EXHIBIT 10.61
ASSET PURCHASE AGREEMENT
By and Among
AIRCOMP L.L.C., as Buyer
DIAMOND AIR DRILLING SERVICES, INC.
AND
MARQUIS BIT CO., L.L.C., as Sellers;
▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇, and
▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇, as Shareholders
dated November 10, 2004
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS ............................................................1-10
2. SALE AND TRANSFER OF ASSETS; CLOSING ....................................10
2.1 Assets to be Sold ...................................................10
2.2 Excluded Assets .....................................................12
2.3 Purchase Price ......................................................13
2.4 Liabilities .........................................................13
2.5 Allocation ..........................................................15
2.6 Closing .............................................................15
2.7 Closing Obligations .................................................16
2.8 Consents ............................................................17
3. REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDERS ..............17
3.1 Organization and Good Standing ......................................18
3.2 Enforceability; Authority; No Conflict ..............................18
3.3 Capitalization ......................................................19
3.4 Financial Statements ................................................19
3.5 Books and Records .................................................. 20
3.6 Description of Leased Real Property .................................20
3.7 Title to Assets And Real Property Leases ............................20
3.8 Condition of Personal Property ......................................20
3.9 Accounts Receivable .................................................20
3.10 No Undisclosed Liabilities .........................................20
3.11 Taxes ..............................................................21
3.12 No Material Adverse Change .........................................21
3.13 Workers' Compensation ..............................................21
3.14 Compliance with Legal Requirements; Governmental Authorizations ....21
3.15 Legal Proceedings; Orders ..........................................22
3.16 Absence of Certain Changes and Events ..............................22
3.17 Contracts; No Defaults .............................................23
3.18 Insurance ..........................................................24
3.19 Environmental Matters ..............................................24
3.20 Employees ..........................................................26
3.21 Labor Disputes; Compliance .........................................26
3.22 Disclosure .........................................................26
3.23 Brokers or Finders .................................................26
3.24 Relationships with Related Persons .................................27
3.25 Intellectual Property ..............................................27
4. REPRESENTATIONS AND WARRANTIES OF BUYER .................................28
4.1 Organization and Good Standing ......................................28
4.2 Authority; No Conflict ..............................................28
4.3 Brokers or Finders ..................................................29
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5. COVENANTS OF SELLERS PRIOR TO CLOSING....................................29
5.1 Access and Investigation ............................................30
5.2 Best Efforts ........................................................30
5.3 Interim Financial Statements ........................................30
5.4 Change of Name ......................................................30
5.5 Payment of Liabilities ..............................................30
6. COVENANTS OF BUYER PRIOR TO CLOSING .....................................30
6.1 Required Approvals ..................................................30
6.2 Best Efforts ........................................................30
6.3 Documents............................................................30
6.4 Due Diligence .......................................................31
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE .....................31
7.1 Accuracy of Representations .........................................31
7.2 Sellers' Performance ................................................31
7.3 Consents ............................................................31
7.4 Additional Documents ................................................32
7.5 No Proceedings ......................................................32
7.6 Licenses and Permits ................................................32
7.7 Environmental Report ................................................32
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE ....................32
8.1 Accuracy of Representations .........................................32
8.2 Buyer's Performance .................................................33
8.3 Additional Documents ................................................33
8.4 No Injunction .......................................................33
9. TERMINATION .............................................................33
9.1 Termination Events ..................................................33
9.2 Effect of Termination ...............................................34
10. ADDITIONAL COVENANTS ...................................................34
10.1 Employees .........................................................34
10.2 Payment of all Taxes Resulting from Sale of Assets by Sellers .....35
10.3 Removing Excluded Assets ..........................................35
10.4 Reports and Returns ...............................................36
10.5 Assistance in Proceedings .........................................36
10.6 Covenant Not to Compete ...........................................36
10.7 Customer and Other Business Relationships .........................36
10.8 Retention of and Access to Records ................................37
10.9 Further Assurances ................................................37
11. INDEMNIFICATION; REMEDIES ..............................................37
11.1 Survival ..........................................................37
11.2 Indemnification and Reimbursement by Sellers and Shareholders .....38
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11.3 Indemnification and Reimbursement by Sellers -
Environmental Matters .............................................39
11.4 Indemnification and Reimbursement by Buyer ........................39
11.5 Limitations on Amount - Sellers and Shareholders ..................40
11.6 Limitations on Amount - Buyer .....................................40
11.7 Procedure for Indemnification - Third Party Claims ................40
11.8 Procedure for Indemnification - Other Claims ......................42
12. CONFIDENTIALITY ........................................................42
13. GENERAL PROVISIONS .....................................................43
13.1 Expenses ..........................................................43
13.2 Public Announcements ..............................................43
13.3 Notices ...........................................................43
13.4 Jurisdiction; Service of Process ..................................44
13.5 Enforcement of Agreement ..........................................45
13.6. Entire Agreement and Modification ................................45
13.7 Schedules .........................................................45
13.8 Assignments, Successors, and No Third-Party Rights ................45
13.9 Severability ......................................................46
13.10 Section Headings, Construction ...................................46
13.11 Time of Essence ..................................................46
13.12 Governing Law ....................................................46
13.13 Execution of Agreement ...........................................46
13.14 Shareholder Guarantee ............................................47
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
November 10, 2004, effective as of November 1, 2004 by and among AIRCOMP L.L.C.,
a Delaware limited liability company ("BUYER"); DIAMOND AIR DRILLING SERVICES,
INC., a Texas corporation ("DIAMOND AIR") and MARQUIS BIT CO., L.L.C., a New
Mexico limited liability company ("MARQUIS BIT"), ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇,
residents of Texas (collectively "▇▇▇▇▇▇") and ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇,
residents of New Mexico (collectively "▇▇▇▇▇▇"). Diamond Air and Marquis Bit are
hereinafter collectively referred to as "Sellers". ▇▇▇▇▇▇ and ▇▇▇▇▇▇ are
hereinafter collectively referred to as "SHAREHOLDERS").
RECITALS
Sellers desire to sell, and Buyer desires to purchase the herein
designated Assets of Sellers for the consideration and on the terms set forth in
this Agreement. ▇▇▇▇▇▇ and ▇▇▇▇▇▇, as the Shareholders, own 100% of the issued
and outstanding shares of capital stock and limited liability company interests
of Sellers.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the capitalized terms and variations
thereof have the meanings specified or referred to below:
"ACCOUNTS PAYABLE" is defined as any trade payables due to suppliers or
vendors in the Ordinary Course of Business, not including any debt or
borrowings, but including any late charges, past due charges, interest or other
similar charges incurred on such trade payables.
"ACCOUNTS RECEIVABLE" is defined as (i) the specified accounts
receivable and other rights to payment from customers of Sellers therefor and
the full benefit of all security for such specified accounts or debts, and (ii)
other specified accounts or notes receivable and the full benefit of all
security for such accounts or notes, and (iii) any claims, remedies and other
rights related to any of the foregoing.
"AFFILIATE" is defined, with respect to any Person, as a relative,
partner, shareholder, member, manager, director, officer, or employee of such
Person, any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person or any other Person
affiliated, directly or indirectly, by virtue of family membership, ownership,
management or otherwise.
"ASSETS" is defined in Section 2.1.
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" is defined in Section 2.7(a)(10.
"ASSIGNMENT OF PATENT" is defined in Section 2.7(a)(vi).
"ASSUMED LIABILITIES" is defined in Section 2.4(a).
"BEST EFFORTS" is defined as the efforts that a reasonable and prudent
Person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as possible, PROVIDED,
HOWEVER, that a Person required to use his Best Efforts under this Agreement
will not be thereby required to take actions that would result in a materially
adverse change in the benefits to such Person under this Agreement and the
Contemplated Transactions, or expend any material funds or have to take any
unreasonable burden.
"BREACH" is defined as any violation or breach of, any
misrepresentation or inaccuracy in, any default under, or any failure to
perform or comply with any representation, warranty, covenant, obligation, or
other provision of any Contract, or any event which with the passing of time or
the giving of notice, or both, would constitute such a violation, breach,
misrepresentation, inaccuracy, default or failure. When used with respect to
this Agreement or any Contract delivered pursuant to this Agreement, a "BREACH"
will also be deemed to include any claim (by any Person) that is or was
inconsistent with any representation, warranty, covenant, promise, obligation,
duty under, or other provision of, this Agreement or any Contract delivered
pursuant to this Agreement.
"BUSINESS DAY" is defined as any day other than Saturday or Sunday or
any other day on which banks in Texas are permitted or required to be closed.
"BUYER" is defined in the first paragraph of this Agreement.
"BUYER'S ADVISORS" is defined in Section 5.1.
"BUYER'S CLOSING DOCUMENTS" is defined in Section 4.2.
"CLOSING" is defined in Section 2.7.
"CLOSING DATE" is defined as the date as of which the Closing actually
takes place.
"CODE" is defined as the Internal Revenue Code of 1986, as amended, or
any successor law, and regulations issued by the IRS pursuant to the Code or any
successor law.
"COMPETING BUSINESS" is defined in Section 3.24.
"CONSENT" is defined as any approval, consent, ratification, waiver, or
other authorization.
"CONTEMPLATED TRANSACTIONS" is defined as all of the transactions
contemplated by this Agreement.
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"CONTRACT" is defined as any legally enforceable agreement, contract,
Lease, consensual obligation, promise, or undertaking (whether written or oral
and whether express or implied).
"DAMAGES" is defined in Section 11.2.
"DUE DILIGENCE" means having exercised that degree of care, caution,
investigation, and diligence of review of the businesses of Sellers, their
books, Records, financial matters, liabilities, contracts, leases, the Assets,
and other matters of Sellers that an experienced, reasonable, and prudent Buyer
in the same or similar circumstances would exercise in protecting itself in such
an agreement as this and the Contemplated Transactions.
"EMPLOYMENT AGREEMENT" is defined in Section 2.7(a)(iv).
"ENCUMBRANCE" is defined as any charge, clam, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right of
first option, right of first refusal or restriction of any kind, including any
restriction on use, voting (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership.
"EMPLOYEE BENEFIT PLANS" is defined in Section 3.16(a).
"ENVIRONMENT" is defined as soil, land surface or subsurface strata,
surface waters (including navigable waters and ocean waters), groundwaters,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life, and any other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" is defined as any cost,
damages, expense, Liability, obligation, or other responsibility arising from or
under any Environmental Law or Occupational Safety and Health Law, including
those consisting of or relating to:
(a) any environmental, health, or safety matter or condition (including
on-site or off site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, remedial, or inspection costs and expenses arising under any
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any cleanup, removal, containment, or other
remediation or response actions ("CLEANUP") required by any
Environmental Law or Occupational Safety and Health Law (whether or not
such Cleanup has been required or requested by any Governmental Body or
any other Person) and for ANY natural resource damages; or
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(d) any other compliance, corrective, or remedial measures required
under any Environmental Law or Occupational Safety and Health Law.
The terms "REMOVAL," "REMEDIAL," and "RESPONSE ACTION" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" is defined as any Legal Requirement that requires
or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and
the commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the
Threat of Release, or paying the costs of such clean up or prevention;
or
(h) making responsible parties pay private parties, or groups of them.,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
"EXCLUDED ASSETS" is defined in Section 2.2.
"EXHIBIT" is defined as an exhibit to this Agreement.
"FACILITIES" is defined as the leasehold interests currently operated
by Sellers, including the Real Property and Tangible Personal Property currently
being used or operated by Sellers at the respective locations of the Real
Property specified in Section 3.7.
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"GAAP" is defined as generally accepted accounting principles for
financial reporting in the United States, applied on a consistent basis.
"GENERAL CONVEYANCE, TRANSFER AND ASSIGNMENT" is defined in Section
2.7(a)(i).
"GOVERNING DOCUMENTS" is defined, with respect to any particular
entity, as (a) if a corporation, the articles or certificate of incorporation,
minutes of shareholder's meetings, minutes of the board of director's meetings,
waivers of notice, shares of stock, restrictions on a stock transfer agreements,
buy-sale agreements, stock transfer ledger and the bylaws; (b) if a general
partnership, the partnership agreement and any statement of partnership; (c) if
a limited partnership, the limited partnership agreement and the certificate of
limited partnership; (d) if a limited liability company, the articles of
organization, records of meetings and operating agreement; (e) any other charter
or similar document adopted or filed in connection with the creation, formation,
organization or formal operation of a Person; (f) all equityholders' agreements,
voting agreements, voting trust agreements, joint venture agreements,
registration rights agreements or other agreements or documents relating to the
organization, management or operation of any Person, or relating to the rights,
duties and obligations of its equityholders; and (g) any amendment or supplement
to any of the foregoing.
"GOVERNMENTAL AUTHORIZATION" is defined as any consent, license, or
permit issued, granted, given, or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
" GOVERNMENTAL BODY" is defined as any:
(a) the United States or a state, county, city, town, village,
district, or other jurisdiction within the United States;
(b) federal, state, local, municipal, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi-governmental
powers) within the United States;
(d) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power within the United States; or
(f) official of any of the foregoing.
"GUARANTY AGREEMENT" is defined in Section 2.7(b)(viii).
"HAZARDOUS ACTIVITY" is defined as the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into the
Environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities.
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"HAZARDOUS MATERIAL" is defined as any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"IMPROVEMENTS" is defined as all buildings, structures, fixtures and
improvements located on the Land or included in the Assets, including those
under construction.
"INDEMNIFIED PERSONS" is defined in Section 11.2.
"INDEMNITEE" is defined in Section 11.6(x).
"INDEMNITOR" is defined in Section 11.6(a).
"INTERIM BALANCE SHEET" is defined in Section 3.4 as the July 31, 2004
audited balance sheet, and related audited statements of income, changes in
shareholders equity, and cash flows for the seven months then ended prepared by
The Accounting & Consulting Group LLC.
"INVENTORIES" is defined as all inventories of the Sellers, wherever
located, including all finished goods, work in process, raw materials, spare
parts and all other materials and supplies on hand to be used or consumed by
Sellers in the production of finished goods.
"IRS" is defined as the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE" of a particular fact or matter by an individual exists if
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting
that individual's business affair in a reasonably prudent manner on a
day-to-day basis.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter (as set forth in (a) and (b) above), and any such
individual (and any individual Party to this Agreement) will be deemed to have
given appropriate and reasonable thought and consideration regarding the
accuracy of any representations and warranties made herein by such Person or
individual.
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"LAND" is defined as all the real property leasehold estates in which
Sellers are operating as of the Closing Date.
"LEASE" IS defined as any lease, rental or occupancy agreement,
license, or installment and conditional sale agreement to which Sellers is a
party and any other Sellers Contract pertaining to the leasing or use of any
Real Property or Tangible Personal Property;
"LEASED REAL PROPERTY" is defined as that Real Property leased by
Sellers as tenant under any Lease.
"LEGAL REQUIREMENT" IS defined as any federal, state, local, municipal,
constitution, law, ordinance, principle of common law, regulation, or statute.
"LIABILITY" is defined, with respect to any Person, as any Liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person.
"MATERIAL CONSENTS" is defined in Section 2.8.
"NON-COMPETITION AGREEMENT" is defined in Section 2.7(a)(v).
"OCCUPATIONAL SAFETY AND HEALTH LAW" is defined as any applicable Legal
Requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, including the Occupational Safety
and Health Act, 29 U.S.C. ss. 651, and any program, whether governmental or
private (such as those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions
for the industry in which Sellers are involved.
"ORDER" is defined as any order, injunction, judgment, decree, ruling,
assessment Or arbitration award of any Governmental Body or arbitrator.
"ORDINARY COURSE OF BUSINESS" is defined, with respect to an action
taken by a Person,
(a) an act or omission that is consistent in nature, scope and economic
magnitude with the past practices of such Person and is in the ordinary
course of the normal day-to-day operations of such Person;
(b) an action that does not require authorization by the board of
directors, or shareholders of such Person (or by any Person or group of
Persons exercising similar authority) and does not require any other
separate or special authorization of any nature; and
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(c) an act or omission is substantially similar in time, nature, scope
and economic magnitude to actions customarily taken, without any
separate or special authorization, in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of
business and similarly situated in all relevant and material aspects as
such Person.
"PARTY" OR "PARTIES" shall mean the Sellers, the Shareholders or Buyer,
individually or in the aggregate as the case may be.
"PATENT" is defined in Section 2.1(h).
"PERSON " is defined as an individual, partnership, corporation,
business trust, limited liability company, limited liability partnership, joint
stock company, trust, unincorporated association, joint venture or other entity,
or a Governmental Body.
"PROCEEDING" is defined as any lawful action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, judicial or investigative) commenced, brought, conducted, or
heard by or before, or otherwise involving, any court of competent jurisdiction,
any Governmental Body or arbitrator.
"PURCHASE PRICE" is defined in Section 2.3.
"REAL PROPERTY LEASES" IS defined in Section 3.7.
"RECORD" is defined as information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.
"RELATED PERSON" is defined, with respect to a particular individual,
as:
(a) each other member of such individual's immediate Family;
(b) any Person with respect to which one or more members of such
individual's Family serves as a director, officer, shareholder, member,
manager partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
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(d) any Person in which such specified Person holds a Material
Interest; and
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "CONTROL" (including "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act, (b) the "FAMILY" of an individual includes
(1) the individual, (ii) the individual's spouse, and (iii) any other natural
person who is related to the individual or the individual's spouse within the
second degree, and (c) "MATERIAL INTEREST" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 20% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 20% of the outstanding equity securities or
equity interests in a Person.
"RELEASE" is defined with regard to the Environment as any release,
spill, emission, leaking, pumping, pouring, dumping, emptying, injection,
deposit, disposal, discharge, dispersal, leaching, or migration on or into the
Environment or into or out of any property.
"REMEDIAL ACTION" IS defined as all legally required actions, including
any capital expenditures, required or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way address any Hazardous Material or other
substance; (ii) prevent the Release or Threat of Release, or minimize the
further Release of any Hazardous Material or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
Environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) bring any Leased Real Property and
the Facilities located and operations conducted thereon into compliance with all
Environmental Laws and Environmental Permits.
"REPRESENTATIVE" is defined, with respect to a particular Person, as
any director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.
"RETAINED ACCOUNTS RECEIVABLE" is defined as only those Accounts
Receivable specifically listed and described by amount and customer in Section
2.2(e) and includes such Accounts Receivable represented by loan to shareholders
and employees whether within Schedule 2.2(e) or not.
"RETAINED LIABILITIES" is defined in Section 2.4(b).
"SCHEDULE" OR "SCHEDULES" is defined as a schedule or schedules to this
Agreement.
"SELLERS" is defined in the first paragraph of this Agreement.
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"SELLERS CONTRACT" is defined as any Contract (a) under which Sellers
have or may acquire any rights or benefits, (b) under which Sellers have or may
become subject to any obligation or Liability, or (c) by which Sellers or any of
the assets owned, leased or used by Sellers is or may become bound.
"SELLERS' CLOSING DOCUMENTS" is defined in Section 3.2(a).
"SHAREHOLDER(S) " is defined as ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇.
"SUBSIDIARY" is defined, with respect to any Person (the "Owner"), as
any entity because of which securities or other interests held there exists the
power to elect a majority of that entity's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that entity (other than securities or other interests having such
power only upon the happening of a contingency that has not occurred) are held
by the Owner or one or more of its Subsidiaries.
"TANGIBLE PERSONAL PROPERTY" is defined as all tangible machinery,
equipment, tools, furniture, office equipment, computer hardware, supplies,
materials, vehicles and other items of tangible personal property (other than
Inventories) of every kind owned or leased by Sellers (wherever located and
whether or not carried on Sellers' books), together with any express or implied
warranty by the manufacturers or Sellers or lessors of any item or component
part thereof, and all maintenance Records and other documents relating thereto,
unless such has been sold, transferred, conveyed or consumed in the Ordinary
Course of Business.
"TAX" is defined as each and every tax of whatsoever kind or character
and however or why ever imposed, and any interest, penalties, additions or
additional amounts thereon, imposed, assessed, collected by or under the
authority of any Governmental Body or payable under any tax-sharing agreement or
any other Contract.
"TAX RETURN" is defined as any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any tax.
2. SALE AND TRANSFER OF ASSETS; CLOSING
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, Sellers shall sell, convey, assign, transfer and
deliver to Buyer, free and clear of any Encumbrances and Buyer shall purchase
and acquire from Sellers, all of Sellers' right, title and interest in and to
the following Sellers' property and assets, personal or mixed, tangible and
intangible, where located on the Closing Date and in the condition it is in on
the Closing Date
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(but excluding the Excluded Assets):
(a) the designated leasehold and other title to, estate or interest in
all Leased Real Property described in Schedule 2.1(a);
(b) all Tangible Personal Property and Inventories, described in
Schedule 2.1(b) (as is, where is with no warranties, including the
exclusion of the warranties of merchantability and fitness for a
particular purpose), but not including the Excluded Assets;
(c) all the Accounts Receivable as of the Closing as specified in
Schedule 2.1(c) including any work in progress, except the Retained
Accounts Receivable listed and described in Section 2.2;
(d) all Sellers' rights in, to and under the Sellers Contracts, listed
in Schedule 2.1(d), and all (oral or written) outstanding offers,
solicitations for any work in progress, to the extent the performance
of such Sellers Contract is guaranteed by Buyer and legally assignable
or transferable;
(e) all Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent legally
transferable to Buyer, including those listed in Schedule 2.1(e);
(f) copies of the data and Records related to the operations of
Sellers, including client and customer lists, referral sources, service
and warranties relating to or constituting equipment logs, equipment
warranties, operating guides and manuals, customer account records,
advertising materials, promotional materials, studies, reports,
communications and other similar documents as well as copies of all
personnel Records (if employee so consents) of employees of Sellers
hired by Buyer to the extent legally transferable and consented to by
such employee and other such Records described in Schedule 2.1(f), but
excluding attorney-client communications and attorney work product of
Sellers;
(g) all the of the intangible rights of Sellers, including Sellers'
names "Diamond Air Drilling Services, Inc." and "Marquis Bit Co.,
L.L.C." and any derivatives of such names, and assumed names, trading
names, good-will, telephone numbers, facsimile numbers and e-mail
addresses, websites and listings and those items listed in Schedule
2.1(g); and
(h) all of the Sellers interest, in that certain U. S. Patent
Application regarding the "A Percussion Hammer Bit Retainer Apparatus"
Provisional Application No. 601427,775 and Non-Provisional Application
No. 101718,167 ("PATENT")
All of the foregoing property and assets are herein referred to
collectively as the "ASSETS".
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Notwithstanding the foregoing, the transfer of the Assets pursuant to
this Agreement shall not include the assumption of any Liability in respect
thereof unless the Buyer expressly assumes such Liability pursuant to Section
2.4(a) of this Agreement.
2.2 EXCLUDED ASSETS
Notwithstanding anything to the contrary contained in this Agreement,
or the documents executed hereunder, the following items (collectively, the
"EXCLUDED ASSETS") are not part of the sale and purchase contemplated hereunder,
are excluded from the Assets, and shall remain the property of Sellers after the
Closing.
(a) the minute books, stock Records, membership Records, bylaws,
articles of incorporation, corporate seal of Sellers and all other
Governing Documents of Sellers;
(b) the shares of capital stock and limited liability company
interests, respectively, of Sellers;
(c) all the Sellers Contracts not listed in Schedule 2.1(6);
(d) all personnel Records (except copies given to Buyer) as provided in
Section 2.1(f) herein, and other Records that Sellers are required by
law to retain in its possession and other Records relating to the
business of Sellers not included in Schedule 2.1(f);
(e) the rights in and to Sellers designated Retained Accounts
Receivable in the amount of $225,000 and as listed in Schedule 2.2
(such $225,000 does not include, and is in addition to, any accounts
receivable represented by loans to Shareholders and employees, and
inter-company accounts receivable among Sellers which accounts
receivable are also retained) and all rights of payment and collection
related thereto;
(f) all rights in connection with and assets of Employee Benefit Plans,
if any;
(g) all rights of Sellers under this Agreement, the ▇▇▇▇ of Sale, and
the Assignment and Assumption Agreement;
(h) property and assets expressly designated in Schedule 2.2;
(i) all rights to insurance policies and benefits, indemnity, offset
and other rights and remedies from or by third parties and other such
rights, including contract rights, as may be needed by Sellers in
conjunction with the indemnities provisions, warranties and other
liabilities of Sellers to Buyer set forth herein;
j) the 2004 Crown Victoria Automobile, Vehicle Identification No.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇;
(k) all rights to tax refunds, reductions or credits; and
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(1) all rights in and to life insurance insuring the life of any
director of Sellers.
2.3 PURCHASE PRICE
The purchase price (the "PURCHASE PRICE") for the Assets will be in U.
S. Dollars as follows: (i) $4,050,000 for the Assets, (ii) $200,000 for work in
progress, (iii) 5350,000.00 for the Patent, and (iv) the assumption of the
Assumed Liabilities.
The cash portion of the Purchase Price in the amount of $4,600,000 shall be
delivered immediately by Buyer to Sellers at the Closing in U. S. currency via
bank wire transfer of funds that will be immediately available to Sellers upon
transfer to a bank specified by Sellers.
2.4 LIABILITIES
(a) ASSUMED LIABILITIES. On the Closing Date, Buyer assumes, agrees to
discharge, and indemnifies Sellers for the following specifically
enumerated obligations and Liabilities of Sellers (the "ASSUMED
LIABILITIES"):
(i) all Accounts Payable reflected on the Interim Balance
Sheet (other than an account payable to the Shareholders or a
Related Person of Sellers or Shareholders) incurred in the
Ordinary Course of Business which remains unpaid as of the
Closing Date, but in no event more than 120 days past due;
(ii) all Accounts Payable (other than an account payable to
the Shareholders or a Related Person of Sellers or
Shareholders) that has been incurred by Sellers in the
Ordinary Course of Business between the date of the Interim
Balance-Sheet and the Closing which remain unpaid as of the
Closing Date;
(iii) all Liability to Sellers' customers incurred by Sellers
in the Ordinary Course of Business for non-delinquent orders
and under Seller's Contracts outstanding as of the Closing
Date;
(iv) all Liability to Sellers' customers under warranty
agreements given in writing by Sellers to its customers or
occurring through Sellers ordinary and standard practices of
the industry in which Sellers are engaged and arising in the
Ordinary Course of Business prior to the Closing Date;
(v) any Liability of under those Sellers' Contracts described
in Schedule 2.4(a);
(vi) all Liability for satisfactory completion of the Work in
Progress acquired by Buyer from Sellers under this Agreement;
(vii) all Liability arising out of or resulting from Buyer's
knowing non-compliance with any Legal Requirement or Order of
any Governmental Body; and
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(viii) all costs associated with the transfer, sale,
assignment and conveyance of the Assets to Buyer from and
after the Closing Date, such as recording fees, vehicle title
transfer fees, and other similar costs.
(ix) any Liability for product liability claims on bits
manufactured by Sellers if the claim is made after the Closing
Date. The Parties agree that any Liability not defined as an
Assumed Liability above is specifically a Retained Liability
which is retained by the Sellers.
(b) RETAINED LIABILITIES "RETAINED LIABILITIES" shall mean every
Liability of Sellers other than the Assumed Liabilities. All of the
Retained Liabilities shall remain the sole responsibility of and shall
be retained, paid, performed and discharged solely by Sellers. Retained
Liabilities shall include:
(i) any Liability arising out of or relating to services
provided by Sellers to the extent services were provided prior
to the Closing Date other than to the extent assumed under
Section 2.4(a);
(ii) any Liability under any Contract assumed by Buyer
pursuant to Section 2.4(a) which arises after the Closing Date
but which arises out of or relates to any Breach that occurred
prior to the Closing Date except as to Liabilities herein
assumed by Buyer;
(iii) any Liability for Taxes of Sellers or Shareholders
including (A) any Taxes arising as a result of Sellers'
operation of its business or ownership of the Assets prior to
the Effective Date, (B) any Taxes that will arise as a result
of the sale of the Assets pursuant to this Agreement or that
ordinarily taxed against a seller (excluding vehicle transfer
taxes)and (C) any deferred Taxes of Sellers of any nature;
(iv) any Liability arising out of or relating to Sellers'
outstanding debt, or any security interest related thereto;
(v) any Environmental, Health and Safety Liabilities arising
out of or relating to the operation of Sellers' business or
Sellers' leasing, ownership or operation of Real Property;
(vi) any Liability under Sellers' Employee Benefit Plans, if
any, or relating to payroll, vacation, sick leave, pension
benefits, employee stock option or profit-sharing plans,
health care plans or benefits, or any other employee plans or
benefits of any kind for Sellers' employees or former
employees, or both;
(vii) any Liability under any employment, severance, retention
or termination agreement Sellers may have with any employee of
Sellers or any of its Related Persons;
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(viii) any Liability arising out of or relating to any
employee grievance that occurs before the Closing Date whether
or not the affected employees are hired by Buyer;
(ix) any Liability of Sellers to the Shareholders, any other
shareholder, or member of Sellers or a Related Person to the
Shareholders;
(x) any Liability to indemnify, reimburse or advance amounts
to any officer, director, manager, employee shareholder or
member of Sellers which Buyer has not agreed to accept;
(xi) any Liability to distribute to any of Sellers,
Shareholders, officers, directors or employees or otherwise
apply all or any part of the consideration received hereunder;
(xii) any Liability arising out of any Proceeding pending as
of the Closing Date, whether or not set forth in any Schedule,
or any Proceeding commenced after the Closing Date and arising
out of, or relating to, any occurrence or event happening
prior to the Closing Date except as to Liabilities herein
assumed by Buyer; and
(xiii) any Liability arising out of or resulting from Sellers'
non-compliance with any Legal Requirement or Order of any
Governmental Body.
2.5 ALLOCATION
The Purchase Price shall be allocated in accordance with Schedule 2.5
as agreed to by the Parties hereto. After the Closing, the Parties shall make
consistent use of the allocation, fair market value and useful lives specified
in Schedule 2.5 for all Tax purposes and in any and all filings, declarations
and reports with the IRS in respect thereof, including the reports required to
be filed under Section 1060 of the Code, if applicable, it being understood that
Buyer shall prepare and deliver IRS Form 8594 to Sellers within sixty (60) days
after the Closing Date if such form is required to be filed with the IRS. In any
Proceeding related to the determination of ANY Tax, neither Buyer, Sellers, nor
the Shareholders shall contend or represent that such allocation is not a
correct allocation.
2.6 CLOSING
The consummation of the purchase and sale provided for in this
Agreement (the "CLOSING") will take place at the offices of ▇▇▇▇▇-▇▇▇▇▇▇▇▇
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10.00 a.m.
(local time) on November 10, 2004 ("Closing Date"). Subject to the provisions of
Article 9, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.6 will not result in the termination of this Agreement and will not
relieve any Party of any obligation under this Agreement so long as this
Agreement is consummated within thirty days thereof
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2.7 CLOSING OBLIGATIONS
In addition to any other documents to be delivered or otherwise
provided under other provisions of this Agreement, at the Closing:
(a) Sellers or the Shareholders, as applicable, shall deliver or cause
to be delivered to
Buyer:
(i) a ▇▇▇▇ of sale for all of the Assets to be transferred to
Buyer the form of Exhibit 2.7(a)(i) (the "GENERAL CONVEYANCE,
TRANSFER AND ASSIGNMENT"), executed by Sellers;
(ii) an assignment of all of the Assets to be transferred to
Buyer in the form of Exhibit 2.7(a)(ii) which assignment shall
also further confirm Buyers undertaking, assumption and
guaranty of payment of the Assumed Liabilities (the
"ASSIGNMENT AND ASSUMPTION AGREEMENT"), executed by Sellers;
(iii) such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of
transfer and conveyance as may reasonably be requested by
Buyer, each in form and substance reasonably satisfactory to
Buyer and its legal counsel and executed by Sellers provided
this in no way requires Sellers to act in transferring the
vehicle titles beyond the extent of endorsing the certificates
of title, removing the liens on such titles or like action
commonly used in transferring such a title;
(iv) an employment agreement in the form of Exhibit 2.7(a)(iv)
executed by ▇▇▇▇ ▇▇▇▇▇▇ (the "EMPLOYMENT AGREEMENT");
(v) anon- competition agreement in the form of Exhibit
2.7(a)(v) executed by ▇▇▇▇ ▇▇▇▇▇▇ (the "NON-COMPETITION
AGREEMENT");
(vi) a Patent Assignment in the form of Exhibit 2.7(a)(vi)
executed by Diamond Air ("PATENT ASSIGNMENT"); (vii) a
certificate in the form of Exhibit 2.7(a)
(vii) executed by Sellers and the Shareholders as to the
accuracy of their representations and warranties as of the
Closing Date in accordance with Section 7.1 and as to their
compliance with and performance of their covenants and
obligations to be performed or complied with at or before the
Closing in accordance with Section 7.2; and
(viii) a certificate of an officer of Sellers in the form of
Exhibit 2.7(a)(viii) certifying, all requisite resolutions or
actions of Sellers' board of directors, members, managers, the
Shareholders approving the execution and delivery of this
Agreement and the consummation of the Contemplated
Transactions and the change of name contemplated by Section
5.4 and certifying to the incumbency of the officers of
Sellers executing this Agreement and any other document
relating to the Contemplated Transactions.
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(b) Buyer shall deliver to Sellers, and the Shareholders as applicable:
(i) the amount of $4,600,400.00 in U. S. Dollars to Sellers'
designated account via wire transfer to be immediately
available on transfer;
(ii) the Assignment and Assumption Agreement executed by
Buyer;
(iii) the Employment Agreement for ▇▇▇▇ ▇▇▇▇▇▇ executed by
Buyer;
(iv) the Non-Competition Agreement for ▇▇▇▇ ▇▇▇▇▇▇ executed by
Buyer;
(v) the Patent Assignment executed by Buyer;
(vi) a certificate in the form of Exhibit 2.7(b)(v) executed
by Buyer as to the accuracy of its representations and
warranties as of the Closing Date in accordance with Section
8.1 and as to its compliance with and performance of its
covenants and obligations to be performed or complied with at
or before the Closing in accordance with Section 8.2;
(vii) an officer's certificate of Buyer in the form of Exhibit
2.7(b)(vii) certifying, as complete and accurate as of the
Closing Date certifying all requisite resolutions or actions
of Buyer's governing body approving the execution and delivery
of this Agreement and the consummation of the transactions
contemplated herein and the authority of Buyer executing this
Agreement and any other document relating to the Contemplated
Transactions; and
(viii) a Guaranty Agreement executed by ▇▇▇▇▇-▇▇▇▇▇▇▇▇
Corporation guaranteeing payment of the Non-Competition
Agreement in the form of Exhibit 2.7(b)(viii).
2.8 CONSENTS
The Material Consents listed in Schedule 2.8 ("Material Consents') must
have been obtained as of the time of the Closing unless Buyer elects to waive
the closing conditions as to such Material Consents, then, the Parties shall use
reasonable efforts, and cooperate with each other, to obtain the Material
Consents as quickly as practicable.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS SHAREHOLDERS
Sellers and the Shareholders represent and warrant, jointly and
severally, to Buyer as follows:
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3.1 ORGANIZATION AND GOOD STANDING
Schedule 3.1 contains a complete and accurate list of Sellers'
jurisdiction of incorporation and any other jurisdictions in which it is
qualified to do business as a foreign corporation. Diamond Air is a corporation
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own, use, or purchase, as
applicable, the properties and assets that it purports to own or use, and to
perform all its obligations under Sellers Contracts_ Marquis Bit is a limited
liability company duly organized, validly existing, and is in good standing
under the laws of its jurisdiction of organization, with full power and
authority to conduct is business it is now being conducted, to own or use its
properties and assets that it purports to own or use, and to perform its
obligation under the Sellers Contracts. Marquis Bit does not do business outside
the State of New Mexico and is not qualified to do business in any other state.
Diamond Air does business in Oklahoma, New Mexico, Colorado, Arkansas and Utah
and pays taxes in those states, but is not qualified to do business in Oklahoma,
New Mexico Colorado, Arkansas and Utah.
3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Sellers and the Shareholders, enforceable against each of them in
accordance with its terms. Upon the execution and delivery by Sellers
and the Shareholders of the respective Employment Agreement,
Non-Competition Agreement, Patent Assignment and other agreements to be
executed or delivered by any or all of the Sellers and the Shareholders
at Closing (collectively, the "SELLERS' CLOSING DOCUMENTS"), each of
the Sellers' Closing Documents will constitute the legal, valid, and
binding obligation of Sellers and the Shareholders, enforceable against
each of them in accordance with its terms. Sellers have the absolute
and unrestricted right, power and authority to execute and deliver this
Agreement and the Sellers' Closing Documents to which it is a Party and
to perform their obligations under this Agreement and the Sellers'
Closing Documents, and such action has been duly authorized by all
necessary action by Sellers' board of directors, members or manager,
respectively. The Shareholders have all necessary legal capacity to
enter into this Agreement and the Sellers' Closing Documents to which
each is a Party and to perform their obligations hereunder and
thereunder.
(b) Except as set forth in Schedule 3.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance of any
of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) Breach (A) any provision of any of the Governing Documents
of Sellers, or (B) any resolution adopted by the board of
directors or management committee of Sellers;
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(ii) Breach or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Sellers, the Shareholders,
or any of the Assets, may be subject;
(iii) contravene, conflict with, or result in a violation or
Breach of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by Sellers or that otherwise relates to the
Assets or to the business of Sellers; (iv) Breach any
provision of, or give any Person the right to declare a
default or to cancel, terminate, or modify, any Sellers
Contract; or
(iv) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets to be purchased
hereunder by Buyer from Sellers unless legally created by this
Agreement.
Except as set forth in Schedule 3.2(b), neither Sellers or the Shareholders are
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION
The Shareholders own (i) 100% of the issued and outstanding shares of
capital stock of Diamond Air, and (ii) 100% of the issued and outstanding
membership interests of Marquis Bit. The Shareholders are and will be on the
Closing Date the record and beneficial owners and holders of the shares and
membership interests, respectively, of Sellers owned by each of them.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer an audited balance sheet of Sellers as
of July 31, 2004 (the "INTERIM BALANCE SHEET") and the related audited
statements of income, changes in shareholders' equity, and cash flows for the 7
months then ended, including in each case the notes thereto. Such financial
statements fairly present (and the financial statements delivered pursuant to
Section 5.3 will fairly present) the financial condition and the results of
operations, changes in shareholders' equity, and cash flows of Sellers as of the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the Interim Balance Sheet). The financial statements referred to in
this Section 3.4 and delivered pursuant to Section 5.3 reflect and will reflect
the consistent application of such accounting principles throughout the periods
involved, except as otherwise noted therein. The financial statements have been
and will be prepared from and are in accordance with the books and Records of
Sellers, which have been prepared in accordance with
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Section 3.5.
3.5 BOOKS AND RECORDS
The books of account and other financial Records of Sellers, all of
which have been made available to Buyer, are complete and correct and represent
actual, bona fide transactions.
3.6 DESCRIPTION OF LEASED REAL PROPERTY
Schedule 3.6 contains the correct legal description or street address
or both of all Land in which Sellers have a current leasehold interest or
license to use and reasonable description of the Leases for the leased Real
Property (the "REAL PROPERTY LEASES") the originals or copies of which Real
Property leases have already been made available to Buyer.
3.7 TITLE TO ASSETS AND REAL PROPERTY LEASES
(a) Sellers owns good and marketable title to the Tangible Personal
Property and Inventories described in Section 2.1(b) hereof, free and
clear of any Encumbrances.
(b) Sellers are entitled to the leasehold contract rights herein
described, and to the extent allowed by each Real Property Lease and
applicable laws, and will transfer all rights therein to Buyer,
contingent upon, and subject to Buyer's assumption of liabilities
associated with each Real Property Lease as of the Closing Date.
(c) Sellers owns good and transferable title to all of the other Assets
that are, or will be free and clear of any Encumbrances.
3.8 CONDITION OF PERSONAL PROPERTY
Notwithstanding anything herein to the contrary, the Tangible Personal
Property and Inventory, being purchased by Buyer from the Sellers is acquired as
is, where is, in its condition as of the Closing Date, with no warranties,
expressed or implied with regard thereto by Sellers, including warranties
related to fitness for a particular purpose or merchantability.
3.9 ACCOUNTS RECEIVABLE
Schedule 3.9 contains a complete and accurate list of all Accounts
Receivable as of the Closing Date, which list sets forth the aging of each such
Account Receivable. Sellers has no Knowledge of any existing or potential
contest, claim, defense or right of set-off, other than returns of goods or
merchandise in the Ordinary Course of Business that would offset the Accounts
Receivable to be transferred to Buyer under this Agreement.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Schedule 3.10, Sellers have no Liability except
for Liabilities reflected or reserved against in the Interim Balance Sheet and
current Liabilities incurred in the 20 AirComp/Diamond Air/Asset Purchase
Agreement] O.doc 3:49 PM 11/9/2004
20
Ordinary Course of Business of Sellers since the date of the Interim Balance
Sheet.
3.11 TAXES
(a) TAX RETURNS FILED AND TAXES PAID. Except as described in Schedule
3.11(a), Sellers have filed or caused to be filed on a timely basis all
Tax Returns (including where appropriate consolidated Tax Returns) and
all reports with respect to Taxes that are or were required to be filed
pursuant to applicable Legal Requirement. Sellers have paid, or made
provision for the payment of all Taxes that have or may have become due
for all periods covered by the Tax Returns or otherwise, or pursuant to
any assessment received by Sellers, except said Taxes, if any, as are
listed in Schedule 3.11(a) and are being contested in good faith and
its to which adequate reserves (determined in accordance with GAAP)
have been provided in the Interim Balance Sheet. There are no
Encumbrances on any of the assets of Sellers that arose in connection
with any failure (or alleged failure) to pay any Tax, and Sellers have
no Knowledge of any basis for assertion of any claims attributable to
Taxes which, if adversely determined would result in any such
Encumbrance.
(b) WITHHOLDING. Except as described in Schedule 3.11(b), all Taxes
that Sellers are or were required by Legal Requirements to withhold,
deduct or collect have been duly withheld, deducted and collected and,
to the extent required, have or will be paid to the proper Governmental
Body or other Person prior to or at the Closing Date.
(c) S CORPORATION. Diamond Air is a S corporation as defined in Code
Section 1361. 3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Interim Balance Sheet, to Sellers Knowledge,
there has not been any material adverse change in the business, operations,
prospects, assets, results of operations or condition (financial or other) of
Sellers, and to Sellers Knowledge, no event has occurred or circumstance exists
that may result in such a material adverse change.
3.13 WORKERS' COMPENSATION
Sellers have maintained workers' compensation coverage as required by
applicable state law through purchase of insurance and not by self-insurance or
otherwise except as disclosed to Buyer on Schedule 3.13.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
Except as set forth in Schedule 3.14:
(i) Sellers are, and at all times since January 1, 2003 have
been, in full compliance with each material Legal Requirement
that is or was applicable to it or to the conduct or operation
of its business or the ownership of its assets;
21
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or
result in a violation by Sellers of, or a failure on the part
of Sellers to comply with, any material Legal Requirement, or
(B) may give rise to any obligation on the part of Sellers to
undertake, or to bear all or any portion of the cost of, any
Remedial Action of any nature; and
(iii) Sellers have not received, at any time since January 1,
2003 any notice or other communication (whether oral or
written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any material Legal
Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of Sellers to undertake, or
to bear all or any portion of the cost of, ANY Remedial Action
of any nature.
3.15 LEGAL PROCEEDINGS; ORDERS
Except as set forth in Schedule 3.15 attached hereto and made a part
hereof for all purposes, there is no pending or, to Sellers' or the
Shareholders' Knowledge, threatened Proceeding:
(i) by or against Sellers or that otherwise relates to or may
affect the business of, any of the assets owned or used by,
Sellers; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of Sellers and the Shareholders, no event has occurred
or circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Schedule 3.16, since the date of the Interim
Balance Sheet, Sellers have conducted its business only in the Ordinary Course
of Business and there has not been any:
(a) amendment to the Governing Documents of Sellers other than those
authorizing the negotiations leading to this Agreement and related to
the letter of intent;
(b) payment (except in the Ordinary Course of Business) or increase by
Sellers of any bonuses, salaries, or other compensation to any
shareholder, director, officer, or employee or entry into any
employment, severance, or similar Contract with any director, officer,
or employee;
(c) entry into, termination of, or receipt of notice of termination of
(i) any master service agreement, license, distributorship, dealer,
sales representative, joint venture,
22
credit, or similar agreement to which Sellers is a party, or (ii) any
Contract or transaction involving a total remaining commitment by
Sellers of at least 510,000 except those arising in the Ordinary Course
of Business and those representing customer accepted bids, cost
estimates or drilling proposals; and
(d) indication by any customer or supplier of an intention to
discontinue or change the terms of its relationship with Sellers other
than a continuation, renewal or extension of a relationship and new
customer agreements arising in the Ordinary Course of Business.
3.17 CONTRACTS; NO DEFAULTS
(a) Schedule 3.17(a) contains an accurate and complete list, and
Sellers have delivered to or made available to Buyer accurate and
complete copies, of
(i) each Seller Contract that involves performance of services
or delivery of goods or materials by Sellers of an amount or
value in excess of $10,000;
(ii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended
by Sellers; and
(iii) each written amendment, supplement, and modification in
respect of any of the foregoing.
Schedule 3.17(x) sets forth reasonably descriptive details concerning
such Contracts, including the parties to the Contracts, the status of
performance under the Contracts, and the location of Sellers' office
where details relating to the Contracts are located.
(b) Except as set forth in Schedule 3.17(b):
(i) to Sellers' Knowledge, and at all times since January 1,
2003, Sellers have been, in material compliance with all
applicable terms and requirements of each material Sellers
Contract which is being assumed by Buyer;
(ii) each other Person that has or had any obligation or
Liability under any Seller Contract which is being assigned to
Buyer is, and at all times since January 1, 2003 has been, in
material compliance with all applicable terms and requirements
of such Contract; and
(iii) Sellers have no Knowledge that ANY event has occurred or
circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with, or result in a Breach of,
or give Sellers or other Person the right to declare a default
or exercise any default remedy under, or to, or to cancel,
terminate, or modify, any Seller Contract which is being
assigned to or assumed by Buyer except to the extent such
Contracts provide for their respective expiration or
termination in accordance with their terms.
23
3.18 INSURANCE
(a) Sellers have delivered or made available to Buyer:
(i) accurate and complete copies of all policies of non-life
insurance to which Sellers are a party or under which Sellers
are or have been covered at any time within the one (1)
calendar year preceding the date of this Agreement;
(ii) all known statements by any consultant or risk management
advisor with regard to the adequacy of such entity's coverage
or of the reserves for claims.
(b) Except as set forth on Schedule 3.18(b) and to Sellers' Knowledge-
(i) all policies of insurance to which Sellers are a party or
that provide coverage to Sellers:
(A) are valid, outstanding, and enforceable; and
(B) are issued by an insurer that is financially
sound and reputable.
(ii) Sellers have not 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 policy of insurance is no longer in full
force or effect or that the issuer of any policy of insurance
is not willing or able to perform its obligations thereunder
other than normal expectation of such policies under the term
stated within such policies;
(iii) Sellers has paid all premiums due, and has otherwise
performed all of its obligations, under each policy of
insurance to which it is a party or that provides coverage to
Sellers; and
(iv) Sellers have given notice to the insurer of all claims
that may be insured thereby of which Sellers have Knowledge.
3.19 ENVIRONMENTAL MATTERS
Except as disclosed in Schedule 3.19:
(a) Sellers are, and at all times have been, in full compliance with,
and has not been and is not in violation of or liable under, any
Environmental Law. Neither Sellers nor any Shareholder have any basis
to expect, nor has any of them or any other Person for whose conduct
they are or may be held to be responsible received, any actual or
threatened Order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest, or
(ii) the current or prior owner or operator of any Facilities, of any
actual or potential violation or failure to comply with any
Environmental Law, or of any
24
actual or threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of
the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials
were generated, manufactured, refined, transferred, imported, used, or
processed by Sellers or any other Person for whose conduct it is or may
be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled,
or received.
(b) There are no pending or, to the Knowledge of Sellers, threatened
claims, Encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health, and Safety Liabilities or arising under
or pursuant to any Environmental Law, with respect to or affecting any
of the Facilities or ANY other properties and assets in which Sellers
has or had an interest.
(c) Neither Sellers nor any Shareholders have any Knowledge of or any
basis to expect, nor has any of them, or any other Person for whose
conduct they are or may be held responsible, received, any citation,
directive, inquiry, notice, Order, summons, warning, or other
communication that relates to a violation of a Legal Requirement
pertaining to Hazardous Activity, Hazardous Materials, or any alleged,
actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any properties or
assets (whether real, personal, or mixed) in which Sellers had an
interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred,
imported, used, or processed by Sellers or any other Person for whose
conduct it is or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(d) Neither Sellers, nor any other Person for whose conduct it is or
may be held responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or, to the Knowledge of
Sellers with respect to any other properties and assets in which
Sellers has or had an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or
assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities or to Sellers or Shareholders' Knowledge, at any
geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether movable or
fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any
structure therein or thereon. To the Knowledge of Sellers and the
Shareholders, neither Sellers or the Shareholders have permitted or
conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets in which
Sellers has or had an interest.
25
(fl There has been no Release or, to the Knowledge of Sellers, Threat
of Release, of any Hazardous Materials at or from the Facilities or at
any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from any other properties and
assets in which Sellers have or had an interest.
3.20 EMPLOYEES
(a) Schedule 3.20(a) contains an accurate and complete list of the
following information for each employee; name; job title; date of
hiring; current compensation and any change in compensation since
January 1, 2004; vacation leave that is unused to the extent such
disclosure is legally allowed and only for such employees Buyer intends
to employ upon Closing.
(b) To the Knowledge of Buyer, no officer, director, employee of
Sellers are bound by any contract that purports to limit the ability of
such officer, director, employee, (i) to engage in or continue or
perform any conduct, activity, duties or practice relating to the
business of Sellers or (ii) assign to Sellers or to any other Person
any rights to any invention, improvement, or discovery.
3.21 LABOR DISPUTES; COMPLIANCE
To Sellers' Knowledge, they have complied in all respects with all
Legal Requirements relating to employment practices, terms and conditions of
employment the payment of social security and similar Taxes. Buyer is not liable
for the payment of any Taxes through the Closing Date, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements that occurred prior to the Closing Date.
3.22 DISCLOSURE
(a) No representation or warranty or other statement made by Sellers or
any Shareholders, to such Shareholders Knowledge, in this Agreement or
in connection with the Contemplated Transactions omits to state a
material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
(b) No representation, warranty or other statement given by Sellers or
any Shareholders, to such Shareholders Knowledge, pursuant to this
Agreement will contain any untrue statement or omit to state a material
fact necessary to make the statements made in this Agreement and in the
Schedules, in light of the circumstances in which they were made, not
misleading.
3.23 BROILERS OR FINDERS
All obligations or liabilities, if any, for brokerage or finders' fees
or agents' commissions or other similar payment incurred by Sellers or
Shareholders in connection with the sale of Sellers' business will be the sole
responsibilities of Sellers and the Shareholders, who hereby
26
indemnify Buyer against such.
3.24 RELATIONSHIPS WITH RELATED PERSONS
Except as disclosed in Schedule 3.24, no Shareholders or any Related
Person of any of them has, or since January 1, 2004 has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the business of Sellers. Neither Sellers, nor any
Shareholders, nor any Related Person of any of them owns, or since January 1,
2004 has owned, of record or as a beneficial owner, an equity interest or any
other financial or profit interest in any Persons that has (a) had business
dealings or a material financial interest in any transaction with Sellers other
than business dealings or transactions disclosed in Schedule 3.24, each of which
has been conducted in the Ordinary Course of Business with Sellers at
substantially prevailing market prices and on substantially prevailing market
terns, or (b) engaged in competition with Sellers with respect to any line of
the products or services of Sellers (a "COMPETING BUSINESS") in any market
presently served by Sellers, except for ownership of less than one percent of
the outstanding capital stock of any Competing Business that is publicly traded
on any recognized exchange or in the over-the-counter market. Except as set
forth in Schedule 3.24, neither Sellers nor any Shareholder nor any Related
Person of any of them is a party to any Contract with, or has any claim or right
against, Sellers.
3.25 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets - The term "Intellectual Property
Assets" includes:
(i) the names "Diamond Air Drilling Services, Inc." and
"Marquis Bit Co., L.L.C." and all fictional assumed names,
trademarks, service marks;
(ii) the Patent Assignment; and
(iii) all of Sellers commercial and industry related know-how,
trade secrets, confidential information, customer lists,
software, technical information, data owned, used or licensed
by Sellers as licensee or licensor and software to the extent
such is transferable or assignable to Buyer.
(b) Agreements - Schedule 3.25(b) contains an accurate list of
royalties paid or received by Sellers, from all contracts relating to
Intellectual Property Assets to which Sellers are currently a party,
except for any license for commonly available software programs with a
value less than $10,000 each under which the Sellers are the licensee.
There are no outstanding and, to Sellers' Knowledge, no threatened
disputes or disagreements with respect to any such agreement.
(c) Patent Assignment -
(i) Schedule 3.25(c) contains a complete and accurate
description of the Patent to be assigned and purchased by
Buyer from Diamond Air. Diamond Air is the owner of all
rights, titles and interests in and to the Patent, free and
clear of all liens, security interests, charges, transfers and
encumbrances, entities and other
27
adverse claims. The Patent Assignment will convey to Buyer all
rights in and to the Patent free and clear of any and all
Encumbrances.
(ii) The Patent, currently in the application stage, is in
compliance with formal legal requirements (including payment
of filing, examination and maintenance fees and proofs of
working or use) is valid and enforceable, and is not subject
to any maintenance fees or taxes or actions falling that are
due on or prior to the Closing Date or within thirty (30) days
of the Closing Date.
(iii) The Patent has not been or is not now involved in any
interference, reissue, reexamination or opposition proceeding.
To Sellers' Knowledge, there is no potentially interfering
patent or patent application of any third party.
(iv) To Sellers and Shareholders Knowledge, the Patent has not
infringed or been challenged or threatened in any way. To
Sellers and Shareholders Knowledge none of the products
manufactured and sold, nor any process or know-how used,
infringes or is alleged to infringe any patent or any
proprietary right of any other Person.
(v) All products made, used or sold under the Patent have been
marked with proper patent notice.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is now being conducted.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Upon
the execution and delivery by Buyer of the Assignment and Assumption
Agreement, the Employment Agreement, Patent Assignment, Non-Compete
Agreement and other agreements to be executed or delivered by Buyer at
Closing (collectively, the "BUYER'S CLOSING DOCUMENTS"), each of the
Buyer's Closing Documents will constitute the further legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance
with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and
the Buyer's Closing Documents and to perform its obligations under this
Agreement and the Buyer's Closing Documents, and such action has been
duly authorized by all necessary corporate action.
28
(b) Neither the execution nor delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions
by Buyer will give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Governing Documents;
(ii) any resolution adopted by the management committee of
Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; Or
(iv) any Contract to which Buyer is a party or by which Buyer
may be bound. Buyer is not and will not be required to obtain
any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions except for
the consent of M-I L.L.C. which has been obtained.
4.3 BROKERS OR FINDERS
Neither Buyer nor any of its officers, directors, employees or agents
has incurred any obligation or Liability, contingent or otherwise, for brokerage
or finders' fees or agents' commissions or other similar payment in connection
with the Contemplated Transactions.
5. COVENANTS OF SELLERS PRIOR TO CLOSING
5.1 ACCESS AND INVESTIGATION
Sellers have afforded and will continue to afford Buyer and its
Representatives (collectively, "BUYER'S ADVISORS") reasonable access during
normal business hours to Sellers' personnel, properties (including subsurface
testing), Contracts, Governmental Authorizations, books and Records, and other
relevant and material documents and data (b) furnished Buyer and Buyer's
Advisors with reasonably requested copies of all such relevant and material
Contracts, Governmental Authorizations, books and Records, and other like
documents and data as Buyer may reasonably request, (c) furnished Buyer and
Buyer's Advisors with such additional financial, operating, and other relevant
data and information as Buyer may reasonably request, and (d) otherwise
cooperated and assisted, to the extent reasonably requested by Buyer, with
Buyer's investigation of the properties, assets and financial condition related
to Sellers. In addition, and at such times, Buyer has had and shall continue to
have the right to have the Real Property and Tangible Personal Property
inspected by Buyer's Representatives, at Buyer's sole cost and expense, for
purposes of determining the physical condition and legal characteristics of the
Real Property and Tangible Personal Property.
29
5.2 BEST EFFORTS
Sellers and Shareholders shall use their Best Efforts to cause the
conditions in Article 7 to be satisfied.
5.3 INTERIM FINANCIAL STATEMENTS
Until the Closing Date, Sellers shall deliver to Buyer within a
reasonable time after the end of each calendar month a copy of Sellers' interim
financial statements for such month prepared by Sellers in their usual and
customary manner and containing information reasonably required by Buyer and
certified by Sellers' chief financial officer as to compliance with Section 3.4.
5.4 CHANGE OF NAME
At Closing, Sellers shall execute such documents as may be necessary to
effectuate a change of name with the applicable Secretary of State to one
sufficiently dissimilar to Sellers' present name.
5.5 PAYMENT OF LIABILITIES
Sellers shall (and Shareholders shall cause Sellers to) pay or
otherwise satisfy in the Ordinary Course of Business all of its Liabilities and
obligations other than the Assumed Liabilities.
6. COVENANTS OF BUYER PRIOR TO CLOSING
6.1 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Buyer
shall make, or cause to be made, at Buyer's expense, all filings required by
Legal Requirements to be made by it to consummate the Contemplated Transactions,
including transferring at its sole expense the titles to all vehicles and
trailers that encompass the Assets. Buyer also shall fully cooperate, and cause
any Related Person to cooperate, with Sellers (a) with respect to all filings
Sellers shall be required by Legal Requirements to make, and (b) in obtaining
all Consents identified in Schedule 7.3, provided, however, that Buyer shall not
be required to dispose of or make any change to its business, expend any
material funds or incur any other burden in order to comply with this Section
b.1.
6.2 BEST EFFORTS
Buyer shall use its Best Efforts to cause the conditions in Article 8
and Section 7.3 to be satisfied.
6.3 DOCUMENTS
Seller has provided to Buyer all requested documents and information.
30
6.4 DUE DILIGENCE
Buyer has performed its Due Diligence and has satisfied itself
concerning the matters arising within this Agreement.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of Sellers' and Shareholders' representations and warranties in
this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must be
accurate in all material respects as of the time of the Closing as if
then made.
(b) Each of the representations and warranties in Sections 3.2(a), 3.3,
3.4 and 3.7 and in each other Section of this Agreement which contains
an express materiality qualification, must have been accurate in all
respects as of the Closing Date of this Agreement, and must be accurate
in all respects as to the time of the Closing as if then made.
(c) All Sellers' and Shareholders' conditions in this Agreement and in
the Employment Agreement and Non-Competition Agreement for ▇▇▇▇ ▇▇▇▇▇▇
are satisfactory to Buyer.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers and Shareholders
are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
duly performed and complied with in all material respects.
(b) Sellers and the Shareholders must have delivered each of the
documents required to be delivered by them pursuant to Section 23(a),
and each of the other covenants and obligations in Sections 10.2 and
10.3, must have been performed and complied with in all respects.
7.3 CONSENTS
Each of the Material Consents identified in Schedule 2.9 must have been
obtained and must be in full force and effect as of the Closing Date.
31
7.4 ADDITIONAL DOCUMENTS
Sellers and Shareholders shall have caused the documents and
instruments required by Section 2.7(a) and the following documents to be
delivered (or tendered subject only to Closing) to Buyer:
(a) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C., dated the Closing Date, in
the form of Exhibit 7.4(a);
(b) If requested by Buyer, any Consents or other instruments at Buyer's
expense that may be required to permit Buyer's qualification in each
jurisdiction in which Sellers is licensed or qualified to do business
as a foreign corporation under the name, "Diamond Air Drilling
Services, Inc." or, "Marquis Bit Co., L.L.C." or any derivative
thereof,
(c) Such other documents as Buyer may reasonably and necessarily
request for the purpose of (i) evidencing the accuracy of any of
Sellers' representations and warranties, (ii) evidencing the
performance by Seller or any Shareholder of, or the compliance by
Seller or any Shareholder with, any covenant or obligation required to
be performed or complied with by Sellers or such Shareholders, (iii)
evidencing the satisfaction of any condition referred to in this
Article 7, or (iv) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
As of the Closing Date, there shall not have been commenced or
threatened against Buyer, or against any Related Person of Buyer, any Proceeding
(a) involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, imposing limitations or conditions on, or
otherwise interfering with any of the Contemplated Transactions.
7.6 LICENSES AND PERMITS
Buyer shall have received such Governmental Authorizations as are
necessary or desirable to allow Buyer to operate the Assets from and after the
Closing.
7.7 ENVIRONMENTAL REPORT
Buyer shall have received at Buyer's expense a Phase I Environmental
Site Assessment Report with respect to Sellers' Facilities, along with soil
samples or additional studies if Buyer so desires, which report shall be
acceptable to Buyer.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Assets and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
32
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must be accurate in all material respects as of the
Closing Date as if made on the Closing Date and must be accurate in all respects
as of the time of Closing if then made. ,
8.2 BUYERS PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed
and complied with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered, and made each of the payments required to be made by Buyer
pursuant to this Agreement.
8.3 ADDITIONAL DOCUMENTS
Buyer shall have caused the documents and instruments required by
Section 2.7(b) and the following documents to be delivered (or tendered subject
only to Closing) to Sellers and Shareholders such other documents as Sellers may
reasonably and necessarily request for the purpose of (i) evidencing the
accuracy of any representation or warranty of Buyer, (ii) evidencing the
performance by Buyer of, or the compliance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, (iii) evidencing
the satisfaction of any condition referred to in this Article 8, or (iv) an
opinion of the Counsel to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Corporation, dated the Closing Date, in
the form of Exhibit 83.
8.4 NO INJUNCTION
There shall not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the consummation of the Contemplated
Transactions, and (b) has been adopted or issued, or has otherwise become
effective.
9. TERMINATION
9.1 TERMINATION EVENTS
The obligation of the Parties to effect the Contemplated Transactions
pursuant to this Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Sellers if a material Breach of any provision of
this Agreement has been committed by the other Party and such Breach
has not been waived;
33
(b) (i) by Buyer if any of the conditions in Article 7 has not
been satisfied as of the date specified for Closing or if
satisfaction of such a condition by such date is or becomes
impossible (other than through the failure of Buyer to comply
with its obligations under this Agreement) and Buyer has not
waived such condition on or before such date; or
(ii) by Sellers, if any of the conditions in Article S has not
been satisfied as of the date specified for Closing or if
satisfaction of such a condition by such date is or becomes
impossible (other than through the failure of Sellers or the
Shareholders to comply with their obligations under this
Agreement) and Sellers and the Shareholders have not waived
such condition on or before such date;
(c) by mutual Consent of Buyer and Sellers;
(d) by Buyer or Sellers if the Closing has not occurred (other than
through the failure of Buyer or Sellers as applicable, to comply fully
with their obligations under this Agreement) on or before November 15,
2004, or such later date as the Parties may jointly agree; or
(e) as otherwise provided herein.
9.2 EFFECT OF TERMINATION
Each Party's right of termination under Section 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of such right of termination will not be an election of remedies. If the
obligations of the Parties to effect the Contemplated Transactions pursuant to
this Agreement are terminated pursuant to Section 9.1, all further obligations
of the Parties under this Agreement will terminate, except that the obligations
in Section 9.2, Articles 12 and 13 (except for those in Section 13.5) will
survive; provided, however, that if obligations under this Agreement are
terminated by a Party because of the Breach of the Agreement by another Party or
because one or more of the conditions to the terminating Party's obligations
under this Agreement is not satisfied as a result of the other Party's failure
to comply with its obligations under this Agreement, the terminating Party's
right to pursue all legal remedies will survive such termination unimpaired.
10. ADDITIONAL COVENANTS
10.1 EMPLOYEES
(a) TERMINATION. Sellers will effectuate the termination of every
employee on or before 5:00 p.m. on the Closing Date.
(b) HIRING EMPLOYEES. Buyer is not obligated to hire any of Sellers'
employees, but Buyer may do so in its sole discretion except that Buyer
will offer employment to ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
at no less than their then compensation level (excluding any raises
three months before Closing) and in the same districts as they
34
work at Closing so they do not have to relocate. For a period of 24
months as long as these individuals satisfactorily fulfill their
employment duties, in the sole judgment of Buyer, they will be offered
employment by Buyer in such districts with no reduction in
compensation.
(c) SALARIES AND BENEFITS.
(i) Sellers shall be responsible for the payment of all wages
and other remuneration due to Sellers' Employees with respect
to their services through date of termination of employees or
5:00 p.m. on the Closing Date, whichever is later, and Buyer
will be responsible for such wages and other remuneration for
those employees of Sellers hired by Buyer from date of hire by
Buyer. Buyer agrees to give such employees of Sellers hired by
Buyer credit for vacation time accrued as of Closing Date.
(d) GENERAL EMPLOYEE PROVISIONS.
(i) Sellers shall give any notices required by law and take
whatever other actions with respect to the plans, programs and
policies in this Section 10.1 in which such employees of
Sellers participate as of the Closing Date and thereafter by
Buyer as may be necessary to carry out the arrangements
described in this Section 10.1.
(ii) Sellers and Buyer shall provide each other with such plan
documents and summary plan descriptions, employee data or
other information as may be reasonably required to carry out
the arrangements described in this Section 10.1.
10.2 PAYMENT OF ALL TAXES RESULTING FROM SALE OF ASSETS BY SELLERS
Sellers and Buyer shall pay in a timely manner all Taxes for which each
is responsible and resulting from or payable in connection with the sale of the
Assets pursuant to this Agreement.
10.3 REMOVING EXCLUDED ASSETS
On or before the Closing Date, Sellers shall remove all Excluded Assets
from all Facilities and other Real Property to be occupied by Buyer. Such
removal shall be done in such manner as to avoid any damage to the Facilities
and other properties to be occupied by Buyer or any disruption of the business
operations to be conducted by Buyer after the Closing. Any damage to the Assets
or to the Facilities resulting from such removal shall be paid by Sellers at the
Closing. Should Sellers fail to remove the Excluded Assets as required by this
Section, Buyer shall have the right, but not the obligation, (i) to remove the
Excluded Assets at Sellers' sole but reasonable cost and expense, (ii) to store
the Excluded Assets and to charge Sellers all reasonable and necessary storage
costs associated therewith, (iii) to treat the Excluded Assets as unclaimed and
to proceed to dispose of the same under the laws governing unclaimed property,
or (iv) to
35
exercise any other right or remedy conferred by this Agreement. Sellers shall
promptly reimburse Buyer for all reasonable and necessary costs and expenses
incurred by Buyer in connection with any Excluded Assets not removed by Sellers
on or before the Closing Date.
10.4 REPORTS AND RETURNS
Sellers shall promptly after the Closing prepare and f le all reports
and returns required by applicable law relating to the business of Sellers and
the sale of the Assets, to and including the Closing.
10.5 ASSISTANCE IN PROCEEDINGS
Each Party will cooperate with the other Parties and/or its or their
counsel in the contest or defense of, and make available its personnel and
provide any testimony and access to its books and Records in connection with,
any Proceeding involving or relating to (a) any Contemplated Transaction, or (b)
any action, activity, circumstance, condition, conduct, event, fact, failure to
act, incident, occurrence, plan, practice, situation,, status, or transaction on
or before the Closing Date involving Sellers or its business or any
Shareholders.
10.6 COVENANT NOT TO COMPETE
For a period of three years after the Closing Date, neither Sellers nor
any Shareholder (except for ▇▇▇▇ ▇▇▇▇▇▇ for which his responsibilities are
described in the Employment Agreement and Non-Compete Agreement) shall directly
or indirectly, do any of the following:
(a) Own, manage, operate, control, be or remain employed or retained
at, act as consultant or advisor to, render any services for, have any
financial interest in, or otherwise be connected in any manner with the
ownership, management, operation, or control of any Person, firm,
partnership, corporation, or other entity that is engaged in any
business substantially similar or competitive to the business of
Sellers or Buyer as carried on by the Sellers or Buyer prior to the
Closing Date.
(b) Solicit the air hammer, air compression or related services in the
air drilling industry business of any Person who to Sellers' or any
Shareholders' Knowledge is a customer of Buyer or any Person who was a
customer or account of Sellers at the time of the Closing or within the
preceding year.
All of the foregoing provisions are reasonable and are necessary to protect and
preserve the value of the Assets and to prevent any unfair advantage being
conferred on Sellers or Shareholders. Any breach of this covenant by any
Shareholder will result in liability only to the Shareholder breaching such
covenant and not to all Shareholders.
10.7 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
(a) After the Closing, Sellers will cooperate with Buyer in its efforts
to continue and maintain for the benefit of Buyer those business
relationships of Sellers existing prior to
36
the Closing and relating to the business to be operated by Buyer after
the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers, and others,
and Sellers will satisfy the Retained Liabilities in a manner which is
not detrimental to any of such relationships. Sellers will refer to
Buyer all inquiries relating to said business.
(b) After the Closing, if Buyer shall come into possession of any part
of the Retained Accounts Receivable, then Buyer will forward to Sellers
such Retained Accounts Receivable within three days of receiving such
Retained Accounts Receivable. Buyer will diligently act in collecting
such Retained Accounts Receivable. Sellers shall cooperate with Buyer
in transferring to Buyer any Accounts Receivable of Buyer that come
into the possession of Sellers within three days of receiving such
Accounts Receivable.
10.8 RETENTION OF AND ACCESS TO RECORDS
After the Closing Date, Buyer shall retain for a period consistent with
Buyers record retention policies and practices those Records of Sellers
delivered to Buyer. Buyer also shall provide Sellers and Shareholders and their
Representatives reasonable access thereto, during normal business hours and on
at least three days' prior written notice, to enable them to prepare financial
statements or Tax Returns or deal with tax audits. After the Closing Date,
Sellers shall provide Buyer and its Representatives reasonable access to Records
that are Excluded Assets, during normal business hours and on at least three
days' prior written notice, for any reasonable business purpose specified by
Buyer in such notice.
10.9 FURTHER ASSURANCES
Subject to the provision in Section 6.1, the Parties shall cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the Parties agree (a) to furnish upon
reasonable request to each other such further information, (b) to execute and
deliver to each other such other documents reasonably requested, and (c) to do
such other reasonable acts and things, all as the other Party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
Contemplated Transactions.
11. INDEMNIFICATION; REMEDIES
11.1 SURVIVAL
All representations, warranties, covenants, and obligations in this
Agreement, the Schedules, the certificates delivered pursuant to Section 2.7,
and any other certificate or document delivered pursuant to this Agreement shall
survive the Closing. The right to indemnification, reimbursement, or other
remedy based on such representations, warranties, covenants and obligations
shall not be affected by any investigation conducted with respect to, or any
Knowledge acquired (or capable of being acquired) about, the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant or
obligation.
37
11.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS AND SHAREHOLDERS
Sellers and each Shareholder, severally, as described in Section 11.5
hereof, will indemnify and hold harmless Buyer, and its Representatives,
employees, Subsidiaries, and Related Persons (collectively, the "INDEMNIFIED
PERSONS"), and will reimburse the Indemnified Persons, for any loss, Liability,
claim, damage, expense (including reasonable attorneys' fees and expenses),
whether or not involving a third-parry claim (collectively, "DAMAGES"), arising
from or in connection with each of the following except to the extent such
Liability was expressly assumed herein by Buyer:
(a) any Breach of any representation or warranty made by Sellers or any
Shareholder in this Agreement, the certificates delivered pursuant to
Section 2.7, any transfer instrument or any other certificate or
document delivered by Sellers or any Shareholder pursuant to this
Agreement;
(b) any Breach of any covenant or obligation of Sellers or any
Shareholder in this Agreement OR in any other document, writing or
instrument delivered by Sellers or any Shareholder pursuant to this
Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Sellers
or any Shareholder (or any Person acting on their behalf) in connection
with any of the Contemplated Transactions;
(d) any services to third parties provided by, Sellers, in whole or in
part, prior to the Closing Date;
(e) any Retained Liabilities;
(f) any state or local law Liability that may result from an Employment
Loss, as defined by 29 U.S.C. ss. 2101(a)(5), caused by any action of
Sellers prior to the Closing or by Buyer's decision not to hire
previous employees of Sellers other than the refusal to employ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ at no less than their then
compensation level (excluding any raises three months before Closing)
and in the same districts they work as of Closing;
(g) any employee benefit plans, practices, programs or arrangements
(including the establishment, operation or terminations thereof)
established or maintained by Sellers; or
(h) any other debts, Liabilities or obligations of Sellers, whether
accrued, absolute, contingent, known, unknown, or otherwise, but
excluding any Assumed Liabilities.
38
11.3 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS --ENVIRONMENTAL
MATTERS
In addition to the indemnification under Section 11.2, Sellers and the
Shareholders, severally and as described in Section 11.5 hereof, will indemnify
and hold harmless Buyer and the other Indemnified Persons, and will reimburse
Buyer and the other Indemnified Persons, for any Damages (including costs of
cleanup, containment, or other remediation) arising from or in connection with
each of the following so long as such resulted from or arose through the acts or
omissions of Sellers:
(a) any Environmental, Health and Safety Liabilities arising out of or
relating to: (i) the ownership or operation by Sellers or any Person
they were responsible for at any time on or prior to the Closing Date
of any of the Facilities, the Assets or the business of the Sellers, or
(ii) any Hazardous Materials or other contaminants that were present on
the Facilities or Assets at any time on or prior to the Closing Date as
a result of Sellers possession or use thereof; or
(b) any bodily injury (including illness, disability and death,
resulting from the acts or omissions of Sellers), personal injury,
property damage (including trespass, nuisance, wrongful eviction, and
deprivation of the use of Real Property), or other damage of or to any
Person or any Assets in any way arising from or allegedly arising from
any Hazardous Activity conducted by any Person with respect to the
business of Sellers or the Assets prior to the Closing Date, or from
any Hazardous Material that was (i) present or suspected to be present
on or before the Closing Date on or at the Facilities (or present or
suspected to be present on any other property, if such Hazardous
Material emanated or allegedly emanated from any of the Facilities and
was present or suspected to be present on any of the Facilities on or
prior to the Closing Date) or Released or allegedly Released by any
Person on or at any Assets at any time on or prior to the Closing Date.
Buyer will be entitled to control any Remedial Action, any Proceeding relating
to an Environmental Claim, and, except as provided in the following sentence,
any other Proceeding with respect to which indemnity may be sought under this
Section 11.3. The procedure described in Section 11.9 will apply to any claim
solely for monetary damages relating to a matter covered by this Section 11.3.
11.4 INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer will indemnify and hold harmless Sellers, and will reimburse
Sellers, for any Damages arising from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any transfer instrument, certificate or document
executed by Buyer pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Buyer in this Agreement
or in any other document, writing or instrument executed by Buyer
pursuant to this Agreement;
39
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer (or
any Person acting on Buyer's behalf) in connection with any of the
Contemplated Transactions; or
(d) any Assumed Liabilities.
11.5 LIMITATIONS ON AMOUNT - SELLERS AND SHAREHOLDERS
(a) Notwithstanding anything herein to contrary, Sellers and
Shareholders will have no liability (for indemnification or otherwise)
with respect to the matters in this Agreement until the total of all
Damages with respect to such matters exceeds $50,000.00, but then for
all Damages if such exceeds $50,000.00. In no event shall the aggregate
indemnification provided by Sellers and Shareholders for all Damages
with regard to this Agreement exceed $2,000,000.00. In addition, with
respect to each Shareholders' liability for indemnification pursuant to
this Agreement, each Shareholder, individually, shall have a maximum
aggregate liability of $500,000.00.
(b) However, this Section 11.5 will not apply to any Breach of any of
Sellers or Shareholders representations and warranties of which Sellers
or Shareholders had Knowledge any time prior to the date on which such
representation and warranty is made or any intentional Breach by
Sellers or Shareholders of any covenant or obligation, and Sellers and
Shareholders will be liable for all Damages with respect to such
Breaches.
11.6 LIMITATIONS ON AMOUNT -BUYER
(a) Buyer will have no liability (for indemnification or otherwise)
with respect to the matters described in this Agreement until the total
of all Damages with respect to such matters exceeds $50,000.00, but
then for all Damages if such exceeds $50,000.00. Notwithstanding
anything contained herein to the contrary, the aggregate liability of
Buyer for all Damages with regard to this Agreement shall be. limited
to $2,000,000.00.
(b) However, this Section 11.6 will not apply to any Breach of any of
Buyer's representation and warranties of which Buyer had Knowledge at
any time prior to the date on which such representation and warranty is
made or any intentional Breach by Buyer of any covenant or obligation,
and Buyer will be liable for all Damages with respect to such Breaches.
11.7 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party ("INDEMNITEE") under
Section 11.2, 11.3, or 11.4 (to the extent provided in the last
sentence of Section 11.3) of notice of the assertion of a claim or
commencement of any Proceeding against it, such Indemnitee will, if a
claim is to be made against an indemnifying party ("INDEMNITOR") under
such Section, give prompt notice within ten (10) days to the Indemnitor
of the claim, but the
40
failure to notify the Indemnitor will not relieve the Indemnitor of any
Liability that it may have to any Indemnitee, except to the extent that
the Indemnitor demonstrates that the defense of such action is
prejudiced by the Indemnitee's failure to give such notice.
(b) If any Proceeding referred to in Section 11.7(a) is brought against
an Indemnitee and it gives notice to the Indemnitor of the commencement
of such Proceeding, the Indemnitor will be entitled to participate in
such Proceeding and, to the extent that it wishes (unless (i) the
Indemnitor is also a party to such Proceeding and the Indemnitee
determines in good faith that joint representation would be
inappropriate, or (ii) the Indemnitor fails to provide reasonable
assurance to the Indemnitee of its financial capacity to defend such
Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the Indemnitee and, after notice from the Indemnitor
to the Indemnitee of its election to assume the defense of such
Proceeding, the Indemnitor will not, as long as it diligently conducts
such defense, be liable to the Indemnitee under this Section 11.7 for
any fees of other counsel with respect to the defense of such
Proceeding or other expenses, incurred by the Indemnitee in connection
with the defense of such Proceeding. If the Indemnitor assumes the
defense of a Proceeding, no compromise or settlement of such claims may
be effected by the Indemnitor without the Indemnitee's Consent unless
(i) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect
on any other claims that may be made against the Indemnitee, and (ii)
the sole relief provided is monetary damages that are paid in full by
the Indemnitor; and (iii) the Indemnitor will have no Liability with
respect to any compromise or settlement of such claims effected without
its Consent.
(c) Notwithstanding the foregoing, if an Indemnitee determines in good
faith that there is a reasonable probability that a Proceeding may
adversely affect it other than as a result of monetary damages for
which it would be entitled to indemnification under this Agreement, the
Indemnitee may, by notice to the Indemnitor, assume the exclusive right
to defend, compromise, or settle such Proceeding, but the Indemnitor
will not be bound by any determination of a Proceeding so defended for
the purposes of this Agreement or any compromise or settlement effected
without its Consent (which may not be unreasonably withheld).
(d) Notwithstanding the provisions of Section 13.4, Buyer, Sellers and
each Shareholder hereby consent as between themselves to the
non-exclusive jurisdiction of any court in which a Proceeding is
brought against any Indemnified Person for purposes of any claim that
an Indemnified Person may have under this Agreement with respect to
such Proceeding or the matters alleged therein, and agree that process
may be served on Buyer, Sellers and the Shareholder with respect to
such a claim anywhere in the world.
(e) With respect to any Proceeding subject to indemnification under
this Section 11.7(i) both the Indemnitee and the Indemnitor, as the
case may be, shall keep the other party fully informed of the
Proceeding at all stages thereof where such party is not represented by
its own counsel, and (ii) the Parties agree (each at its own expense)
to render to each other such assistance as they may reasonably require
of each other and to
41
cooperate in good faith with each other in order to ensure the proper
and adequate defense of any Proceeding brought by any third party.
(f) To the extent permitted by law, with respect to any Proceeding
subject to indemnification under this Section 11.7, the Parties agree
to cooperate in such a manner as to preserve in full (to the extent
possible) the confidentiality of all confidential business Records and
the attorney-client and work-product privileges. In connection
therewith, each Party agrees that: (1) it will use its Best Efforts, in
any Proceeding in which it has assumed or participated in the defense,
to avoid production of confidential business Records (consistent with
applicable law and rules of procedure) without a protective order in
place, and (ii) all communications between any Party hereto and counsel
responsible for or participating in the defense of any Proceeding
shall, to the extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.
11.7 PROCEDURE FOR INDEMNIFICATION OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the Party from whom indemnification is
sought.
12. CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer, Sellers
and the Shareholders will maintain in reasonable confidence, and will reasonably
cause the directors, officers, employees, agents, and advisors of Buyer and the
Sellers to maintain in confidence, and not use to the detriment of another Party
any written, oral, or other information obtained in confidence from another
Party or Sellers in connection with this Agreement or the Contemplated
Transactions, unless (a) such information is already known to such Party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such Party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the famishing or use of such information is required by any
Proceedings.
If the Contemplated Transactions are not consummated, each Party will
return or destroy within ten (10) days as much of such written information as
the other Party may reasonably request.
Unless consented to by each Party in advance or required by Legal
Requirements, prior to the Closing, each Party shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person.
42
13. GENERAL PROVISIONS
13.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each Party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of its Representatives. In the
event of termination of this Agreement, the obligation of each Party to pay its
own expenses will be subject to any rights of recovery by such Party arising
from a Breach of this Agreement by another Party.
13.2 PUBLIC ANNOUNCEMENTS
Upon Closing of the Agreement, any public announcement, press release
or similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
determines. Sellers and Buyer will consult with each other concerning the means
by which Sellers' employees, customers, suppliers and others having dealings
with Sellers will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
13.3 NOTICES
All notices, Consents, waivers, payments for Retained Accounts
Receivable by Sellers and other communications required or permitted by this
Agreement shall be in writing and shall be deemed given to a Party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with
confirmation by the transmitting equipment; or (c) received by the addressee, if
sent by certified mail, return receipt requested, in each case to the following
addresses and facsimile numbers and marked to the attention of the person (by
name or title) designated below (or to such other address, facsimile number or
person as a Party may designate by notice to the other Parties):
Sellers (before the Closing):
-------
Diamond Air Drilling Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Marquis Bit Co., L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Sellers (after the
-------
Closing): ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
43
Shareholders:
-------------
▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Clay and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
---------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C_
P. O. ▇▇▇ ▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Buyer:
------
AirComp L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
With a copy to:
---------------
▇▇▇▇▇-▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
▇▇▇▇▇▇▇▇ ▇. Pound III, General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
M-I L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Contracts Administrator
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
13.4 JURISDICTION; SERVICE OF PROCESS
Any action or Proceeding seeking to enforce any provision of, or based
on any right or obligation arising out of, this Agreement or any of the
Contemplated Transactions may be brought
44
against any of the Parties in the courts of the State of Texas, or, if it has or
can acquire jurisdiction, in the United States District Courts for the State of
Texas, and each of the Parties consents to the jurisdiction of each of such
courts (and of the appropriate appellate courts) in any such action or
Proceeding and waives any objection to venue and to convenience of that forum
laid therein. Process in any action or Proceeding referred to in the preceding
sentence may be served on any Party anywhere in the world.
13.5 ENFORCEMENT OF AGREEMENT
Each Party acknowledges and agrees that the other Parties hereto would
be damaged irreparably in the event any of the provisions of this Agreement are
not performed in accordance with their specific terms and that any Breach of
this Agreement by either Party could not be adequately compensated by monetary
damages. Accordingly, each Party hereto agrees that, in addition to any other
right or remedy to which that Party may be entitled, at law or in equity, it
shall be entitled to enforce any provision of this Agreement by a decree of
specific performance and to temporary, preliminary and permanent injunctive
relief to prevent Breaches or threatened Breaches of the provisions of this
Agreement.
13.6 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements, whether written or
oral, between the Parties with respect to its subject matter (including the
Confidential Letter of Intent dated July 7, 2004 between Buyer and Sellers dated
July 7, 2004, and constitutes (along with the Schedules, Exhibits and other
documents delivered pursuant to this Agreement) a complete and exclusive
statement of the terms of the agreement between the Parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the Party to be charged with the amendment.
13.7 SCHEDULES
(a) The statements in the Schedules relate only to the representations
and warranties in the Section of the Agreement to which they expressly
relate and not to any other representation or warranty in this
Agreement unless specifically incorporated therein.
(b) In the event of any inconsistency between the statements in this
Agreement and the Exhibits hereto and those in the Schedules, the
statements in this Agreement will control first and the Exhibits hereto
will control second. All Schedules have been completed and attached to
this Agreement as of the Closing Date.
13.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No Party may assign any of its rights or delegate any of its
obligations under this Agreement without the express prior written Consent of
the other Parties. This Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
Parties. Nothing expressed or referred to within this Agreement will be
construed to give any Person other than the parties to this Agreement any legal
or equitable right, remedy, or
45
claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 13.5.
13.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect so long as the essential elements of the
agreement among the Parties expressed herein can be effectuated. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable
so long as the essential elements of the agreement among the Parties expressed
here can be effectuated.
13.10 SECTION HEADINGS, CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation. All
references to "Articles", "Sections" and "Schedules" refer to the corresponding
Articles, Sections and Schedules of this Agreement and the Schedules,
respectively. All words used in this Agreement will be construed to be of such
gender or number as the context requires. Unless otherwise expressly provided,
the word "including" or "includes" does not limit the preceding words, but
extends to include such other matters or items as would customarily and
reasonably be included or terms and the word "or" is used in the inclusive
sense. All references to documents, instruments or agreements shall be deemed to
refer as well to all addenda, exhibits, schedules or amendments thereto.
13.11 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
13.12 GOVERNING LAW
This Agreement will be governed by and construed under the laws of the
State of Texas without regard to conflicts of laws principles that would require
the application of any other law.
13.13 EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
The exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the Parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the Parties transmitted by facsimile shall be deemed to
be their original signatures for any purpose whatsoever.
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13.14 SHAREHOLDER GUARANTEE
The Shareholders have joined in this Agreement for the purpose of
guaranteeing, and by their respective signatures below, do hereby
unconditionally guarantee each and every, all and singular, the obligations of
Sellers hereunder and under the deeds, bills of sale, assignments, and other
documents, writings, and instruments executed and delivered by Sellers or on its
behalf pursuant to Section 2.7(a) and other provisions of this Agreement. The
Liability of each Shareholder hereunder shall be several with Sellers and with
the other Shareholders. Where in this Agreement provision is made for any action
to be taken or performed by Sellers, Shareholders jointly and severally
undertake to cause Sellers to take such action or to perform such action.
Without limiting the generality of the foregoing, Shareholders shall be
severally liable with Sellers for the indemnities as described and set forth in
Article 11 hereof. IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
BUYER: AIRCOMP L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
SELLERS: DIAMOND AIR DRILLING SERVICES, INC.,
A TEXAS CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
MARQUIS BIT CO., L.L.C.,
A NEW MEXICO LIMITED LIABILITY COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Member
SHAREHOLDERS: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Individually
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