Document:

Exhibit 10.29

 

2008 Bonus Plan

 

On December 7,
2007, the Compensation Committee recommended that the Board of Directors
approve a new Bonus Plan (the “Bonus Plan”) for the fiscal year ending September 30,
2008.  The Bonus Plan was approved by the Board of Directors on the same
date.  Under the Bonus Plan, bonuses may be awarded to the Company’s
employees, including the Company’s executive officers, upon the satisfaction of
certain goals based on a percentage of annual base salaries.  The goals
include attaining measured results for some or all of the following categories:
cash flow, capital and research and development budgets, revenues, research and
development and operations performance, renew and obtain new contracts, and
safety.

 

Under
the terms of the Bonus Plan, the Company’s employees, including its executive
officers, may receive a bonus calculated based on a percentage of their annual
base salary.  The ultimate percentage of annual base salary used to
calculate bonuses, if any bonuses are paid, will be at the sole discretion of
the Compensation Committee.  The target percentage and the high percentage
of base salary set by the Compensation Committee to be used for purposes of
calculating bonuses to the Company’s employees, including its executive officers,
are as follows:

 

	
   

  	
   

  	
  Target Percentage

  	
   

  	
  High Percentage

  	
   

  
	
  Staff (Operations,
  Accounting & Administrative)

  	
   

  	
  10

  	
  %

  	
  20

  	
  %

  
	
  Manager

  	
   

  	
  15

  	
  %

  	
  30

  	
  %

  
	
  Senior Manager

  	
   

  	
  25

  	
  %

  	
  40

  	
  %

  
	
  Executive (other than
  President and Chief Executive Officer)

  	
   

  	
  40

  	
  %

  	
  80

  	
  %

  
	
  President and Chief
  Executive Officer

  	
   

  	
  50

  	
  %

  	
  100

  	
  %Exhibit 10.1

 

STOCK PURCHASE
AGREEMENT

 

THIS
STOCK PURCHASE AGREEMENT (this “Agreement”), is dated as of December 7,
2007, by and among CELSION CORPORATION, a Delaware corporation (the “Company”),
and BOSTON SCIENTIFIC CORPORATION, a Delaware Corporation (“Seller”).

 

WITNESSETH:

 

WHEREAS,
subject to the terms and conditions set forth herein, the Company desires to
purchase 659,738
shares of the Company’s common stock (the “Shares”) from Seller at a
purchase price of $4.00 per share for an aggregate purchase price of $2,638,592  (the “Purchase Price”); and

 

WHEREAS,
subject to the terms and conditions set forth herein, Seller desires to sell the
Shares to the Company for the Purchase Price.

 

NOW,
THEREFORE, in consideration of the premises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.                                      Recitals.

 

The foregoing recitals are
hereby incorporated by reference and considered to be a part of this Agreement.

 

2.                                      Purchase and Sale of Stock.

 

2.1                                 Transfer of Stock. 
Seller hereby sells, conveys, transfers, assigns and delivers to the Company,
free and clear of all Liens (as defined below) and Company hereby purchases
from Seller, subject to and upon the terms and conditions contained herein, the
Shares.

 

2.2                                 Purchase Price; Payment of
Purchase Price.
Contemporaneously with the execution of this Agreement, the Company is
delivering to  Seller the Purchase Price
to acquire the Shares by wire transfer of immediately available funds.

 

2.3                                 Deliveries. 
Contemporaneously with the execution of this Agreement, Seller is
delivering to the Company certificates representing all of the Shares, duly and
properly assigned to the Company, or accompanied by stock powers duly endorsed
in blank.

 

 

 

3.                                      Seller Representations.

 

3.1                                 Ownership of Shares.  Seller
hereby represents and warrants to the Company that Seller is the sole owner,
beneficially and of record, of the Shares, free and clear of any liens,
security interests, pledges, options, claims or other encumbrances of any kind
(“Liens”), and upon delivery and payment for the Shares pursuant hereto,
the Company will acquire valid title to the Shares free and clear of all Liens.  None of the Shares is subject to any
restrictions on the transfer thereof, except for restrictions imposed by
applicable federal and state securities laws.

 

3.2                                 Power and Authority;
Enforceability.  Seller has all requisite corporate power and
authority to enter into and to perform its obligations under this Agreement and
the transactions contemplated hereby. 
The execution and delivery of this Agreement and the performance of the
terms and provisions hereof by Seller have been duly authorized by Seller and
no other corporate action is required or advisable in respect hereof.  This Agreement constitutes a valid, legal and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except as limited by general principles of equity and subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally.

 

4.                                      Applicable Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of conflict of laws.

 

5.                                      Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same Agreement.

 

6.                                      Entire Agreement;
Amendment; Waiver.  This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter hereof,
and supersede any and all prior and contemporaneous agreements, understandings,
negotiations, and discussions of the parties, whether oral or written.  No amendment, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
all of the parties hereto, or in the case of a waiver, by the party for whom
such benefit was intended.  No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision of this Agreement, whether or not similar, nor
shall such waiver constitute a continuing waiver unless otherwise expressly so
provided in writing.

 

 

[Signatures
on following page]

 

 

 

IN WITNESS WHEREOF, Seller and the Company have caused this
Agreement to be executed as of the date first written above.

 

	
   

  	
   

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CELSION CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael H. Tardugno

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael H. Tardugno

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BOSTON SCIENTIFIC CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Milan Kofol

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Milan Kofol

  
	
   

  	
   

  	
   

  	
  Title:

  	
  VP, TreasurerExhibit 10.1

 

ASSET
PURCHASE AGREEMENT

 

AMONG

 

KEY ENERGY
SERVICES, LLC,

 

KINGS OIL
TOOLS, INC.

 

AND

THOMAS FOWLER

DECEMBER 7, 2007

 

 

ASSET
PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is
entered into as of December 7, 2007, among Key Energy Services, LLC, a
Texas limited liability company (the “Buyer”), and Kings Oil Tools, Inc., a
California corporation (the “Seller”), and Thomas Fowler (the “Shareholder”).

 

W
I T N E S S E T H:

 

WHEREAS, the Seller is engaged in the
business of drilling, workover, maintenance and production work using rigs,
cranes and hoisting equipment (the “Business”);

 

WHEREAS, the Shareholder  owns
100% of the issued and outstanding capital stock of the Seller;

 

WHEREAS, the Seller desires to sell to the
Buyer, and the Buyer desires to purchase from the Seller, substantially all of
the assets of the Seller that are used in the Business on the terms and
conditions set forth herein; and

 

WHEREAS, in connection with the sale of the
Business, the Seller agreed to enter into a noncompetition agreement with the
Buyer as set forth in Section 3.8 hereof (the “Noncompetition Agreement”)
and the Shareholder agreed to enter into a separate noncompetition agreement
dated the date hereof (the “Shareholder Noncompetition
Agreement”);

 

NOW, THEREFORE, in consideration of the
premises and of the mutual representations, warranties and agreements, and
subject to the terms and conditions herein contained, the parties hereto hereby
agree as follows:

 

Article 1

 

PURCHASE AND SALE OF ASSETS

 

1.1           Purchase and Sale of the Assets. Subject
to the terms and conditions set forth in this Agreement, the Seller hereby
agrees to sell, convey, transfer, assign and deliver to the Buyer the following
assets of the Seller, on an “AS IS/WHERE IS/WITH ALL FAULTS” basis (all of such
assets being sold hereunder are referred to collectively herein as the “Assets”):

 

(a)                                  all
tangible personal property of the Seller solely used or usable in the Business
(including, without limitation, production/workover rigs, trucks, transport
trailers and oil tools and equipment associated with the Business), which is
more fully described on Schedule 1.1(a) hereto;

 

(b)                                 all
of the inventory of the Seller solely used or usable in the Business
(including, without limitation, consumables and spare parts), which is more
fully described on Schedule 1.1(b) hereto;

 

 

(c)                                  all
equipment warranties, if any, of the Seller relating to the Assets;

 

(d)                                 all
information, files, books, records and computer data solely related to the maintenance
of the Assets (the “Books and Records”); and

 

(e)                                  all
of the goodwill associated solely with the Business.

 

EXCEPT FOR THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE ASSETS WILL BE
TRANSFERRED “AS IS, WHERE IS,” WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OF ANY
KIND, INCLUDING AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE,
AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR, WITH ALL FAULTS,
LIMITATIONS AND DEFECTS.

 

1.2           Retained Assets. Notwithstanding Section 1.1,
the Seller shall not transfer to the Buyer, and the Assets shall not include
the Seller’s right, title and interest in and to, the following (collectively,
the “Retained Assets”):

 

(a)                                  all
pumps, power swivels and foam units associated with the Retained Business (as
defined in Section 3.5);

 

(b)                                 all
fishing and rental tools related to the Retained Business;

 

(c)                                  one (1) oil
production/workover rig associated with the Retained Business, as more fully
described on Schedule 1.2(c) hereto;

 

(d)                                 all
of the permits, authorizations, certificates, approvals, registrations,
variances, waivers, exemptions, rights-of-way, franchises, ordinances, orders,
licenses and other rights of every kind and character of the Seller relating
principally to the operation of the Retained Business; and

 

(e)                                  all
of the goodwill associated with the Retained Business.

 

1.3           Liabilities. The Seller shall be
responsible for all of its liabilities and obligations. All of the Seller’s
liabilities are referred to herein as the “Retained Liabilities” and include, without
limitation, (i) any obligations arising before the Closing Date from the
Seller’s employment of any employee, independent contractor, consultant, agent
or advisor; (ii) any failure to pay any Taxes (as defined in Section 2.1.8)
owed by the Seller; (iii) any liabilities, known or unknown, fixed or
unfixed, accrued, absolute, contingent or otherwise, arising out of or related
to any Retained Assets or the Retained Business (as defined in Section 3.5)
or any expressed or implied contract of the Seller; and (iv) any other
liabilities or obligations resulting from the Seller’s operation of the Assets
or conduct of the Business before the Closing Date. The Buyer shall assume and
pay all obligations and liabilities for any sales, use, vehicle or other Tax
that may be imposed by any governmental authority in connection with the
purchase and sale of the Assets from the Seller to the Buyer.

 

1.4           Purchase
Price. As consideration for the sale of the Assets and for the other
covenants and agreements of the Seller and the Shareholder contained herein,
the Buyer agrees 

 

2

 

to pay, on the Closing Date (as
defined in Section 1.5), (a) $35,395,750 (the “Asset Purchase Price”) to the
Seller for the Assets and (b) $100,000 (the “Seller
Noncompete Amount”) to the Seller for its agreement not to
compete contained in Section 3.5 (collectively, the Asset Purchase
Price and the Seller Noncompete Amount are referred to herein as the “Purchase Price”) by wire transfer
of immediately available funds to such accounts at a California financial
institution as designated by the Seller in its sole and absolute discretion.

 

1.5           Time and Place of Closing. The closing of
the transactions contemplated by this Agreement (the “Closing”) shall be at
the offices of Clifford & Brown, a Professional Corporation, located
at 1430 Truxtun Avenue, Suite 900, in Bakersfield, California, at 5:00 P.M.
(PDT) on December 7, 2007 (the “Closing Date”).

 

1.6           Conditions to Closing.

 

1.6.1        Deliveries
of the Seller and the Shareholder. At the Closing, in addition to
the conveyance of the Assets from the Seller to the Buyer in exchange for the
Purchase Price, the Seller shall deliver or cause to be delivered to the Buyer:

 

(a)                                  a
bill of sale in the form of Exhibit A attached hereto (the “Bill of Sale”), executed by the
Seller, effectively transferring to the Buyer the Assets being purchased by the
Buyer;

 

(b)                                 all
required certificates and documents of title relating to the Assets being
purchased by the Buyer duly executed and endorsed for transfer to the Buyer;

 

(c)                                  evidence
of releases of all liens to which the Assets were subject before the Closing
Date;

 

(d)                                 a
secretary’s certificate from the Seller which shall have all charter documents
of the Seller attached thereto and attesting to: (i) the due organization
of the Seller; (ii) the due authorization of the transactions contemplated
by this Agreement; and (iii) all corporate, shareholder or other
resolutions adopted by the Seller and the Shareholder in connection with the
transactions contemplated by this Agreement;

 

(e)                                  the
Shareholder Noncompetition Agreement executed by the Shareholder; and

 

(f)                                    all
other deliveries reasonably requested by the Buyer to be delivered by the
Seller or the Shareholder.

 

1.6.2        Deliveries
of the Buyer. At the Closing, the Buyer shall deliver to the Seller:

 

(a)                                  the
Purchase Price, pursuant to Section 1.4;

 

3

 

(b)                                 a
secretary’s certificate from the Buyer, which certificate shall have all
organizational documents of the Buyer attached thereto and attesting to: (i) the
due organization of the Buyer; (ii) the due authorization of the
transactions contemplated by this Agreement; (iii) all company resolutions
adopted by the Buyer in connection with the transactions contemplated by this
Agreement;

 

(c)                                  the
Shareholder Noncompetition Agreement executed by the Buyer; and

 

(d)                                 all
other deliveries reasonably requested by the Seller to be delivered by the
Buyer.

 

1.7           Asset Sale.
The parties specifically represent to each other that this Agreement is for the
purchase and sale of assets. Except as otherwise provided, the Buyer is not
assuming any of the debts, liabilities, obligations or responsibilities of the
Seller.

 

Article 2

 

REPRESENTATIONS AND WARRANTIES

 

2.1           Representations and Warranties of the Seller.
The Seller makes the following representations and warranties to the Buyer,
each of which is true and correct as of the date hereof and shall be true and
correct as of the Closing Date. Representations and warranties made to the “best
of Seller’s knowledge,” means to the actual knowledge of Shareholder, without a
duty of independent investigation or inquiry.

 

2.1.1        Organization,
Good Standing and Authority. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its organization, has full requisite corporate power and authority to carry on
its business as it is currently conducted, and to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign entity authorized to do business
in all jurisdictions in which the character of the properties owned or the
nature of the business conducted by it would make such qualification or
licensing necessary.

 

2.1.2        Authority
to Execute. The execution and delivery of this Agreement has been
authorized by all necessary corporate, shareholder or other action on the part
of the Seller. This Agreement is the valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.

 

2.1.3        Absence
of Conflicts. Except as set forth in Schedule 2.1.3, the
execution, delivery and performance of this Agreement by the Seller, and the
consummation of the transactions contemplated hereby, will not conflict with or
result in a violation or breach of any term or provision of, nor constitute a
default under, (i) the organizational documents of the Seller, (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which the Seller is a party or by which the Seller or any of its
properties are bound, or (iii) any provision of any law, rule, regulation,
order, permit, 

 

4

 

certificate,
writ, judgment, injunction, decree, determination, award or other decision of
any court, arbitrator or other governmental authority to which the Seller or
any of its properties are subject.

 

2.1.4        Liabilities.
The Seller has no liabilities or obligations, either accrued, absolute,
contingent or otherwise, or has any knowledge of any potential liabilities or
obligations that would adversely affect the value of the Assets or become a
liability of the Buyer as a result of the consummation of the transactions
contemplated by this Agreement, by operation of law or otherwise.

 

2.1.5        Litigation.
There is no suit, action (equitable, legal, administrative or otherwise),
proceeding or investigation of any kind pending or, to the best of the Seller’s
knowledge, threatened against the Seller that would materially adversely affect
the value of the Assets, the operation of the Business or the transactions
contemplated by this Agreement, nor does the Seller know of any reasonably
likely basis for any such suit, action, proceeding or investigation.

 

2.1.6        Compliance
with Laws. The Seller has complied in all material respects with, is
not in violation of, and, except as set forth on Schedule 2.1.6, has not
received any notices of violation in any material respect with respect to, any
foreign, federal, state or local statute, law, rule or regulation.

 

2.1.7        Books
and Records. The Books and Records are complete and correct.

 

2.1.8        Taxes.
There are (and as of the Closing there will be) no liens or similar
encumbrances on the Assets with respect to taxes or other governmental charges,
obligations or fees, including but not limited to any income, business,
occupation, franchise, licensing, sales, use, withholding, property, ad
valorem, excise or other similar taxes, or secondary or transferee liability
for any of such taxes, and any related interest or penalties thereon (“Tax” or “Taxes”), except for
liens for real and personal property Taxes not yet due and payable. No claim
with respect to Taxes attributable to or incurred in connection with the
operations of the Seller (other than real and personal property Taxes not yet
due and payable as of the Closing Date) will result in a lien or similar
encumbrance on the Assets or will otherwise adversely affect the Buyer.

 

2.1.9        Warranties;
Customers. All of the Warranties are in full force and effect. The
Seller is not, and no other party to any of the Warranties is, in breach
thereunder, and to the best of the Seller’s knowledge no event has occurred which
(with or without notice, lapse of time, or the happening of any other event)
would constitute a breach thereunder. The Seller has not received any
information that would cause the Seller to conclude that any customer of the
Seller would not become a customer of the Buyer after the consummation of the
transactions contemplated hereby. All of the Warranties set forth in Schedule
1.1(c) are assignable (and as of the Closing Date will be validly
assigned) to the Buyer without the consent of any other party thereto, other
than consents obtained no later than the Closing Date.

 

5

 

2.1.10      Title
to and Condition of Assets. The Assets being transferred to the
Buyer hereunder constitute substantially all of the assets of the Seller. The
Assets, together with the Employees to be hired by the Buyer under Section 3.3,
constitute all of the Business. The Seller has good and marketable title to all
of the Assets, free and clear of any Encumbrances (defined below). Seller has
the absolute right to sell, transfer and assign the Assets to the Buyer, and
upon the consummation of the transactions contemplated hereby, the Buyer will
collectively have good and marketable title to the Assets, free and clear of
any Encumbrances. A true and correct list of all Encumbrances on the Assets,
all of which have been released or are being released at Closing, is attached
hereto as Schedule 2.1.10. All loans secured by such Encumbrances have
been paid in full. The parties acknowledge that certificates of title to
certain Assets shown on Schedule 2.1.10 as encumbered by GMAC and CSC
Logistics will be signed off and delivered to the Seller by such lenders
immediately after the Closing. The Seller shall deliver all such certificates
of title to the Buyer immediately upon receipt thereof. No notice of any
violation of any law, statute, ordinance or regulation relating to any of the
Assets has been received by the Seller, nor, to the best of the Seller’s
knowledge, is there any basis for any of the foregoing. For purposes of this
Agreement, the term “Encumbrances”
means all liens (including Tax liens), security interests, pledges, mortgages,
deeds of trust, claims, rights of first refusal, options, charges, restrictions
or conditions to transfer or assignment, liabilities, obligations, privileges,
equities, easements, rights of way, limitations, reservations, restrictions and
other encumbrances of any kind or nature.

 

2.1.11      Employee
Benefits. There are no obligations, agreements or understandings between
the Seller and any employee, officer or director of the Seller under which any
such employee, officer or director are entitled to receive any payment, benefit
or service under any benefit plan maintained by the Seller or any affiliate of
the Seller, including, but not limited to, any employment agreement, bonus,
retention bonus, retirement, severance, job security or similar benefit.

 

2.1.12      No
Untrue Statements. This Agreement and all other agreements executed
and delivered by the Seller in connection with the transactions contemplated
hereby do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

2.1.13      Brokers.
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by the Seller and its counsel directly with the
Buyer and its counsel, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder’s fee or any similar payment. The Seller has not
taken any action that would give any third party a valid claim for any such
commission, fee or payment.

 

2.1.14      Pricing. Attached
hereto as Schedule 2.1.14 is a true, correct and complete copy of the
schedule of rates currently being charged for well services by the Seller to,
and paid by, the customer identified on such Schedule. Such rate schedule has 

 

6

 

been incorporated in the
existing contract between the Seller and such customer and is binding on such
parties subject to the other terms and conditions of such contract.

 

2.2           Representations
and Warranties of the Shareholder. The Shareholder makes the
following representations and warranties to the Buyer, each of which is true
and correct as of the date hereof and shall be true and correct as of the
Closing Date:

 

2.2.1        Authority to Execute.
Each of this Agreement and the Shareholder Noncompetition Agreement is the
valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms.

 

2.2.2        Absence
of Conflicts. The execution, delivery and performance of this
Agreement and the Shareholder Noncompetition Agreement by the Shareholder, and
the consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in a violation or breach of any term or provision of, nor
constitute a default under, (i) any obligation, indenture, mortgage, deed
of trust, lease, contract or other agreement to which the Shareholder is a
party or by which the Shareholder or any of his properties are bound, or (ii) any
provision of any law, rule, regulation, order, permit, certificate, writ,
judgment, injunction, decree, determination, award or other decision of any
court, arbitrator or other governmental authority to which the Shareholder or
any of his properties are subject.

 

2.2.3        Litigation.
There is no suit, action (equitable, legal, administrative or otherwise),
proceeding or investigation of any kind pending or, to the best of the
Shareholder’s knowledge, threatened against the Shareholder that would
materially adversely affect the value of the Assets, the operation of the
Business or the transactions contemplated by this Agreement or the Shareholder
Noncompetition Agreement, nor does the Shareholder know of any reasonably
likely basis for any such suit, action, proceeding or investigation.

 

2.2.4        Brokers.
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by the Seller and its counsel directly with the
Buyer and its counsel, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder’s fee or any similar payment. The Shareholder
has not taken any action that would give any third party a valid claim for any
such commission, fee or payment or any such claim in connection with the
Shareholder Noncompetition Agreement.

 

2.3           Representations and Warranties of the Buyer.
The Buyer makes the following representations and warranties to the Seller,
each of which is true and correct as of the date hereof and shall be true and
correct as of the Closing Date:

 

2.3.1        Organization
and Good Standing. Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of its state of
organization, has full requisite power and authority to carry on its business
as it is currently conducted, and to own and operate the properties currently
owned and operated by it, and is duly qualified or licensed to do business and
is in good standing as a foreign 

 

7

 

limited partnership or
corporation, as applicable, authorized to do business in all jurisdictions in
which the character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary.

 

2.3.2        Authority
to Execute. The execution and delivery of each of this Agreement and
the Shareholder Noncompetition Agreement has been authorized by all necessary
corporate and other action on the part of the Buyer, and each of this Agreement
and the Shareholder Noncompetition Agreement is the valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms.

 

2.3.3        Absence
of Conflicts. The execution, delivery and performance of this
Agreement and the Shareholder Noncompetition Agreement and the consummation of
the transactions contemplated hereby and thereby will not conflict with or
result in a violation or breach of any term or provision of, nor constitute a
default under, (i) the organizational documents of the Buyer, (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which the Buyer is a party or by which the Buyer or its properties
are bound, or (iii) any provision of any law, rule, regulation, order,
permit, certificate, writ, judgment, injunction, decree, determination, award
or other decision of any court, arbitrator or other governmental authority to
which the Buyer or any of its properties are subject.

 

2.3.4        Litigation. To
the best of the Buyer’s knowledge, no litigation, actions, arbitrations or
proceedings, whether legal, equitable, administrative or governmental
investigations of any type are pending or threatened which might affect the
consummation of this Agreement or the Shareholder Noncompetition Agreement by
the Buyer.

 

2.3.5        Brokers.
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by the Buyer and its counsel directly with the
Seller and its counsel, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder’s fee or any similar payment. The Buyer has not
taken any action that would give any third party a valid claim for any such
commission, fee or payment or any such claim in connection with the Shareholder
Noncompetition Agreement.

 

Article 3

 

ADDITIONAL COVENANTS

 

3.1           Cooperation; Further Assurances. Each of
the parties hereto shall use its commercially reasonable efforts to take
promptly, or cause to be taken promptly, all actions, and to do promptly, or
cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations in order for such party to consummate and make
effective the transactions contemplated hereby, to obtain all necessary
waivers, consents, approvals and other documents required to be delivered
hereunder and to effect all necessary registrations and filings and to remove
any injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose 

 

8

 

of securing to the parties
hereto the benefits contemplated by this Agreement. In addition, the Seller and
the Shareholder shall use their commercially reasonable efforts to assist the
Buyer (i) in negotiating a lease on the San Ardo property currently leased
by the Seller, (ii) in facilitating a smooth transition of the Business’s
customers from the Seller to the Buyer and (iii) in transferring or
obtaining any permits and licenses required in connection with the Business or
the operation of the Assets. From time to time, as and when requested by any
party hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effect the transactions contemplated hereby.

 

3.2           Employees. Schedule 3.2 hereto
sets forth a complete and accurate listing of all individuals who are full
time, part time or casual employees and independent contractors of the Seller
employed solely in the Business as of the date of this Agreement (the “Employees”),
specifying the length of hire, title or classification, and accrued and unpaid
vacation owing at the Closing Date. The Seller shall use its best efforts to
make all of the Employees available for hire by the Buyer or its affiliates,
and the Buyer and such affiliates collectively agree to offer to hire all of
such Employees on the Closing Date, subject to such Employees’ meeting the
Buyer’s standard employment eligibility requirements and mutual agreement
between such Employees and the Buyer as to their compensation levels. The Buyer
shall indemnify, hold harmless and defend the Seller from any failure by the
Seller as a result of the transactions contemplated by this Agreement to comply
with the Worker Adjustment and Retraining Notification Act (the “WARN Act”);
provided, however, that the Seller shall not terminate the employment of any of
its retained employees within ninety (90) days following the Closing. Other
than WARN Act indemnification, the Buyer shall not have any liability or
obligation with respect to, and the Seller hereby indemnifies the Buyer for,
the compensation of any Employee or any employee benefits of any Employee,
including, without limitation, any bonuses, accrued vacation, health benefits
or IRA contributions, except for those benefits that accrue pursuant to such
Employees’ employment with the Buyer on or after the Closing Date. The Seller
shall cooperate with the Buyer in connection with any offer of employment from
the Buyer to the Employees and the parties shall use their respective best
efforts to cause the acceptance of any and all such offers. All Employees hired
by the Buyer shall be at-will employees of the Buyer. Notwithstanding any other
provisions of this Agreement, this Section 3.2 shall not be deemed
to create any right or claim for the benefit of, and shall not be enforceable
by, any person that is not a party to this Agreement.

 

3.3           Taking Possession of Certain Assets. The
Buyer and the Seller acknowledge that on the Closing Date some of the Assets
will be located on certain of the Seller’s premises that will not be
transferred to the Buyer on the Closing Date. The Seller hereby grants to the
Buyer a license to use the premises of the Seller on which the Assets are
located as of the Closing Date for the storage, use and operation of the Assets
for a period not to exceed ninety (90) days, during which time the Buyer will
make arrangements for taking possession of the Assets and removing them from
the Seller’s premises. During such 90-day period, the Buyer shall be permitted
to use such property as may be necessary to conduct the Buyer’s business. The
license granted hereunder is in consideration of the Purchase Price and the
representations, warranties and covenants of the Buyer hereunder, and no
separate compensation shall be paid to the Seller for the granting of such
license.

 

9

 

3.4           Tax Matters.
The allocation of the Purchase Price (the “Allocation”)
shall be made as follows: (a) the Asset Purchase Price shall be allocated
among the Assets as mutually agreed upon by the parties hereto based (i) on
the fair market value of the Assets on the Closing Date as determined by an
independent appraisal and (ii) in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended, and (b) the Seller Noncompete
Amount shall be allocated to the Seller’s agreement not to compete contained in
Section 3.5. The Buyer and the Seller for themselves and for their
respective successors and assignees covenant and agree that (i) each will
file its Form 8594 with its income tax return for the taxable year that
includes the Closing Date and in accordance with the Allocation and (ii) they
will pro rate, and each will pay its pro rata share of, any ad valorem or
similar taxes on the Assets for any tax period that includes the Closing Date,
with such proration to be based on the number of days in such tax period that
each of them owned the Assets.

 

3.5           Agreement Not To Compete. Except as
otherwise consented to or approved in writing by the Buyer, the Seller agrees
that for a period of five (5) years from the Closing Date (the “Restricted Period”),
the Seller will not, directly or indirectly, acting alone or as a member of a
partnership or as a consultant, lender (including gifts used for capitalization
or collateral), representative, holder of, or investor in as much as 5% of any
security of any class of any corporation or other business entity, engage
in any Competing Business (defined below) in the Restricted Region (defined
below). The Seller agrees that if either the length of time or geographical
area set forth in this Section 3.5 is deemed too restrictive in any
court proceeding, a court may reduce such restrictions to those that it deems
reasonable under the circumstances. For purposes of this Agreement, “Competing Business”
means providing drilling, workover and maintenance services using rigs and
hoisting equipment, and other production services associated therewith or
ancillary thereto, and any business that is substantially related thereto. Notwithstanding
the foregoing, “Competing Business” shall not
include fishing and foam unit, pump and swivel rental services, and/or the
provision of cranes (the “Retained
Business”). For purposes of this Agreement, the term “Restricted Region”
means the State of California. The Seller agrees and acknowledges that the
Buyer and its affiliates do not have any adequate remedy at law for the breach
or threatened breach of this Agreement by the Seller, and agree that the Buyer
or any affiliate of the Buyer may, in addition to the other remedies that may
be available to them hereunder, file a suit in equity to enjoin the Seller or
the officers, directors, employees or agents of the Seller from such breach or
threatened breach. The obligations of the Seller under this Section 3.5
are in consideration of the Purchase Price set forth in Section 1.4,
the representations and warranties of the Buyer contained in this Agreement and
other good and valuable consideration the receipt and sufficiency of which is
acknowledged by the Seller.

 

3.6           Non-Solicitation. During the Restricted
Period, the Seller shall not:

 

3.6.1        Directly or indirectly solicit, or
attempt to persuade, influence or induce, or assist any other person in so
persuading or inducing, any customer or supplier of the Business, the Buyer or
any of its affiliates to cease doing business with the Buyer or any of its
affiliates or to reduce the amount of business such customer or supplier does
with the Business, the Buyer or its affiliates. The Seller acknowledges that
this covenant is necessary to enable the Buyer and its affiliates to maintain a
stable customer and supplier base, and that it would disrupt, damage, impair
and interfere with the Buyer’s and its affiliates’ businesses if the Seller
were to engage in such solicitation.

 

10

 

3.6.2        Directly or indirectly solicit, or
attempt to persuade, influence or induce, or assist any other person in so
persuading or inducing, any employee or former employee of the Business, the
Buyer or any of its affiliates to leave the employ of the Buyer or any of its
affiliates, or to accept any other employment or position, unless, in the case
of a former employee, such former employee has not been employed by the Buyer
or any of its affiliates for at least six (6) months. The Seller
acknowledges that the purpose of this covenant is to enable the Buyer and its
affiliates to maintain a stable workforce, and that it would disrupt, damage,
impair and interfere with the Buyer’s and its affiliates’ businesses if the
Seller were to engage in such solicitation.

 

3.7           Confidentiality. The Seller recognizes and
acknowledges that by virtue of its ownership, management and operation of the
Business, it has had access to certain trade secrets and confidential
information of the Business and that such information, following the Closing,
will constitute valuable, special and unique property of the Buyer, and has
economic value because it is not generally known to the public or to others who
could benefit from its disclosure or use (the “Confidential Information”). Confidential
Information, as defined herein, is limited to the following:  (i) customer information such as
customer lists and other information concerning particular needs, problems,
likes or dislikes of the customers of the Business; (ii) the identities of
the customers of the Business; (iii) price information, such as price
lists, the contents of bids, and other information concerning costs or profits;
(iv) technical information, such as formulae, know-how, computer programs,
software, secret processes or machines, inventions and research projects,
documentation, or other methods or processes; (v) business information
relating to costs, profits, sales, markets, suppliers, plans for further
development, market studies or research projects; (vi) personnel or a
compilation of data concerning the employees and independent contractors of the
Business; and (vii) any other information valuable because of its private
or confidential nature. The Seller agrees that it will not reproduce, copy or
disclose the Confidential Information, except as required by law, to any
person, firm, corporation, association or other entity, nor will the Seller
advise, discuss or in any way assist any other person or firm (including
customers or former customers of the Business) in obtaining or learning about
the Confidential Information. The Seller covenants and acknowledges that
following the Closing it shall immediately surrender to the Buyer the Business’s
Confidential Information, and any and all such documents, materials or other
tangible items pertaining to such Confidential Information that it may possess
and that such Confidential Information shall be and remain the sole property of
the Buyer.

 

3.8           Right of
First Negotiation. If the Seller decides to sell the Retained
Business, the Seller shall first attempt to negotiate in good faith with the
Buyer for a period of not less than twenty (20) business days (the “Negotiation Period”) for the Buyer
to acquire the Retained Business (a “Sale Event”).
During the Negotiation Period, the Buyer shall be entitled to conduct due
diligence with the reasonable cooperation of the Seller and the Shareholder. If
the Seller and the Buyer do not enter into a letter of intent with respect to a
Sale Event during the Negotiation Period, the Seller shall be free to enter
into a definitive agreement with respect to a Sale Event with a third party and
subsequently consummate a Sale Event, provided that such definitive agreement
is entered into within one hundred eighty (180) days following termination of
the Negotiation Period.

 

11

 

3.9           Right of First Call.
Following the Closing, if the Buyer requires tooling services within Fresno,
Kern, Kings, Tulare, Monterey, San Luis Obispo, Santa Barbara and Ventura
Counties, California, the Buyer shall offer to the Seller the opportunity to
provide such services to the Buyer through the Retained Business before the
Buyer contacts any current unaffiliated third party to provide such services. Notwithstanding
the foregoing, if due to the unavailability of the Seller’s equipment or if
Seller declines the Buyer’s service request then the Buyer may retain a third
party to provide the requested services on a case-by-case basis. The Seller’s
rates for performing such services for the Buyer shall be consistent with
then-current market rates for such services within the region where such
services are performed. The Seller’s right of first call set forth in this Section 3.9
shall continue for a period of five (5) years for the provision of fishing
and foaming services, and for a period of two (2) years for the provision
of pumps and swivels.

 

3.10         Continued Well Service
Pricing. The Buyer agrees that after the Closing and continuing
through April 30, 2008, the Buyer shall honor, with respect to the
provision of services involving any of the Assets but not other rigs or
equipment of the Buyer, the existing rates being charged by the Seller under
Contract No. 99005718 between the Seller and Chevron USA Inc. dated June 28,
1999, as amended, and as set forth in the schedule of rates attached hereto as
part of Schedule 2.1.14 unless and until Chevron agrees to different
rates for such services.

 

3.11         Termination of Lease. Subject
to Section 3.3, immediately following the Closing, the Seller shall
terminate the leases for its equipment yards located in Coalinga and San Ardo,
California, in accordance with the terms of the specific lease. If the Buyer
desires to retain the equipment yards, it shall negotiate new leases with the
respective landlords and the Seller shall cooperate with the Buyer’s efforts to
do so.

 

Article 4

 

INDEMNIFICATION

 

4.1           Indemnification by the Seller and the Shareholder.
In addition to any other remedies available to the Buyer under this Agreement,
or at law or in equity, the Seller and the Shareholder shall indemnify, defend
and hold harmless the Buyer, its affiliates and each of their respective
officers, directors, employees, agents and stockholders (collectively, the “Buyer Indemnitees”), against and with
respect to any and all claims, costs, damages, losses, expenses, obligations,
liabilities, recoveries, taxes, suits, causes of action and deficiencies,
including, without limitation, interest, penalties and reasonable attorney’s
fees and expenses (collectively, the “Damages”)
that the Buyer Indemnitees shall incur or suffer, which arise, result from or
relate to (i) any breach of, or failure by the Seller or the Shareholder
to perform, their respective representations, warranties, covenants or
agreements in this Agreement or the Shareholder Noncompetition Agreement or in
any schedule, certificate, exhibit or other instrument furnished or delivered
to the Buyer by the Seller or the Shareholder under this Agreement, (ii) any
liabilities or obligations of the Seller or the Shareholder, including, without
limitation, the Retained Liabilities, (iii) the operation of the Business
or the Assets prior to the Closing Date or (iv) the matters disclosed on Schedule
2.1.6.

 

12

 

4.2           Indemnification by Buyer. In addition to
any other remedies available to the Seller under this Agreement, or at law or
in equity, the Buyer shall indemnify, defend and hold harmless the Seller and
the Shareholder, and each of their affiliates, officers, directors, employees,
agents and stockholders (the “Seller
Indemnitees”) against and with respect to any and all Damages that
the Seller Indemnitees shall incur or suffer, which arise, result from or
relate to (i) any breach of, or failure by the Buyer to perform, any of
its representations, warranties, covenants or agreements in this Agreement or
the Shareholder Noncompetition Agreement or in any schedule, certificate,
exhibit or other instrument furnished or delivered to the Seller by or on
behalf of the Buyer under this Agreement, (ii) the operation of the
Business or the Assets after the Closing Date or (iii) as set forth in Schedule
4.2.

 

4.3           Indemnification Procedure. If any party
hereto discovers or otherwise becomes aware of an indemnification claim arising
under Section 4.1 or Section 4.2 of this Agreement,
such indemnified party shall give written notice to the indemnifying party,
specifying such claim, and may thereafter exercise any remedies available to
such party under this Agreement; provided, however, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly
after receipt by an indemnified party hereunder of written notice of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Article 4, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of any obligations hereunder to the extent the indemnifying
party is not materially prejudiced thereby. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof unless the indemnifying party
has failed to assume the defense of such claim and to employ counsel reasonably
satisfactory to such indemnified person. An indemnifying party who elects not
to assume the defense of a claim shall not be liable for the fees and expenses
of more than one counsel in any single jurisdiction for all parties indemnified
by such indemnifying party with respect to such claim or with respect to claims
separate but similar or related in the same jurisdiction arising out of the
same general allegations. Notwithstanding any of the foregoing to the contrary,
the indemnified party shall be entitled to select its own counsel and assume
the defense of any action brought against it if the indemnifying party fails to
select counsel reasonably satisfactory to the indemnified party, the expenses
of such defense to be paid by the indemnifying party. No indemnifying party
shall consent to entry of any judgment or enter into any settlement with
respect to a claim without the consent of the indemnified party, which consent
shall not be unreasonably withheld, or unless such judgment or settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability with
respect to such claim. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action, the defense of which
has been 

 

13

 

assumed by an
indemnifying party, without the consent of such indemnifying party, which
consent shall not be unreasonably withheld or delayed.

 

Article 5

 

MISCELLANEOUS

 

5.1           Survival of Representations, Warranties and Covenants.
Except as set forth herein, all representations, warranties, covenants and
agreements made by the parties hereto (whether in this Agreement or in any
certificate, schedule, exhibit or other instrument delivered under this
Agreement) shall survive the execution and delivery of this Agreement for a
period of twelve (12) months; provided, that any claim for
indemnification as to which notice has been given prior to the expiration of
such 12-month period shall survive such expiration until final resolution of
such claim, and provided, further, the representations and warranties
contained in Section 2.1.2, Section 2.1.8, Section 2.1.10,
Section 2.1.13, Section 2.1.14, Section 2.2.1,
Section 2.2.4, Section 2.3.2 and Section 2.3.5
shall survive the execution of this Agreement for the period specified in the
applicable statute of limitation.

 

5.2           Entirety. This Agreement, including,
without limitation, the Schedules and Exhibits referred to herein, the
Shareholder Noncompetition Agreement and the other documents and certificates
specifically identified herein or contemplated hereby or delivered in
connection herewith, embodies the entire agreement among the parties with
respect to the subject matter hereof, and all prior agreements between the
parties with respect thereto are hereby superseded in their entirety. Except as
specifically provided in this Agreement, no amendment, waiver, consent,
modification or termination of any provision of this Agreement shall be
effective unless signed by all parties hereto.

 

5.3           Counterparts. Any number of counterparts
of this Agreement may be executed and each such counterpart shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one instrument. This Agreement may be executed by facsimile signature,
which signature shall be binding upon the parties hereto.

 

5.4           Attorneys’
Fees and Disbursements. In the event of any action at law or in
equity between the parties to enforce or interpret this Agreement, the
unsuccessful party to such litigation shall pay to the successful party all
costs and expenses, including reasonable attorneys’ fees and disbursements,
incurred therein by such successful party and, if such successful party shall
recover judgment in any such action or proceedings, such costs, expenses and
attorneys’ fees and disbursements may be included in and as a part of such
judgment. The successful party shall be the party who is entitled to recover
his costs of suit, whether or not the suit proceeds to final judgment. If no
costs of suit are awarded, then the successful party shall be determined by the
court. For the purpose of this Section 5.4, the term “attorneys’
fees and disbursements” shall include, but not be limited to, fees and
disbursements incurred in connection with the following: (i) contempt
proceedings; (ii) discovery; (iii) any motion, proceeding or other
activity of any kind or nature in connection with a bankruptcy proceeding or
case arising out of, concerning or related in any way to any petition under
Title 11 of the United States Code, as the same shall be in effect from time to
time, or any similar law; (iv) garnishment, levy, and debtor and third
party 

 

14

 

examinations;
and, (v) postjudgment motions, proceedings or activity of any kind or
nature, including, but not limited to, any activity taken to collect or enforce
any judgment.

 

5.5           Waiver. No
waiver of any default or failure or delay to exercise any right or remedy by a
party shall operate as a waiver of any other default or of the same default in
the future or as a waiver of any right or remedy with respect to the same or
any other occurrence.

 

5.6           Notices and Waivers. Any notice or waiver
to be given to any party hereto shall be in writing and shall be delivered by
courier, sent by facsimile transmission or first class registered or certified
mail, postage prepaid, return receipt requested:

 

If to the Buyer

 

	
  Addressed to:

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Key Energy Services, LLC

  	
   

  	
  Paul S. Blencowe, Esq.

  
	
  1301 McKinney Street, Suite 1800

  	
   

  	
  Fulbright & Jaworski L.L.P.

  
	
  Houston, Texas 77010

  	
   

  	
  555 South Flower Street, 41st
  Floor

  
	
  Facsimile: (713) 651-4559 Attn:

  	
   

  	
  Los Angeles, California 90071

  
	
  General Counsel

  	
   

  	
  Facsimile: (213) 892-9494

  

 

If to the Seller or the Shareholder

 

	
  Addressed to:

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Kings Oil Tools, Inc.

  	
   

  	
  Charles D. Melton, Esq.

  
	
  1924 Spring Street

  	
   

  	
  Clifford & Brown

  
	
  Paso Robles, California 93446

  	
   

  	
  1430 Truxtun Avenue, Suite 900

  
	
  ATTN: Thomas Fowler

  	
   

  	
  Bakersfield, California 93301

  
	
  Facsimile: (805) 238-9411

  	
   

  	
  Facsimile: (661) 322-3508

  

 

Any communication so addressed and mailed by
first-class registered or certified mail, postage prepaid, with return receipt
requested, shall be deemed to be received on the third business day after so
mailed, and if delivered by courier or facsimile to such address, upon delivery
during normal business hours on any business day.

 

5.7           Construction;
Computation of Time. Headings are used herein for convenience only
and shall have no force or effect in the construction or interpretation of this
Agreement. As used in this Agreement, the singular includes the plural and the
masculine includes the feminine and neuter. This Agreement shall not be
construed against the party drafting it but shall be construed fairly and
equitably as though it was the joint product of the parties. Except where the
context otherwise requires, all references to the term of this Agreement shall
include any extensions of such term. The time in which any act under this
Agreement is to be done shall be computed by excluding the first day and
including the last day. If the last day of any time period shall fall on a
Saturday, Sunday or legal holiday, then the duration of such time period shall
be 

 

15

 

extended so
that it shall end on the next succeeding day which is not a Saturday, Sunday or
legal holiday. To the extent used or subsequently used in an amendment to this
Agreement, the word “day” shall mean a “calendar” day and the phrase “business
day” shall mean those days on which the Kern County Superior Court is open for
business.

 

5.8           Assignment; Successors and Assigns. This
Agreement may not be assigned without the prior written consent of the other
party hereto, provided that the Buyer may assign this Agreement to any of its
affiliates. This Agreement shall be binding upon and shall inure to the benefit
of and be enforceable by the successors and assigns of the parties hereto. Nothing
in this Agreement shall entitle any person other than the parties hereto to any
claim, cause of action, right or remedy of any kind.

 

5.9           Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.

 

5.10         Expenses. Except as provided in Section 1.3,
each party shall pay its own expenses incidental to the negotiation, execution
and delivery of this Agreement.

 

5.11         Press
Releases. Any party may issue a press release or make a public
statement following the Closing regarding the transactions contemplated by this
Agreement. Any party issuing a press release shall furnish a copy to the other parties
prior to its dissemination. Nothing herein shall limit the ability of any party
to make any disclosures required by law in a timely manner.

 

5.12         Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of California, without reference to its conflicts of laws rules. Each
party hereto hereby acknowledges and agrees that it has consulted legal counsel
in connection with the negotiation of this Agreement and that it has bargaining
power equal to that of the other parties hereto in connection with the
negotiation and execution of this Agreement. Accordingly, the parties hereto
agree that the rule that an agreement shall be construed against the
draftsman shall have no application in the construction or interpretation of
this Agreement.

 

5.13         Opportunity
to Inspect. The Buyer acknowledges that prior to execution of this
Agreement it was given the opportunity to inspect all major equipment
constituting part of the Assets.

 

[SIGNATURE PAGES FOLLOW]

 

16

 

IN WITNESS WHEREOF, the parties have caused
this Agreement to be signed in their individual names or their respective
corporate names by their respective duly authorized representatives, as applicable,
all as of the day and year first above written.

 

	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  KEY ENERGY SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Newton W. Wilson III

  
	
   

  	
  Name:

  	
  Newton W. Wilson III

  
	
   

  	
  Title:

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  KINGS OIL TOOLS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ THOMAS FOWLER

  
	
   

  	
  Name:THOMAS FOWLER

  
	
   

  	
  Title:President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   /s/ THOMAS FOWLER

  
	
   

  	
  THOMAS FOWLER

  
					

 

17

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