Exhibit 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into on
August 1, 2003, by and among Drilling Services, Inc., a Delaware corporation
(the "Seller"), Mitcham Industries, Inc., a Texas corporation (the "Parent"),
WBW Enterprises of Texas LLC, a Texas limited liability company (the "Buyer"),
and William B. Waldroff (the "Guarantor").
RECITALS
WHEREAS, the Seller desires to transfer to the Buyer the Purchased
Assets (as defined herein), and the Buyer desires to acquire the Purchased
Assets, all upon the terms and subject to the conditions set forth herein; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and agreements, all as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms have the following
respective meanings:
"Agreement" has the meaning specified in the opening paragraph.
"Applicable Laws" has the meaning specified in Section 2.4(a).
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Assumption Agreement" has the meaning specified in Section 4.2(d).
"Business" means the business and operations of the Seller relating to
front-end seismic drilling services.
"Business Employees" has the meaning specified in Section 7.2(a).
"Buyer" means WBW Enterprises of Texas LLC, a Texas limited liability
company.
"Cash Consideration" has the meaning specified in Section 3.1(a).
"Claims" has the meaning specified in Section 8.1.
"Closing" shall mean 12:01 a.m. on the date hereof, the effective time
at which the Seller transfers the Purchased Assets to the Buyer and the Buyer
pays to the Seller the Purchase Price.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrances" means liens, charges, pledges, options, mortgages,
security interests, claims, easements, rights-of-way, servitudes, title defects,
rights of third parties and other encumbrances of every type and description,
whether imposed by law, agreement, understanding or otherwise.
"Excluded Assets" has the meaning specified in Section 2.2.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"General Conveyance" has the meaning specified in Section 4.2(d).
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or instrumentality
(domestic or foreign).
"Guarantor" means William Waldroff.
"Guaranty" has the meaning specified in Section 3.1(b).
"Indemnified Party" has the meaning specified in Section 8.3.
"Indemnifying Party" has the meaning specified in Section 8.3.
"Ordinary Course Agreements" has the meaning specified in Section
2.1(d).
"Parent" means Mitcham Industries, Inc., a Texas corporation.
"Permitted Encumbrances" means (i) Encumbrances for Taxes not yet due
and payable or the validity of which are being contested in good faith by
appropriate proceedings; and (ii) statutory liens arising in the ordinary course
of business relating to obligations as to which there is no default on the part
of the Seller, excluding any mortgage, but shall not include any Encumbrances
for Taxes filed of record against the Purchased Assets, or statutory liens filed
of record against the Purchased Assets.
"Permits" has the meaning specified in Section 2.1(c).
"Person" shall mean a corporation, an association, a partnership, an
organization, a business, an individual or a Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental Entity.
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"Promissory Note" has the meaning specified in Section 3.1(b).
"Purchase Price" has the meaning specified in Section 3.1.
"Purchased Assets" has the meaning specified in Section 2.1.
"Retained Liabilities" has the meaning specified in Section 2.4.
"Security Agreement" has the meaning specified in Section 3.1(b).
"Seller" means Drilling Services, Inc., a Delaware corporation.
"Tax" or "Taxes" means all federal, state, local, foreign and other
taxes, charges, fees, duties, levies, imposts, customs or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, profit sharing, license,
lease, service, service use, value added, withholding, payroll, employment,
excise, estimated, severance, stamp, recording, occupation, premium, property,
windfall profits, or other taxes, fees, assessments, customs, duties, levies,
imposts, or charges of any kind whatsoever, together with any interest,
penalties, additions to tax, fines or other additional amounts imposed thereon
or related thereto, and the term "Tax" means any one of the foregoing Taxes.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASED ASSETS. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, the Seller shall sell, assign,
transfer, deliver and convey to the Buyer, and the Buyer shall purchase, free
and clear of any Encumbrances, the assets of the Seller set forth in this
Section 2.1 and on Schedule 2.1 hereto (collectively, the "Purchased Assets").
Except for the Excluded Assets, the Purchased Assets shall constitute all of the
operating assets of the Business, and shall include:
(a) All inventory, machinery, spare parts, equipment and other
tangible assets of the Seller used in connection with the operation of
the Business;
(b) All records to be delivered to the Buyer pursuant to
Section 2.5;
(c) The certificates, licenses, permits, consents, operating
authorities, orders, exemptions, franchises, approvals, registrations
and other authorizations and applications therefor specifically
associated with the operation of the Business and the Purchased Assets
(collectively, the "Permits");
(d) The benefit and burden subsequent to the Closing of all
customer agreements, customer purchase orders, bids and leases to which
the Seller is a party and as set forth on Schedule 2.1(d) hereto
(collectively, the "Ordinary Course Agreements");
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(e) Any goodwill associated with the Business; and
(f) All other or additional privileges, rights, interests,
properties and assets of the Seller of every kind and description and
wherever located that are used in connection with the operation of the
Business.
2.2 EXCLUDED ASSETS. The Purchased Assets shall include all of the
tangible personal property assets of the Seller only those other assets
described or referred to in Section 2.1, and no other assets of the Seller shall
be transferred hereunder (collectively, the "Excluded Assets"). Without limiting
the generality of the preceding sentence, the Purchased Assets shall not include
(i) any cash, certificates of deposit or marketable securities of the Seller;
(ii) any real property, including any buildings thereon, owned by the Seller;
(iii) any accounts receivable of the Seller; or (iv) any claims or rights under
any contracts to which the Seller is a party not assigned to and assumed by the
Buyer hereunder and, in the case of contracts that are assigned to and assumed
by the Buyer, any claims or rights thereunder to the extent, but only to the
extent, that such claims and rights accrue prior to the Closing. Notwithstanding
the foregoing, any claims or rights of the Seller under warranties relating to
the Purchased Assets given by third parties shall be considered a Purchased
Asset, to the extent transferable.
2.3 ASSUMED LIABILITIES. Subject to Section 2.4, the Buyer hereby
assumes the rights and obligations under the express written terms of the
Ordinary Course Agreements being assumed by the Buyer to the extent and only to
the extent such obligations accrue on or after the Closing, excluding any
Retained Liabilities (collectively, the "Assumed Liabilities").
2.4 RETAINED LIABILITIES. The Buyer does not assume and is not in any
way liable or responsible for any liabilities or obligations of the Seller; it
being expressly acknowledged that it is the intention of the parties hereto that
all liabilities that the Seller has or may have in the future, whether fixed or
contingent, whether known or unknown, and not expressly described in the
definition of Assumed Liabilities shall be "Retained Liabilities" and remain the
liabilities of the Seller. Without limiting the generality of the foregoing, the
Buyer shall not assume, or take title to the Purchased Assets subject to:
(a) Any liability or obligation for any and all Taxes of, or
pertaining or attributable to, (i) the Seller for any period that ends
on or before, or includes, the Closing, or (ii) the Business and/or the
Purchased Assets for any period or portion thereof that ends on or
before the Closing for which liability is or may be sought to be
imposed on the Buyer under any successor liability, transferee
liability or similar provision of any applicable law, rule, regulation,
code, governmental determination, order, governmental certification
requirement or other public limitation (collectively, the "Applicable
Laws");
(b) Any liability or obligation of the Seller under any note,
bond or other instrument;
(c) Any liability or obligation of the Seller in respect of
any express or implied representation, warranty, agreement or guaranty
made by the Seller or imposed or asserted to
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be imposed by operation of law (except obligations or liabilities
imposed on the Buyer by operation of law after the Closing);
(d) Any obligation of the Seller relating to (i) acts, events
or omissions by any Person or circumstances existing at or prior to the
Closing; (ii) goods or services provided to or for the benefit of the
Seller prior to the Closing; (iii) goods or services provided by or on
behalf of the Seller prior to the Closing; or (iv) any pending or
threatened litigation or claims made or threatened prior to the
Closing;
(e) Any statutory liens accrued or existing at Closing against
the Purchased Assets;
(f) Any violation by the Seller of, or default by the Seller
under, any Applicable Laws which affects the ownership or operation of
the Purchased Assets or results in any change in the Assumed
Liabilities arising out of or related to the ownership or operation of
the Purchased Assets prior to the Closing;
(g) Any claims, actions, demands, losses or liabilities,
including negligence or strict liability claims indemnified by the
Seller pursuant to Section 8.1;
(h) Any debts, liabilities or obligations to any employee,
agent, officer, director, consultant, contractor or security holder of
the Seller as to any salary, bonus, commission, severance or other
termination pay or benefits or other compensation or benefits arising
out of or in connection with any plan or arrangement, pension plan,
profit sharing plan, multi-employer plan within the meaning of Section
3(37) of ERISA, health plan or any other benefit plan of the Seller, or
any other liabilities or obligations of the Seller to any employee,
agent, officer, director, consultant, contractor or security holder of
the Seller;
(i) Any liability resulting from or relating to the employment
relationship between the Seller and any of its present or former
employees or the termination of any such employment relationship with
the Seller; or
(j) Any liability of the Seller to perform or provide services
or products to customers under the Ordinary Course Agreements if the
Seller has already been paid for such services and products but has not
provided or performed the services or products.
2.5 DELIVERY. The Buyer is entitled to the records relevant to the
Purchased Assets, and the Seller shall deliver to the Buyer all documents and
other papers relating to the Purchased Assets, the Assumed Liabilities and the
current operations of the Business. The Seller, however, shall be entitled to
retain the historical books and records relating to the Business to the extent
such books and records are not necessary for the ongoing operations of the
Business by the Buyer. The Seller agrees that so long as the corporate,
accounting, auditing and Tax books, records and other books and records relating
to the Seller, the Business, the Purchased Assets and the Assumed Liabilities
remain in existence and in the possession of the Seller, the Buyer and its
authorized representatives shall have the right to inspect and, at the Buyer's
expense, to copy the same at any time during regular business hours for any
proper purpose. For a period of seven (7) years following the
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Closing, the Seller agrees that it will not destroy any of such books and
records without having first offered to deliver the same to the Buyer.
ARTICLE III
PURCHASE PRICE
3.1 PAYMENT OF PURCHASE PRICE. The aggregate purchase price for
the Purchased Assets shall be $1,050,000 (the "Purchase Price"), and shall be
paid to the Seller at Closing, as follows:
(a) $250,000 in cash (the "Cash Consideration"), payable to
the order of the Seller by wire transfer of immediately available funds
to such account as shall be designated by the Seller at least five (5)
business days prior to the Closing; and
(b) A promissory note issued by the Buyer in the principal
amount of $800,000, bearing interest at the rate of seven percent (7%)
per annum, and payable as specified therein which promissory note shall
be substantially in the form attached hereto as Exhibit A (the
"Promissory Note"). The Buyer's obligations under the Promissory Note
shall be guaranteed by the Guarantor pursuant to a Guaranty, in
substantially the form attached hereto as Exhibit B (the "Guaranty"),
and shall be secured by the Purchased Assets pursuant to a Security
Agreement, in substantially the form attached hereto as Exhibit C (the
"Security Agreement").
3.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets in the manner specified on Schedule 3.2 hereto (which
Schedule shall be completed within ninety (90) days following the date hereof).
The Seller and the Buyer shall cooperate with each other in the preparation,
execution and filing of (i) all information returns and supplements thereto
required to be filed with the Internal Revenue Service by the parties under
Section 1060 of the Code and the Treasury Regulations promulgated thereunder
relating to the allocation of the Purchase Price and (ii) all similar filings
required to be filed with respect to the transactions contemplated by this
Agreement with the Internal Revenue Service and other appropriate taxing
authorities.
ARTICLE IV
CLOSING
4.1 CLOSING. The Closing will take place at the offices of Haynes and
Boone, LLP, legal counsel for the Buyer, located at 1000 Louisiana Street, Suite
4300, Houston, Texas 77002, on the date hereof.
4.2 DELIVERIES BY THE SELLER. At Closing, the Seller shall hereby
deliver to the Buyer the following:
(a) Certificates of the Secretary of State and the taxing
authorities of the State of Delaware, dated not more than twenty (20)
days prior to the date hereof, attesting to the due organization and
good standing of the Seller as a corporation in its jurisdiction of
incorporation, and to the payment of all state Taxes due and owing
thereby;
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(b) Copies, certified by the Secretary of the Seller as of the
date hereof, of resolutions duly adopted by the Board of Directors of
the Seller authorizing the execution and delivery by the Seller of this
Agreement and all other agreements contemplated herein, the
consummation the transactions contemplated herein, and the taking of
all such other corporate action as shall have been required as a
condition to or in connection with the consummation of the contemplated
transactions;
(c) Four (4) counterparts each of the Security Agreement and
the Guaranty duly executed by the Seller; and
(d) Four (4) counterparts each of a General Conveyance,
Transfer and Assignment, substantially in the form attached hereto as
Exhibit D (the "General Conveyance"), and an Assumption Agreement,
substantially in the form attached hereto as Exhibit E (the "Assumption
Agreement"), duly executed by the Seller, together with such other
bills of sale, assignments and other instruments of transfer,
assignment and conveyance as the Buyer shall reasonably request, to
vest in the Buyer good and marketable title to the Purchased Assets.
4.3. DELIVERIES BY THE BUYER. At Closing, the Buyer shall hereby
deliver the following to the Seller:
(a) Certificates of the Secretary of State and the taxing
authorities of the State of Texas, dated not more than twenty (20) days
prior to the date hereof, attesting to the due organization and good
standing of the Buyer as a limited liability company in its
jurisdiction of incorporation, and to the payment of all state Taxes
due and owing thereby;
(b) Copies, certified by the Secretary of the Buyer as of the
date hereof, of resolutions duly adopted by the Manager of the Buyer
authorizing the execution and delivery by the Buyer of this Agreement
and all other agreements contemplated herein, the consummation the
transactions contemplated herein, and the taking of all such other
action as shall have been required as a condition to, or in connection
with the consummation of the contemplated transactions;
(c) The Cash Consideration;
(d) The Promissory Note duly executed by the Buyer;
(e) Four (4) counterparts of the Security Agreement duly
executed by the Buyer; and
(f) Four (4) counterparts each of the General Conveyance and
the Assumption Agreement duly executed by the Buyer.
4.4. DELIVERIES BY THE GUARANTOR. At Closing, the Guarantor shall
hereby deliver to the Seller four (4) counterparts of the Guaranty duly
executed by the Guarantor.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE PARENT
The Seller and the Parent hereby represent and warrant to the Buyer as
follows:
5.1 ORGANIZATION. The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
5.2 AUTHORITY. The Seller has all necessary corporate power and
authority to execute, deliver, and perform this Agreement and the other
agreements and instruments to be executed and delivered by it in connection with
the transactions contemplated hereby and thereby, and has taken all necessary
corporate action to authorize the execution and delivery of this Agreement and
such other agreements and instruments and the consummation of the transactions
contemplated hereby and thereby. This Agreement is, and the other agreements and
instruments to be executed and delivered by the Seller in connection with the
transactions contemplated hereby shall be, the legal, valid, and binding
obligations of the Seller, enforceable in accordance with their terms, except to
the extent the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other laws relating to or affecting
creditors' rights generally or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3 NONCONTRAVENTION. The execution and delivery of this Agreement by
the Seller, the fulfillment of and compliance by it with the terms and
conditions hereof and the consummation by it of the transactions contemplated
hereby will not (i) contravene, conflict with or violate any of the provisions
of the articles of incorporation or bylaws, each as amended, of the Seller, or
any resolutions adopted by the Board of Directors or shareholders of the Seller;
(ii) result in a breach of or constitute a default under (whether with notice or
the lapse of time or both) any note, bond, mortgage, loan agreement, indenture
or other instrument evidencing borrowed money to which the Seller is a party or
by which the Seller is bound; or (iii) to the knowledge of the Seller, violate
any provision of any Applicable Laws.
5.4 OWNERSHIP OF PURCHASED ASSETS; SEPARATE BUSINESS SEGMENT. Except as
set forth on Schedule 5.4 hereto, the Seller owns good and marketable title to
the Purchased Assets, free and clear of all Encumbrances except for Permitted
Encumbrances, and, upon the Seller's execution and delivery of this Agreement,
the General Conveyance and the Assumption Agreement, the Buyer will own good and
marketable title to the Purchased Assets, free and clear of all Encumbrances
except for Permitted Encumbrances. Except for the Excluded Assets, the Purchased
Assets constitute all of the operating assets of the Business.
5.5 LITIGATION. There is no litigation and there are no Proceedings,
suits or investigations pending, instituted or, to the knowledge of the Seller,
threatened against the Business or the Seller relating to the Business, the
Purchased Assets or the Assumed Liabilities before any Governmental Entity
applicable to or binding upon the Seller or any of the Purchased Assets.
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5.6 COMPLIANCE WITH LAWS. The Seller is not in any material violation
of or in default under any Applicable Laws relating to the ownership or
operation of the Purchased Assets or the Business, and no claim is pending or,
to the Seller's knowledge, threatened with respect to any such matters which if
determined adversely to the Seller would have such effect.
5.7 FULL FORCE AND EFFECT. The Ordinary Course Agreements and the
Permits are valid, binding and in full force and effect, and upon assignment and
assumption, with applicable consents if necessary, will be enforceable by the
Buyer in accordance with their respective terms. There are no material defaults
by the Seller thereunder. Except as set forth on Schedule 5.7 hereto, none of
the rights under the Ordinary Course Agreements will be impaired by the
consummation of the transactions contemplated by this Agreement, and all such
rights will inure to and be enforceable by the Buyer after the Closing without
the authorization, consent, approval or filing with, any other Person. Further,
the Seller has not received any deposits, prepayments or other payments under
the Ordinary Course Agreements for services not yet performed or products not
yet delivered.
5.8 TAXES. The Seller has duly filed when due, including any
extensions, all Tax reports and returns in connection with and in respect of the
Business, and has timely paid and discharged all Taxes shown thereon.
5.9 DISCLAIMER. EXCEPT AS SPECIFICALLY SET FORTH IN THIS ARTICLE V, THE
BUYER ACKNOWLEDGES AND AGREES THAT THE SELLER HAS NOT MADE, DOES NOT MAKE, AND
EXPRESSLY DISCLAIMS ANY WARRANTIES, REPRESENTATIONS, COVENANTS, OR GUARANTEES,
EITHER EXPRESS OR IMPLIED, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, AS
TO THE MERCHANTABILITY, HABITABILITY, QUALITY OR PHYSICAL CONDITION OF THE
PURCHASED ASSETS, OR THEIR SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
USE. THE BUYER AFFIRMS THAT IT (I) HAS HAD THE OPPORTUNITY PRIOR TO EXECUTION OF
THIS AGREEMENT TO INVESTIGATE AND INSPECT THE PURCHASED ASSETS, AND (II) HAS
MADE ITS OWN DETERMINATION AS TO THE (A) MERCHANTABILITY, HABITABILITY, QUALITY
AND PHYSICAL CONDITION OF THE PURCHASED ASSETS AND (B) THE PURCHASED ASSETS'
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE. EXCEPT AS OTHERWISE
SET FORTH HEREIN, INCLUDING THE INDEMNITY OBLIGATIONS IN ARTICLE VIII, THE BUYER
HEREBY AGREES TO ACCEPT THE PURCHASED ASSETS AT CLOSING IN THEIR PRESENT
PHYSICAL CONDITION ON AN "AS IS", "WHERE IS", AND "WITH ALL FAULTS AND DEFECTS"
BASIS, REGARDLESS OF HOW CAUSED OR CREATED (INCLUDING BY THE SELLER'S
NEGLIGENCE, ACTIONS, OMISSIONS, OR FAULT, PURSUANT TO ANY STATUTORY SCHEME, DUE
TO STRICT LIABILITY, OR OTHERWISE), AND ACKNOWLEDGES THAT THE SELLER SHALL NOT
BE UNDER ANY OBLIGATION WHATSOEVER PURSUANT TO THIS AGREEMENT OR OTHERWISE TO
UNDERTAKE ANY IMPROVEMENT, REPAIR, MODIFICATION, ALTERATION, OR OTHER WORK OF
ANY KIND WITH RESPECT TO ANY OF THE PURCHASED ASSETS.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE BUYER AND THE GUARANTOR
The Buyer hereby represents and warrants, and for purposes of Sections
6.2(b) and 6.3(b), the Guarantor hereby represents and warrants, to the Seller
as follows:
6.1 ORGANIZATION. The Buyer is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Texas.
6.2 AUTHORITY.
(a) The Buyer has all necessary power and authority to
execute, deliver, and perform this Agreement and the other agreements
and instruments to be executed and delivered by it in connection with
the transactions contemplated hereby and thereby, and has taken all
necessary action to authorize the execution and delivery of this
Agreement and such other agreements and instruments and the
consummation of the transactions contemplated hereby and thereby. This
Agreement is, and the other agreements and instruments to be executed
and delivered by the Buyer in connection with the transactions
contemplated hereby shall be, the legal, valid, and binding obligations
of the Buyer, enforceable in accordance with their terms, except to the
extent the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws
relating to or affecting creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The Guarantor has all necessary power and authority to
execute, deliver, and perform this Agreement and the other agreements
and instruments to be executed and delivered by him in connection with
the transactions contemplated hereby and thereby. This Agreement is,
and the other agreements and instruments to be executed and delivered
by the Guarantor in connection with the transactions contemplated
hereby shall be, the legal, valid, and binding obligations of the
Guarantor, enforceable in accordance with their terms, except to the
extent the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws
relating to or affecting creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
6.3 NONCONTRAVENTION.
(a) The execution and delivery of this Agreement by the Buyer,
the fulfillment of and compliance by it with the terms and conditions
hereof and the consummation by it of the transactions contemplated
hereby will not (i) contravene, conflict with or violate any of the
provisions of the regulations, as amended, of the Buyer, or any
resolutions adopted by the managers or members of the Buyer; (ii)
result in a breach of or constitute a default under (whether with
notice or the lapse of time or both) any note, bond, mortgage, loan
agreement, indenture or other instrument evidencing borrowed money to
which the Buyer is a party or by which the Buyer is bound; or (iii) to
the knowledge of the Buyer, violate any provision of any Applicable
Laws.
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(b) The execution and delivery of this Agreement by the
Guarantor, the fulfillment of and compliance by him with the terms and
conditions hereof and the consummation by him of the transactions
contemplated hereby will not (i) result in a breach of or constitute a
default under (whether with notice or the lapse of time or both) any
note, bond, mortgage, loan agreement, indenture or other instrument
evidencing borrowed money to which the Guarantor is a party or by which
the Guarantor is bound; or (ii) to the knowledge of the Guarantor,
violate any provision of any Applicable Laws.
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
RELATING TO AND SUBSEQUENT TO THE CLOSING
The Seller and the Buyer hereby covenant and agree as follows:
7.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each of the parties hereto shall assume and bear all expenses, costs and fees
incurred or assumed by such party in the preparation and execution of this
Agreement and in compliance with and performance of the agreements and covenants
contained in this Agreement.
7.2 EMPLOYEE MATTERS.
(a) The Buyer shall have the right and option, but not the
obligation, to offer employment to and hire as of or after the Closing
any of the Seller's employees who are currently employed to perform
work for the Business (the "Business Employees"), and shall have the
right to interview the Business Employees at any time. Except as
otherwise described herein, the Buyer shall not assume any liabilities
or obligations of the Seller with respect to the Business Employees,
including those Business Employees hired by the Buyer. To the extent
the Buyer offers employment to any Business Employees and such Business
Employees accept employment with the Buyer, the Buyer will have
complete discretion as to the terms of employment that are offered to
such Business Employees, and the Seller will provide the Buyer access
to employee personnel files and information on medical and workmen's
compensation claims with respect to such Business Employees. Nothing
contained in this Section 7.2 is intended to confer upon any of the
Business Employees any right to continued employment after evaluation
by the Buyer of its employment needs after the Closing. Notwithstanding
any other provision of this Agreement, the parties hereto do not intend
to create any third-party beneficiary rights respecting any of the
Business Employees or former Business Employees as a result of the
provisions herein and specifically hereby negate any such intention.
(b) Notwithstanding the Buyer's decision to hire any of the
Business Employees, the Buyer shall not be liable or obligated under
any employee benefit plan or for any other employee benefits that may
have been established by the Seller for the Business Employees for any
vacation, sick pay or health insurance benefits that may have accrued
to the Business Employees prior to the Closing; provided, however, that
the Buyer shall add any Business Employees which the Buyer elects to
hire on a full-time basis pursuant to this Section 7.2 on the
appropriate medical insurance plan of the Buyer. The Seller expressly
acknowledges that
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it has sole liability for all compensation and employee benefit costs
accrued as of the Closing and as between the Buyer and the Seller, for
all medical, workmen's compensation and other similar costs and
expenses for any Business Employee condition, illness or injury, unless
the Business Employee becomes an employee of the Buyer and then only
for such condition, illness or injury which arose before the Business
Employee became an employee of the Buyer, whether or not any or all of
the Business Employees are subsequently hired by the Buyer.
(c) The Buyer and the Seller shall complete and furnish to
each other such other employee data as shall be reasonably required
from time to time for each party to perform and fulfill its obligations
under this Section 7.2.
ARTICLE VIII
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS; INDEMNIFICATION
8.1 INDEMNIFICATION BY THE SELLER. The Seller and the Parent agree to
indemnify, defend and hold the Buyer and its officers, managers, employees and
agents harmless from and against any and all losses, liabilities, claims,
demands, damages, costs and expenses (including reasonable attorneys' fees and
disbursements) of every kind, nature and description, including but not limited
to negligence and both statutory and common law strict liability claims
(collectively, the "Claims"), sustained by the Buyer or any of its officers,
managers, employees or agents based upon, arising out of or otherwise in respect
of (i) the inaccuracy of any representation or warranty, or the breach of any
covenant or agreement, of the Seller contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant to this
Agreement; (ii) the ownership, management or use of the Purchased Assets or
operation of the Business prior to the Closing; or (iii) any Retained
Liabilities. Notwithstanding the foregoing, the Seller and the Parent shall not
have any obligation to indemnify the Buyer and its officers, managers, employees
and agents from and against any Claims until the aggregate amount of such Claims
is greater than $10,000, but in no event shall the Seller's aggregate obligation
to indemnify the Buyer and its officers, managers, employees and agents exceed
the Purchase Price. In the event that the $10,000 threshold is exceeded, the
Seller shall be liable to indemnify the Buyer and its officers, managers,
employees or agents, as the case may be, for all Claims as provided in this
Section 8.1, without deducting such $10,000.
8.2 INDEMNIFICATION BY THE BUYER. The Buyer agrees to indemnify, defend
and hold the Seller and its officers, directors, employees and agents harmless
from and against any and all Claims sustained by the Seller and any of its
officers, directors, employees or agents based upon, arising out of or otherwise
in respect of (i) the inaccuracy of any representation or warranty, or the
breach of any covenant or agreement, of the Buyer or the Guarantor contained in
this Agreement or in any certificate, agreement, document or instrument
delivered pursuant to this Agreement; (ii) the ownership, management or use of
the Purchased Assets or operation of the Business after the Closing; or (iii)
any Assumed Liabilities. Notwithstanding the foregoing, the Buyer shall not have
any obligation to indemnify the Seller and its officers, directors, employees
and agents from and against any Claims until the aggregate amount of such Claims
is greater than $10,000, but in no event shall the Buyer's aggregate obligation
to indemnify the Seller and its officers, directors,
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employees and agents exceed the Purchase Price. In the event that the $10,000
threshold is exceeded, the Buyer shall be liable to indemnify the Seller and its
officers, directors, employees or agents, as the case may be, for all Claims as
provided in this Section 8.2, without deducting such $10,000.
8.3 INDEMNIFICATION PROCEDURE. Any party seeking information or
reimbursement for Claims hereunder (the "Indemnified Party") shall as promptly
as practical notify the party from which such indemnification is sought (the
"Indemnifying Party") upon which the Indemnified Party intends to base a claim
for indemnification or reimbursement hereunder; provided, however, that the
failure of an Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability under this Agreement to the
Indemnified Party with respect to such Claim except to the extent the
Indemnifying Party is actually prejudiced or damaged by the failure to receive
timely notice. In the event of any claims for indemnification or reimbursement,
the Indemnifying Party, at its option, may assume (with legal counsel reasonably
acceptable to the Indemnified Party) the defense of any claim, demand, lawsuit
or other proceeding brought against the Indemnified Party, which claim, demand,
lawsuit or other proceeding may give rise to the indemnity or reimbursement
obligation of the Indemnifying Party hereunder, and may assert any defense of
any party; provided, however, that the Indemnified Party shall have the right at
its own expense to participate jointly with the Indemnifying Party in the
defense of any claim, demand, lawsuit or other proceeding in connection with
which the Indemnified Party claims indemnification or reimbursement hereunder.
Notwithstanding the right of an Indemnified Party so to participate, the
Indemnifying Party shall have the sole right to settle or otherwise dispose of
such claim, demand, lawsuit or other proceeding on such terms as the
Indemnifying Party, in its sole discretion, shall deem appropriate with respect
to any issue involved in such claim, demand, lawsuit or other proceeding as to
which (i) the Indemnifying Party shall have acknowledged the obligation to
indemnify the Indemnified Party hereunder and the settlement is solely for cash
or (ii) the Indemnified Party shall have declined so to participate.
8.4 SURVIVAL. All representations and warranties of the parties to this
Agreement shall survive the Closing and shall remain in full force and effect
for a period of two (2) years from the Closing. All representations, warranties
and covenants and agreements made by the parties shall not be affected by any
investigation heretofore or hereafter made by and on behalf of any of them and
shall not be deemed merged into any instruments or agreements delivered in
connection with the transactions contemplated hereby. The covenants and
agreements entered into pursuant to this Agreement shall survive the Closing
without limitation.
8.5 EXCLUSIVE RIGHTS AND REMEDIES. THE RIGHTS AND REMEDIES PROVIDED IN
THIS ARTICLE VIII SHALL BE THE EXCLUSIVE RIGHTS AND REMEDIES, CONTRACTUAL OR
OTHERWISE, OF THE BUYER AND THE SELLER, AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS, WITH RESPECT TO ANY MATTERS WHICH THEY MAY BE
INDEMNIFIED UNDER THIS ARTICLE.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices and other communications required or
permitted to be given or
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made hereunder by either party hereto shall be in writing and shall be deemed to
have been duly given if delivered personally or transmitted by first class
registered or certified mail, postage prepaid, return receipt requested, or sent
by prepaid overnight delivery service, or sent by facsimile, to the parties at
the following addresses or facsimile numbers (or at such other addresses or
facsimile numbers as shall be specified by the parties by like notice):
If to the Buyer or the Guarantor:
WBW Enterprises of Texas LLC
P.O. Box 487
Needville, Texas 77461
Attn.: William B. Waldroff
Facsimile: (979) 793-2828
with a copy to (which shall not constitute notice):
Winstead Sechrest & Minick P.C.
910 Travis Street, Suite 2400
Houston, Texas 77002
Attn.: Richard C. Yount, Jr., Esq.
Facsimile: (713) 650-2400
If to the Seller:
Drilling Services, Inc.
c/o Mitcham Industries, Inc.
8141 Highway 75 South
Huntsville, Texas 77340
Attn.: P. Blake Dupuis
Facsimile: (936) 295-0382
with a copy to (which shall not constitute notice):
Haynes and Boone, LLP
1000 Louisiana, Suite 4300
Houston, Texas 77002
Attn.: Bryce D. Linsenmayer, Esq.
Facsimile: (713) 547-2300
Such notices, demands and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended receipt; (ii) if mailed, upon the earlier of five (5) days after
deposit in the mail or the date of delivery as shown by the return receipt
therefore; or (iii) if sent by facsimile transmission, when confirmation of
receipt is received.
9.2 ENTIRE AGREEMENT. This Agreement, including the schedules,
exhibits and other writings referred to herein or delivered pursuant hereto,
constitutes the entire agreement between the
14
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
9.3 AMENDMENTS AND WAIVER; RIGHTS AND REMEDIES. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of either party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of either party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of either party
based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
9.4 GOVERNING LAW; ARBITRATION. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. FOR THE RESOLUTION OF ANY
DISPUTE UNDER THIS AGREEMENT, THE DISPUTE SHALL BE SUBMITTED TO BINDING
ARBITRATION IN HOUSTON, TEXAS. ANY SUCH ARBITRATION SHALL BE CONDUCTED UNDER THE
AUSPICES OF, AND PURSUANT TO THE RULES OF, THE AMERICAN ARBITRATION ASSOCIATION
AS THEN IN EFFECT, OR SUCH OTHER PROCEDURES AS THE PARTIES MAY AGREE TO AT THE
TIME, BEFORE AN ARBITRATOR, WHO SHALL BE SELECTED BY THE PARTIES TO THE DISPUTE.
SHOULD THE ARBITRATOR APPOINTED DIE, RESIGN, REFUSE OR BECOME UNABLE TO ACT
BEFORE A DECISION IS GIVEN, THE VACANCY SHALL BE FILLED BY THE METHOD SET FORTH
IN THIS CLAUSE FOR THE ORIGINAL APPOINTMENT. ANY AWARD ISSUED AS A RESULT OF
SUCH ARBITRATION SHALL BE FINAL AND BINDING BETWEEN THE PARTIES, AND SHALL BE
ENFORCEABLE BY ANY COURT HAVING JURISDICTION OVER THE PARTY AGAINST WHOM
ENFORCEMENT IS SOUGHT. EACH PARTY ACKNOWLEDGES THAT HE OR SHE OR IT HAS
VOLUNTARILY AND KNOWINGLY ENTERED INTO AN AGREEMENT TO ARBITRATION UNDER THIS
SECTION 9.4 BY EXECUTING THIS AGREEMENT.
9.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
9.6 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
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9.7 REFERENCES. All references in this Agreement to Articles, Sections
and other subdivisions refer to the Articles, Sections and other subdivisions of
this Agreement unless expressly provided otherwise. The words "this Agreement,"
"herein," "hereof," "hereby," "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly
so limited.
9.8 SEVERABILITY OF PROVISIONS. If any provision of this Agreement is
held to be unenforceable, this Agreement shall be considered divisible and such
provision shall be deemed inoperative to the extent it is deemed unenforceable,
and in all other respects this Agreement shall remain in full force and effect;
provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by applicable law.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first written above.
SELLER:
DRILLING SERVICES, INC.
By: /s/ P. Blake Dupuis
-------------------------------
P. Blake Dupuis,
Vice President
PARENT:
MITCHAM INDUSTRIES, INC.
By: /s/ P. Blake Dupuis
-------------------------------
P. Blake Dupuis,
Executive Vice President
BUYER:
WBW ENTERPRISES OF TEXAS LLC
By: /s/ William B. Waldroff
-------------------------------
Name: William B. Waldroff
-----------------------------
Title: President
----------------------------
GUARANTOR:
/s/ William B. Waldroff
----------------------------------
WILLIAM B. WALDROFF
A copy of the schedules and exhibits to this Asset Purchase Agreement shall be
furnished to the Securities and Exchange Commission or its staff upon request.
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EXHIBIT A
PROMISSORY NOTE
18
EXHIBIT B
GUARANTY
19
EXHIBIT C
SECURITY AGREEMENT
20
EXHIBIT D
GENERAL CONVEYANCE, TRANSFER AND ASSIGNMENT
21
EXHIBIT E
ASSUMPTION AGREEMENT
22
SCHEDULE 2.1
PURCHASED ASSETS
23
SCHEDULE 2.1(D)
ORDINARY COURSE AGREEMENTS
24
SCHEDULE 3.2
ALLOCATION OF PURCHASE PRICE
25
SCHEDULE 5.4
OWNERSHIP OF PURCHASED ASSETS
26
SCHEDULE 5.7
FULL FORCE AND EFFECT
27