Document:

Exhibit 10.2

UNI-PIXEL, INC.

 

2007 STOCK INCENTIVE PLAN

 

1.             Purposes
of the Plan.  The purposes of this
Stock Incentive Plan are to attract and retain the best available personnel, to
provide additional incentive to Employees, Directors and Consultants and to
promote the success of the Corporation’s business.

 

2.             Definitions.

 

2.01.        Certain
Defined Terms. As used herein, the following definitions shall apply:

 

“Administrator” means the Board or any of the
Committees appointed to administer the Plan.

 

“Affiliate” and “Associate” shall have
the respective meanings ascribed to such terms in Rule 12b-2 promulgated under
the Exchange Act.

 

“Applicable Laws” means the legal requirements
relating to the administration of stock incentive plans, if any, under applicable
provisions of federal securities laws, state corporate and securities laws, the
Code, the rules of any applicable stock exchange or national market system, and
the rules of any foreign jurisdiction applicable to Awards granted to residents
therein.

 

“Assumed” means that (i) pursuant to a
Corporate Transaction (as defined in section (i), (ii), or (iii) of the
definition of such term) or a Related Entity Disposition, the contractual
obligations represented by the Award are assumed by the successor entity or its
Parent in connection with the Corporate Transaction or Related Entity
Disposition or (ii) pursuant to a Corporate Transaction (as defined in sections
(iv) or (v) of the definition of such term), the Award is affirmed by the
Corporation. The Award shall not be deemed “Assumed” for purposes of
terminating the Award (in the case of a Corporate Transaction) and the
termination of the Continuous Service of the Grantee (in the case of a Related
Entity Disposition) if pursuant to a Corporate Transaction or a Related Entity
Disposition the Award is replaced with a comparable award with respect to
shares of capital stock of the successor entity or its Parent.  However, for
purposes of determining whether the vesting of the Award accelerates, the Award
shall be deemed “Assumed” if the Award is replaced with such a comparable stock
award or the Award is replaced with a cash incentive program of the successor
entity or Parent thereof which preserves the compensation element of such Award
existing at the time of the Corporate Transaction or Related Entity Disposition
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such Award.

 

The determination of Award comparability shall be made by the
Administrator and its determination shall be final, binding and conclusive.

 

“Award” means the grant of an Option, SAR,
Dividend Equivalent Right, Restricted Stock, Performance Unit, Performance
Share, or other right or benefit under the Plan.

 

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“Award Agreement” means the written agreement
evidencing the grant of an Award executed by the Corporation and the Grantee,
including any amendments thereto.

 

“Board” means the Board of Directors of the
Corporation.

 

“Cause” means, with respect to the termination
by the Corporation or a Related Entity of the Grantee’s Continuous Service,
that such termination is for “Cause” as such term is expressly defined in a
then-effective written agreement between the Grantee and the Corporation or
such Related Entity, or in the absence of such then-effective written agreement
and definition, is based on, in the determination of the Administrator, the
Grantee’s: (i) performance of any act or failure to perform any act in bad
faith and to the detriment of the Corporation or a Related Entity; (ii)
dishonesty, intentional misconduct or material breach of any agreement with the
Corporation or a Related Entity; or (iii) commission of a crime involving
dishonesty, breach of trust, or physical or emotional harm to any person.

 

“Change in Control”  means
a change in ownership or control of the Corporation after the Registration Date
effected through either of the following transactions: (i) the direct or
indirect acquisition by any person or related group of persons (other than an
acquisition from or by the Corporation or by a Corporation-sponsored employee
benefit plan or by a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders which a majority of the
Continuing Directors who are not Affiliates or Associates of the offeror do not
recommend such stockholders accept, or (ii) a change in the composition of the
Board over a period of thirty-six (36) months or less such that a majority of
the Board members (rounded up to the next whole number) ceases, by reason of
one or more contested elections for Board membership, to be comprised of
individuals who are Continuing Directors.

 

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

 

“Committee” means any committee appointed by
the Board to administer the Plan.

 

“Common Stock” means the common stock of the
Corporation.

 

“Corporation” means Uni-Pixel, Inc.,  a  Delaware  corporation.

 

“Consultant” means any person (other than an
Employee or a Director, solely with respect to rendering services in such
person’s capacity as a Director) who is engaged by the Corporation or any
Related Entity to render consulting or advisory services to the Corporation or
such Related Entity.

 

“Continuing Directors” means members of the
Board who either (i) have been Board members continuously for a period of at
least thirty-six (36) months or (ii) have been Board members for less than
thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i) who
were still in office at the time such election or nomination was approved by
the Board.

 

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“Continuous Service” means that the provision
of services to the Corporation or a Related Entity in any capacity of Employee,
Director or Consultant, is not interrupted or terminated. Continuous Service
shall not be considered interrupted in the case of (i) any approved leave of
absence, (ii) transfers among the Corporation, any Related Entity, or any
successor, in any capacity of Employee, Director or Consultant, or (iii) any
change in status as long as the individual remains in the service of the
Corporation or a Related Entity in any capacity of Employee, Director or
Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave.  For purposes
of each Incentive Stock Option granted under the Plan, if such leave exceeds
ninety (90) days, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the expiration of such ninety (90) day period.

 

“Corporate Transaction” means any of the
following transactions: (i) a merger or consolidation in which the Corporation
is not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Corporation is incorporated; (ii) the
sale, transfer or other disposition of all or substantially all of the assets
of the Corporation (including the capital stock of the Corporation’s subsidiary
corporations); (iii) approval by the Corporation’s stockholders of any plan or
proposal for the complete liquidation or dissolution of the Corporation; (iv)
any reverse merger in which the Corporation is the surviving entity but in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding securities are transferred to a
person or persons different from those who held such securities immediately
prior to such merger; or (v) acquisition by any person or related group of
persons (other than the Corporation or by a Corporation-sponsored employee
benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding securities
(whether or not in a transaction also constituting a Change in Control) but
excluding any such transaction that the Administrator determines shall not be a
Corporate Transaction.

 

“Covered Employee” means an Employee who is a “covered
employee” under Section 162(m)(3) of the Code.

 

“Director” means a member of the Board or the
board of directors of any Related Entity.

 

“Disability” means as defined under the
long-term disability policy of the Corporation or the Related Entity to which
the Grantee provides services regardless of whether the Grantee is covered by
such policy. If the Corporation or the Related Entity to which the Grantee
provides service does not have a long-term disability plan in place, “Disability”
means that a Grantee is unable to carry out the responsibilities and functions
of the position held by the Grantee by reason of any medically determinable
physical or mental impairment. A Grantee will not be considered to have
incurred a Disability unless he or she furnishes proof of such impairment
sufficient to satisfy the Administrator in its discretion.

 

“Dividend Equivalent Right” means a right
entitling the Grantee to compensation measured by dividends paid with respect
to Common Stock.

 

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“Employee” means any person, including an
Officer or Director, who is in the employ of the Corporation or any Related
Entity, subject to the control and direction of the Corporation or any Related
Entity as to both the work to be performed and the manner and method of
performance. The payment of a director’s fee by the Corporation or a Related
Entity shall not be sufficient to constitute “employment” by the Corporation.

 

“Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

“Fair Market Value” means, as of any date, the
value of Common Stock determined as follows: (i) where there exists a public
market for the Common Stock, the Fair Market Value shall be (A) the closing
price for a Share on the date of the determination (or, if no closing price was
reported on that date, on the last trading date on which a closing price was
reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the NASDAQ National Market, whichever is
applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the NASDAQ Small Cap Market on the date of the determination (or, if
no such prices were reported on that date, on the last date on which such
prices were reported), in each case, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or (ii) in the absence
of an established market for the Common Stock of the type described in (i),
above, the Fair Market Value thereof shall be determined by the Administrator
in good faith.

 

“Good Reason” means the occurrence after a
Corporate Transaction, Change in Control or Related Entity Disposition of any
of the following events or conditions unless consented to by the Grantee (and
the Grantee shall be deemed to have consented to any such event or condition
unless the Grantee provides written notice of the Grantee’s non-acquiescence
within 30 days of the effective time of such event or condition): (i) a change
in the Grantee’s responsibilities or duties which represents a material and
substantial diminution in the Grantee’s responsibilities or duties as in effect
immediately preceding the consummation of a Corporate Transaction, Change in
Control or Related Entity Disposition; (ii) a reduction in the Grantee’s base
salary to a level below that in effect at any time within six (6) months
preceding the consummation of a Corporate Transaction, Change in Control or
Related Entity Disposition or at any time thereafter; or (iii) requiring the
Grantee to be based at any place outside a [____]-mile radius from the Grantee’s
job location prior to the Corporate Transaction, Change in Control or Related
Entity Disposition except for reasonably required travel on business which is
not materially greater than such travel requirements prior to the Corporate
Transaction, Change in Control or Related Entity Disposition.

 

“Grantee” means an Employee, Director or
Consultant who receives an Award under the Plan.

 

“Immediate Family” means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Grantee’s household (other than a tenant or employee), a trust in
which these persons (or the Grantee) have more than fifty percent (50%) of the
beneficial interest, a foundation in which these persons (or the Grantee)
control the management of assets, and any other entity in which these persons
(or the Grantee) own more than fifty percent (50%) of the voting interests.

 

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“Incentive Stock Option” means an Option
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.

 

“Non-Qualified Stock Option” means an Option
not intended to qualify as an Incentive Stock Option.

 

“Officer” means a person who is an officer of
the Corporation or a Related Entity within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

 

“Option” means an option to purchase Shares
pursuant to an Award Agreement granted under the Plan.

 

“Parent” means a “parent corporation,” whether
now or hereafter existing, as defined in Section 424(e) of the Code.

 

“Performance-Based Compensation” means
compensation qualifying as “performance-based compensation” under Section
162(m) of the Code.

 

“Performance Shares” means Shares or an Award
denominated in Shares which may be earned in whole or in part upon attainment
of performance criteria established by the Administrator.

 

“Performance Units” means an Award which may be
earned in whole or in part upon attainment of performance criteria established
by the Administrator and which may be settled for cash, Shares or other
securities or a combination of cash, Shares or other securities as established
by the Administrator.

 

“Plan” means this 2007 Stock Incentive Plan.

 

“Registration Date” means the first to occur of
(i) the closing of the first sale to the general public pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended, of (A) the
Common Stock or (B) the same class of securities of a successor corporation (or
its Parent) issued pursuant to a Corporate Transaction in exchange for or in
substitution of the Common Stock; and (ii) in the event of a Corporate
Transaction, the date of the consummation of the Corporate Transaction if the
same class of securities of the successor corporation (or its Parent) issuable
in such Corporate Transaction shall have been sold to the general public
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, on or prior to the date of consummation of such Corporate Transaction.

 

“Related Entity” means any Parent, Subsidiary
and any business, corporation, partnership, limited liability company or other
entity in which the Corporation, a Parent or a Subsidiary holds a substantial
ownership interest, directly or indirectly.

 

“Related Entity Disposition” means the sale,
distribution or other disposition by the Corporation, a Parent or a Subsidiary
of all or substantially all of the interests 

 

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of the Corporation, a Parent or a Subsidiary in any Related Entity
effected by a sale, merger or consolidation or other transaction involving that
Related Entity or the sale of all or substantially all of the assets of that
Related Entity, other than any Related Entity Disposition to the Corporation, a
Parent or a Subsidiary.

 

“Restricted Stock” means Shares issued under
the Plan to the Grantee for such consideration, if any, and subject to such
restrictions on transfer, rights of first refusal, repurchase provisions,
forfeiture provisions, and other terms and conditions as established by the
Administrator.

 

“Rule 16b-3” means Rule 16b-3 promulgated under
the Exchange Act or any successor thereto.

 

“SAR” means a stock appreciation right
entitling the Grantee to Shares or cash compensation, as established by the
Administrator, measured by appreciation in the value of Common Stock.

 

“Share” means a share of the Common Stock.

 

“Subsidiary” means a “subsidiary corporation,”
whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

2.02.        Other
Defined Terms. Other capitalized terms not defined above in Section 2.01
of this plan shall have the meanings provided elsewhere in this plan.

 

3.             Stock
Subject to the Plan.

 

3.01.        Fixed
Share Limit.  Subject to the
provisions of Section 10, below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options)
is Four Million (4,000,000) Shares. The Shares to be issued pursuant to Awards
may be authorized, but unissued, or reacquired Common Stock.

 

3.02.        Shares
Deemed Not Issued.  Any Shares
covered by an Award (or portion of an Award) which is forfeited or canceled,
expires or is settled in cash, shall be deemed not to have been issued for
purposes of  determining the maximum
aggregate number of Shares which may be issued under the Plan. Shares that
actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan, except that if unvested Shares are forfeited, or repurchased by the
Corporation at their original purchase price, such Shares shall become
available for future grant under the Plan.

 

4.             Administration
of the Plan.

 

4.01.        Plan
Administrator.

 

(a)           Administration
with Respect to Directors and Officers. With respect to grants of Awards to
Directors or Employees who are also Officers or Directors of the Corporation,
the Plan shall be administered by (i) the Board or (ii) a Committee designated
by the Board, which Committee shall be constituted in such a manner as to
satisfy the Applicable Laws and to permit such grants and related transactions
under the Plan to be exempt from 

 

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Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.

 

(b)           Administration
with Respect to Consultants and Other Employees.  With respect to grants of Awards to Employees
or Consultants who are neither Directors nor Officers of the Corporation, the
Plan shall be administered by (i) the Board or (ii) a Committee designated by
the Board, which Committee shall be constituted in such a manner as to satisfy
the Applicable Laws. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. The Board may
authorize one or more Officers to grant such Awards and may limit such
authority as the Board determines from time to time.

 

(c)           Administration
with Respect to Covered Employees. 
Notwithstanding the foregoing,  grants of
Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee)
which is comprised solely of two or more Directors eligible to serve on a
committee making Awards qualifying as Performance-Based Compensation. In the
case of such Awards granted to Covered Employees, references to the “Administrator”
or to a “Committee” shall be deemed to be references to such Committee or
subcommittee.

 

(d)           Administration
Errors.  In the event an Award is
granted in a manner inconsistent with the provisions of this Section 4.01,
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.

 

4.02.        Powers
of the Administrator.  Subject to
Applicable Laws and the provisions of the Plan (including any other powers
given to the Administrator hereunder), and except as other wise provided by the
Board, the Administrator shall have the authority, in its discretion:

 

(a)           to
select the Employees, Directors and Consultants to whom Awards may be granted
from time to time hereunder;

 

(b)           to
determine whether and to what extent Awards are granted hereunder;

 

(c)           to
determine the number of Shares or the amount of other consideration to be
covered by each Award granted hereunder;

 

(d)           to
approve forms of Award Agreements for use under the Plan;

 

(e)           to
determine the terms and conditions of any Award granted hereunder;

 

(f)            to
amend the terms of any outstanding Award granted under the Plan, provided that
any amendment that would adversely affect the Grantee’s rights under an
outstanding Award shall not be made without the Grantee’s written consent;

 

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(g)           to
construe and interpret the terms of the Plan and Awards, including with out
limitation, any notice of Award or Award Agreement, granted pursuant to the  Plan;

 

(h)           to
establish additional terms, conditions, rules or procedures to accommodate the
rules or laws of applicable foreign jurisdictions and to afford Grantees
favorable treatment under such rules or laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and

 

(i)            to
take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.

 

5.             Eligibility.  Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants. Incentive Stock Options may
be granted only to Employees of the Corporation, a Parent or a Subsidiary. An
Employee, Director or Consultant who has been granted an Award may, if
otherwise eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in foreign jurisdictions
as the Administrator may determine from time to time.

 

6.             Terms
and Conditions of Awards.

 

6.01.        Type
of Awards.  The Administrator is
authorized under the Plan to award any type of arrangement to an Employee,
Director or Consultant that is not inconsistent with the provisions of the Plan
and that by its terms involves or might involve the issuance of (i) Shares,
(ii) an Option, a SAR, or similar right with a fixed or variable price related
to the Fair Market Value of the Shares and with an exercise or conversion
privilege related to the passage of time, the occurrence of one or more events,
or the satisfaction of performance criteria or other conditions, or (iii) any
other security with the value derived from the value of the Shares. Such awards
include, without limitation, Options, SARs, or sales or bonuses of Restricted
Stock, Dividend Equivalent Rights, Performance Units or Performance Shares, and
an Award may consist of one such security or benefit, or two (2) or more of
them in any combination or alternative.

 

6.02.        Designation
of Award.  Each Award shall be
designated in the Award Agreement.  In
the case of an Option, the Option shall be designated as either an Incentive
Stock Option or a Non-Qualified Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of Shares
subject to Options designated as Incentive Stock Options which become
exercisable for the first time by a Grantee during any calendar year (under all
plans of the Corporation or any Parent or Subsidiary) exceeds $100,000, such
excess Options, to the extent of the Shares covered thereby in excess of the
foregoing limitation, shall be treated as Non-Qualified Stock Options. For this
purpose, Incentive Stock Options shall be taken into account in the order in
which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option.

 

6.03.        Conditions
of Award.  Subject to the terms of
the Plan, the Administrator shall determine the provisions, terms, and
conditions of each Award including, but not limited to, the Award vesting
schedule, repurchase provisions, rights of first refusal, forfeiture
provisions, form of payment (cash, Shares, or other consideration) upon
settlement of the Award, payment

 

 

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contingencies, and satisfaction of any
performance criteria. The performance criteria established by the Administrator
may be based on any one of, or combination of, increase in share price,
earnings per share, total stockholder return, return on equity, return on
assets, return on investment, net operating income, cash flow, revenue,
economic value added, personal management objectives, or other measure of
performance selected by the Administrator. Partial achievement of the specified
criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.

 

6.04.        Acquisitions and Other Transactions.  The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or
obligations to grant future awards in connection with the Corporation or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase,
asset purchase or other form of transaction.

 

6.05         Deferral of Award Payment.  The Administrator may establish one or more
programs under the Plan to permit selected Grantees the opportunity to elect to
defer receipt of consideration upon exercise of an Award, satisfaction of
performance criteria, or other event that absent the election would entitle the
Grantee to payment or receipt of Shares or other consideration under an Award
(but only to the extent that such deferral programs would not result in an
accounting compensation charge unless otherwise determined by the
Administrator). The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration
so deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program.

 

6.06.        Separate Programs. 
The Administrator may establish one or more separate programs under the
Plan for the purpose of issuing particular forms of Awards to one or more
classes of Grantees on such terms and conditions as determined by the
Administrator from time to time.

 

6.07.        Individual Option and SAR Limit.  There shall be no limit to the maximum number
of Shares with respect to which Options and SARs may be granted to any Grantee
in any fiscal year of the Corporation, except to the extent required by Section
162(m) of the Code or the regulations thereunder.

 

6.08.        Early Exercise. 
The Award Agreement may, but need not, include a provision whereby the
Grantee may elect at any time while an Employee, Director or Consultant to
exercise any part or all of the Award prior to full vesting of the Award. Any
unvested Shares received pursuant to such exercise may be subject to a
repurchase right in favor of the Corporation or a Related Entity or to any
other restriction the Administrator determines to be appropriate.

 

6.09.        Term of Award. 
The term of each Award shall be the term stated in the Award Agreement,
provided, however, that the term of an Incentive Stock Option shall be no more
than ten (10) years from the date of grant thereof. However, in the case of an
Incentive Stock Option granted to a Grantee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Corporation or any Parent or Subsidiary,
the term of the Incentive Stock Option shall be five (5)

 

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years from the date of grant thereof or such
shorter term as may be provided in the Award Agreement.

 

6.10.        Transferability of Awards.  Incentive Stock Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee; provided,
however, that the Grantee may designate a beneficiary of the Grantee’s
Incentive Stock Option in the event of the Grantee’s death on a beneficiary
designation form provided by the Administrator. Other Awards shall be
transferred by will and by the laws of descent and distribution, and during the
lifetime of the Grantee, by gift and/or pursuant to a domestic relations order
to members of the Grantee’s Immediate Family to the extent and in the manner
determined by the Administrator.

 

6.11.        Time of Granting Awards.  The date of grant of an Award shall for all
purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

 

7.             Award Exercise or Purchase Price, Consideration and
Taxes.

 

7.01.        Exercise or Purchase Price.  The exercise or purchase price, if any, for
an Award shall be as follows:

 

(a)           In the case of an Incentive Stock Option:

 

(i)            granted to an Employee who, at the time of the grant of
such Incentive Stock Option owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Corporation or any Parent or
Subsidiary, the per Share exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant; or

 

(ii)           granted to any Employee other than an Employee described
in the preceding paragraph, the per Share exercise price shall be not less than
one hundred percent (100%) of the Fair Market Value per Share on the date of
grant.

 

(b)           In the case of a Non-Qualified Stock Option, the per Share
exercise price shall be not less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant unless otherwise determined by the
Administrator.

 

(c)           In the case of Awards intended to qualify as
Performance-Based Compensation, the exercise or purchase price, if any, shall
be not less than one hundred percent (100%) of the Fair Market Value per Share
on the date of grant.

 

(d)           In the case of other Awards, such price as is determined
by the Administrator.

 

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(e)           Notwithstanding the foregoing provisions of this Section
7.01, in the case of an Award issued pursuant to Section 6.04, above, the exercise or purchase price for the Award shall
be determined in accordance with the principles of Section 424(a) of the Code.

 

7.02.        Consideration. 
Subject to Applicable Laws, the consideration to be paid for the Shares
to be issued upon exercise or purchase of an Award including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant). In addition
to any other types of consideration the Administrator may determine, the
Administrator is authorized to accept as consideration for Shares issued under
the Plan the following; provided, however, that the portion of
the consideration equal to the par value of the Shares must be paid in cash or
other legal consideration permitted by the Delaware General Corporation Law:

 

(a)           cash;

 

(b)           check;

 

(c)           delivery of Grantee’s promissory note with such recourse,
interest, security, and redemption provisions as the Administrator determines
as appropriate;

 

(d)           if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award
shall be exercised (but only to the extent that such exercise of the Award
would not result in an accounting compensation charge with respect to the
Shares used to pay the exercise price unless otherwise determined by the
Administrator);

 

(e)           with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and
remittance procedure pursuant to which the Grantee (A) shall provide written
instructions to a Corporation-designated brokerage firm to effect the immediate
sale of some or all of the purchased Shares and remit to the Corporation, out
of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased Shares and (B)
shall provide written directives to the Corporation to deliver the certificates
for the purchased Shares directly to such brokerage firm in order to complete
the sale transaction; or

 

(f)            any combination of the foregoing methods of payment.

 

7.03.        Taxes.  No
Shares shall be delivered under the Plan to any Grantee or other person until
such Grantee or other person has made arrangements acceptable to the
Administrator for the satisfaction of any foreign, federal, state, or local
income and employment tax withholding obligations, including, without
limitation, obligations incident to the receipt of Shares or the disqualifying
disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award, the Corporation shall withhold or collect from Grantee an
amount sufficient to satisfy such tax obligations.

 

8.             Exercise of Award.

 

11

 

8.01.        Procedure for Exercise; Rights as a Stockholder.

 

(a)           Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement.

 

(b)           An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Corporation in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure
to pay the purchase price as provided in Section 7.02(e). Until the issuance
(as evidenced by the appropriate entry on the books of the Corporation or of a
duly authorized transfer agent of the Corporation) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Corporation shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Award. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in the Award Agreement or Section 10, below.

 

8.02.        Exercise of Award Following Termination of Continuous
Service.

 

(a)           An Award may not be exercised after the termination date
of such Award set forth in the Award Agreement and may be exercised following
the termination of a Grantee’s Continuous Service only to the extent provided
in the Award Agreement.

 

(b)           Where the Award Agreement permits a Grantee to exercise an
Award following the termination of the Grantee’s Continuous Service for a
specified period, the Award shall terminate to the extent not exercised on the
last day of the specified period or the last day of the original term of the
Award, whichever occurs first.

 

(c)           Any Award designated as an Incentive Stock Option to the
extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee’s Continuous
Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms
for the period specified in the Award Agreement.

 

9.             Conditions upon Issuance of Shares. Shares shall
not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares pursuant thereto shall
comply with all Applicable Laws, and shall be further subject to the approval
of counsel for the Corporation with respect to such compliance. As a condition
to the exercise of an Award, the Corporation may require the person exercising
such Award to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Corporation, such a representation is required by any Applicable Laws.

 

12

 

10.           Adjustments upon Changes in Capitalization.  Subject to any required action by the
stockholders of the Corporation, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, the maximum number of Shares with respect to which
Options and SARs may be granted to any Grantee in any fiscal year of the Corporation,
as well as any other terms that the Administrator determines require adjustment
shall be proportionately adjusted for (a) any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Shares, or similar
transaction affecting the Shares, (b) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Corporation, or (c) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock to which Section 424(a) of the
Code applies or a similar transaction; provided, however that
conversion of any convertible securities of the Corporation shall not be deemed
to have been “effected without receipt of consideration.” Such adjustment shall
be made by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason hereof
shall be made with respect to, the number or price of Shares subject to an
Award.

 

11.           Corporate Transactions/Changes in Control  /Related Entity Dispositions.

 

11.01.      Termination of Award to Extent Not
Assumed.

 

(a)           Corporate Transaction.  Effective upon the consummation of a
Corporate Transaction, all outstanding Awards under the Plan shall terminate; provided,
however, that all such Awards shall not terminate to the extent they are
Assumed in connection with the Corporate Transaction.

 

(b)           Related Entity Disposition.  Effective upon the consummation of a Related
Entity Disposition, for purposes of the Plan and all Awards, there shall be a deemed
termination of Continuous Service of each Grantee who is at the time engaged
primarily in service to the Related Entity involved in such Related Entity
Disposition and each Award of such Grantee which is at the time outstanding
under the Plan shall be exercisable in accordance with the terms of the Award
Agreement evidencing such Award. However, such Continuous Service shall not be
deemed to terminate as to the portion of any such award that is Assumed.

 

11.02.      Acceleration of Award upon Corporate Transaction/Change
in Control/Related Entity Disposition.

 

(a)           Corporate Transaction.  Except as provided otherwise in an individual
Award Agreement, in the event of a Corporate Transaction and:

 

(i)            for the portion of each Award that is Assumed, then such
Award (if assumed), the replacement Award (if replaced), or the cash incentive
program automatically shall become fully vested, exercisable and payable and be
released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares at the time represented
by such Assumed portion of the Award, immediately upon termination of the
Grantee’s Continuous Service (substituting the successor employer

 

13

 

corporation,
if any, for “Corporation or Related Entity” for the definition of “Continuous
Service”) if such Continuous Service is terminated by the successor company or
the Corporation without Cause or voluntarily by the Grantee with Good Reason
within twelve (12) months of the Corporate Transaction; and

 

(ii)           for the portion of each Award that is not Assumed, such
portion of the Award shall automatically become fully vested and exercisable
and be released from any repurchase or forfeiture rights (other than repurchase
rights exercisable at Fair Market Value) for all of the Shares at the time
represented by such portion of the Award, immediately prior to the specified
effective date of such Corporate Transaction.

 

(b)           Change in Control. 
Except as provided otherwise in an individual Award Agreement, following
a Change in Control (other than a Change in Control which also is a Corporate
Transaction) and upon the termination of the Continuous Service of a Grantee if
such Continuous Service is terminated by the Corporation or Related Entity
without Cause or voluntarily by the Grantee with Good Reason within twelve (12)
months of a Change in Control, each Award of such Grantee which is at the time
outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other
than repurchase rights exercisable at Fair Market Value), immediately upon the
termination of such Continuous Service.

 

(c)           Related Entity Disposition  Except as provided otherwise in an individual
Award Agreement, in the event of a Related Entity Disposition and:

 

(i)            for the portion of each Award that is Assumed, then such
Award (if assumed), the replacement Award (if replaced), or the cash incentive
program automatically shall become vested, exercisable and payable and be
released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares at the time represented
by such Assumed portion of the Award, immediately upon termination of the
Grantee’s Continuous Service (substituting the successor employer corporation,
if any, for “Corporation or Related Entity” for the definition of “Continuous
Service”) if such Continuous Service is terminated by the successor company
without Cause or voluntarily by the Grantee with Good Reason within twelve (12)
months of the Related Entity Disposition; and

 

(ii)           for the portion of each Award of a Grantee who is at the
time engaged primarily in service to the Related Entity involved in such
Related Entity Disposition that is not Assumed, such portion of the Award of
such Grantee automatically shall become fully vested and exercisable and be
released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares at the time represented
by such portion of the Award, immediately prior to the specified effective date
of such Related Entity Disposition.

 

(d)           Effect of Acceleration on Incentive Stock Options.  The portion of any Incentive Stock Option
accelerated under this Section 11 in connection with a Corporate
Transaction, Change in Control or Related Entity Disposition shall remain
exercisable as an Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To
the extent such dollar limitation is exceeded, the accelerated excess portion
of such Option shall be exercisable as a Non-Qualified Stock Option.

 

14

 

12.           Effective Date and Term of Plan.  The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
stockholders of the Corporation. It shall continue in effect for a term of ten
(10) years unless sooner terminated. Subject to Section 17, below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.

 

13.           Amendment, Suspension or Termination of the Plan.
The Board may at any time amend, suspend or terminate the Plan. To the extent
necessary to comply with Applicable Laws, the Corporation shall obtain
stockholder approval of any Plan amendment in such a manner and to such a
degree as required. No Award may be granted during any suspension of the Plan
or after termination of the Plan. Any amendment, suspension or termination of
the Plan (including termination of the Plan under Section 12, above)
shall not affect Awards already granted, and such Awards shall remain in full
force and effect as if the Plan had not been amended, suspended or terminated,
unless mutually agreed otherwise between the Grantee and the Administrator,
which agreement must be in writing and signed by the Grantee and the
Corporation.

 

14.           Reservation of Shares. The Corporation, during the
term of the Plan, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan. The
inability of the Corporation to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Corporation’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Corporation of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.

 

15.           No Effect on Terms of Employment/Consulting
Relationship.  The Plan shall not
confer upon any Grantee any right with respect to the Grantee’s Continuous
Service, nor shall it interfere in any way with his or her right or the
Corporation’s right to terminate the Grantee’s Continuous Service at any time,
with or without Cause, and with or without notice. The Corporation’s ability to
terminate the employment of a Grantee who is employed at will is in no way
affected by its determination that the Grantee’s Continuous Service has been
terminated for Cause for the purposes of this Plan.

 

16.           No Effect on Retirement and Other Benefit Plans.  Except as specifically provided in a
retirement or other benefit plan of the Corporation or a Related Entity, Awards
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Corporation or a Related Entity,
and shall not affect any benefits under any other benefit plan of any kind or
any benefit plan subsequently instituted under which the availability or amount
of benefits is related to level of compensation. The Plan is not a “Retirement
Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of
1974, as amended.

 

17.           Stockholder Approval.  The grant of Incentive Stock Options under
the Plan shall be subject to approval by the stockholders of the Corporation
within twelve (12) months before or after the date the Plan is adopted
excluding Incentive Stock Options issued in substitution for outstanding
Incentive Stock Options pursuant to Section 424(a) of the Code. Such
stockholder approval shall be obtained in the degree and manner required under
Applicable Laws. The Administrator may grant Incentive Stock Options under the
Plan prior to approval by the stockholders, but until such approval is
obtained, no such Incentive Stock Option shall be exercisable. In the event
that stockholder approval is not obtained within the twelve (12) month

 

15

 

period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.

 

16Exhibit
10.1

STOCK AND MEMBERSHIP INTEREST PURCHASE
AGREEMENT

by and among

Key Energy Services, LLC

and

L. Charles
Moncla, Jr., Moncla Family Partnership, Ltd., L. Charles Moncla, Jr. Charitable
Remainder Trust, Michael Moncla, Matthew Moncla, Marc Moncla, Christopher
Moncla, Bipin A. Pandya, Thomas Sandahl, Rhonda Moncla, Cain Moncla, Andrew
Moncla, Kenneth Rothstein, Moncla Well Service, Inc., Moncla Marine, L.L.C.,
Moncla Marine Operations, L.L.C., Moncla Marine Vessel No. 1, L.L.C., Moncla
Marine Vessel No. 2, L.L.C., Moncla Marine Vessel No. 3, L.L.C., Moncla Marine
Vessel No. 4, L.L.C., Moncla Marine Vessel No. 5, L.L.C., Moncla Marine Vessel
No. 6, L.L.C., Moncla Marine Vessel No. 8, L.L.C., Moncla Marine Vessel No. 9,
L.L.C., Moncla Marine Crew Boats, L.L.C., Brothers Oilfield Service &
Supply, L.L.C., 4M Equipment & Leasing, L.L.C., L C M Industries, L.L.C.,
Moncla Drilling, L.L.C.,

and Petroleum Well Service, Inc.

dated as of September 19, 2007

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I Purchase And Sale Of Stock And Membership
  Interests

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Purchase and Sale.

  	
   

  	
  2

  
	
  1.2

  	
   

  	
  Purchase Price.

  	
   

  	
  2

  
	
  1.3

  	
   

  	
  Post Closing Adjustment.

  	
   

  	
  4

  
	
  1.4

  	
   

  	
  Closing.

  	
   

  	
  5

  
	
  1.5

  	
   

  	
  Earnout.

  	
   

  	
  7

  
	
  1.6

  	
   

  	
  Allocation of Purchase Price.

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Business of the Companies.

  	
   

  	
  13

  
	
  2.2

  	
   

  	
  Existence and Power.

  	
   

  	
  14

  
	
  2.3

  	
   

  	
  Authorization.

  	
   

  	
  15

  
	
  2.4

  	
   

  	
  Non-Contravention.

  	
   

  	
  16

  
	
  2.5

  	
   

  	
  Subsidiaries.

  	
   

  	
  17

  
	
  2.6

  	
   

  	
  Related Entities.

  	
   

  	
  17

  
	
  2.7

  	
   

  	
  Financial Statements.

  	
   

  	
  17

  
	
  2.8

  	
   

  	
  Absence of Certain Changes.

  	
   

  	
  18

  
	
  2.9

  	
   

  	
  Properties.

  	
   

  	
  20

  
	
  2.10

  	
   

  	
  No Undisclosed Liabilities.

  	
   

  	
  21

  
	
  2.11

  	
   

  	
  Litigation.

  	
   

  	
  21

  
	
  2.12

  	
   

  	
  Insurance.

  	
   

  	
  22

  
	
  2.13

  	
   

  	
  Material Contracts.

  	
   

  	
  24

  
	
  2.14

  	
   

  	
  Licenses and Permits.

  	
   

  	
  26

  
	
  2.15

  	
   

  	
  Compliance with Laws; No Defaults.

  	
   

  	
  27

  
	
  2.16

  	
   

  	
  Receivables.

  	
   

  	
  27

  
	
  2.17

  	
   

  	
  Intellectual Property.

  	
   

  	
  28

  
	
  2.18

  	
   

  	
  Employees.

  	
   

  	
  29

  
	
  2.19

  	
   

  	
  Fees.

  	
   

  	
  30

  
	
  2.20

  	
   

  	
  Labor Matters.

  	
   

  	
  30

  
	
  2.21

  	
   

  	
  Capitalization.

  	
   

  	
  30

  
	
  2.22

  	
   

  	
  Other Information.

  	
   

  	
  32

  
	
  2.23

  	
   

  	
  Environmental Matters.

  	
   

  	
  32

  
	
  2.24

  	
   

  	
  409A.

  	
   

  	
  33

  
	
  2.25

  	
   

  	
  Accrued Vacation.

  	
   

  	
  33

  
	
  2.26

  	
   

  	
  Severance Obligations.

  	
   

  	
  33

  
	
  2.27

  	
   

  	
  Employment Contracts.

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Organization and Existence.

  	
   

  	
  33

  

 

 i
 

 

	
  3.2

  	
   

  	
  Corporate Authorization.

  	
   

  	
  33

  
	
  3.3

  	
   

  	
  Governmental Authorization.

  	
   

  	
  33

  
	
  3.4

  	
   

  	
  Non-Contravention.

  	
   

  	
  34

  
	
  3.5

  	
   

  	
  Fees.

  	
   

  	
  34

  
	
  3.6

  	
   

  	
  Financing.

  	
   

  	
  34

  
	
  3.7

  	
   

  	
  Litigation.

  	
   

  	
  34

  
	
  3.8

  	
   

  	
  Liberty and Lafayette Yards.

  	
   

  	
  34

  
	
  3.9

  	
   

  	
  Employees.

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV COVENANTS OF SELLERS

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Non-Competition; Non-Solicitation; Business
  Opportunities.

  	
   

  	
  35

  
	
  4.2

  	
   

  	
  Conduct of the Business.

  	
   

  	
  38

  
	
  4.3

  	
   

  	
  Access to Information.

  	
   

  	
  40

  
	
  4.4

  	
   

  	
  Notices of Certain Events.

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V COVENANTS OF PURCHASER

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Access.

  	
   

  	
  41

  
	
  5.2

  	
   

  	
  No Election Under Section 338.

  	
   

  	
  42

  
	
  5.3

  	
   

  	
  Confidentiality.

  	
   

  	
  42

  
	
  5.4

  	
   

  	
  Non-Solicitation.

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI COVENANTS OF SELLERS AND PURCHASER

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Best Efforts; Further Assurances.

  	
   

  	
  43

  
	
  6.2

  	
   

  	
  Certain Filings.

  	
   

  	
  44

  
	
  6.3

  	
   

  	
  Public Announcements.

  	
   

  	
  44

  
	
  6.4

  	
   

  	
  Notice of Developments.

  	
   

  	
  44

  
	
  6.5

  	
   

  	
  No Solicitation.

  	
   

  	
  45

  
	
  6.6

  	
   

  	
  Waivers.

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII TAX MATTERS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Tax Definitions.

  	
   

  	
  45

  
	
  7.2

  	
   

  	
  Tax Matters.

  	
   

  	
  46

  
	
  7.3

  	
   

  	
  Tax Cooperation: Allocation of Taxes.

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII EMPLOYEE BENEFITS

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Employee Benefits Definitions.

  	
   

  	
  49

  
	
  8.2

  	
   

  	
  Employee Matters.

  	
   

  	
  51

  
	
  8.3

  	
   

  	
  Employee Benefit Plans and Benefit Arrangements.

  	
   

  	
  54

  
	
  8.4

  	
   

  	
  No Third Party Beneficiaries.

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX CONDITIONS TO CLOSING

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Conditions to the Obligations of Each Party.

  	
   

  	
  56

  

 

 ii
 

 

	
  9.2

  	
   

  	
  Conditions and Obligations of Purchaser.

  	
   

  	
  57

  
	
  9.3

  	
   

  	
  Conditions to Obligations of Sellers.

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X SURVIVAL; INDEMNIFICATION

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Survival.

  	
   

  	
  59

  
	
  10.2

  	
   

  	
  Indemnification.

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI TERMINATION

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Grounds for Termination.

  	
   

  	
  62

  
	
  11.2

  	
   

  	
  Effect of Termination.

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII MISCELLANEOUS

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Notices.

  	
   

  	
  63

  
	
  12.2

  	
   

  	
  Amendments; No Waivers.

  	
   

  	
  64

  
	
  12.3

  	
   

  	
  Expenses.

  	
   

  	
  65

  
	
  12.4

  	
   

  	
  Successors and Assigns.

  	
   

  	
  65

  
	
  12.5

  	
   

  	
  Governing Law.

  	
   

  	
  65

  
	
  12.6

  	
   

  	
  Counterparts; Effectiveness.

  	
   

  	
  65

  
	
  12.7

  	
   

  	
  Entire Agreement.

  	
   

  	
  66

  
	
  12.8

  	
   

  	
  Captions.

  	
   

  	
  66

  
	
  12.9

  	
   

  	
  Severability.

  	
   

  	
  66

  
	
  12.10

  	
   

  	
  Certain Definitions.

  	
   

  	
  66

  
	
  12.11

  	
   

  	
  Offset.

  	
   

  	
  68

  
	
  12.12

  	
   

  	
  Payment Agent.

  	
   

  	
  68

  

 

 iii

STOCK AND MEMBERSHIP INTEREST PURCHASE
AGREEMENT

THIS
STOCK AND MEMBERSHIP INTEREST PURCHASE AGREEMENT is made and
entered into as of September        , 2007
by, between and among Key Energy Services, LLC, a Texas limited liability
company (hereinafter referred to as “Purchaser”),
and L. Charles Moncla, Jr. (“Moncla”),
Moncla Family Partnership, Ltd. (“Family Partnership”),
L. Charles Moncla, Jr., as Trustee of the L. Charles Moncla, Jr. Charitable
Remainder Trust, Michael Moncla, Matthew Moncla, Marc Moncla, Christopher
Moncla, Bipin A. Pandya, Thomas Sandahl, Rhonda Moncla, Cain Moncla, Andrew
Moncla, and Kenneth Rothstein (together with Moncla and Family Partnership
hereinafter collectively referred to as “Sellers”) and
Moncla Well Service, Inc. (“MWS”), Moncla
Marine, L.L.C. (“Moncla Marine”),
Moncla Marine Operations, L.L.C. (“Marine Operations”),
Moncla Marine Vessel No. 1, L.L.C. (“Marine No. 1”),
Moncla Marine Vessel No. 2, L.L.C. (“Marine No. 2”),
Moncla Marine Vessel No. 3, L.L.C. (“Marine No. 3”),
Moncla Marine Vessel No. 4, L.L.C. (“Marine No. 4”),
Moncla Marine Vessel No. 5, L.L.C. (“Marine No. 5”),
Moncla Marine Vessel No. 6, L.L.C. (“Marine No. 6”),
Moncla Marine Vessel No. 8, L.L.C. (“Marine No. 8”),
Moncla Marine Vessel No. 9, L.L.C. (“Marine No. 9”),
Moncla Marine Crew Boats, L.L.C. (“Marine Crew Boats”
and, together with Marine Operations, Marine No. 1, Marine No. 2, Marine No. 3,
Marine No. 4, Marine No. 5, Marine No. 6, Marine No. 8, and Marine No. 9, the “Marine Subsidiaries”), Brothers Oilfield Service &
Supply, L.L.C. (“Brothers”), 4M
Equipment & Leasing, L.L.C. (“4M”), L C M
Industries, L.L.C. (“L C M”), Moncla
Drilling, L.L.C. (“Drilling”), and
Petroleum Well Service, Inc. (“Well Service”).  MWS, Moncla Marine, Marine Subsidiaries, Brothers,
4M, L C M, Drilling, and Well Service are sometimes referred to as the “Companies” and each, individually, a “Company”.

 1
 

W I T N E S S E T H :

WHEREAS,
Sellers desire to sell and the Purchaser desires to purchase all of the
outstanding shares of capital stock of MWS remaining after the redemption
described in Section 1.1(A) (the “Shares”) and
all of the membership interests (the “Membership Interests”)
of the other Companies for the consideration and on the terms and conditions
set forth herein; and,

WHEREAS,
Purchaser and Sellers desire to enter into certain non-competition agreements
(the “Non-Competition Agreements”) as
provided in Section 4.1.

NOW,
THEREFORE, the parties hereto hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF STOCK AND MEMBERSHIP INTERESTS

1.1          Purchase
and Sale.

(A)          At
least one day prior to the closing of the transaction contemplated hereby
provided all conditions to closing have been satisfied, Moncla shall deliver to
MWS two (2) shares of common stock of MWS for cancellation in exchange for a
distribution from MWS of all of its rights, title and interest in and to the
assets described on Schedule 1.1(A) attached hereto.  MWS shall execute any and all bills of sale,
stock powers, conveyances, motor vehicle title transfers and the like in order
to properly and effectively convey title to the assets described on Schedule
1.1(A) to Moncla in accordance herewith.

(B)          Upon
the terms and subject to the conditions contained in this Agreement, Purchaser
shall purchase from Sellers and Sellers shall sell at the Closing all of the
Shares and all of the Membership Interests free and clear of any and all liens,
mortgages, encumbrances and security interests.

1.2          Purchase
Price.

The purchase price
(“Purchase Price”) for the Shares and
Membership Interests purchased by Purchaser shall be the sum of the following:

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(A)          an
initial Purchase Price to be paid at Closing equal to One Hundred Thirty-Four
Million Nine Hundred Thousand and No/100 Dollars ($134,900,000.00) (the “Initial Purchase Price”).  The Initial Purchase Price shall be allocated
among the Companies and then to the Sellers who are owners of the Companies,
all in accordance with the provisions of Schedule 1.2(C) hereto, as the same
may be amended and modified pursuant to the terms of this Agreement prior to
Closing. The Initial Purchase Price shall be payable at Closing as follows:

1.             Cash
in the amount of One Hundred Twelve Million Four Hundred Thousand and No/100
Dollars ($112,400,000.00) (“Cash at Closing”);

2.             Delivery
by Purchaser to the Sellers of a non-negotiable promissory note in the form of
Exhibit 1.2(A)2 hereto in the principal amount of Twelve Million Five Hundred
Thousand and No/100 Dollars ($12,500,000.00), endorsed by Key Energy Services,
Inc., payable in a single payment on the second (2d) anniversary of the Closing
Date, together with interest thereon at the Federal Funds rate adjusted
annually on the anniversary of the Closing Date and paid on the adjustment date
and at maturity (the “Two-Year Note”);
and

3.             Delivery
by Purchaser to the Sellers of a non-negotiable promissory note in the form of
Exhibit 1.2(A)3 hereto in the principal amount of Ten Million and No/100
Dollars ($10,000,000.00), endorsed by Key Energy Services, Inc., payable in
five (5) equal annual installments of Two Million and No/100 Dollars
($2,000,000.00) each, commencing on the first (1st) anniversary of the Closing, together
with interest thereon at the Federal Funds rate adjusted annually on each
anniversary of the Closing and payable on each principal payment date (the “Deferred Note,” and, together with the
Two-Year Note, the “Notes”); and

 3
 

(B)          an
earnout (“Earnout”) of Twenty-Five
Million and No/100 Dollars ($25,000,000.00), payable in accordance with the
provisions of Section 1.5.

(C)          The
Purchase Price shall be allocated between the Companies and then to the Sellers
of the Companies as set forth on Schedule 1.2(C).

1.3          Post
Closing Adjustment.

(A)          Within
sixty (60) days after the Closing Date, Purchaser shall provide Sellers balance
sheets of the Companies (the “Purchaser
Determinations”) which will constitute Purchaser’s determination of
Net Book Value of the Companies (without duplication in the case of
subsidiaries), computed in accordance with U.S. Generally Accepted Accounting
Principles (“GAAP”) effective as
of the Closing.  If within thirty days
following delivery of the Purchaser Determinations, Sellers have not given
Purchaser notice of an objection to the Purchaser Determinations (such notice
must contain a statement of the basis of Sellers’ objection), then the
calculations of Net Book Value of the Companies reflected in the Purchaser
Determinations will be final.  If Sellers
give notice of objection, then the issues in dispute will be submitted to Ernst
& Young, LLP, certified public accountants (the “Accountants”), for resolution. If issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish to the
Accountants such work papers and other documents and information relating to
the disputed issues as the Accountants may request and are available to that
party or its subsidiaries (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to
both parties by the Accountants, will be binding and conclusive on the parties;
and (iii) Purchaser and Sellers will each bear fifty percent (50%) of the fees
of the Accountants for such determination.

 4
 

(B)          In
the event Net Book Value is less than Thirty-Eight Million and No/100 Dollars
($38,000,000.00) the Purchase Price shall be reduced dollar for dollar by any
deficiency.  All payments will be made
together with interest at the Federal Funds rate beginning on the Closing and
ending on the date of payment. Payments must be made in immediately available
funds.  Payments to Purchaser must be
made by wire transfer to such bank account as Purchaser will specify.

1.4          Closing.

The closing (the “Closing”) shall take place at the offices of Liskow &
Lewis, A Professional Law Corporation, Lafayette, Louisiana, on a mutually
agreeable date (the “Closing Date”),
but not later than ten (10) days following satisfaction of all conditions to
Closing set forth in ARTICLE IX. 
Assuming the conditions set forth in ARTICLE IX shall have been
satisfied, the Closing shall be deemed effective as of the close of business of
the Companies on the date of the Closing. 
At the Closing:

(A)          Purchaser
shall deliver the Cash at Closing to Sellers by wire transfer or certified
funds, allocated among the Sellers in accordance with Schedule 1.2(C).

(B)          Purchaser
shall deliver to the Sellers the Notes.

(C)          Sellers
shall deliver to Purchaser: (i) Assignments and Bills of Sale substantially in
the form of Exhibit 1.4(C) hereto, selling and assigning all of the Shares and
the Membership Interests; (ii) all of the Shares with stock powers executed in
blank; and (iii) any certificates representing Membership Interests, in each
case, free and clear of all liens, mortgages, security interests and
encumbrances.

(D)          Purchaser
shall deliver in cash (by wire transfer or bank cashier’s check) to Sellers in
the aggregate amount of One Hundred Thousand and No/100 Dollars ($100,000.00)

 5
 

in full payment of the non-compete fee provided in this Section 1.4(D),
payable to Sellers in proportion to their shares of the Initial Purchase Price.

(E)           Sellers
shall deliver to Purchaser an opinion of counsel to Sellers in the form of
Exhibit 1.4(E) hereto.

(F)           Purchaser
shall deliver to Sellers an opinion of counsel to Purchaser in the form of
Exhibit 1.4(F) hereto.

(G)          Sellers
shall deliver to Purchaser a certificate in the form of Exhibit 1.4(G) hereto
representing that each of Sellers’ representations in Article II hereof was
accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the Closing.

(H)          Purchaser
shall deliver to Sellers a certificate in the form of Exhibit 1.4(H) hereto
representing that each of Purchaser’s representations in Article III hereof was
accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the Closing.

(I)            Sellers
shall deliver to Purchaser an updated list of names and annual compensation of
each employee, broken out among the Companies, as of the payroll date
immediately preceding the Closing Date, in form similar to Schedule 8.2(F)
hereto.

(J)           Sellers
shall deliver to Purchaser evidence of the authorization of this Agreement and
the Assignments and Bills of Sale by Moncla as trustee of the Trust and the
Moncla Management Trust, and by the Moncla Management Trust as General Partner
of Family Partnership.

(K)          The
presidents and all other officers of MWS and Well Service, and the managers and
other officers of each other Company shall deliver to Purchaser signed
resignations.

(L)           Purchaser
shall discharge outstanding debt of the Companies reflected on the Balance
Sheets or shall obtain the release of all personal guaranties of such debt.

 6
 

1.5          Earnout.

The Earnout shall
be paid over a five-year period contingent upon the Companies and Purchaser’s
Liberty, Texas and Lafayette, Louisiana yards (the “Earnout
Business”), combined, meeting the following revenue and EBITDA margins:

(A)          The
Earnout amount (“Earnout Amount”)
shall not exceed Twenty-Five Million and No/100 Dollars ($25,000,000.00) (the “Maximum Earnout Amount”), calculated as the
sum of:

1.             The
aggregate of the following amounts (the “Revenue
Earnout Amount”), based on the annual performance of the Earnout
Business as follows:

(a)           $2,500,000.00
if the Earnout Business achieves revenue of $160,000,000.00 for the year ended
September 30, 2008;

(b)           $2,500,000.00
if the Earnout Business achieves revenue of $165,000,000.00 for the year ended
September 30, 2009;

(c)           $2,500,000.00
if the Earnout Business achieves revenue of $170,000,000.00 for the year ended
September 30, 2010;

(d)           $2,500,000.00
if the Earnout Business achieves revenue of $170,000,000.00 for the year ended
September 30, 2011; and

(e)           $2,500,000.00
if the Earnout Business achieves revenue of $170,000,000.00 for the year ended
September 30, 2012.

The Revenue
Earnout Amount is independent of the EBITDA Earnout Amount (defined
below).  If the above revenue thresholds
are achieved for any year the Revenue Earnout Amount for such year will be due
regardless of whether the EBITDA Margin (defined below) for such year has been
achieved.

2.             The
aggregate of the following amounts (the “EBITDA
Earnout Amount”) based on the annual performance of the Earnout
Business as follows: Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00) for each year (years

 7
 

ended
September 30, 2008 through September 30, 2012) the Earnout Business achieves an
EBITDA Margin (defined below) of thirty-one percent (31%).

The EBITDA Earnout
Amount is independent of the Revenue Earnout Amount.  If an EBITDA Margin of thirty-one percent
(31%) is achieved for any year the EBITDA Earnout Amount for such year will be
due regardless of the level of revenue for such year.

3.             The
following amounts based on the cumulative performance of the Earnout Business
during the five years ended September 30, 2012, as follows:

(a)           If
the Earnout Business has not achieved any of the annual revenue thresholds
established in Section 1.5(A) above but the cumulative revenue of the Earnout
Business for the five years ended September 30, 2012, was Eight Hundred
Thirty-Five Million and No/100 Dollars ($835,000,000.00) or greater, Purchaser
shall pay an amount equal to Twelve Million Five Hundred Thousand and No/100
Dollars ($12,500,000.00) less the total Revenue Earnout Amount payments
previously paid to the Sellers.

(b)           If
the Earnout Business has not achieved an EBITDA margin of thirty-one percent
(31%) in any of the five years ending September 30, 2012 but the cumulative
EBITDA Margin of the Earnout Business for the five years ended September 30,
2012, was thirty-one percent (31%) or greater, Purchaser shall pay an amount
equal to Twelve Million Five Hundred Thousand and No/100 Dollars
($12,500,000.00) less the total EBITDA Earnout Amount payments previously paid
to the Sellers.

(B)          “EBITDA Margin” means EBITDA for a period
divided by revenue for the same period.  “EBITDA” means, for any period, an amount
equal to the sum of:

1.             net income
(calculated using GAAP; provided, that for purposes of this calculation
selling, general, and administrative expenses shall be eight and four-tenths
percent (8.4%) of revenue) and shall consist of those matters set forth on Schedule
1.5(B),

2.             interest
charges (interest expense net of interest income),

 8
 

3.             the amount
of taxes, based on or measured by income, used or included in the determination
of such net income, plus

4.             the amount
of depreciation and amortization expense deducted in determining such net
income.

(C)          Subject to
the terms and conditions of this Agreement, the Purchaser shall provide to the
Payment Agent (as defined below):

1.             Beginning
on November 30, 2008, and for each November 30th thereafter through November 30, 2012: (a) a
detailed written statement showing the calculation of the Revenue Earnout
Amount and the EBITDA Earnout Amount owing in respect of the immediately
preceding year ending September 30th,
and (b) a check or wire transfer representing payment of each of the Revenue
Earnout Amount and the EBITDA Earnout Amount owing in respect of the
immediately preceding year ended September 30th. 
Payment Agent shall be solely responsible for disbursing such amounts to
the Sellers.

2.             On
November 30, 2012, (a) a detailed written statement showing the calculation of
the cumulative Revenue Earnout Amount and the cumulative EBITDA Earnout Amount
each of which shall be calculated in accordance with Section 1.5(A)3, and (b) a
check or wire transfer representing payment of each of the Revenue Earnout
Amount and the EBITDA Earnout Amount owing in respect of the five (5) years
ending September 30, 2012. Payment Agent shall be solely responsible for
disbursing such amounts to the Sellers.

(D)          Purchaser
shall, immediately following Closing, establish either a separate reporting
unit or shall otherwise establish accounting provisions that would enable it to
compile the foregoing results for the Earnout Business.  Purchaser will record the results of
operations in

 9
 

such a manner as will permit the Revenue
Earnout Amount and the EBITDA Earnout Amount to be ascertainable.  Such reporting unit shall initially be
managed by employees of Purchaser who were previously employed by the Companies
(the “Key Employees”).  The Key Employees or their successors shall
manage the Earnout Business in compliance with the policies and practices of
the Purchaser and its Affiliates and as any other division of Purchaser and its
Affiliates.

(E)           Purchaser
shall support the Earnout Business as it does each other of its divisions.

(F)           Prior to the
Closing Date, Purchaser and Sellers shall negotiate in an attempt to establish
an employee retention plan, effective as of the Closing Date, for the benefit
of the Moncla Employees (defined below). 
The terms and conditions of the plan will be determined by Sellers and
Purchaser, taking into account tax, accounting, employee benefit and employment
laws, and would generally provide a set amount of Four Million Two Hundred
Thousand and No/100 Dollars ($4,200,000.00) (“Retention
Compensation”), to be paid by Purchaser.  While the final terms of the plan are subject
to negotiations between Purchaser and Sellers, their preliminary discussions
include the following points:

1.             Non-Exempt
Moncla Employees would receive their entire share of the Retention Compensation
as soon as administratively feasible after the Closing Date.

2.             Exempt
Moncla Employees whose share of the Retention Compensation is Six Thousand and
No/100 Dollars ($6,000.00) or less would receive their entire share of the
Retention Compensation as soon as administratively feasible after the Closing
Date.

 10
 

3.             Exempt
Moncla Employees whose share of the Retention Compensation is in excess of Six
Thousand and No/100 Dollars ($6,000.00) shall receive:

(a)           $6,000.00
as soon as administratively feasible after the Closing Date;

(b)           twenty-five
percent (25%) of the balance of such Moncla Employee’s share of the Retention
Compensation on the first (1st)
anniversary of the Closing Date;

(c)           an
additional twenty-five percent (25%) of the balance of such Moncla Employee’s
share of the Retention Compensation on the second (2nd) anniversary of the Closing Date; and

(d)           the
remaining fifty percent (50%) balance on the third (3rd) anniversary of the Closing Date.

4.             Any
Moncla Employee not employed by Purchaser on any such anniversary shall forfeit
the balance of such Moncla Employee’s share of the Retention Compensation
payable on such anniversary date or at any time thereafter, provided, however,
that certain of the Retention Compensation may be distributed to Moncla
Employees who are not employed on such anniversary dates due to involuntary
severance from employment under plan terms.

5.             Any
forfeited amounts of the Retention Compensation shall be allocated to and
distributed after the third anniversary of the Closing Date to those Moncla
Employees who are then employed by Purchaser as stated under plan terms.

In the event that Sellers and Purchasers are able to establish a
mutually acceptable plan the Initial Purchase Price otherwise payable to
Sellers of MWS shall be reduced by the portion of the Retention Compensation
paid as soon as administratively feasible after the Closing Date and by the
present value of future payments of the balance of the Retention Compensation,
based on a discount rate of 5%, in order to provide funding for such plan.

 11
 

(G)          Purchaser
shall make available Ten Million and No/100 Dollars ($10,000,000.00) of annual
capital investment to the Earnout Business, subject to investment return and
other requirements that the Purchaser uses with its other divisions.

(H)          Sellers
acknowledge and accept that Purchaser may re-name the Earnout Business or any
part or product thereof, and may generally change any part of the branding or
marketing strategy or altogether re-brand or re-market the Earnout Business, or
any part or product thereof, in each case at such time and in such manner and
to such extent (and with or without notice to any Party) as the Purchaser may
determine in its sole discretion.

(I)            Sellers
acknowledge and accept that any obligation of the Purchaser provided for in
this Section 1.5 may be performed or satisfied by one or more affiliates of the
Purchaser, provided that such acknowledgement and acceptance does not release
or discharge the Purchaser from that obligation.

(J)           In the event
of a dispute respecting the Revenue Earnout Amount or the EBITDA Earnout Amount
or the amount of interest thereon to be paid for a particular year, Sellers
shall notify Purchaser within twenty (20) days after receipt, furnishing
Purchaser with the reasons for the disagreement.  If the parties have not resolved their
disagreements within twenty (20) days after said notice, Sellers and Purchaser
shall submit the calculation to the Accountants for resolution.  If issues in dispute are submitted to the
Accountants for resolution, (i) each party will furnish to the Accountants such
work papers and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party or its
Subsidiaries (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the

 12
 

parties; and (iii) Purchaser and Sellers will
each bear fifty percent (50%) of the fees of the Accountants for such
determination.

1.6          Allocation
of Purchase Price.

(A)          Sellers and
Purchaser recognize that although Membership Interests are being sold, the
transactions contemplated hereby are applicable asset acquisitions and forms
8594 will be prepared and timely filed with respect to them.

(B)          The Purchase
Price allocable to each Company shall be allocated to each Company’s assets and
goodwill in accordance with a third-party appraisal that Purchaser shall obtain
between the date hereof and the Closing Date and in accordance with relevant tax
and accounting guidelines. Purchaser shall provide a draft of such allocation
(the “Asset Allocation”) to the
Sellers at least five (5) Business Days prior to Closing.  Sellers and Purchaser shall meet before
Closing to discuss the draft Asset Allocation and Purchaser shall consider any
requests by Sellers for modifications to the draft Asset Allocation; however,
the Asset Allocation delivered at Closing by Purchaser shall be as determined
by Purchaser, but shall be in accordance with relevant tax and accounting
guidelines.  The parties agree to use the
Asset Allocation for purposes of each form 8594 and in connection with the
application of section 751(a) of the Internal Revenue Code to the contemplated
transactions.

ARTICLE
II

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers
herewith represent and warrant to Purchaser as of the date hereof and as of the
Closing Date (unless another date is expressly set forth below) that:

2.1          Business of the Companies.

The business (the “Business”) of each Company is:

 13
 

MWS:
Oil and gas well drilling, completion, maintenance, workover, well servicing
and equipment transportation business and the performance of ancillary
activities thereto, including oilfield equipment rentals.

Moncla
Marine: Ownership and operation (directly or through the
Marine Subsidiaries) of inland barge workover rigs that provide well
completion, maintenance, workover and other well service activities along the
U. S. Gulf Coast.

Brothers:
Ownership and operation of trucks and related equipment that provide swabbing,
anchor, tubing testing and related services for various well site applications,
and the rental of power swivels.

Drilling:
Ownership of pumps and related equipment and operation of rigs used to provide
drilling services.

4M:
Ownership and leasing of well service rigs and related equipment to MWS and
Moncla Marine.

L C M:
Ownership and rental of real estate to MWS.

The phrase “in the ordinary course” for a particular company means in
the course of performing any one or more of the activities enumerated for such
company, consistent with past practices of such company in the ordinary course
of normal day to day operations.

2.2          Existence
and Power.

(A)          MWS is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana, and MWS has all corporate powers and all
governmental licenses, permits, authorizations, consents and approvals required
to carry on its Business as now conducted. 
MWS is duly qualified to conduct business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary.  Sellers have heretofore

 14
 

delivered to Purchaser true and complete
copies of MWS’ Articles of Incorporation and By-Laws as currently in effect.

(B)          Well Service
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Texas, and Well Service has all corporate powers and
all governmental licenses, permits, authorizations, consents and approvals
required to carry on its Business as now conducted.  Well Service is duly qualified to conduct
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities make such qualification necessary. 
Sellers have heretofore delivered to Purchaser true and complete copies
of Well Service’s Articles of Incorporation and By-Laws as currently in effect.

(C)          Each other
Company is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Louisiana, and each such Company
has all powers and all governmental licenses, permits, authorizations, consents
and approvals required to carry on its Business as now conducted.  Each such Company is duly qualified to
conduct business as a foreign limited liability company and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities make such qualification necessary.  Sellers have heretofore delivered to
Purchaser true and complete copies of each such Company’s Articles of
Organization and Operating Agreement as currently in effect.

2.3          Authorization.

(A)          The execution,
delivery and performance by Sellers of this Agreement and the consummation by
Sellers of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, except as may be required under 15 U.S.C. § 18a.

 15

(B)          Sellers
have all requisite power and authority to execute and deliver this Agreement
and to perform their obligations hereunder and to consummate the transactions
contemplated hereby.  The execution and
delivery of this Agreement by the Sellers and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action, and no other action on the part of the Sellers is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly executed and
delivered by the Sellers and constitutes the valid and legally binding
obligation of the Sellers enforceable against the Sellers in accordance with
its terms.

2.4          Non-Contravention.

The execution, delivery and performance by Sellers of this Agreement
and the consummation by Sellers of the transactions contemplated hereby do not
and will not:

1.             contravene
or conflict with the Articles of Incorporation and By-Laws of MWS or the
Articles of Organization or Operating Agreement of each other Company (other
than any right of first refusal in favor of any Company and some or all
Sellers, in each case, which shall be waived at Closing),

2.             contravene
or conflict with or constitute a violation of any provision of law, regulation,
judgment, injunction, order or decree binding upon or applicable to Sellers or
the Companies, or

3.             except
as disclosed in Schedule 2.4, require any consent, approval or other action by
any person or constitute a default under any obligation of Sellers or the
Companies under any provision of any contract or other instrument binding upon
Sellers or the Companies other than contracts and obligations that will be
terminated and fully discharged at the Closing and other than contracts which
provide that they may be

 16
 

cancelled
unilaterally upon notice to Sellers or the Companies, without penalty or
economic consequences adverse to the Companies.

2.5          Subsidiaries.

No Company owns,
directly or indirectly, any capital stock, equity interest or other ownership
interest in any Company, partnership, association, joint venture, limited
liability company or other entity except that 4M owns sixty-four percent (64%)
of the Membership Interests of Drilling, MWS owns one hundred percent (100%) of
the outstanding shares of Well Service, and Moncla Marine owns one hundred
percent (100%) of the Membership Interests of Marine Subsidiaries.

2.6          Related
Entities.

Except as set
forth on Schedule 2.6, no Seller owns an interest in any non-publicly traded
entity other than the Companies, or five percent (5%) of any publicly-traded
entity.  Schedule 2.6 contains a full
description of the businesses of such entities and a description of any
business any entity conducts with any Business.

2.7          Financial
Statements.

The balance sheet
of each Company for the year ended December 31, 2006 (such date referred to
herein as the “Balance Sheet Date” and such
balance sheet the “Balance Sheet”),
and the related statements of income for the year ended December 31, 2006
(collectively, the “Financial Statements”),
have been previously delivered to Purchaser. 
The Financial Statements were prepared in accordance with GAAP applied
on a consistent basis.  The Financial
Statements fairly present the financial position of each Company as of the date
thereof and its results of operations for the period then ended.  The unaudited balance sheet and income
statement as of and for the four (4) months ended April 30, 2007 (the “Interim Financial Statements”), attached hereto as Schedule
2.7 were prepared in accordance with

 17
 

GAAP
applied on a consistent basis and fairly present in all respects the financial
position of each Company as of the date thereof and the results of operations
for the periods then ended, subject to the following qualifications:

(A)          Many
accruals of expense are not made until year end, e.g., profit sharing
contributions, performance bonuses, safety awards;

(B)          Purchase
commitments not booked;

(C)          Write
offs of accounts receivable not done until year end;

(D)          Depreciation
schedules are incomplete until year end.

2.8          Absence of Certain Changes.

Since the Balance
Sheet Date to the date hereof, each Company has conducted its Business in the
ordinary course consistent with past practice and, except as set forth in
Schedule 2.8 or permitted under the Agreement, there has not been:

(A)          Any event,
occurrence, development or state of circumstances or facts which has had an
adverse effect on any Company;

(B)          Any
incurrence, assumption or guarantee of any indebtedness for borrowed money or
any purchase money obligation or other debt or liability, other than draws upon
existing lines of credit in the maximum amount of Seven Million Two Hundred
Thousand and No/100 Dollars ($7,200,000.00) in accordance with ordinary course
consistent with past practice;

(C)          Any creation
or other incurrence of any Lien (as defined in Section 2.9) on any asset of any
Company, except for Permitted Liens;

(D)          Any making of
any loan, advance or capital contributions to or investment in any person;

 18
 

(E)           Any damage,
destruction or other casualty loss affecting any of the assets of any Company;

(F)           Any
transaction or commitment made, or any contract or agreement entered into, by
any Company relating to its assets or its Business or any relinquishment of any
contract or other right, other than transactions and commitments (including
acquisitions and dispositions of equipment) in the ordinary course of the
Business of such Company consistent with past practice;

(G)          Any general
or specific increase in the salary or other compensation (including, without
limitation, bonuses, profit sharing, deferred compensation or other employee
benefits) payable or to become payable to any employees of the Companies,
except in the ordinary course of the Business consistent with past practice and
then only with respect to employees who are not Sellers;

(H)          Any labor
dispute other than routine individual grievances, any activity or proceeding by
a labor union or representative thereof to organize any employees of the
Companies,  or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any employees of the Companies;

(I)            Any
declaration, setting aside or payment of dividends on the Shares or
distributions, other than for personal income taxes, in respect of Membership
Interests in cash or in the form of assets, or any redemption, purchase or
other acquisition of any other securities of the Companies.  Such distributions by the Companies other
than MWS and Well Service, are calculated at forty percent (40%) of the
estimated federal taxable income of those Companies from August 1, 2007 through
the Closing Date.

(J)           Any
amendment to the Articles of Incorporation, By-Laws, Articles of Organization,
Operating Agreement or other organizational documents;

 19
 

(K)          Any change in
its tax or accounting methods, principles or practices other than as required
by GAAP; or

(L)           Any
agreement or understanding entered into to do any of the foregoing.

2.9          Properties.

(A)          The Companies
have good and marketable title to, or in the case of leased property, valid
leasehold interests in, all property and assets (whether real or personal,
tangible or intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since the Balance
Sheet Date in the ordinary course of business consistent with past practice.

(B)          Schedule
2.9(B) is a full, true and correct description of all real (immovable) property
owned or leased (as a lessee) by any Company, and whether such property is
owned or leased.

(C)          Schedule
2.9(C) is a full, true, and correct description of all personal (movable)
property owned or leased by any Company, describes the location of such
property, identifies the owner or lessee and lessor of such property.

(D)          None of such
properties or assets is subject to any liens, mortgages, security interests or
other encumbrances (herein “Liens”)
except:

1.             Liens
disclosed on the Balance Sheet;

2.             Liens
for taxes not yet due or being contested in good faith (and for which adequate
accruals or reserves have been established on the Balance Sheet);

3.             Liens
disclosed in Schedule 2.9(D) or which will be discharged at the Closing;

4.             Liens
in favor of vendors and lessors incurred in the ordinary course of the
Business.

 20
 

Clauses (1)
through (4) are collectively, referred to herein as “Permitted
Liens”.

(E)           Except as
set forth on Schedule 2.9(E), or reflected on the Interim Financial Statements,
to the knowledge of Sellers, there are no developments affecting any of such
properties or assets pending or threatened which could detract from the value
of such property or assets, interfere with any present or intended use of any
such property or assets or affect the marketability of such properties or
assets.

(F)           Schedule
2.9(F) contains a schedule of all leases of real and personal property with
respect to which any Company is a lessee or a lessor and which provide for
rentals in excess of Twenty-Five Thousand and No/100 Dollars ($25,000.00) per
annum, identifies the terms of the lease, the property affected by the lease,
and the name of the Company that is a lessor or lessee. Each such lease is
valid, binding and enforceable against the lessor and lessee in accordance with
its terms and there does not exist under any such lease any default or any
event which with notice or lapse of time or both would constitute a default.

2.10        No Undisclosed Liabilities.

Except as
disclosed on Schedule 2.10, as of July 31, 2007, there are no liabilities of
the Companies of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and to the best of Sellers’ knowledge,
there is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than liabilities
disclosed or provided for in the July 31, 2007 Financial Statements attached as
Schedule 2.10.

2.11        Litigation.

Except as set
forth in Schedule 2.11, as of the date hereof there is no action, suit,
investigation or proceeding (or any basis therefore) pending against, or to the
knowledge of Sellers threatened against or affecting, Sellers, the Companies or
any of their or its properties

 21
 

before
any court or arbitrator or any governmental body, agency, official or
authority, which, individually or in the aggregate, if determined or resolved
adversely to Sellers or the Companies in accordance with the plaintiff’s
demands, would reasonably be expected to result in a judgment in excess of
Twenty-Five Thousand and No/100 Dollars ($25,000.00), or which in any manner
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement.

2.12        Insurance.

(A)          Sellers have
heretofore provided true and correct copies of all insurance policies to which
any Company is a party currently, or under which any director of any Company is
covered.  Schedule 2.12(A) consists of:

1.             a
list of all policies of insurance to which any Company is a party or under
which any Company, or any director of any Company, is or has been covered at
any time within the five (5) years preceding the date of this Agreement;

2.             true
and complete copies of all pending applications for policies of insurance; and

3.             any
statement by the auditor of any Company’s financial statements with regard to
the inadequacy of such entity’s coverage or of the reserves for claims.

(B)          Schedule
2.12(B) describes:

1.             other
than the policies listed in 2.12(A) above, any self-insurance arrangement by or
affecting any Company, including any reserves established thereunder;

2.             any
contract or arrangement, other than a policy of insurance, for the transfer or
sharing of any risk by any Company; and

 22
 

3.             all
obligations of the Companies to third parties with respect to insurance
(including such obligations under leases and service agreements) and identifies
the policy under which such coverage is provided.

(C)          Schedule
2.12(C) sets forth, by year, for the current policy year and each of the five
preceding policy years:

1.             a
summary of the loss experience under each policy;

2.             a
statement describing each claim under an insurance policy for an amount in
excess of Twenty-Five Thousand and No/100 Dollars ($25,000.00) which sets
forth:

(a)           the
name of the claimant;

(b)           a
description of the policy by insurer, type of insurance, and period of
coverage; and

(c)           the
amount and a brief description of the claim; and

3.             a
statement describing the loss experience for all claims that were self-insured,
including the number and aggregate cost of such claims.

(D)          Except as set
forth on Schedule 2.12(D):

1.             All
policies to which any Company is a party or that provide coverage to any
Seller, any Company, or any director or officer of a Company:

(a)           are
valid, outstanding, and enforceable;

(b)           are
issued by an insurer that is financially sound and reputable;

(c)           taken
together, provide adequate insurance coverage for the assets and the operations
of the Companies for all risks to which the Companies are normally exposed;

(d)           are
sufficient for compliance with all legal requirements and contracts to which
any Company is a party or by which any of them is bound;

(e)           will
continue in full force and effect following the consummation of the
transactions; and

 23
 

(f)            do
not provide for any retrospective premium adjustment or other experienced-based
liability on the part of any Company.

2.             No
Seller or Company has received (a) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (b) any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder.

3.             The
Companies have paid all premiums due, and have otherwise performed all of their
respective obligations, under each policy to which any Company is a party or
that provides coverage to any Company or director thereof.

4.             The
Companies have given notice to the insurer of all claims that may be insured
thereby.

5.             Except
as disclosed on Schedule 2.12(D)5, as of the date hereof there is no claim by
any Company pending under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies

2.13         Material Contracts.

(A)          Except as
disclosed in Schedule 2.13(A) and elsewhere in this Agreement, as of the date
hereof the Companies are not a party to or subject to.

1.             Any
lease of real or immovable property, whether as lessor or lessee;

2.             Any
lease of personal or movable property as lessor or lessee, other than equipment
leased from third parties and sublet to customers in the ordinary course of the
Business;

 24
 

3.             Any
contract for the purchase of materials, supplies, goods, services, equipment or
other assets, other than contracts which do not require payments in excess of
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) individually;

4.             Any
sales, distribution or other similar agreement providing for the sale by the
Companies of materials, supplies, goods, services, equipment or other assets,
other than to customers in the ordinary course of the Business;

5.             Any
partnership, joint venture or other similar contract, arrangement or agreement;

6.             Any
contract relating to indebtedness for borrowed money (whether incurred,
assumed, guaranteed or secured by any asset);

7.             Any
license, franchise or similar agreement;

8.             Any
agency, dealer, sales representative or other similar agreement;

9.             Any
contract or commitment that limits the freedom of the Companies to compete in
any line of business or with any person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose of or encumber any asset or which
would so limit the freedom of the Companies after the Closing;

10.          Any
consulting agreement;

11.          Any
contract relating to any guaranty or indemnity issued by the Companies;

12.          Any
agreement relating to the acquisition or disposition of any part of the
Business;

13.          Any
other contract or commitment not made in the ordinary course of the Business
consistent with past practice or any other contract or commitment which

 25
 

involves consideration individually in excess of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00);

14.          Any
agreement under which the Companies have advanced or loaned any amount of money
to any director, officer or employee;

15.          Any
contract relating to employment, severance or similar arrangements; or

16.          Any
leases or other contracts with respect to the furnishing of rental tools or
other items of equipment to customers which, individually or in the aggregate
involve more than five percent (5%) of the value of all pipe, rental tools and
equipment owned by the Companies.

17.          Any
master service agreement or similar agreement providing terms and conditions
for providing well services to the top twenty customers of the Companies for
the first six months of 2007, based upon billings to such customers.

(B)          Each contract
to which any Company is a party is a valid and binding agreement of such
Company, and, to the knowledge of Sellers, as of the date hereof is in full
force and effect, and neither the Companies nor, to the knowledge of Sellers, any
other party thereto is in default or breach in any respect under the terms of
any such contract, nor, to the knowledge of Sellers, has any event or
circumstance occurred that, with notice or lapse of time or both, would
constitute any such default or breach.

2.14        Licenses and Permits.

Schedule 2.14
correctly describes each governmental license, permit, authorization, consent
or approval affecting, or relating in any way to, any Company and its business,
together with the name of the governmental agency or entity issuing such
license or permit (the “Permits”).  Except as set forth on Schedule 2.14, such
Permits are valid and in full

 26
 

force
and effect and will not be terminated or impaired or become terminable as a
result of the transactions contemplated hereby.

2.15        Compliance with Laws; No Defaults.

(A)          The Companies
are not in violation of, to Sellers’ knowledge have not since January 1, 2004,
violated, and to Sellers’ knowledge are not under investigation with respect to
or have not been threatened to be charged with or given notice of any violation
of, any law, rules, ordinances or regulations, judgments, injunctions, orders
or decrees binding upon or applicable to the Company, except for any violations
set forth in Schedule 2.15(A).

(B)          The Companies
are not in default under, and no condition exists that with notice or lapse of
time or both would constitute a default under any contract or other instrument
binding upon any Company or affecting or relating to its business or any
license, authorization, permit, consent or approval held by any Company or
affecting or relating to its business, except as otherwise disclosed in
Schedule 2.15(B).

2.16        Receivables.

(A)          All accounts,
notes and other receivables (other than receivables collected since December
31, 2006, or written off and not reflected on the April 30, 2007 balance sheet)
reflected on the Balance Sheet are, and all accounts, notes and other
receivables arising out of or otherwise relating to the Companies’ Business as
of the Closing will be, valid, binding and enforceable, subject to applicable
laws governing bankruptcy, moratorium or creditors’ rights generally which may
prevent their enforcement and have arisen only from bona fide transactions
entered into in the ordinary course of the Business.  All accounts, notes and other receivables
arising out of or otherwise relating to the Business at the date of the Interim
Financial Statements (other than those previously written off) have been
included in the Interim Financial Statements, and all accounts, notes and other
receivables arising out of or otherwise relating to the Business

 27
 

at the Closing Date will be reflected in the
Interim Financial Statements (net of allowance for doubtful accounts).  Schedule 2.16(A) contains an accurate aging
of all accounts, notes and other receivables and bad debt write offs by the
Companies for the period January 1, 2007 through April 30, 2007.

(B)          Sellers
herewith represent and guarantee the collectibility of the accounts receivable
reflected as outstanding in the Interim Financial Statements (net of allowance
for doubtful accounts).  To the extent
any of these receivables are not collected within one hundred twenty (120) days
following the Closing, Moncla shall repurchase them from Purchaser at book
value as reflected in the Interim Financial Statements and Sellers will
thereafter have the right to collect them.

(C)          Schedule
2.16(A) lists the accounts receivable which have been written off by the
Companies at April 30, 2007, and will be transferred to PWSC, L.L.C. at or
before the Closing and it will be allowed to pursue collection of them.

2.17        Intellectual Property.

(A)          Schedule
2.17(A) sets forth as of April 30, 2007, a list of all intellectual property
rights (herein “Intellectual Property Rights”)
used or held for use or otherwise necessary in connection with the conduct of
the Business, specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual Property Right
and if Seller is not the owner, the rights held by the Companies; (iii) the
jurisdictions by or in which such Intellectual Property Right is recognized,
issued or registered or in which an application for such issuance or
registration has been filed, including the respective registration or application
numbers; and (iv) licenses, sublicenses and other agreements as to which the
Companies are a party and pursuant to which any person is authorized to use
such Intellectual

 28
 

Property Right, including the identity of all
parties thereto, a description of the nature and subject matter thereof, the
applicable royalty and the term thereof.

(B)          Except as set
forth in Schedule 2.17(B), the Companies have not since December 31, 2006, been
sued or charged in writing with or been a defendant in any claim, suit, action
or proceeding relating to its business that has not been finally terminated
prior to the date hereof and that involves a claim of infringement by the
Companies of any intellectual property rights of any other person, and (ii) the
Companies have no knowledge of any basis for any such claim of infringement,
and no knowledge of any continuing infringement by any other person of any
intellectual property rights used or held for use or otherwise necessary in
connection with the conduct of the Business. 
No such intellectual property right is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by the
Companies or restricting the licensing thereof by the Companies to any Person.  The Companies have not entered into any
agreement to indemnify any other person against any charge of infringement of
any intellectual property rights.

(C)          As used
herein, the term “Intellectual Property
Rights” means any trade name, trademark, service name, service mark,
copyright, invention, patent, trade secret, know-how (including any
registrations or applications for registration of any of the foregoing) or any
other similar type of proprietary intellectual property right.

2.18        Employees.

Schedule 2.18
identifies all of the Companies’ Managers, officers and key employees as of
April 30, 2007.  None of such key
employees has indicated to the Companies that he or she intends to resign or
retire as a result of the transactions contemplated by this Agreement, except
as set forth on Schedule 2.18 hereto.

 29
 

2.19        Fees.

No investment
banker, broker, financial advisor, finder or other intermediary who might be
entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement has been retained by or authorized to act on
behalf of Sellers, other than Simmons & Company, International.

2.20        Labor Matters.

The Companies are
in compliance with all currently applicable laws respecting employment and
employment practices (including terms and conditions of employment, wages and
hours) and are not engaged in any unfair labor practice, the failure to comply
with which or engagement in which, as the case may be, would reasonably be
expected to have an adverse effect on the Business.  There is no unfair labor practice complaint
pending or, to the knowledge of Sellers, threatened against any Company before
the National Labor Relations Board or before any other state or local board,
agency or tribunal.

2.21        Capitalization.

(A)          The entire
authorized capital stock of MWS consist of ten thousand (10,000) shares of
common stock, no par value (“Common Stock”),
of which one thousand, ninety-eight (1,098) shares will be issued and
outstanding following completion of the transaction described in Section 1.1(A)
above.  All of the issued and outstanding
shares of Common Stock have been duly authorized and are validly issued, fully
paid and non-assessable.

(B)          Except for
the right of first refusal in favor of MWS and the shareholders contained in
Article VIII of the Articles of Incorporation of MWS (as amended) and the
By-Laws of MWS and the right of first refusal in favor of the Companies and the
Members which may be contained in the Operating Agreement or each Company (as
amended):

 30

1.             All
outstanding Membership Interests and Shares are owned by the Sellers, and are
free and clear of any security interests, options, warrants, calls, purchase
rights, conversion rights, exchange rights, trusts, voting trusts or other
contracts or commitments relating to any Membership Interest, the Shares of or
other security of the Companies (other than this Agreement);

2.             There
are no outstanding or authorized options, warrants, purchase rights, conversion
rights, exchange rights, trusts, voting trusts or other contracts or
commitments that could require the Companies to issue, sell or otherwise cause
to become outstanding any of its Shares and Membership Interests;

3.             There
are no outstanding or authorized stock appreciation, phantom membership interest,
profit participation or similar rights with respect to the Companies’ Shares
and Membership Interests; and

4.             There
are no voting trusts, proxies or other agreements or understandings with
respect to the voting of the Companies’ Shares and Membership Interests.

(C)          The
holders of the Shares and Membership Interests are set forth on Schedule
2.21(C) hereto.

All of the
Membership Interests and Shares registered in the names of the above persons
may be conveyed by them without the consent of any person, other than consents
of the Companies and the other Shareholders and Members which are waivable by
them at or prior to the Closing Date.

 31
 

2.22        Other
Information.

None of the
documents or information delivered to Purchaser in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
fact or omits to state a fact necessary in order to make the statements
contained therein not misleading.

2.23        Environmental
Matters.

Except for matters
disclosed in Schedule 2.23 hereto, neither Sellers nor the Companies have
received any written or oral notice and nothing has come to their attention to
the effect that: (a) the properties, operations and activities of the Companies
are not in compliance with all applicable Environmental Laws (as defined in
Section 12.10 hereof); (b) the Companies and the properties and operations of
the Companies are subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or governmental
authority under any Environmental Law; (c) all Permits, if any, required to be
obtained or filed by the Companies under any Environmental Law in connection
with the business of the Companies have not been obtained or filed and any
required Permits are not valid and currently in full force and effect; (d)
there has been any release of any hazardous substance, pollutant or contaminant
into the environment by the Companies in connection with its properties or
operations; and (e) there has been any exposure of any person or property to
any hazardous substance, pollutant or contaminant in connection with the
properties, operations and activities of the Companies.  The Companies have made available to the
Purchaser all internal and external environmental audits and studies and all
correspondence on substantial environmental matters (in each case relevant to
the Companies) in the possession of the Companies or the Sellers.

 32
 

2.24        409A.

No employee of any
Company has a right to receive additional compensation based on the Purchase
Price for the sale of such Company.

2.25        Accrued
Vacation.

Except as set
forth on Schedule 2.25, no employee of any Company has any accrued vacation
time or leave.

2.26        Severance
Obligations.

No Company has any
severance or similar plan for any employee.

2.27        Employment
Contracts.

No Company has any
employment contract or agreement with any employee.

ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser
represents and warrants to Sellers that:

3.1          Organization
and Existence.

Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Texas and is qualified to do business in Louisiana.

3.2          Corporate
Authorization.

The execution,
delivery and performance by Purchaser of this Agreement and the consummation by
Purchaser of the transactions contemplated hereby or thereby have been duly
authorized by all necessary corporate action on the part of Purchaser.  This Agreement constitutes a valid and
binding agreement of Purchaser.

3.3          Governmental
Authorization.

The execution,
delivery and performance by Purchaser of this Agreement requires no action by
or in respect of, or filing with, any governmental body, agency, official or
authority, except as may be required by 15 U.S.C. § 18a.

 33
 

3.4          Non-Contravention.

The execution,
delivery and performance by Purchaser of this Agreement does not and will not
(i) contravene or conflict with the Articles of Organization or By-Laws of
Purchaser, or (ii) assuming compliance with the matters referred to in Section
3.3, contravene or conflict with any provision of any law, regulation,
judgment, injunction, order or decree binding upon Purchaser.

3.5          Fees.

There is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of Purchaser who might be entitled to any
fee or commission from Sellers upon consummation of the transactions
contemplated by this Agreement.

3.6          Financing.

Purchaser will
have on the Closing Date sufficient funds available to purchase the Shares and
Membership Interests and to satisfy the condition of Section 1.4(L).

3.7          Litigation.

There is no
action, suit, investigation or proceeding pending against, or to the knowledge
of Purchaser threatened against or affecting, Purchaser before any court or
arbitrator or any governmental body, agency or official which in any matter
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated hereby.

3.8          Liberty
and Lafayette Yards.

Purchaser has
provided Sellers with a list of equipment in Purchaser’s Liberty and Lafayette
yards and with copies of Purchaser’s financial statements for the years for
2006 and the first half of 2007 for such yards prepared in accordance with
GAAP.  At Closing, Purchaser will
contribute such yards to the Earnout Business.

 34
 

3.9          Employees.

Purchaser has no
present intention to terminate any current employee of the Companies who is
able to meet Purchaser’s pre-employment qualifications.

ARTICLE
IV

COVENANTS OF SELLERS

4.1          Non-Competition;
Non-Solicitation; Business Opportunities.

(A)          In
recognition of, among other things, the nature and scope of the business and
goodwill of the Companies all of the remaining Shares and Membership Interests
of which are being acquired by Purchaser, the substantial impairment of value
to Purchaser if Sellers were to compete with Purchaser, the consideration being
paid for this covenant and the reasonable restrictions and limitations imposed
hereby, Sellers agree that from the Closing Date until the second anniversary
of the Closing Date in the case of Sellers who do not become Key Affiliate
Employees, and until the second anniversary of the termination of employment,
for whatever reason, for those Sellers who do become Key Affiliate Employees,
Sellers shall not:

1.             Enter
into any competitive endeavors, nor undertake any commercial activity, which
competes with the Business which were conducted by the Companies immediately
prior to the Closing Date and which the Companies continue to conduct within
the following Parishes in the State of Louisiana: Acadia, Allen, Ascension,
Assumption, Avoyelles, East Baton Rouge, Beauregard, Bossier, Caddo, Calcasieu,
Cameron, Evangeline, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette,
Lafourche, Orleans, Ouachita, Plaquemines, Pointe Coupee, Rapides, St. Bernard,
St. Charles, St. Landry, St. Martin, St. Mary, St. Tammany, Tangipahoa,
Terrebonne, and Vermilion, which are all of the parishes in Louisiana in which
the Companies are currently doing business, and, to the extent enforceable
under the laws of the following

 35
 

states (the
laws of which are herewith adopted as governing for this purpose), the States
of Texas, Mississippi, Alabama and Florida (the “Geographic Area”), including, without limitation: (i)
drilling, completing or reworking, maintaining and servicing oil, gas or other
mineral wells and all activities related thereto, including, but not limited to
site preparation and waste disposal; (ii) leasing, renting, providing or
seeking to lease, or rent equipment of types provided by the Companies
immediately prior to the Closing Date which compete with any goods or services
leased, rented or provided by the Companies; and (iii) being an owner (except
for passive investments of not more than one percent (1%) of the outstanding
Membership Interests of, or any other equity interest in, any company or entity
listed or traded on a national securities exchange or in an over-the-counter
securities market), agent or representative of any person in the Geographic
Area which directly competes with any line or lines of business of the
Companies which were conducted by the Companies immediately prior to the
Closing Date; or

2.             Solicit
customers of the Business within the Geographic Area for the purpose of selling
or providing any service described in sub-paragraph 1 above.

3.             Employ
or solicit, or receive or accept the performance of services by any employee of
the Companies or encourage or induce any such person to terminate his or her
employment with the Companies for the purpose of employing him in the
Geographic Area.

Notwithstanding
the foregoing, Sellers may continue to own their Shares and Membership
Interests in Location Supply & Specialty, Inc., PWSC, L.L.C. and LM
Industries, L.L.C.

 36
 

(B)          The
consideration for this Agreement by Sellers is the payment by Purchaser of the
sum of One Hundred Thousand and No/100 Dollars ($100,000.00) cash to Sellers on
the Closing Date in proportion to their shares of Cash at Closing.

(C)          The
Sellers acknowledge that the covenants contained in this Agreement are made
ancillary to the sale of the Shares and Membership Interests by the Sellers,
are reasonably necessary to protect the Business, and the trade secrets and
goodwill thereof, being acquired by Purchaser, and do not impose an undue or
unreasonable hardship upon the Sellers. 
The Sellers acknowledge further that Purchaser considers the covenants
contained herein to be fundamental conditions for the consummation of the
transactions contemplated by this Agreement, and that Purchaser would not consummate
such transactions in the absence of such covenants.

(D)          In
the event of a breach by any Seller of the provisions of this Section 4.1,
Purchaser may, but shall not be required to, offset that Seller’s portion of
the unpaid portion of the Earnout by the amount of actual damages sustained by
Purchaser as a result thereof, first, before seeking payment from that Seller.

(E)          Purchaser
and the Sellers each agree that it is their intention that if any portion of
this Agreement is found by a court of competent jurisdiction to be
unenforceable, including, without limitation, as to the duration, geographic
area or scope of activities covered by the covenants contained herein, this
Agreement shall be reformed by the court to give Purchaser the maximum protection
permitted by law and, as reformed, shall be agreed to by the parties and
enforced by the court prospectively.  If
any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, and shall not be reformed as
set forth in the immediately preceding sentence, such provision shall be of no
force or effect, but

 37
 

the illegality and unenforceability of such provision shall have no
effect upon and shall not impair the enforceability of any other provision of
this Agreement.

4.2          Conduct
of the Business.

From the date
hereof until the Closing Date, Sellers shall cause the Companies to conduct the
Business in the ordinary course consistent with past practice and use the
Companies’ best efforts to preserve intact its business organization and
relationships with third parties and to keep available the services of its
present officers and employees.  Without
limiting the generality of the foregoing, from the date hereof until the
Closing Date, without the prior written consent of Purchaser, Sellers shall not
cause the Companies to:

(A)          Merge
or consolidate with any other person or acquire the assets of any other person,
other than pipe, tools and equipment purchased in the ordinary course of the
Business;

(B)          Sell,
lease, license or otherwise dispose of any assets except (1) pursuant to
existing contracts or commitments, and (2) in the ordinary course of the
Business consistent with past practices;

(C)          Amend
its Articles of Organization, bylaws or other organizational documents;

(D)          Issue,
deliver, sell, pledge or otherwise encumber any Membership Interests or any
securities convertible into, or exchangeable or exercisable for, Membership
Interests;

(E)          Except
for borrowings under existing credit facilities in the ordinary course of
business, (1) incur any obligation for borrowed money or purchase money
indebtedness, or (2) make any loan, advance, guarantee, capital contribution or
investment in any person;

 38
 

(F)           Make
any change in its accounting methods, principles or practices other than as
required by GAAP;

(G)          Waive
the benefits of, or agree to modify, any confidentiality, standstill or similar
agreement;

(H)          Except
for changes made in the ordinary course of business not involving Sellers or
officers or key employees of the Companies, increase or otherwise modify
(except as contemplated by this Agreement) the compensation of their employees,
including salaries, bonus or other employee benefits, or severance payments or
obligations, or enter into or modify the terms of any employment, severance or
collective bargaining agreement;

(I)            Except
as elsewhere disclosed in this Agreement, and except for existing commitments
and capital expenditures as may be necessary to perform obligations under
existing contracts or maintain the assets in the event of damage thereto, and
except as provided in Schedule 4.2(I) hereto make any capital expenditure other
than in the ordinary course of the Business or in an amount in excess of Two
Million and No/100 Dollars ($2,000,000.00);

(J)           Adopt
or amend any employee benefit plan or other compensation arrangement,
including, without limitation, any Employee Plan and Benefit Arrangement,
except as otherwise provided under Section 8.3 hereof;

(K)          Take
or agree or commit to take any action that would make any representation and
warranty of Sellers hereunder inaccurate in any respect at, or as of any time
prior to, the Closing Date or omit or agree to commit or omit to take any
action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time; or

(L)           Agree
or commit to do any of the foregoing.

 39
 

4.3          Access
to Information.

Sellers will:

(A)
give Purchaser, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and records
of the Companies;

(B)
furnish to Purchaser, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to the Companies as such persons may reasonably request;
and

(C)
instruct its employees, counsel and financial advisors to cooperate with
Purchaser in its investigation of the Companies; provided, however,
Purchaser shall utilize the minimum number of personnel as will not interfere
with the conduct of the Companies’ business and shall utilize them only at the
times the Companies are open for business. 
No investigation by Purchaser or other information received by Purchaser
shall operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Sellers hereunder.

4.4          Notices
of Certain Events.

Sellers shall
promptly notify Purchaser of:

(A)          Any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions contemplated
by this Agreement;

(B)          Any
notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement;

(C)          Any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
the Companies or the Business that, if pending on the date of this Agreement,
would have been required to have

 40
 

been disclosed pursuant to ARTICLE II hereto or that relate to the
consummation of the transactions contemplated by this Agreement;

(D)          any
fact or condition that would constitute a breach of any representation of
ARTICLE II hereto as of the date of this Agreement, or, if any Seller becomes
aware of the occurrence, after the date of this Agreement, of any fact or
condition that would constitute a breach of any representation, had such
representation been made, as of the time of such occurrence or as of the
discovery of such fact or condition; or

(E)           the
occurrence of a breach of any covenant of this ARTICLE IV.

ARTICLE V

COVENANTS OF PURCHASER

Purchaser
agrees that:

5.1          Access.

On and after the
Closing Date, Purchaser will afford promptly to Sellers and their agents
reasonable access to the Companies’ properties, books, records, employees and
auditors to the extent necessary to permit Sellers to determine any matter
relating to their rights and obligations hereunder and Sellers’ federal and
state income and other tax liabilities with respect to any period ending on or
before the Closing Date and shall maintain them for a period of five (5) years
following the Closing or for such longer period as any audit (private, tax or
other governmental) of those documents is continuing; provided that any such
access by Sellers shall not unreasonably interfere with the conduct of the
Business of the Companies or Purchaser. 
Sellers will hold, and will use their best efforts to cause their
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning Purchaser or the Business provided to them
pursuant to this Section 5.1.

 41
 

5.2          No
Election Under Section 338.

Purchaser shall
not cause nor shall MWS make or file any election under any provision of
section 338, including section 338(h)(10), of the Code with respect to the
transactions contemplated by this Agreement.

5.3          Confidentiality.

Prior to the
Closing Date and for a period of three (3) years after any termination of this
Agreement without Closing, Purchaser will hold, and will use its best efforts
to cause its respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all confidential documents and information (including, without limitation,
confidential commercial information and information with respect to customers
and proprietary systems, technologies or processes) concerning the Business or
which the Companies or Sellers furnished to Purchaser in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a
non-confidential basis by Purchaser, (ii) in the public domain through no fault
of Purchaser or (iii) later lawfully acquired by Purchaser from sources other
than the Companies or Sellers; provided, that Purchaser may disclose such
information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such persons are informed by
Purchaser of the confidential nature of such information and are directed by
Purchaser to treat such information confidentially.  This obligation shall be satisfied if
Purchaser exercises the same reasonable and customary care, in light of the
industry and its past practices, with respect to such information as it would
take to preserve the confidentiality of its own confidential information.  If this Agreement is terminated without
Closing, Purchaser will, and will use its best efforts to

 42
 

cause
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents to, destroy or deliver to Sellers, upon request, all documents and
other materials, and all copies thereof, obtained by Purchaser or on their
behalf from Sellers or the Companies in connection with this Agreement that are
subject to such confidence.  If this
Agreement is not terminated and Closing occurs, Purchaser agrees that it will
retain all documents and other materials obtained by Purchaser from Sellers or
the Companies in connection with this Agreement and the transactions
contemplated hereby for a reasonable and customary period of time and will not
destroy any material documents during such period without first providing
Sellers with the opportunity of making copies thereof.

5.4          Non-Solicitation.

Prior to the
Closing Date and for a period of three (3) years after termination of this
Agreement without Closing, Purchaser shall not solicit for hire, as an employee
or independent contractor, any current employee of the Companies who comes to
Purchaser’s attention as a result of its evaluation of the Companies, or
otherwise, without the Companies’ consent except in the case of employees who
respond to general solicitations or advertisements of Purchaser that are not
directed in particular to such employees.

ARTICLE
VI

COVENANTS OF SELLERS AND PURCHASER

Sellers
and Purchaser hereto agree that:

6.1          Best
Efforts; Further Assurances.

Subject to the
terms and conditions of this Agreement, each of Sellers and Purchaser will use
their and its best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary or desirable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement.  Sellers and Purchaser each
agree

 43
 

to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by
this Agreement, but without expanding the obligations and responsibilities of
any party hereunder.

6.2          Certain
Filings.

Sellers and
Purchaser shall cooperate with one another (a) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any contracts, in
connection with the consummation of the transactions contemplated by this
Agreement, including the filing of all notices under 15 U.S.C. § 18a, and
(b) in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.

6.3          Public
Announcements.

The parties agree
to consult with each other before issuing any press release or making any
public statement with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law, will not issue any
such press release or make any such public statement prior to such
consultation.

6.4          Notice
of Developments.

Each party to this
Agreement will give prompt written notice to the other of any adverse
development causing a breach of any of its representations and warranties under
this Agreement, except for accidents or occurrences which may give rise to
liabilities of the Companies but with respect to which Sellers reasonably believe
will be covered by insurance.

 44
 

6.5          No
Solicitation.

From and after the
date of this Agreement until the termination of this Agreement in accordance
with its terms, neither any Company, any Seller nor any officer, director,
employee, agent or representative of any Company shall, directly or indirectly,
solicit or encourage, including by way of furnishing information, the
initiation of any inquiries or proposals regarding, or engage in or continue
any discussions or enter into any agreements regarding, any merger, tender
offer, sale of Stock or Membership Interests or similar business combination
transactions involving any or all of the Business, or any sale of all or
substantially all the assets of the Business, other than in connection with the
transaction with Purchaser contemplated herein.

6.6          Waivers.

Sellers shall
waive, and shall cause each Company to waive, all rights of first refusal that
may exist in connection with the consummation of the transactions provided for
herein.

ARTICLE
VII

TAX MATTERS

7.1          Tax
Definitions.

The following
terms, as used herein, have the following meanings:

“Pre-Closing Taxable Period” means all or a portion of (i)
any taxable period up to and including the Closing Date or (ii) any taxable
period with respect to which the Tax is computed by reference to Tax Items,
assets, capital or operations of the Companies arising on or before, or
existing as of, the Closing Date.

“Post-Closing Taxable Period” means all or a portion of (i)
any taxable period after the Closing Date or (ii) any taxable period with
respect to which the Tax is computed by 

 45
 

reference
to Tax Items, assets, capital or operations of the Companies arising after, or
existing subsequent to, the Closing Date.

“Tax” means: (i) any net income, alternative or add-on minimum,
gross income, gross receipts, sales, use, lease, ad valorem, franchise, margin,
capital, paid-up capital, profits, greenmail, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such tax
(a “Taxing Authority”), and (ii) any
liability to any person (including any applicable Taxing Authority) in respect
of any tax included in Clause (i) above by reason of Treasury  Regulation section 1.1502-6 (or any similar provision of
state, local or foreign law as a transferee or successor, by contract or
otherwise), regardless of whether or not shown as due and payable on a Tax
Return.

7.2          Tax
Matters.

Sellers hereby
represent and warrant to Purchaser as of the date hereof and as of the Closing
Date that, except as provided in Schedule 7.2 hereto:

(A)          The
Companies have paid or accrued for all taxes of the Companies attributable to
any Pre-Closing Tax Period.

(B)          (i)
All returns and reports (“Tax Returns”)
of or with respect to any Tax which is required to be filed on or before  the Closing Date by or with respect to the
Companies have been or will be duly and timely filed; (ii) all items of income,
gain, loss, deduction and credit or other items required to be included in each
such Tax Return have been or will be so included and all information provided
in each such Tax Return is true, correct and complete in all respects; (iii)
all Taxes which have become or will become due with respect to the period

 46
 

covered by each such Tax Return have been or will be timely paid in
full; (iv) all withholding Tax requirements imposed on or with respect to the
Companies have been or will be satisfied in full; and (v) no penalty, interest
or other charge is or will become due with respect to the late filing of any
such Tax Return or late payment of any such Tax.

(C)          No
Seller or director or officer (or employee responsible for Tax) of any of the
Companies expects any authority to assess any additional Taxes for any period
for which Tax Returns have been filed. 
There is no foreign, federal, state or local Tax dispute or claim
concerning any Tax Liability of MWS or any of the Companies either (i) claimed
or raised by any authority in writing; (ii) pursuant to a request for
information related to Tax Matters; (iii) pursuant to a notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or accessed by
any taxing authority; or (iv) as to which any of the Sellers and the directors
and officers (and employees responsible for Tax) of the Companies has knowledge
based upon personal contact with any agent of such authority.

(D)          There
is not in force any extension of time with respect to the due date for the
filing of any Tax Return of or with respect to the Companies, or any waiver or
agreement for any extension of time for the assessment or payment of any Tax of
or with respect to the Companies.

(E)           The
total amounts set up as liabilities for current and deferred Taxes in the
Balance Sheet are sufficient to cover the payment of all Taxes, whether or not
assessed or disputed, which are, or are hereafter found to be, or to have been,
due by or with respect to the Companies up to and through the periods covered
thereby.

(F)           There
are no Tax allocation or sharing agreements affecting the Companies.

 47
 

(G)          Neither
MWS nor any of the Companies will be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any: (i)
change in the method of accounting for a taxable period ending on or prior to
the Closing Date; (ii) “closing agreement” as described in Code section 7121
(or any corresponding or similar provision of state, local or foreign income
Tax law) executed on or prior to the Closing Date; (iii) intercompany
transaction or excess loss account described in Treasury Regulations under Code
section 1502 (or any corresponding or similar provision of state, local or
foreign income Tax law); (iv) installment sale or open transaction disposition
made on or prior to the Closing Date; or (v) prepaid amount received on or
prior to the Closing Date.

(H)          With
the exception of MWS and Well Service, each of the Companies has been treated
as a valid partnership or disregarded entity for Tax purposes.

(I)            No
claim has ever been made by an authority in a jurisdiction where any of the
Companies does not file Tax Returns that any of the Companies are or may be
subject to taxation by that jurisdiction.

(J)           There
are no Liens for Taxes upon any of the assets of the Companies.

(K)          The
Companies have disclosed on their federal income Tax Returns all positions
taken herein that could give rise to a substantial understatement of federal
income Tax within the meaning of section 6662 of the Code.

(L)           None
of the Companies have made any payments, is obligated to make any payment, or
is a party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under federal, state, or local
Tax law, other than tickets for sporting events and entertainment.

 48

(M)          None
of the Companies has been a United States real property holding corporation
within the meaning of Code section 897(c)(2) during the applicable period
specified in Code section 897(c)(1)(A)(ii).

7.3          Tax
Cooperation: Allocation of Taxes.

(A)          Purchaser
and Sellers agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information and assistance relating
to the Companies, the non-compete covenant described in Section 4.1 hereinabove
and the Business as is reasonably necessary for the filing of all tax returns,
and making of any election related to taxes, the preparation for any audit by
any taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any tax return. 
Sellers and Purchaser shall cooperate with each other in the conduct of
any audit or other proceeding related to taxes involving the Business and each
shall execute and deliver such powers of attorney and other documents as are
reasonably necessary to carry out the intent of this Section 7.3(A).

(B)          Any
transfer, documentary, sales, use or other taxes arising in connection with the
transactions contemplated by this Agreement and any recording or filing fees
with respect thereto (each, a “Transfer Tax”)
shall be the responsibility of Purchaser.

ARTICLE
VIII

EMPLOYEE BENEFITS

8.1          Employee
Benefits Definitions.

The following
terms, as used herein, shall have the following meanings:

“Benefit Arrangement” means any employment, consulting,
severance or similar contract or memorandum of understanding, or any other
contract, plan, policy or arrangement (whether or not written) providing for
compensation, bonus, supplemental income, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), 

 49
 

health
or medical benefits, disability benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) that (i) is not an Employee Plan; (ii) is sponsored, maintained,
administered or contributed to, or has been so sponsored, maintained,
administered or contributed to within six years prior to the Closing Date, as
the case may be, by the Companies or any ERISA Affiliate; and (iii) covers any
employee, director, consultant or former employee, director or consultant of
the Companies or any ERISA Affiliate.

“Employee Plan” means any “employee benefit plan” as defined
in section 3(3) of ERISA, that (i) is maintained, administered, sponsored or
contributed to, or has been so maintained, administered, sponsored or
contributed to within six years prior to the Closing Date, by the Companies or
any ERISA Affiliate, and (ii) covers an employee or former employee of the
Companies or any ERISA Affiliate.

“ERISA” means the Employee Retirement Income Security Act or
1974, as amended.

“ERISA Affiliate” means any other entity, trade or business
which, together with the Companies, would be treated as a single employer under
section 414 of the Code or section 4001 of ERISA.

“Moncla Employees” mean the individuals who are both employed
by the Companies as of the date of Closing and employed by the Purchaser or any
of its affiliates immediately after Closing, such affiliates specifically to
include the Companies after their purchase by Purchaser.

“Multi-Employer Plan” means each Employee Plan that is a
multi-employer plan, as defined in section 3(37) of ERISA.

 50
 

“PBGC” means the Pension Benefit Guaranty Company.

“Profit Sharing Plan” means the Companies’ Profit-Sharing
Plan and Trust.

“Title IV Plan” means an Employee Plan, other than any
Multi-Employer Plan, subject to Title IV of ERISA.

8.2          Employee Matters.

The Sellers hereby
represent and warrant to Purchaser as of the date hereof and the Closing Date:

(A)                               Schedule 8.2(A)
hereto provides a list of each Employee Plan and each Benefit Arrangement and
true, correct and complete copies of each of the Employee Plans and Benefit
Arrangements, related trusts, and all amendments thereto have been furnished to
Purchaser.  There has also been furnished
to Purchaser, with respect to each Employee Plan required to file such report
and description, the most recent report on Form 5500 and the summary plan
description.  No Employee Plan is a Title
IV Plan or a Multi-Employer Plan.  No
Employee Plan is funded by a trust that is intended to be exempt from federal
income taxation pursuant to section 501(c)(9) of the Code.  The Profit Sharing Plan is the only Employee
Plan that is intended to be qualified under section 401(a) of the Code.

(B)                               Except as otherwise
reported in Section 8.3(A) below:

1.             The
Companies and the ERISA Affiliates have performed all obligations, whether
arising by operation of law or by contract, required to be performed by them in
connection with the Employee Plans and the Benefit Arrangements, and, to the
best knowledge of the Companies there have been no defaults or violations by any
other party to the Employee Plans or Benefit Arrangements;

 51
 

2.             Each
Employee Plan and each Benefit Arrangement has been administered and operated
in compliance with its governing documents and applicable law (including, where
applicable, ERISA and the Code);

3.             To
the knowledge of the Companies the Profit Sharing Plan satisfies the
requirements of section 401 of the Code;

4.             There
are no actions, suits or claims pending (other than routine claims for
benefits) or threatened against, or with respect to, any of the Employee Plans
or Benefit Arrangements or their assets, and there is no matter pending with
respect to any of the Employee Plans or Benefit Arrangements before any
governmental agency or authority;

5.             All
contributions required to be made to the Employee Plans and Benefit
Arrangements pursuant to their terms and provisions have been made timely;

6.             There
has been no termination or partial termination of the Profit Sharing Plan
within the meaning of section 411(d)(3) of the Code;

7.             No
act, omission or transaction has occurred which would result in imposition on
the Companies or any ERISA Affiliate of (a) breach of fiduciary duty liability
damages under section 409 of ERISA; (b) a civil penalty assessed pursuant to
subsections (c), (i) or (1) of section 502 of ERISA; or (c) a tax imposed
pursuant to chapter 43 of subtitle D of the Code;

8.             The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (a) require the Companies or any
ERISA Affiliate to make a larger contribution to, or pay greater benefits
under, any Employee Plan or Benefit Arrangement than it otherwise would, or

 52
 

(b) create or give rise to any additional vested rights or service
credits under any Employee Plan or Benefit Arrangement.

(C)          Neither the
Companies nor any ERISA Affiliate is a party to any agreement, nor have the
Companies or any ERISA Affiliate established any policy or practice, requiring
it to make a payment or provide any other form of compensation or benefit to
any person performing services for such entity upon termination of such
services which would not be payable or provided in the absence of the
consummation of the transactions contemplated by this Agreement.

(D)          In connection
with the consummation of the transactions contemplated by this Agreement, no
payments have or will be made hereunder or under the Employee Plans or Benefit
Arrangements which, in the aggregate, would result in imposition of the
sanctions imposed under sections 280G and 4999 of the Code.

(E)           Each
Employee Plan and Benefit Arrangement may be unilaterally amended or terminated
in its entirety without liability except as to benefits accrued thereunder
prior to such amendment or termination.

(F)           Schedule
8.2(F) hereto sets forth the name and annual compensation of each salaried
employee, and the hourly rate and year-to-date compensation through the most
recent pay period of each non-salaried employee of the Companies or an ERISA
Affiliate as of the date of this Agreement, and none of said employees are
subject to union or collective bargaining agreements with the Companies or an
ERISA Affiliate.  Except as otherwise set
forth in Schedule 8.2(F) neither the Companies nor any ERISA Affiliate has at
any time within five years preceding the date of this Agreement had or been
threatened with any work stoppages or other labor disputes or controversies
with respect to its employees.

 53
 

(G)          Except for
the individuals identified on Schedule 8.2(G) hereto, no individual is
receiving continuation coverage under any Employee Plan or Benefit Arrangement
pursuant to the continuation of coverage provisions contained in section 4980B
of the Code, sections 601 through 608 of ERISA, or applicable state laws.

8.3          Employee Benefit Plans and
Benefit  Arrangements.

(A)          Section 8.3(A)1.
shall apply to the Employee Plan that is the Profit Sharing Plan, Section
8.3(A)2. shall apply to Employee Plans and Benefit Arrangements other than the
Profit Sharing Plan, and Section 8.3(A)3. shall apply to the actions agreed to
in Sections 8.3(A)1. and 8.3(A)2. herein.

1.             Profit
Sharing:

(a)           Sellers
agree to cause the Companies to make a submission to, and request a Compliance
Statement from, the Voluntary Compliance Program under the Employee Plans
Compliance Resolution System (EPCRS) for approval of corrections made to
correct operational and form errors relating to the failure to operate the plan
as a multiple employer plan from 2002 to date. 
Correction will involve both Plan amendments and correction of Code
Section 401(a)(4) nondiscrimination testing Operational Failures.  Correction shall also involve corrections of
any additional Profit Sharing Plan failures as may be discovered prior to, or
during, the submission process.

(b)           Sellers agree to
cause the Companies to submit the Profit Sharing Plan to the Internal Revenue
Service for a determination letter as to its qualified status under Internal
Revenue Code section 401(a) upon plan termination (Form 5310).  The plan will be terminated on or
before the Closing Date.

(c)           With regard to the
VCP and IRS determination letter request: (a) the targeted VCP and
determination letter submission date is November 15, 2007, and Purchaser will
be promptly notified if the Sellers determine that the submissions will be
delayed; (b) the Sellers shall cause the Companies to use best efforts to
obtain a  Compliance Statement and
favorable determination letter; (c) in connection with the submissions, the
Companies shall use the legal services of Jones, Walker, Waechter, Poitevent,
Carrère & Denègre, L.L.P. and the plan administration services of Flower
& Associates, Inc., and/or such other advisors as selected by Sellers; and
(d) in connection with the submissions, the employees working on each
submission shall be those employees of the Companies as designated by
Sellers.  Sellers agree to provide

 54
 

progress
and status reports to Purchaser on a monthly basis, or between such reporting
periods in the event of a material occurrence.

(d)           Distributions to
Participants that are made on account of Profit Sharing Plan termination shall
not be available until the IRS favorable determination letter on plan
termination and the VCP Compliance Statement have both been received.

(e)           Sellers agree to
cause the Profit Sharing Plan Form 5500s for years 2002 through 2006 to be amended
to report the filing for a multiple employer plan and copies of the amended
filings will be provided to Purchaser; the filing of the amended reports shall
occur prior to Closing.

2.             Welfare
Benefit Plans – Sellers agree to cause the following actions to occur, with (a)
and (b) occurring prior to Closing and (c) occurring by the applicable filing
deadline

(a)           Forms M-1 –
Reports for Multiple Employer Welfare Arrangements will be filed for the
medical plans and copies will be provided to Purchaser.

(b)           The Companies’
Cafeteria Plan will be amended to reflect participation by Moncla
Marine, L.L.C. and Brothers Oilfield Service & Supply, L.L.C.. The plan
will be terminated on or before the Closing Date.

(c)           The
Companies will file a 2006 Form 5500 for the Medical Benefit Plan (provided
through Blue Cross and Blue Shield of Louisiana).

3.             The Companies
agree that all fees, expenses and costs relating to actions above, and through
the receipt of the Compliance Statement and favorable determination letter, any
additional amendments required, the costs of any additional plan contributions
and all other corrective actions shall be the sole obligation of, and borne in
full by, the Sellers.  Notwithstanding,
all fees, expenses and costs relating to the above actions incurred by the
Purchaser, including employee costs and professional fees, if any, from Liskow
& Lewis, PLC or any other professional firm, shall be the sole
responsibility of the Purchaser.

(B)          Effective as of the day after the Closing
Date, or as soon thereafter as practicable, Purchaser shall cause each Moncla
Employee, if and to the extent eligible, to be

 55
 

provided with coverage under
Purchaser’s 401(k) profit sharing plan and welfare benefit plans on the same
terms and conditions as other Purchaser employees, but with the following
exceptions: the 401(k) profit sharing plan age and service requirements shall
be waived; any welfare benefit plan waiting period requirements shall be
waived; and service with the Companies prior to Closing Date shall be credited
for 401(k) profit sharing plan vesting purposes.

8.4          No Third Party Beneficiaries.

No provision of
this Agreement shall create any third party beneficiary or other rights in any
employee or former employee (including any beneficiary or dependent thereof) of
the Companies in respect of continued employment (or resumed employment) with
either the Companies or Purchaser or with respect to payment of any Retention
Compensation and no provision of this Agreement shall create any such rights in
any such persons in respect of any benefits that may be provided, directly or
indirectly, under any Employee Plan or Benefit Arrangement or any plan or
arrangement which may be maintained or established by the Companies or
Purchaser on or after the Closing Date or any Retention Compensation Plan.  No provision of this Agreement shall
constitute a limitation on rights to amend, modify or terminate after the
Closing Date any such plans or arrangements of the Companies or Purchaser.

ARTICLE
IX

CONDITIONS TO CLOSING

9.1          Conditions to the Obligations of
Each Party.

The obligations of
Purchaser and Sellers to consummate the Closing are subject to the
satisfaction, or waiver by both parties, of the following conditions:

(A)          No provision
of any applicable law or regulation and no judgment, injunction, order or
decree shall (1) prohibit the consummation of the Closing, or (2) restrain,

 56
 

prohibit or otherwise interfere with the
effective operation or enjoyment by Purchaser of the Shares and Membership
Interests.

(B)          All actions by
or in respect of or filings with any governmental body, agency, official or
authority required to permit the consummation of the Closing, and all third
party consents necessary in connection with the consummation of the Closing,
shall have been obtained and the applicable waiting period after the filing
pursuant to 15 U.S.C. § 18a has expired without intervention by the United
States to prevent consummation of these transactions.

9.2          Conditions and Obligations of
Purchaser.

The obligation of
Purchaser to consummate the Closing is subject to the satisfaction of the
following further conditions:

(A)          (1) Sellers
shall have completed the requirements of Section 8.3 hereof; (2) Sellers shall
have performed in all respects all of its obligations hereunder required to be
performed by them at or prior to the Closing Date; (3) the representations and
warranties of Sellers contained in this Agreement and in any certificate or
other writing delivered by Sellers pursuant thereto, disregarding all
qualifications and exceptions contained therein relating to materiality, shall
be true at and as of the Closing Date as if made as of that date; and (4)
Purchaser shall have received a certificate signed by the Sellers to the
foregoing effect, but with any modifications to the attached schedules, to the
extent required by subsequent events, made therein.

(B)          No proceeding
challenging this Agreement or the transactions contemplated hereby or seeking
to prohibit, alter, prevent or delay the Closing shall have been instituted by
any person before any court, arbitrator or governmental body, agency or
official nor shall they be pending.

 57
 

(C)          Purchaser
shall have received certificates of the Louisiana Secretary of State relating
to the existence of and good standing of the Companies.

(D)          There shall
have not occurred any events or developments, individually or in the aggregate,
resulting in a Material Adverse Effect with respect to the Companies.

(E)           All
applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Act shall have expired or otherwise been terminated.

(F)           MWS shall
have redeemed two (2) shares from Moncla as set forth in Section 1.1(A) hereto.

(G)          All waivers
of applicable rights of first refusal by the Companies and the Sellers have
been obtained to permit consummation of the transactions contemplated herein.

(H)          Sellers shall
deliver to Purchaser a certificate with supporting reports satisfactory to
Purchaser that shall document that the Companies, combined (without
duplication, in the case of subsidiaries) have, as of the Closing Date a net
book value of at least  Thirty-Eight
Million Three Hundred Thousand and No/100 Dollars ($38,300,000.00), net working
capital (current assets less current liabilities, excluding current maturities
of long-term debt) of at least Three Million Nine Hundred Ten Thousand and
No/100 Dollars ($3,910,000.00) remaining after the distribution referenced in
Section 2.8(I), and long term liabilities (inclusive of long term debt and
deferred income and other taxes) of no more than Fourteen Million Eight Hundred
Seventy Thousand and No/100 Dollars ($14,870,000.00).

(I)            Purchaser
shall have received Phase I reports and any recommended follow-up reports as to
all immovable property of any Company and none of such reports shall identify
any conditions unacceptable to Purchaser in its sole discretion.

 58
 

9.3          Conditions to Obligations of
Sellers.

The obligation of
Sellers to consummate the Closing is subject to the satisfaction of the
following further conditions:

(A)          (1) Purchaser
shall have performed in all respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date, and (2) the
representations and warranties of Purchaser contained in this Agreement and in
any certificate or other writing delivered by Purchaser pursuant hereto shall
be true in all respects at and as of the Closing Date, as if made at and as of
such date.

(B)          Sellers shall
have received all documents they may reasonably request relating to the
existence of Purchaser and the authority of Purchaser to execute and consummate
this Agreement, all in form and substance reasonably satisfactory to Seller.

(C)          The
transaction contemplated herein and its consummation has been approved by all
necessary corporate action on behalf of Purchaser.

(D)          Purchaser
shall have delivered a certificate to the effect that each of the conditions
specified in this Section 9.3 is satisfied in all respects.

ARTICLE X

SURVIVAL; INDEMNIFICATION

10.1        Survival.

The
representations and warranties of the parties hereto contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive the Closing and shall expire: (A) eighteen
(18) months after the Closing, as to all representations, warranties and
covenants other than those for which a longer period is specified in Section
10.1 (B) through 10.1 (E); (B) the later of the third (3rd) anniversary of the Closing
and thirty (30) days after the expiration of the applicable statute of
limitations, as to all representations, warranties and covenants contained in
Section 2.23; (C) thirty (30) days after the

 59
 

expiration
of the statute of limitations with respect to assessment and collection of
Taxes, as to all representations, warranties and covenants contained in Article
VII; (D); thirty-six (36) months from the closing of the Profit Sharing Plan
trust and from the closing of the Cafeteria Plan as to representations and
warranties and covenants contained in Article VIII pertaining to them; and (E)
those contained in Sections 2.2, 2.9(A) and 2.21 hereto shall not expire.

10.2        Indemnification.

(A)          Sellers hereby
indemnify Purchaser and all of Purchaser’s affiliates (including, after the
Closing, the Companies) and all of their respective officers, directors, employees
and shareholders (hereinafter collectively, “Indemnified
Parties” and individually, an “Indemnified
Party”) against and agree to defend and hold them harmless from and
against any and all damages (including incidental and consequential
damages), loss, liabilities, expenses, assessments, claims, actions, suits,
proceedings, employee benefit claims, taxes, penalties, interest, awards,
judgments and settlements (including without limitation, reasonable fees and
expenses of investigation and establishing any such losses and reasonable  attorneys’ fees and expenses)  (collectively, “Loss”) incurred or suffered by any Indemnified Party arising
out of or resulting from (a) any breach of any representation or warranty,
covenant or agreement made or to be performed by any Seller pursuant to this
Agreement: (b) any action, inaction, event, condition, liability or
obligation of any Seller or any Company or any ERISA Affiliate occurring or
existing prior to the Closing that is related to, or involves, or arises from
or results from, the Profit Sharing Plan or the Cafeteria Plan maintained by,
or contributed to by, any Company or any ERISA Affiliate; or (c) any Loss in
excess of applicable deductibles that would otherwise be covered by insurance,
but for exhaustion of policy limits, during the policy period applicable to the
claims and losses asserted in Bernadette Peters v.
Moncla Well Service, Inc., No. 83013 of the 15th Judicial District
Court; provided,
however, Sellers’ total aggregate liability under this

 60
 

indemnity
(other than with respect to breaches of representations and warranties and
covenants in Section  2.21, ARTICLE VII
and Losses related to the Profit Sharing Plan in the event an IRS favorable
determination letter on plan termination is not received and/or the Compliance
Statement in response to the VCP submission is not received, with respect to
which there will be no limitation) shall be limited to Twenty-Five Million and
No/100 Dollars ($25,000,000.00), inclusive of legal fees and costs of defense incurred
by Sellers in performing their obligations under this Section 10.2 and Sellers
shall have no obligation to indemnify any Indemnified Party with respect to any
Loss, notice of which is given to Sellers after(1) eighteen (18)
months after the Closing, as to all representations, warranties and covenants
other than those for which a longer period is specified in 10.2(A)2 through
10.2(A)5; (2) the later of the third (3rd) anniversary of the Closing and thirty
(30) days after the expiration of the statute of limitations, as to all
representations, warranties and covenants contained in Section 2.23; (3) thirty
(30) days after the expiration of the statute of limitations on assessment and
collection of taxes as to those contained in ARTICLE VII; (4) thirty-six (36)
months from the closing of the Profit Sharing Plan trust and from the closing
of the Cafeteria Plan as to representations and warranties and covenants
contained in ARTICLE VIII pertaining to them; and (5) those contained in
Sections 2.2, 2.9(A) and 2.21 shall not expire; provided, however,
that except for Losses under Section 
2.21 and ARTICLE VIII, for which no hurdle shall apply, Sellers shall
have no obligation to indemnify Purchasers until the total Loss incurred by the
Companies or Purchasers exceeds a hurdle of One Million Five Hundred Thousand
and No/100 Dollars ($1,500,000.00); provided, that in either case Sellers shall
be responsible from the first dollar of Loss. 
The defense of all such claims and actions shall be undertaken by
Sellers using counsel selected by them (acting through Moncla) and reasonably
acceptable to Purchaser.  Settlements of
each such claim shall require the approval of both Sellers and Purchaser, which
approval shall not be unreasonably

 61
 

withheld. 
The remedies set forth in this Section 10.2(A) shall be the exclusive
remedies of the Indemnified Parties. 
Sellers’ indemnification obligations shall be joint and several and in  solido but no Seller shall
have an indemnification liability for more than his share of the portion of the
Purchase Price.  Sellers herewith agree
to contribute among themselves in order to share the indemnification liability
in proportion to their shares of the Purchase Price.

(B)          Purchaser
hereby agrees to defend and indemnify Sellers against and to hold Sellers
harmless from any and all Loss incurred or suffered by Sellers arising out of
any failure to perform, misrepresentation or breach of any warranty, covenant
or agreement made or to be performed by Purchaser pursuant to this Agreement.  Purchaser shall have no obligation with
respect to any loss, claim, demand, suit or action against Sellers notice of
which is given to Purchaser (by Sellers or any other person or governmental
agency) after the third anniversary of the Closing as to all losses, etc. other
than those which arise from matters described in Section 5.2 and after
expiration of the applicable statute of limitations on assessment and
collection of taxes as to all losses, etc. which arise from matters described
in Section 5.2.

ARTICLE
XI

TERMINATION

11.1        Grounds for Termination.

This Agreement may
be terminated at any time prior to the Closing:

(A)          By mutual
written agreement of Sellers and Purchaser;

(B)          By Sellers or
Purchaser if the Closing shall not have been consummated on or before November
30, 2007, unless extended by mutual agreement of Sellers and Purchaser;
provided, that if Sellers have or Purchaser has received second requests for
information or are otherwise involved in reviews by any governmental agency
following the filing of notices under 15 U.S.C. § 18a, such date shall be
extended automatically to December 31, 2007.

 62

(C)          By
either Sellers or Purchaser if there shall be any law or regulation that makes
the consummation of the transactions contemplated hereby illegal or otherwise
prohibited or if consummation of the transactions contemplated hereby would
violate any non-appealable final order, decree or judgment of any court or
governmental body having competent jurisdiction.

The party desiring
to terminate this Agreement pursuant to clauses (B) or (C) shall give notice of
such termination to the other party.

11.2        Effect
of Termination.

If this Agreement
is terminated as permitted by Section 11.1, such termination shall be without
liability of any party (or of any shareholder, director, officer, employee,
agent, consultant or representative of any party) to another party to this
Agreement; provided that if such termination shall result from the willful
failure of any party to fulfill a condition to the performance of the
obligations of another party or to perform a covenant of this Agreement or from
a willful breach by any party to this Agreement, such party shall be fully
liable for any and all Losses incurred or suffered by the parties as a result
of such failure or breach.  The
provisions of Sections 5.1 and 12.3 shall survive any termination hereof
pursuant to Section 11.1.

ARTICLE
XII

MISCELLANEOUS

12.1        Notices.

All notices,
requests and other communications to either party hereunder shall be in writing
(including facsimile, telecopy or similar writing) and shall be deemed given
when delivered:

	
  If to Purchaser, to:

  	
   

  	
  Key Energy Services, LLC

  
	
   

  	
   

  	
  Attn:  William M. Austin,

  
	
   

  	
   

  	
  Sr.
  Vice-President and Chief

  
	
   

  	
   

  	
  Financial
  Officer

  
	
   

  	
   

  	
  1301 McKinney
  Street, Ste. 1800

  

 

 63
 

 

	
  

  	
   

  	
  Houston, TX  77010

  
	
   

  	
   

  	
  Telecopier:

  	
  (713) 652-4005

  
	
   

  	
   

  	
  Phone:

  	
  (713) 651-4300

  
	
   

  	
   

  	
   

  	
   

  
	
  With a
  Copy to:

  	
   

  	
  Newton Wilson, III, Esq.

  
	
   

  	
   

  	
  Key Energy
  Services, Inc.

  
	
   

  	
   

  	
  Senior Vice
  President and General Counsel

  
	
   

  	
   

  	
  1301 McKinney
  Street, Suite 1800

  
	
   

  	
   

  	
  Houston, TX  77010

  
	
   

  	
   

  	
  Telecopier:

  	
  (713) 651-4005

  
	
   

  	
   

  	
  Phone:

  	
  (713) 651-4412

  
	
   

  	
   

  	
   

  	
   

  
	
  If to
  Sellers, to:

  	
   

  	
  L. Charles Moncla, Jr.

  
	
   

  	
   

  	
  Moncla Well
  Service, Inc.

  
	
   

  	
   

  	
  P. O. Box 52288

  
	
   

  	
   

  	
  Lafayette,
  LA  70505

  
	
   

  	
   

  	
  Telecopier:

  	
  (337) 267-9564

  
	
   

  	
   

  	
  Phone:

  	
  (337) 232-9582

  
	
   

  	
   

  	
   

  	
   

  
	
  With a
  Copy to:

  	
   

  	
  Robert R. Casey

  
	
   

  	
   

  	
  Suite 500

  
	
   

  	
   

  	
  8555 United
  Plaza Blvd.

  
	
   

  	
   

  	
  Baton Rouge, LA
  70809

  
	
   

  	
   

  	
  Telecopier:

  	
  (225) 248-3090

  
	
   

  	
   

  	
  Phone:

  	
  (225) 248-2090

  

 

Each of the above
persons may change their address or facsimile number or phone number by notice
to the other persons in the manner set forth above.

12.2        Amendments;
No Waivers.

(A)          Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
Purchaser and Seller, or in the case of a waiver, by the party against whom the
waiver is to be effective.

(B)          No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
existence of any other right, power

 64
 

or privilege.  The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

12.3        Expenses.

All costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.  Sellers
shall be solely responsible for the fees and expenses of Simmons & Company,
International.

12.4        Successors
and Assigns.

The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns; provided that
neither party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other party hereto;
except that Moncla may assign this Agreement, solely as it relates to his
membership interest in L C M, to a qualified intermediary solely in order to
effectuate a tax-free exchange for him pursuant to section 1031 of the Code.  Such assignment shall not relieve Moncla of
any obligations hereunder.  Neither this
Agreement nor any provision hereof is intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.

12.5        Governing
Law.

This Agreement shall
be construed in accordance with and governed by the law of the State of Texas
without regard to the conflicts of law rules of such state, except to the
extent that the laws of the States of Louisiana, Mississippi, Alabama, or
Florida may govern the provisions of Section 4.1 as to activities of Sellers or
Purchaser within such states.

12.6        Counterparts;
Effectiveness.

This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the

 65
 

same
instrument.  This Agreement shall become
effective when each party hereto shall have received as a counterpart hereof
signed by the other party hereto.

12.7        Entire
Agreement.

This Agreement and
any other agreements referred to herein constitute the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect thereto.  No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by either party hereto.

12.8        Captions.

The captions
herein are included for convenience of reference only and shall be ignored in
the construction or interpretation hereof.

12.9        Severability.

In the event any
one or more of the provisions of this Agreement shall be or become illegal or
unenforceable in any respect, the validity, legality, operation and
enforceability of the remaining provisions of this Agreement shall not be
affected thereby.

12.10      Certain
Definitions.

“Environmental Law or Laws” shall mean any and all laws,
statutes, ordinances, rules, regulations, or orders of any governmental
authority pertaining to health or the environment currently in effect and
applicable to a specified person and its subsidiaries, including the Clean Air
Act, as amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 (“CERCLA”), as
amended the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Hazardous & Solid

 66
 

Waste
Amendments Act of 1984, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, the Oil Pollution Act of 1990, as amended, any state or local
Laws implementing the foregoing federal laws, and any state laws pertaining to
the handling of oil and gas exploration and production wastes or the use,
maintenance, and closure of pits and impoundments, and all other environmental
conservation or protection laws.  For
purposes of the Agreement, the terms “hazardous substance”
and “release” have the meanings specified in
CERCLA; provided, however, that to the extent the laws of the
state or locality in which the property is located establish a meaning for “hazardous
substance” or “release” that is broader than that specified in either CERCLA,
such broader meaning shall apply, and the term “hazardous substance” shall
include all dehydration and treating wastes, waste (or spilled) oil, and waste
(or spilled) petroleum products, and (to the extent in excess of background
levels) radioactive material, even if such are specifically exempt from
classification as hazardous substances pursuant to CERCLA or RCRA or the
analogous statutes of any jurisdiction applicable to the specified person or
its subsidiaries or any of their respective properties or assets.

“Material Adverse Effect” with respect to the Companies shall
mean any change or effect (or any development that, insofar as can reasonably
be foreseen, is likely to result in any change or effect) that is materially
adverse to the business, properties, assets, condition (financial or otherwise)
or results of operations of the Companies, taken as a whole, and without
limiting the foregoing, such term shall in any case mean an effect or change
that adversely affects or impairs the value, ownership or operation of any
asset by, or creates a liability for, an amount greater than Ten Million and
No/100 Dollars ($10,000,000.00); provided, however, this term
does not include (i) changes occurring in the ordinary course of business
(including the expiration of any Contract or other right in accordance with its
terms) and changes affected by

 67
 

this
transaction, (ii) changes relating to conditions generally affecting the oil
and gas industry or the oilfield service industry, and (iii) changes relating
to general political, economic, financial, currency exchange, securities or
commodity market conditions worldwide.

12.11      Offset.

Purchaser may, but
shall not be obligated, to offset any amount owed to it by a Seller under this
Agreement against any amount Purchaser may owe to such  Seller under the Earnout.  Purchaser waives any right it might otherwise
have to offset against amounts due under the Notes.

12.12      Payment
Agent.

Each Seller
irrevocably appoints Leon Charles Moncla, Jr., or his designee (“Payment Agent”), as his payment agent in order to receive
and disburse proceeds of the Notes and the Earnout.  Each Seller agrees that Purchaser’s sole
obligation shall be to pay Payment Agent the amount due all Sellers, and agrees
that Purchaser shall have no responsibility or obligation as to payment or
allocation or disbursement of any funds due such Seller under the Notes and the
Earnout after receipt by Leon Charles Moncla, Jr. In the event Leon Charles
Moncla, Jr. wishes to designate an alternate Payment Agent he shall provide the
name and address and payment instructions, in writing, to Purchaser.

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective authorized
officers effective as of the day and year first above written but executed on
the dates set forth below.

[Signature Pages Follow]

 68

	
  WITNESSES:

  	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KEY ENERGY SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
  /s/ Newton W. Wilson III

  	
   

  	
   

  	
  By:

  	
  /s/ Richard J. Alario

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Richard J. Alario

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: Chairman, President, and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
  /s/ Marilyn C. Maloney

  	
   

  	
   

  	
   

  

 

Signature Pages

 

	
  WITNESSES:

  	
   

  	
  SELLERS:

  
	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
  LEON CHARLES MONCLA, JR.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA FAMILY PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Moncla Management Trust, General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Leon Charles Moncla, Jr

  
	
   

  	
   

  	
   

  	
  LEON
  CHARLES MONCLA, JR., TRUSTEE

  OF L. CHARLES MONCLA, JR.

  CHARITABLE REMAINDER TRUST

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Michael
  Charles Moncla

  
	
   

  	
   

  	
   

  	
  MICHAEL
  CHARLES MONCLA

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Matthew Moncla

  
	
   

  	
   

  	
   

  	
  MATTHEW MONCLA

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Marc Moncla

  
	
   

  	
   

  	
   

  	
  MARC
  MONCLA

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
						

 

 

	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Christopher
  Moncla

  
	
  

  	
   

  	
   

  	
  CHRISTOPHER
  MONCLA

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Bipin A.
  Pandya

  
	
   

  	
   

  	
   

  	
  BIPIN
  A. PANDYA

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Thomas
  Sandahl

  
	
   

  	
   

  	
   

  	
  THOMAS
  SANDAHL

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Rhonda
  Moncla

  
	
   

  	
   

  	
   

  	
  RHONDA
  MONCLA

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Cain Moncla

  
	
   

  	
   

  	
   

  	
  CAIN
  MONCLA

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Andrew
  Moncla

  
	
   

  	
   

  	
   

  	
  ANDREW
  MONCLA

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  /s/ Kenneth
  Rothstein

  
	
   

  	
   

  	
   

  	
  KENNETH
  ROTHSTEIN

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  

 

 

	
  WITNESSES:

  	
   

  	
   

  	
  COMPANIES:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA WELL SERVICE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon
  Charles Moncla, Jr., President

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA MARINE, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA MARINE OPERATIONS, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 1, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 2, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  

 

 

	
  

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 3, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 4, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 5, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 6, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 8, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA
  MARINE VESSEL NO. 9, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MONCLA MARINE CREW BOATS, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BROTHERS OILFIELD SERVICE & SUPPLY, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4M EQUIPMENT & LEASING, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  L C M
  INDUSTRIES, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr.

  
	
   

  	
   

  	
   

  	
  Leon Charles Moncla, Jr., Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  

 

 

	
  

  	
   

  	
   

  	
  MONCLA DRILLING, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Michael
  Charles Moncla

  
	
   

  	
   

  	
   

  	
  Michael
  Charles Moncla, Manager

  
	
  /s/ Kelly Dresley

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PETROLEUM WELL SERVICE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna Hebert

  	
   

  	
   

  	
  By:

  	
  /s/ Leon Charles Moncla, Jr. 

  
	
   

  	
   

  	
   

  	
  Leon
  Charles Moncla, Jr., President

  
	
  /s/ Kelly Dresley

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]