Agreement.

9.13 Time of Essence. This Agreement contains a number of dates and times by
which performance or the exercise of rights is due, and the Parties intend that
each and every such date and time be the firm and final date and time, as
agreed. For this reason, each Party hereby waives and relinquishes any right it
might otherwise have to challenge its failure to meet any performance or rights
election date applicable to it on the basis that its late action constitutes
substantial performance, to require the other Party to show prejudice, or on any
equitable grounds. Without limiting the foregoing, time is of the essence in
this Agreement. If the date specified in this Agreement for giving any notice or
taking any action (including any payment required hereunder) is not a Business
Day (or if the period during which any notice is required to be given or any
action taken expires on a date which is not a Business Day), then the date for
giving such notice or taking such action (and the expiration date of such period
during which notice is required to be given or action taken) shall be the next
day that is a Business Day.

[signature pages follow]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

 

SELLER: Key Energy Services, LLC By:   /s/ J. Marshall Dodson Name:   J.
Marshall Dodson Title:   President and Chief Executive Officer

 

Asset Purchase Agreement - Signature Page

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PURCHASER: Tri-State Water Logistics, LLC By:   /s/ Troy Massey Name:   Troy
Massey Title:   President

 

Asset Purchase Agreement - Signature Page