QuickLinks
 -- Click here to rapidly navigate through this document
  



Exhibit 10.9  


 
 

ASSET PURCHASE AGREEMENT    
    


        THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of the 14th day of August, 2003, by and between BASIC ENERGY
SERVICES, L.P., a Delaware limited partnership (the "Purchaser"), PARKER WINDHAM, LTD., a Texas limited partnership,
("Parker Windham"), PWI, INC., a Texas corporation ("PWI"), PWI RENTALS, L.P., a Texas limited
partnership ("PWI Rentals"), PWI CONSTRUCTION, L.P., a Texas limited partnership ("PWI Construction"), PWI DISPOSAL,
L.P., a Texas limited partnership ("PWI Disposal") and MORRIS B. WINDHAM and PAIGE
WINDHAM, individuals residing in the State of Texas (the "Owners"). Parker Windham, PWI, PWI Rentals, PWI Construction and PWI Disposal are sometimes referred to herein
individually as a "Seller" and collective as the "Sellers." 


RECITALS:  


        A.    The
Sellers own and operate an oil and gas field trucking business, an oil and gas field construction business, an oil and gas field equipment rental business, an oil and
gas field extraction, hauling and disposal business and a pressure testing and sale and storage business, all of which are based in Beaumont, Texas with additional facilities at Dayton, Ganado,
Refugio, Groesbeck, Van Vleck, Bryan and Hallettsville, Texas (collectively, the "Businesses"); 


        B.    The
Purchaser desires to purchase and acquire, and the Sellers are willing to sell and transfer, all of the properties and assets comprising the Businesses except for the
Excluded Assets (as hereinafter defined); 


        C.    The
Owners, Parker Windham, Ltd. and PWI, Inc. each own the real estate described on Exhibit A hereto
and the improvements thereon, all of which are used by the Sellers in the Businesses (the "Real Property") that the Owners, Parker Windham, Ltd. and PWI, Inc. desire to sell and the
Purchaser desires to purchase the Real Property pursuant to separate Real Property Purchase and Sale Agreements (the "Real Estate Purchase Agreements") substantially in the form of that attached
hereto as Exhibit A-1; and 


        D.    The
Owners are the sole owners of the Sellers. 


        NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows: 


 
 

ARTICLE I    
    
    PURCHASE AND SALE    
    


        1.01    Transfer of Assets.    At the Closing, which shall occur on the Closing Date (both
terms as defined in Section 6.01 hereof), and subject to the terms and conditions of this Agreement, the Sellers will grant, sell, convey, assign and deliver to the Purchaser, and the Purchaser
will pay for and accept from the Sellers, all of the following assets, effective as of 12:01 a.m., Beaumont, Texas time on the Closing Date: 




	(a)
	All
of the assets, properties, equipment, inventories and rights of the Sellers of every kind, character and description, whether tangible or intangible, save and except the Excluded
Assets (hereinafter defined), all such items being sold hereunder being hereinafter collectively referred to as the "Assets." The Sellers are not selling and the Assets will not include any deposits,
prepayments, bank accounts, cash, accounts receivable, unbilled work in process, prepaid insurance, bonds or other financial assets of Sellers not used in the Businesses as of the Closing Date, or any
other assets specifically 




1







 



defined
herein as being excluded from the sale and purchase, all of which are hereinafter collectively referred to as the "Excluded Assets". 



	(b)
	Without
limiting the foregoing, the Assets shall include the following assets, properties and rights of the Sellers:



	(i)
	the
transport tractors, vacuum trucks, winch trucks, trailers, pump trucks, storage tanks, frac tanks, backhoes, dozers, forklifts, light plants, pumps, light vehicles, miscellaneous
support trucks and tractors and other equipment described on Exhibit B hereto, together with all tools and accessories located on and used in
connection with the same;



	(ii)
	all
spare oil and gas field servicing components, tools, fittings and accessories, replacements parts and operating supplies, inventories, all shop equipment, tools, accessories and
shop supply inventories, all office equipment and improvements owned by Sellers (the Assets described under Section 1.01(b) (i) and (ii) are sometimes referred to as the "Tangible
Personalty");



	(iii)
	all
licenses, permits, easements and other authorizations or grants owned by or in favor of the Sellers which are in any way used or useful in the ownership and operation of the
Assets and the Businesses;



	(iv)
	all
of the Sellers' rights under the contracts, commitments and agreements which are described on Exhibit C attached hereto and
made a part hereof for all purposes (the "Contracts");



	(v)
	any
usable and salable raw materials and supplies of the Sellers as of the Closing (the "Inventory");



	(vi)
	all
technologies, methods, formulations, data bases, patents, trademarks (including any trademark on the name "Turbo Tank" or the design of such tank), trade secrets,
know-how and other intellectual property used in the Businesses;



	(vii)
	all
existing and assignable guaranties and warranties (express or implied), if any, issued in connection with the purchase, lease, construction, alteration, and/or repair of any
real or personal property included within the Assets;



	(viii)
	all
information, files, records, data, plans and recorded information, including supplier lists and customer lists, relating to the ownership and operation of the Businesses,
provided that the Sellers shall be entitled to keep, retain and utilize copies of all corporate, accounting and tax records maintained by the Sellers;



	(ix)
	all
right, title and interest of the Sellers in and to the names "Parker Windham, Ltd.", "PWI, Inc.," "PWI Rentals, L.P.", "PWI Construction, L.P", "PWI Disposal,
L.P.", "Turbo Tank" and any other trade names used by the Sellers in the operation of the Businesses;



	(x)
	the
Real Property;



	(xi)
	all
goodwill of the Sellers; and



	(xii)
	any
and all other assets of the Sellers other than the Excluded Assets. 










        1.02    Purchase Price.    At the Closing, in accordance with the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants of the Sellers and the Owners, the Purchaser shall purchase the Assets from the Sellers for a total purchase price (the
"Purchase Price") not to exceed Twenty-Six Million Five Hundred Thousand and No/100 Dollars ($26,500,000.00), plus (i) One Million One Hundred Fifty-Four Thousand
Eighty-Five and 34/100 


2







 

($1,154,085.34)
to reimburse Sellers for the expansion capital expenditures made by the Sellers between February 15, 2003 and June 27, 2003, which are identified on  Annex 1 hereto and (ii) such
amount as is required to reimburse Sellers for any other expansion capital expenditures made by them between
June 28, 2003 and the Closing Date, with Purchaser's knowledge and approval (collectively, the "Expansion Capital Reimbursement Amount"). The amount by which the Purchase Price will be
increased pursuant to the provisions of (i) and (ii) above will be decreased by an amount equal to 1/60th of the purchase price paid by Sellers for such equipment times the
number of full months such equipment is owned by Sellers prior to Closing. The Purchaser shall pay the Sellers in immediately available funds at the Closing, the sum of Twenty-Four Million
and No/100 Dollars ($24,000,000.00), plus the Expansion Capital Reimbursement Amount (as adjusted) and less (a) Five Hundred Thousand and No/100 Dollars ($500,000.00) to be placed in escrow as
provided in Section 1.03 below (the Escrowed Funds), (b) the amounts allocated to the Non-Competition Agreements to be executed by the Sellers, (c) the amounts payable
to the Owners, Parker Windham, Ltd. and PWI, Inc. under the Real Property Purchase Agreements ($200,000.00) and (d) the amounts, if any, paid by Purchaser to creditors of Sellers
pursuant to Sellers' instructions. The amount payable by Purchaser at Closing will also be adjusted for any prorations of taxes, rents, lease payments, assumed vacation obligations and other
obligations requiring proration under the terms of this Agreement. The Sellers and the Purchaser agree that they will, as a condition to Closing allocate the Purchase Price among the Assets, which
allocation will be binding on them for federal income tax and all other purposes incident to this Agreement. In addition, Purchaser agrees to pay Owners up to an additional Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) (the "Earn-Out Amount") pursuant to the terms of a Contingent Earn-Out Agreement substantially in the form attached hereto as  Exhibit D, with
appropriate insertions. The Contingent Earn-Out Agreement will be expressly subject to a Subordination Agreement (the
"Subordination Agreement") between the Owners and General Electric Capital Corporation and LaSalle Business Credit LLC (the "Senior Lenders") to which Purchaser's payments to the Owners under the
Contingent Earn-Out Agreement will be subordinated to the Senior Lender. 


        1.03    Escrowed Funds.    At the Closing, Sellers, Purchaser and the Escrow Agent (as defined
in the Escrow Agreement) shall enter into an escrow agreement that is substantially identical in form and substance to that attached hereto as  Exhibit E (the "Escrow Agreement"), pursuant to
which Purchaser shall deposit a portion of the Purchase Price (the "Escrowed Funds") equal to the
sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) (the "Escrow Account"), to serve as a source of security for the payment of any claims asserted by Purchaser within one hundred twenty
(120) days from the Closing Date (hereinafter defined) against Sellers for the breach of any of their representations, warranties and/or covenants under this Agreement and the instruments and
documents executed by Sellers at Closing pursuant hereto (the "Settlement Period"). The establishment of the Escrow Account and any exercise of recourse thereon by Purchaser shall not operate or be
deemed to operate to limit or restrict any other legal or equitable rights or remedies available to Purchaser for any such breach by
Sellers. The Escrow Account shall be administered as set forth in Article VII of this Agreement and as otherwise provided in the Escrow Agreement. 



        1.04    Assumed Contractual Liabilities.    At the Closing, the Purchaser shall assume and
agree to pay, discharge or perform, as appropriate, all liabilities and obligations of the Sellers arising following the Closing Date under only those Contracts specifically described on attached  Exhibit C; provided the Sellers obtain and deliver at or before Closing any requisite consents to assignment to and assumption of such Contracts
by the Purchaser (collectively, the "Assumed Contractual Liabilities"). 



        1.05    Liabilities Not Assumed.    Except for the Assumed Contractual Liabilities and the
Assumed Environmental Liabilities (hereinafter defined), the Purchaser does not assume or agree hereunder to pay, perform or discharge any debt, obligation, tax or liability, known or unknown,
contingent or otherwise, of the Sellers of any kind or nature whatsoever. Without limiting the foregoing, in no event 


3







 



shall
the Purchaser assume or incur any liability or obligation under this Agreement or otherwise in respect of any of the following: 




	(a)
	any
claim for injury to person or property, regardless of when made or asserted, which arises out of or is based upon any express or implied representation, warranty, agreement or
guarantee made by the Sellers or alleged to have been made by the Sellers, or, except for the Assumed Environmental Liabilities, which is imposed or asserted to be imposed by operation of law, in
connection with any service performed or product sold or leased by or on behalf of the Sellers or arising from any actions or inactions of the Sellers or any events occurring prior to the Closing
Date;



	(b)
	any
federal, state or local income or other tax payable with respect to the Businesses, Assets, properties or operations of the Sellers or any member of any affiliated group of which
the Sellers' are a member or incident to or arising as a consequence of the negotiation or consummation by the Sellers of this Agreement and the transaction contemplated hereby, save and except:
(i) any applicable property taxes for the calendar year 2003 which will be prorated by the parties as of the Closing Date with an appropriate credit to the Purchaser at the Closing, and
(ii) any sales or transfer taxes resulting from the consummation of this transaction, which will be the responsibility of the Purchaser;



	(c)
	except
for the Assumed Environmental Liabilities, any liability or obligation arising prior to the Closing Date under any law, ordinance or governmental or regulatory rule or
regulation, whether federal, state or local, to which the Sellers or Sellers' business operations, assets or properties are subject relating to pollution or protection of the environment;



	(d)
	any
liability or obligation arising prior to or as a result of the Closing to any employees, agents or independent contractors of the Sellers, whether or not employed by the Purchaser
after the Closing Date, or under any benefit arrangement with respect thereto, including any obligations of the Sellers under any defined benefit plan, employee benefit plan or severance plan; and



	(e)
	any
liability or obligation of the Sellers incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, including
fees and expenses of counsel, accountants and other professionals. 




 
 

ARTICLE II    
    
    REPRESENTATIONS AND WARRANTIES OF THE SELLERS
  AND THE OWNERS    
    



        The Sellers and the Owners hereby, jointly and severally, represent, warrant and covenant to and with the Purchaser as follows: 


        2.01    Existence and Good Standing; No Subsidiaries.    Parker Windham, PWI Rentals, PWI
Construction and PWI Disposal are each limited partnerships organized, validly existing and in good standing under the laws of the State of Texas. PWI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas. Each Seller has all requisite power and authority to carry on the Businesses now being conducted by such Seller. Each Seller is in good
standing and is duly qualified to do business in all jurisdictions where the character of its properties or assets or the nature of its activities makes such qualification necessary. No Seller has any
subsidiaries. The Owners are residents of the State of Texas. 


4







 



        2.02    Authority; Enforceability.    The Sellers each have full power, authority and legal
right to enter into this Agreement and to consummate the transactions provided for herein. The Owners are each above the age of eighteen (18) years and have the legal capacity and requisite
power and authority to enter into and perform their obligations under this Agreement. All actions on the part of each of the Sellers and the Owners necessary to consummate the transaction contemplated
by this Agreement and the Real
Estate Purchase Agreements have been duly taken as required by applicable law and any applicable agreements. This Agreement has been, and the other agreements, documents and instruments required to be
delivered by the Sellers or the Owners in accordance with the provisions hereof (including, specifically, the Real Property Purchase Agreements) have been or will be, duly executed and delivered by
the Sellers and the Owners and constitute (or will at Closing constitute) the valid and binding obligations of each of the Sellers and each of the Owners, enforceable against each of the Sellers and
the Owners in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or
limiting creditors' rights or by legal principles of general applicability governing the availability of equitable remedies. 


        2.03    Absence of Violation or Conflicts.    The execution, delivery and performance of the
transactions contemplated by this Agreement and the Real Property Purchase Agreements by the Sellers and the Owners do not and will not (a) violate, conflict with or result in the breach of any
term, condition or provision of, or require the consent of any other person under, (i) any law, ordinance or governmental rule or regulation known to the Sellers or the Owners and to which the
Sellers or the Owners, the Assets or the Businesses are subject, (ii) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which is known to the Sellers or the Owners and which is applicable to any of the Sellers or the Owners, the Assets or the Businesses, (iii) the governing documents of or any
securities issued by the Sellers, or (iv) any mortgage, indenture or other instrument, document or understanding, oral or written, to which any of the Sellers or the Owners are a party, by
which any of the Sellers or the Owners may have rights or by which any of the Assets or the Businesses may be bound or affected, and (b) give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or obligations of the Sellers thereunder. Except for certain consents to assignment to be obtained on a post-Closing
basis, as set forth in Section 2.13, no authorization, approval or consent of, and no registration or filing with any governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this Agreement by the Sellers or the Owners. 


        2.04    Title to Assets.    The Sellers have (or will have at Closing) good, indefeasible and
marketable title to all of their properties and assets which are included in the Assets, specifically including, without limitation, the Real Property, the Tangible Personalty and the Inventory, free
and clear of all mortgages, liens, pledges, security interests, charges, claims, rights of first refusals, options, restrictions or conditions to transfer or assignment, liabilities, obligations and
other encumbrances and defects of title of any nature whatsoever (collectively referred to as "Encumbrances"), except for liens for current ad valorem or similar taxes which are not yet due and
payable (collectively, the "Permitted Encumbrances"). Each of the Sellers has the absolute right to sell the Assets to the Purchaser, and upon the consummation of the transaction contemplated hereby,
the Purchaser will have good and marketable title to the Assets, free and clear of any encumbrances. 



        2.05    Contracts.    All Contracts (including lease agreements) to be assumed by the
Purchaser at the Closing are described on attached Exhibit C and the Sellers and the Owners have provided or made available to the Purchaser
true, correct and complete copies of all such Contracts, including any amendments or supplements thereto. To the best of the Sellers' and the Owners' knowledge, after reasonable investigation, neither
the Sellers or the Owners are in default (nor is there any event which with notice or lapse of time or both would constitute a default) under any such Contract. Except as contemplated by
Section 2.13, no consents or approvals of any person other than the Sellers and the 


5







 



Owners
are necessary to sell, assign, convey, transfer and deliver any and all rights and interest in and to the Contracts to the Purchaser. There are no agreements with third parties, either written
or verbal, that are material or necessary to the operation of the Businesses other than the Contracts. 



        2.06    Condition of the Assets.    To the best of the Sellers' and the Owners' knowledge
after reasonable investigation, the equipment and other tangible property comprising any portion of the Assets are structurally sound and in good repair and operating condition, normal wear and tear
excluded. Except for the Excluded Assets, the Assets constitute all property, assets and contractual rights necessary for the conduct of the Businesses as presently conducted. All of the Assets
conform to all applicable laws governing their use. No notice of any violation of any law, statute, ordinance regulation has been received by the Sellers or the Owners, nor, to the knowledge of any of
the Sellers, is there any basis for any of the foregoing. 



        2.07    Trade Secrets and Customer Lists.    The Sellers have the right to use, free and clear
of any claims or rights of others, all trade secrets, customer lists and proprietary information required for the conduct of the Businesses. The Sellers are not using or in any way making use of any
confidential information or trade secrets of any third party, including, without limitation, any past or present employee of either of the Sellers. 


        2.08    Suppliers and Customers.    The Sellers and the Owners have no knowledge that any of
the Sellers' suppliers or customers expect or intend to materially reduce their business with the Businesses. 


        2.09    Compliance with Law; Authorizations.    To the best of Sellers' and Owners' knowledge
after reasonable investigation, the Sellers have complied with each (and are not in violation of any), law, ordinance or governmental or regulatory rule or regulation, whether federal, state, local or
foreign, known to the Sellers and to which the Sellers and Sellers' Businesses, operations, assets and properties are subject ("Regulations"). The Sellers own, hold, possess or lawfully uses in the
operation of the Assets and the Businesses all licenses, permits, patents, easements, rights, applications, filings, registrations and other authorizations ("Authorizations") which are known to the
Sellers or the Owners and which are in any manner necessary for such ownership and use by the Sellers, free and clear of all liens, charges, restrictions and Encumbrances and, to the best of the
Sellers' and the Owners' knowledge after reasonable investigation, in compliance with all Regulations. To the best of the Sellers' and the Owners' knowledge after reasonable investigation, the Sellers
are not in material default, nor have they received any notice of any claim of default, with respect to any such Authorization. 



        2.10    Litigation.    Except for litigation which has been initiated by Sellers in an attempt
to collect accounts receivable owed to Sellers (all of which litigation, together with the claims underlying the same will be retained by Sellers) and except as disclosed on  Schedule 2.10,
no litigation, including any arbitration, investigation or other proceeding of or before any court, arbitrator or governmental or
regulatory official, body or authority, is pending in which the Sellers are a party and in which the Sellers or the Owners have been served with process or otherwise notified or, to the knowledge of
the Sellers or the Owners after reasonable investigation, threatened against the Sellers or the Owners which relate to the Assets, the Businesses or the transactions contemplated by this Agreement,
nor do the Sellers or the Owners know of any reasonably likely basis for any such litigation, arbitration, investigation or proceeding, the result of which could materially adversely affect the
Assets, the Businesses or the transaction contemplated hereby. The Sellers and the Owners are neither a party to nor subject to the provisions of any judgment, order, writ, injunction, decree or award
of any court, arbitrator or governmental or regulatory official, body or authority which may materially adversely affect the Sellers, the Assets, the Businesses or the transactions contemplated
hereby. 


        2.11    Environmental Matters.    



        (a)   To
the best knowledge of the Sellers and the Owners after reasonable investigation, the Assets are in compliance with all federal, state and local laws and regulations
relating to pollution 



6







 

or
protection of the environment (collectively, "Environmental Laws"), including, without limitation, Environmental Laws governing emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment. To the best knowledge of the Sellers and the Owners after reasonable investigation, the Sellers
have obtained all permits, licenses and other authorizations that are required under Environmental Laws with respect to the operation of the Assets and the conduct of the Businesses and is in
compliance therewith. 


        (b)   There
is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation or proceeding pending in
which any of the Sellers is a party and in which any of the Sellers has been served with process or otherwise notified or, to the knowledge of any of the Sellers or the Owners, threatened against the
Sellers based upon any violation or alleged violation of any Environmental Laws. 


        (c)   The
Sellers and Owners will, at least ten (10) days prior to the Closing Date, deliver to Purchaser Phase I Environmental Assessments covering the Real Properties
and the leased real properties at Beaumont, Dayton, Ganado, Refugio, Groesbeck, Van Vleck, and Hallettsville, Texas, all of which properties are utilized by Sellers in the operation of their
Businesses. The Sellers and the Owners agree to cooperate reasonably with the Purchaser in connection with the Purchaser's application for the
transfer, renewal or issuance of any permits, licenses, approvals or other authorizations or to satisfy any regulatory requirements involving the transfer of the Businesses to the Purchaser. 




        2.12    Tax and Other Returns and Reports.    Neither the Sellers or the Owners have received
any notice of assessment or proposed assessment in connection with any of the Assets or the Businesses and, to the knowledge of the Sellers or the Owners, there are no pending tax examinations or tax
claims asserted against any of the Assets or the Businesses. There are no tax liens (other than any lien for current ad valorem taxes not yet due and payable) on any of the Assets or the Businesses. 


        2.13    Consents.    Except for governmental consents routinely obtained on a post closing
basis, the Sellers or the Owners are not aware of any consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority or any other person on the part of the Sellers which is required in connection with the completion of the transactions contemplated by this Agreement and the operation by the
Purchaser of the Businesses in the manner in which they are currently conducted. The Sellers and the Owners agree that they will utilize their best efforts to obtain any governmental consents within
thirty (30) days following Closing. If the Sellers and the Owners, notwithstanding such best efforts, shall fail to obtain such consents within that time period, the Purchaser, at its option,
may reassign the applicable leases, contracts or other rights for which consent was not obtained to the Sellers, whereupon the Sellers will immediately refund to the Purchaser that portion of the
Purchase Price allocated thereto on the allocation schedule required under Section 1.02 above or such other amount as the parties may agree upon to the Purchaser. No such reassignment and
reimbursement will in any way operate to negate, diminish or alter the obligations of the Owners or the Sellers under their respective Non-Competition Agreements (hereinafter defined). 



        2.14    Financial Matters.    



        (a)    Financial Statements.    Each Seller has previously furnished to the Purchaser internally prepared Balance
Sheets of such Seller for the period ended May 31, 2003, together with internally prepared Statements of Income for the twelve month periods ended December 31, 2001 and
December 31, 2002 and for the period ended May 31, 2003. These financial statements represent the books and records of the Sellers and present fairly the information contained therein in
the same manner as such information has been historically reported by the each of the Sellers. 



7







 

        (b)    Liabilities.    Except for the liabilities specifically disclosed by the Sellers to the Purchaser in writing,
the Sellers have and on the Closing Date will have, no other material liabilities of any nature, whether accrued, absolute, contingent or otherwise and whether due or to become due, or arising out of
transactions entered into, or any state of facts existing, prior to the Closing Date which will encumber the Assets or impair the use, value or ownership thereof by the Purchaser following the
Closing. There
has been no material adverse change in the financial condition, results of operations, assets, liabilities, business or prospects of the Sellers since March 31, 2003. 




        2.15    Absence of Certain Changes.    Since March 31, 2003, there has not been
(i) any material amendment, termination or revocation, or threatened termination, revocation or modification of any license, permit or franchise required for the continued operation of the
Businesses; (ii) any sale or transfer of the Assets (other than in the ordinary course of Sellers' businesses); (iii) any pledge or subjection to lien, charge or encumbrance of any kind,
of, on or affecting any of the Assets, or (iv) any damage, destruction or loss of or to the Assets, whether or not covered by insurance. 


        2.16    Disclosure.    No material written statement, representation, warranty or information
provided or furnished by or on behalf of the Sellers or the Owners to the Purchaser in this Agreement or otherwise in connection with the transactions contemplated by this Agreement or the Real Estate
Purchase Agreements contains as of the date made any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. 


        2.17    Expansion Capital Expenditures.    All expenditures made by the Sellers since
February 15, 2003 that constitute Expansion Capital Reimbursement Amounts have been for equipment that expanded the capabilities of the Businesses and none of such expenditures were for
purchases of equipment to replace existing equipment. 


 
 

ARTICLE III    
    
    PURCHASER'S REPRESENTATIONS AND WARRANTIES    
    


        The Purchaser hereby represents and warrants to the Sellers and the Owners as of the date hereof as follows: 


        3.01    Organization.    The Purchaser is a limited partnership duly organized and existing in
good standing, under the laws of the State of Delaware and has the power and authority to carry on its business as contemplated by this Agreement. 


        3.02    Authority.    The Purchaser has full power, authority and legal right to enter into
this Agreement and the Real Estate Purchase Agreements and to consummate the transactions provided for herein and therein. The execution and delivery of this Agreement and the other instruments
specified herein and the consummation of the transaction provided for herein, by the Purchaser have been duly and validly authorized by all necessary action on the part of the Purchaser and are in
compliance with applicable
law. This Agreement has been and the other agreements, documents and instruments required to be delivered by the Purchaser in accordance with the provisions hereof have been or will be, duly executed
and delivered by the Purchaser and constitute (or will at Closing constitute) the valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or limiting creditors' rights or by legal
principles of general applicability governing the availability of equitable remedies. 


        3.03    Absence of Violations or Conflicts.    The execution, delivery and performance of the
transactions contemplated by this Agreement and the Real Estate Purchase Agreements by the Purchaser do not and will not violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under, (a) any law, ordinance or governmental rule or regulation known to the Purchaser and to which the Purchaser is subject,
(b) any judgment, 


8







 



order,
writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to the Purchaser (c) the governing documents of
the Purchaser or any securities issued by the Purchaser, or (d) any mortgage, indenture or other instrument, document or understanding, oral or written, to which the Purchaser is a party or by
which the Purchaser may have rights. No authorization, approval or consent of and no registration or filing with, any governmental or regulatory official, body or authority is required in connection
with the execution, delivery or performance of this Agreement by the Purchaser. 


        3.04    Disclosure.    No written statement, representation, warranty or information provided
or furnished by or on behalf of the Purchaser to the Sellers in this Agreement or otherwise in connection with the transactions contemplated by this Agreement and the Real Estate Purchase Agreements
contains as of the date made any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. 


 
 

ARTICLE IV    
    
    INDEMNIFICATIONS    
    


        4.01    General Indemnification by the Sellers and the Owners.    The Sellers and the Owners,
jointly and severally, agree to indemnify, hold harmless and defend the Purchaser after the Closing Date against and in respect of any of the following matters which may be asserted or established: 




	(a)
	Any
and all damages, losses, expenses, liabilities or deficiencies resulting from any breach of the warranties, representations and covenants of the Sellers and the Owners contained
herein or in any schedule hereto;



	(b)
	Any
and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Purchaser as a result of the nonpayment or assessment of taxes with respect to the Assets or
the Businesses attributable to periods prior to the Closing Date;



	(c)
	Any
and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Purchaser as a result of a claim of any kind arising from the ownership or operation of the
Assets or the Businesses prior to the Closing Date (except for the Assumed Environmental Liabilities);



	(d)
	All
demands, assessments, judgments, costs and expenses (including reasonable legal fees and other expenses of litigation, both at the trial and appellate level) arising from or in
connection with any action, suit, proceeding or claim incident to any of the matters indemnified in subparts (a)-(c) of this Section 4.01. 





        4.02    General Indemnification by the Purchaser.    The Purchaser agrees to indemnify, hold
harmless, and defend the Sellers and the Owners after the Closing Date against and in respect of any of the following matters which may be asserted or established: 




	(a)
	Any
and all damages, losses, expenses, liabilities or deficiencies resulting from any breach of the warranties, representations and covenants of the Purchaser contained herein or in
any schedule hereto;



	(b)
	Any
and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Sellers as a result of the nonpayment or assessment of taxes with respect to the Assets or
the Businesses attributable to periods on and after the Closing Date;



	(c)
	Any
and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Sellers as a result of a claim of any kind arising from the ownership or operation of the
Assets or the Businesses by the Purchaser on and after the Closing Date; and 




9







 


	(d)
	All
demands. assessments, judgments, costs and expenses (including reasonable legal fees and other expenses of litigation, both at the trial and appellate level) arising from or in
connection with any action, suit, proceeding or claim incident to any of the matters identified in subparts (a)-(c) of this Section 4.02. 





        4.03.    Environmental Indemnification by the Sellers and the Owners.    The Sellers and the
Owners, jointly and severally, agree to indemnify, defend and hold the Purchaser harmless from and against any and all claims, demands, causes of action, liabilities, losses, fines, penalties, and/or
expenses (including reasonable attorneys' fees and other expenses of litigation) which the Purchaser may incur or suffer based upon or arising from any occurrence, event, circumstance or omission
occurring prior to the Closing Date and involving or affecting the environmental condition of the Assets, including, without limitation, or any such matters attributable to alleged violations of or
non-compliance with Environmental Laws, save and except the Assumed Environmental Liabilities. 


        4.04    Environmental Assumption and Indemnification by Purchaser.    Purchaser agrees to
indemnify, defend and hold Sellers harmless from and against any and all claims, demands, causes of action, liabilities, losses, fines, penalties and/or expenses (including reasonable attorneys' fees
and other expenses of litigation) which Sellers may incur or suffer based upon or arising from any occurrence, event, circumstance or omission occurring following the Closing Date and involving or
affecting the environmental condition of the Assets including, specifically, any obligation of Purchaser to plug and abandon any salt water disposal well assigned or conveyed by Sellers to Purchaser
hereunder ("Assumed Environmental Liabilities"). 


        4.05    Conditions of Indemnification.    The respective obligations and liabilities of the
Sellers, the Owners and the Purchaser (the "indemnifying party") to the other (the "party to be indemnified") under this Article IV and under the Real Estate Purchase Agreements with respect to
claims resulting from the assertion of liability by third parties shall be subject to the following terms and conditions: 




	(a)
	Within
20 days (or such earlier time as might be required to avoid prejudicing the indemnifying party's position) after receipt of notice of commencement of any claim, whether
meritorious or not, or any action evidenced by service of process or other legal pleading, the party to be indemnified shall give the indemnifying party written notice thereof together with a copy of
such claim, process or other legal pleading, and the indemnifying party shall have the right to undertake the defense thereof by representatives of its own choosing and at its own expenses; provided
that the party to be indemnified may participate in the defense with counsel of its own choice, the fees and expenses of which counsel shall be paid by the party to be indemnified unless
(i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party has failed to assume the defense of such claim or action.



	(b)
	If
the indemnifying party, by the 30th day after receipt of notice of any such claim (or, if earlier, by the 10th day preceding the day on which an answer
or other pleading must be served in order to prevent judgment by default in favor of the person asserting such claim), does not elect to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such claim on behalf of and for the account and risk of the indemnifying party and
at the indemnifying party's expense, subject to the right of the indemnifying party to assume the defense of such claims at any time prior to settlement, compromise or final determination thereof.



	(c)
	Notwithstanding
the foregoing, the indemnifying party shall not settle any claim without the consent of the party to be indemnified unless such settlement involves only the payment of
money and the claimant provides to the party to be indemnified a release from all liability in respect of such claim. If the settlement of the claim involves more 




10







 



than
the payment of money, the indemnifying party shall not settle the claim without the prior consent of the party to be indemnified. 



	(d)
	The
party to be indemnified and the indemnifying party will each cooperate with all reasonable requests to the other. 





        4.06    Limitation.    The obligations under this Article IV and liability for failure
or breach of any warranties, representations, or covenants shall be limited as follows: 




	(a)
	Except
as provided in (c) below, the representations and warranties of the parties and indemnification obligations of the parties with respect to breaches thereof, and any
other claims with regard to, or arising out of, the transactions contemplated by this Agreement shall survive for a period of three year(s) after the Closing Date, provided that if notice of a bona
fide claim by either party has been given in writing as provided in Section 8.03 by a party against the other within such three year period the obligations with respect to such claim shall
survive until resolved.



	(b)
	Except
as provided in (c) and (d) below, the Sellers' and Owners' liability with respect to breaches of warranties and representations and indemnifications therefor
shall be limited to an aggregate of One Million Eight Hundred Thousand and No/100 Dollars ($1,800,000.00).



	(c)
	The
indemnity obligations of the Sellers and the Owners hereunder with respect to sites which are under remediation prior to Closing and with respect to any other sites identified by
the Phase 1 Environmental Studies as having conditions unacceptable to Purchaser with respect to which the Sellers and the Owners accept responsibility shall continue indefinitely and shall not be
limited in amount.



	(d)
	The
indemnity obligations of Purchaser hereunder with respect to the Assumed Environmental Liabilities shall continue indefinitely and shall not be limited in amount. 




 
 

ARTICLE V    
    
    OTHER AGREEMENTS    
    


        5.01    Purchaser's Due Diligence.    Pending Closing, the Purchaser shall have the complete
and unfettered right to inspect, review and audit the Assets and all books, records, data and other information of the Sellers relating to the Assets and the conduct of the Businesses. All expenses
incurred by the Purchaser relating to its inspection and review of the Assets and the Businesses shall be borne and paid exclusively by the Purchaser. The Sellers and the Owners will cooperate with
the Purchaser in all reasonable respects in facilitating such inspection and review. Without limiting the foregoing, the Sellers and the Owners each agree that, until Closing, they will
(a) provide or cause to be provided to the Purchaser or its representatives, during normal business hours or otherwise, if necessary, full access to all of its properties, assets, books,
agreements, commitments and records; (b) furnish the Purchaser and its representatives with such information concerning any of its operations and affairs as they may
reasonably request; and (c) furnish to the Purchaser true copies of all requested financial data and operating statements of the Sellers. 


        5.02    Exclusive Dealing.    During the period from the date of this Agreement through the
Closing Date, the Sellers or the Owners will not, directly or indirectly, encourage, initiate or engage in discussions or negotiations with or provide any information to, or enter into any agreement
to sell the Assets or any equity interest in any of the Sellers with, any person, firm, company or other entity, other than the Purchaser. 



        5.03    Employees.    Employees of Sellers who successfully pass Purchaser's preemployment
screening test and otherwise qualify for employment by Purchaser and who are actually employed by 


11







 



Purchaser
immediately following Closing will be eligible to participate in Purchaser's current benefit programs as of the date of Closing (to the extent any waiting periods can be waived by Purchaser
pursuant to its benefit plan documents) and their length of service with Sellers will be honored in considering their eligibility for Purchaser's benefit programs. Except as may be specifically
provided in this Agreement, the Purchaser will assume no liability for any agreements, arrangements, commitments, policies or understandings of any kind relating to employment, compensation or
benefits for present or former employees of the Sellers prior to the Closing Date, including, but not limited to, severance pay, retirement benefits, accrued vacation pay or benefits or medical claims
incurred before the Closing Date. Without limiting the foregoing, the Sellers shall bear the full cost and expense of any severance expenses and benefits which result from the termination of any
employees of the Sellers by Sellers. Notwithstanding the foregoing, Purchaser will assume the liability for accrued vacations for those employees of Sellers who are hired by Purchaser at Closing,
provided an appropriate reduction in the Purchase Price is made for the vacation benefits assumed. 


        5.04    Expenses.    Except as otherwise provided herein, each party hereto will pay its own
expenses and costs incurred in connection with the negotiation and consummation of this Agreement and the transaction contemplated hereby. The Purchaser will pay all federal, state and local sales,
documentary and other transfer taxes, if any, due as a result of the purchase, sale or transfer of the Assets. 



        5.05    Brokers.    Each of the parties hereto shall be solely responsible for any brokerage
commissions or finder's fees arising from this transaction based upon arrangements made by or on behalf of such party and agrees to indemnify and hold the other party harmless from any claims or
liabilities (including reasonable attorneys' fees and court costs) with respect thereto. 


        5.06    Loss.    If, before the Closing Date, any individual asset making up the Assets is
destroyed, or if there has been damage to any individual asset making up the Assets which would cost in excess of $50,000 to repair or replace and such repair or replacement is not completed by the
Closing Date to the Purchaser's reasonable satisfaction, then the Purchaser, at its option, may either (a) proceed to Closing,
in which event the Sellers shall assign to the Purchaser at Closing all insurance proceeds payable with respect to such loss and the Purchaser shall receive a credit at Closing against the Purchase
Price for any remaining sums necessary to effectuate such repairs (including, without limitation, applicable deductibles) or (b) terminate this Agreement, in which event, except as otherwise
expressly provided in this Agreement, neither party shall have any further rights or obligations hereunder. If, before the Closing Date, there has been damage to any individual asset making up the
Assets which would cost $50,000 or less to repair or replace and such repair or replacement shall not have been completed by the Closing Date to the Purchaser's reasonable satisfaction, then the
parties shall remain obligated to close this transaction, but Purchaser shall be entitled to an assignment at Closing of all insurance proceeds payable with respect to such loss and shall additionally
receive a credit at Closing against the Purchase Price in an amount to be agreed upon by the Purchaser and the Sellers for any remaining sums necessary to effectuate such repairs (including, without
limitation, applicable deductibles). 


        5.07    Assignment of Contracts.    At least ten (10) days prior to Closing, the
Purchaser shall notify the Sellers of those Contracts, if any, which the Purchaser desires to assume at Closing. If the Purchaser does not issue such notification, the Purchaser shall be deemed to
desire to assume all of the Contracts at Closing. Any Contracts the Purchaser elects not to assume will be considered to be Excluded Assets. 


 
 

ARTICLE VI    
    
    THE CLOSING    
    


        6.01    Time, Date and Place of Closing.    Closing ("the Closing") of the transactions
contemplated hereby and by the Real Estate Purchase Agreements shall take place at the offices of the Sellers' legal 


12







 

counsel
in Beaumont, Texas at 10:00 a.m. on or before September 29, 2003, or at such other time and place as the parties may hereafter mutually agree in writing. Such date or any
alternative date selected in accordance with this Section 6.01 is referred to in this Agreement as the "Closing Date." 



        6.02    Conditions to Obligations of the Purchaser.    The obligation of the Purchaser to
close under this Agreement and the Real Estate Purchase Agreements is subject to the fulfillment prior to or at the Closing Date of each of the following conditions, any one or more of which may be
waived by the Purchaser: 




	(a)
	The
representations, warranties and covenants of the Sellers and the Owners contained herein or otherwise delivered pursuant hereto shall be true in all material respects as of the
date when made, shall be deemed to be made again at and as of the Closing Date, and shall be true at and as of the Closing Date;



	(b)
	The
Sellers and the Owners shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by the Sellers and the
Owners prior to or at the Closing Date;



	(c)
	No
material adverse change in the Businesses or in the Assets shall have occurred between March 31, 2003 and the Closing Date;



	(d)
	No
federal, state or local governmental unit, agency, body or authority with competent jurisdiction over the subject matter shall have given official written notice of its intention
to institute proceedings to prohibit the transaction contemplated by this Agreement and the Real Estate Purchase Agreements, or which would interfere with the use of the Assets or the operation of the
Businesses;



	(e)
	No
judgment, order or decree shall have been rendered by any governmental authority and no action shall have been instituted or threatened by any person which has the effect of
enjoining or which seeks to enjoin the consummation of the transaction contemplated by this Agreement and the Real Estate Purchase Agreements;



	(f)
	The
Sellers and the Owners shall have delivered to the Purchaser an opinion of its legal counsel, Orgain, Bell & Tucker, L.L.P., in form and substance reasonably acceptable to
the Purchaser and its counsel, addressing the due and proper authorization, execution and delivery and the enforceability of this Agreement and the Real Estate Purchase Agreements and the instruments
and documents executed in connection herewith and therewith and such other matters as the Purchaser or its counsel may reasonably require; and



	(g)
	The
Phase One Environmental Assessments delivered by Sellers and Owners to Purchaser pursuant to Section 2.11(c) above disclose only conditions that are acceptable to
Purchaser; and



	(h)
	All
deliveries pursuant to Section 6.04 shall have been made and shall be reasonably acceptable to the Purchaser. 





        6.03    Conditions to Obligations of the Sellers and Owners.    The obligation of the Sellers
and Owners to close under this Agreement and the Real Estate Purchase Agreements is subject to the fulfillment prior to or on the Closing Date of each of the following conditions, any one or more of
which may be waived by the Sellers and Owners: 




	(a)
	The
representations, warranties and covenants of the Purchaser contained herein or otherwise delivered pursuant hereto shall be true in all material respects as of the date when made,
shall be deemed to be made again at and as of the Closing Date, and shall be true at and as of the Closing Date; 




13







 


	(b)
	The
Purchaser shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by the Purchaser prior to or at the
Closing Date;



	(c)
	No
federal, state or local governmental unit, agency, body or authority with competent jurisdiction over the subject matter shall have given official written notice of its intention
to institute proceedings to prohibit the transaction contemplated by this Agreement and the Real Estate Purchase Agreements or which would interfere with the use of the Assets or the operation of the
Businesses; and



	(d)
	No
judgment, order or decree shall have been rendered by any governmental authority and no action shall have been instituted or threatened by any person which has the effect of
enjoining or which seeks to enjoin the consummation of the transaction contemplated by this Agreement and the Real Estate Purchase Agreements.



	(e)
	The
Purchaser shall have delivered to the Sellers and Owners an opinion of its legal counsel, Lynch, Chappell & Alsup, P.C., in form and substance reasonably acceptable to the
Sellers and Owners and their counsel, addressing the due and proper authorization, execution and delivery and the enforceability of this Agreement and the Real Estate Purchase Agreements and the
instruments and documents executed in connection herewith and therewith and such other matters as the Sellers and Owners or their counsel may reasonably require; and



	(f)
	All
deliveries pursuant to Section 6.05 shall have been made and shall be reasonably acceptable to Sellers and Owners. 





        6.04    Deliveries by the Sellers and the Owners at the Closing.    At the Closing, the
Sellers and the Owners shall execute, acknowledge, and/or deliver, as appropriate, to the Purchaser the following: 




	(a)
	Evidence
that all consents (other than consents to be obtained on a post Closing basis pursuant to Section 2.13) necessary in connection with this transaction have been
obtained (which shall consist of the original copies of all consents required to be obtained in writing and a certificate from each of the Sellers stating that all other consents have been obtained);



	(b)
	Evidence
that all liens or encumbrances of any kind on the Assets other than Permitted Encumbrances shall have been released and/or a termination statement shall have been filed as of
the Closing Date;



	(c)
	An
officer's certificate of each of the Sellers and certificate of the Owners, dated as of the Closing Date, as to the material truth and correctness of all of the representations and
warranties of the Sellers and the Owners contained in this Agreement and the Real Estate Purchase Agreements;



	(d)
	An
officer's certificate from each of the Sellers and a certificate of the Owners, dated as of the Closing Date, as to the material performance of and compliance by the Sellers and
the Owners with all covenants of the Seller contained in this Agreement and the Real Estate Purchase Agreements;



	(e)
	A
certificate from each of the Sellers, dated as of the Closing Date, as to approval of the transactions contemplated by this Agreement and the Real Estate Purchase Agreements by the
Owners and directors or general partner of each of the Sellers;



	(f)
	Opinion
of Counsel from Orgain, Bell & Tucker, L.L.P.;



	(g)
	A
Contingent Earn-Out Agreement that is substantially identical in form and substance to that attached hereto as  Exhibit D executed by the Owners; 




14







 


	(h)
	An
assignment, conveyance and bill of sale substantially identical in form and substance to that attached hereto as Exhibit F
(the "Conveyance"); conveying the Assets to the Purchaser;



	(i)
	All
title certificates and other registration documents necessary to transfer to the Purchaser the titles to the, motor vehicles, trailers, equipment and other tangible personalty
which are a part of the Assets, including, but not limited to, those shown on attached Exhibit B to the Purchaser;



	(j)
	Non-competition
agreements that are substantially identical in form and substance to that attached hereto as  Exhibit G, duly executed by each of the Owners and each of the Sellers (the "Non-Competition
Agreements");



	(k)
	An
employment agreement that is substantially identical in form and substance to that attached hereto as Exhibit H, duly
executed by Morris B. Windham (the "Employment Agreement");



	(l)
	The
Special Warranty Deeds required by the Real Estate Purchase Agreements; and



	(m)
	The
Escrow Agreement. 







        6.05    Deliveries by the Purchaser at the Closing.    At the Closing, the Purchaser shall
execute, acknowledge, and/or deliver, as appropriate, to the Sellers and the Owners the following: 




	(a)
	An
officer's certificate of the Purchaser, dated as of the Closing Date, as to the material truth and correctness of all of the representations and warranties of the Purchaser
contained in this Agreement and the Real Estate Purchase Agreements;



	(b)
	An
officer's certificate of the Purchaser, dated as of the Closing Date, as to the material performance of and compliance by the Purchaser with all covenants of the Purchaser
contained in this Agreement and the Real Estate Purchase Agreements;



	(c)
	An
officer's certificate of the Purchaser, dated as of the Closing Date, as to approval of the transactions contemplated by this Agreement and the Real Estate Purchase Agreements by
the general partner of the Purchaser;



	(d)
	The
Purchase Price in immediately available funds, less (i) the portion of the Purchase Price paid to the Escrow Account, (ii) the portion of the Purchase Price
allocated to the Non-Competition Agreements to be executed by the Sellers, (iii) the portion of the Purchase Price allocated to the Real Estate Purchase Agreements, and
(iv) payments, if any, made by Purchaser to creditors of Sellers pursuant to Sellers' instructions;



	(e)
	Opinion
of Counsel of Counsel from Lynch, Chappell & Alsup, P.C.;



	(f)
	The
Contingent Earn Out Agreement;



	(g)
	The
Special Warranty Deed required by the Real Estate Purchase Agreements;



	(h)
	The
Escrow Agreement;



	(i)
	The
Non-Competition Agreements; and



	(j)
	The
Employment Agreement. 




 
 

ARTICLE VII    
    
    POST CLOSING REMEDIES OF THE PURCHASER    
    



        7.01    In General.    After the Closing, the Purchaser, without limitation of its other
rights and remedies, shall have recourse upon the Escrowed Funds for breaches of the representations, warranties, 


15







 

covenants
and agreements of the Sellers or the Owners under this Agreement (including all costs, expenses and attorney's fees related thereto) in accordance with the procedure set forth in the Escrow
Agreement. 


        7.02    Dispute Resolution.    



        (a)   The
parties shall attempt in good faith to resolve any controversy or claim arising out of or relating to this Agreement or the breach hereof, including, without
limitation, any controversies or claims arising out of, under, or with respect to the retained portion of the Purchase Price being held in the Escrow Account, promptly by negotiations between
representatives who have authority to settle the controversy. Any party may give the other party written notice of any dispute not resolved in the normal course of business together with a request
that the parties meet and confer ("Notice of Dispute"). Within twenty (20) days after delivery of the Notice of Dispute, the parties or their representatives shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the dispute. If the matter has not been resolved within thirty
(30) days after delivery of the Notice of Dispute, or if the parties fail to meet within twenty (20) days after delivery of the Notice of Dispute, either party may initiate mediation of
the claim or dispute as provided hereafter. 


        If
a party or its representative intends to be accompanied at a meeting by an attorney, the other parties shall be given advance notice of such intention and may also be accompanied by
an attorney. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and any state's
rules of evidence. 


        (b)    Mediation.    If a claim or controversy has not been resolved by negotiation as provided in Section 7.02
(a), the parties shall endeavor to settle the claim or dispute by mediation under the Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes. A neutral third party will
be selected from the CPR panel of neutrals. If the parties encounter difficulty in agreeing on a neutral third party, they will seek the assistance of CPR in the selection process. Mediation under
this Section 7.02 (b) will commence within sixty (60) days of the Notice of Dispute. 


        (c)    Statutes of Limitation Tolled During Meeting and Mediation.    All applicable statutes of limitation and
defenses based upon the passage of time shall be tolled while the procedure specified in Sections 7.02(a) and (b) are pending. The parties will take such action, if any, required to effectuate
such tolling. 


        (d)    Performance To Continue Pending Dispute Resolution.    Each party is required to continue to perform its
obligations under this Agreement pending final resolution of any claim or dispute covered by this Article VII. 



 
 

ARTICLE VIII    
    
    MISCELLANEOUS PROVISIONS    
    



        8.01    Survival.    The parties agree that all of the representations, warranties and
covenants contained in this Agreement or in any document, certificate, instrument, schedule or exhibit delivered pursuant to this Agreement shall survive the Closing and continue to be binding upon
the parties. 


        8.02    Further Assurances; Further Cooperation.    The parties to this Agreement shall
undertake to perform their obligations under this Agreement, to satisfy all conditions, and to cause the transaction contemplated by this Agreement to be carried out in accordance with the terms of
this Agreement. Upon the execution of this Agreement and thereafter, each party shall do such things as may be 


16







 



reasonably
requested by the other party hereto in order more effectively to consummate or document the transaction contemplated by this Agreement. 



        8.03    Notices.    Any notice or communication required or permitted hereunder shall be given
in writing, shall refer specifically to the section of this Agreement under which it is given or to which it is applicable, and shall be sent by (a) personal delivery, (b) expedited
delivery service with proof of delivery, (c) United States mail, postage prepaid, registered or certified mail, or (d) telecopy (provided that such telecopy is confirmed by expedited
delivery service or by mail in the manner previously described) addressed as follows: 



	If to the Sellers or the Owners:	 	Mr. Morris B. Windham

2295 Thomas Road

Beaumont, Texas 77706

Telephone: (409) 892-5370
	

With a copy to:	
 	

Orgain, Bell & Tucker, L.L.P.

4th Floor, 470 Orleans Street

P. O. Box 1751

Beaumont, Texas 77704-1751

Attn: Mr. John Creighton, III

Telephone: (409) 838-6412

Facsimile: (409) 838-6959
	

If to the Purchaser:	
 	

Basic Energy Services, L.P.

400 W. Illinois, Suite 800

Midland, Texas 79701

Attn: Mr. Kenneth V. Huseman, President

Telephone: (432) 620-5500

Facsimile: (432) 620-5501
	

With a copy to:	
 	

Lynch, Chappell & Alsup, P.C.

300 N. Marienfeld, Suite 700

Midland, Texas 79701

Attn: Mr. James M. Alsup

Telephone: (432) 683-3351

Facsimile: (432) 683-2587






or
to such other address or to the attention of such other persons as hereafter shall be designated in writing by the applicable party sent in accordance herewith. Any such notice or communication
shall be deemed to have been given either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of telecopy upon receipt. 


        8.04    Binding Effect.    This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns. 



        8.05    Captions; Definitions.    The titles or captions of articles, sections and subsections
contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision
hereof. The parties agree to all definitions in the statement of parties to this Agreement and in the other introductory language to this Agreement. 


        8.06    Controlling Law; Amendment; Waiver; Remedies Cumulative.    This Agreement shall be
construed and enforced in accordance with the laws of the State of Texas. This Agreement may not be altered or amended except in writing signed by the Purchaser, the Seller and the Owners. The failure 


17







 



of
any party hereto at any time to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party hereto of any condition, or of the
breach of any term, provision, warranty, representation, agreement or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term, provision, warranty, representation, agreement or covenant
herein contained. Except as otherwise expressly provided herein, this Agreement is performable in Midland County, Texas. 


        8.07    Post Closing Access and Audit.    The Sellers and the Purchaser shall have reasonable
access to all books and records of the Businesses, and the parties hereto shall furnish to each other any information or copies of any document which may be relevant in connection with any tax matter
requiring such information and shall provide such other assistance in this connection as the parties reasonably request, at no cost to the party to which the request is made. Without limiting the
foregoing, the Sellers further agree that, upon request by the Purchaser following Closing, the Sellers will execute and deliver to the Purchaser or its accountants such audit response letters and
further confirmations as the Purchaser or its accountants may reasonably require for purposes of verification of the accuracy, validity and completeness of all financial and other information provided
or made available by the Sellers in connection with the transactions contemplated by this Agreement. Sellers and Owners further agree that they will fully cooperate with Purchaser in connection with
any audit of the books and records relating to the conduct of the Businesses by Sellers during the three (3) calendar year preceding the Closing, provided the cost of such audit is borne by
Purchaser. 


        8.08    Entire Agreement.    This Agreement constitutes the entire agreement among the parties
hereto with respect to the transaction contemplated and supersedes all prior negotiations. understandings and agreements, both written and oral, among the parties with respect thereto. 


        8.09    No Presumption.    Neither this Agreement nor any other agreement between the parties
nor any uncertainty or ambiguity herein or therein shall be construed or resolved using any presumption against any party hereto or thereto, whether under any rule of construction or otherwise. On the
contrary, this Agreement and the other agreements between the parties have been reviewed by the parties and their counsel and, in the case of any ambiguity or uncertainty, shall be construed according
to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. 


        8.10    Counterparts.    This Agreement may be executed by each party upon a separate copy,
and in such case one counterpart of this Agreement shall consist of enough of such copies to reflect the signatures of all of the parties to this Agreement. This Agreement shall become effective when
one or more counterparts have been signed by each of the parties to this Agreement and delivered to each of the other parties to this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one of such
counterparts. 


(The
balance of this page is left blank intentionally) 


18







 

        DULY
EXECUTED by the parties hereto as of the day and year first above written. 



	 	 	SELLERS:
	

 	
 	
PARKER WINDHAM, LTD.
	 	 	By:	PWI Management, L.L.C., General Partner
	

 	
 	

By:	

/s/  MORRIS B. WINDHAM      
 Morris B. Windham, Manager
	

 	
 	
PWI, INC.
	

 	
 	

By:	

/s/  MORRIS B. WINDHAM      
 Morris B. Windham, President
	

 	
 	
PWI RENTALS, L.P.
	 	 	By:	PWI, Inc., General Partner
	

 	
 	

By:	

/s/  MORRIS B. WINDHAM      
 Morris B. Windham, President
	

 	
 	
PWI CONSTRUCTION, L.P.
	 	 	By:	PWI Management, L.L.C., General Partner
	

 	
 	

By:	

/s/  MORRIS B. WINDHAM      
 Morris B. Windham, Manager
	

 	
 	
PWI DISPOSAL, L.P.
	 	 	By:	PWI Management, L.L.C., General Partner
	

 	
 	

By:	

/s/  MORRIS B. WINDHAM      
 Morris B. Windham, Manager





19







 

	 	 	OWNERS:
	

 	
 	

/s/  MORRIS B. WINDHAM      
 Morris B. Windham
	

 	
 	

/s/  PAIGE WINDHAM      
 Paige Windham
	

 	
 	

PURCHASER:
	

 	
 	
BASIC ENERGY SERVICES, L.P.
	 	 	By:	Basic Energy Services G.P., L.L.C., Its General Partner
	

 	
 	

By:	

/s/  KENNETH V. HUSEMAN      
 Kenneth V. Huseman, President




20











QuickLinks


ASSET PURCHASE AGREEMENT

ARTICLE I PURCHASE AND SALE

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE OWNERS

ARTICLE III PURCHASER'S REPRESENTATIONS AND WARRANTIES

ARTICLE IV INDEMNIFICATIONS

ARTICLE V OTHER AGREEMENTS

ARTICLE VI THE CLOSING

ARTICLE VII POST CLOSING REMEDIES OF THE PURCHASER

ARTICLE VIII MISCELLANEOUS PROVISIONS