ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT (the “Agreement”) is made July 8, 2008 (the “Effective
Date”) by and between XXXXXXX XXXX DRILLING, INC. (“Buyer”) and SEQUOIA FOSSIL
FUELS, INC. (“Seller”). Buyer and Seller may be referred to herein individually
as “Party” or collectively as “Parties”.
RECITALS
WHEREAS,
Buyer
desires to purchase all of Seller’s right, title and interest in the assets (the
“Assets”) listed in Annex A of this Agreement from Seller, and Seller desires to
sell all of its right, title and interest in the Assets to Buyer;
NOW,
THEREFORE,
based
on the above and in consideration of the covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1.
Purchase and Sale.
1.1
Purchase and Sale; Consideration. In consideration for the payment of
$1,500,000 in cash, Seller hereby agrees to sell, transfer and relinquish all
of
Seller’s right, title and interest in the Assets to Buyer. Except as otherwise
agreed by the Parties, title and risk of loss to Assets will transfer to the
Buyer upon the physical delivery of the Assets by Seller.
2.
Representations and Warranties
2.1
Each Party. Each Party represents to the other Party that:
(a)
Authority. They each have the authority to enter into this Agreement in
the name, title and capacity herein stated with full and lawful authority on
behalf of their respective principals including a current authorization by
their
respective boards of directors, managers or trustees approving the execution
and
delivery of this Agreement;
(b)
No
Default. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the compliance with
the terms hereof, will result in any default under any agreement or instrument
to which a Party is a party, or violate any order, writ, injunction, decree,
statute, rule or regulation applicable to a Party;
(c)
No
Action. No order has been entered, or remains in effect at the Effective
Date, in any court or governmental agency having jurisdiction over the Parties
or the subject matter of this Agreement that restrains or prohibits the purchase
and sale contemplated herein, and no order has been entered, or remains in
effect at the Effective Date which seeks to recover damages from any of the
Parties resulting therefrom; and
(d)
Enforceability. This Agreement constitutes the legal, valid and binding
obligation of each Party, enforceable in accordance with its terms, except
as
limited by bankruptcy or other laws applicable generally to creditor's rights
and as limited by general equitable principles.
2.2
Conditions of Assets. Purchaser understands that the Assets are being
purchased in an “as is” condition. Unless otherwise prohibited by law, Purchaser
agrees that Seller (i) makes no warranties, expressed or implied, except that
Seller warrants that Seller has good and marketable titles to the Assets and
the
Assets will be delivered free and clear of all liens; (ii) Purchaser waives
as
to Seller all warranties, whether of merchantability, fitness or otherwise;
(iii) Seller disclaims all legal responsibility for product defects that might
cause harm; (iv) Seller shall not be liable for any general, consequential
or
incidental damages, including without limitation, any damages for loss of use,
loss of profits or dimunition of market value, and Seller shall not be liable
for any damages claimed by Purchaser or any other person or entity upon the
theories of negligence or strict liability in tort; (v) if the Assets should
for
any reason prove to be defective, Seller bears no obligation for the servicing
and repair of such defect(s); and (vi) all risks as to the quality and
performance of the Assets is that of Purchaser.
2.3
Title to and Condition of Properties. Seller has good and marketable
title to, is the lawful owner of, and has the full right to sell, convey,
transfer, assign and deliver the Assets free and clear of any mortgage, lien,
pledge, security interest, option, lease (or sublease), conditional sales
agreement, title retention agreement, charge, claim, encumbrances, easement
or
encroachment, except as disclosed on Exhibit B hereto. At and as of the Closing,
Seller will convey the Assets to Purchaser by xxxxx, xxxx of sale, certificates
of title and instruments of assignment and transfer effective to vest in
Purchaser, and Purchaser will have, good and valid record and marketable title
to all of the Purchased Assets, free and clear of all encumbrances other than
those described in this Section.
2.4
Breach of Seller's Warranties. From and after the Effective Date, Seller
agrees to indemnify, defend and hold harmless Purchaser against all losses,
claims, damages, liabilities and expenses (including reasonable attorneys’ fees)
incurred in connection with (A) actions taken or omitted to be taken (including
any untrue statement made or any statement omitted to be made) by the Seller
or
any of its officers, directors employees, agents, representatives or their
respective affiliates with respect to the Assets; and (B) any breach of the
several representations and warranties of Seller set forth herein.
3.
Miscellaneous
3.1
Term. This Agreement shall continue in effect until the obligations of
the Parties pursuant to this Agreement have been fully performed, unless the
context of a particular provision indicates by its context that it should
survive such termination. The termination of this Agreement shall not relieve
a
Party of any expense, liability or other obligation, or any remedy therefor,
which has accrued or attached prior to the date of such termination.
3.2
Assignability. This Agreement is personal in nature and may not be
assigned by a Party or Parties without the prior written consent of the
non-assigning Party or Parties, which consent shall not be unreasonably
withheld. Any assignment of this Agreement shall be made specifically subject
to
the terms and conditions of this Agreement and any assignee shall agree in
writing to be bound by the terms of this Agreement.
3.3
Successors and Assigns. This Agreement, and all the rights, titles,
interests, requirements, covenants, obligations, terms and conditions set forth
herein, shall be binding upon, and inure to the benefit of the Parties hereto
and their respective partners, parties of interests, beneficiaries, heirs,
representatives, trustees, and permitted successors and assigns.
2
3.4
Counterparts. This Agreement may be executed in multiple counterparts, by
original signature, facsimile, or by electronic copy (the means of such
electronic copy to be mutually agreed by the Parties), no one of which need
be
executed by all the Parties hereto.
3.5
Partial Invalidity. The invalidity or unenforceability of any particular
provision of this Agreement or any of the documents collateral to it will not
affect the other provisions hereof or thereof, and the Agreement and any of
the
documents collateral to it will be construed in all respects as if such invalid
or unenforceable provisions were omitted.
3.6
Notices. Except as otherwise provided above, all notices required under
this Agreement will be given in writing and delivered in person, by United
States certified mail return receipt requested, courier service, facsimile,
telecopy or e-mail addressed to each of the Parties at the addresses listed
below:
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Xxxxxxx
Xxxx Drilling, Inc.
000
Xxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxx
Telephone:
(000)-000-0000
Telecopy:
(000) 000-0000
Xxxxxxxxxxxxxxx@xxxxxxx.xxx
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Sequoia
Fossil Fuels Corp.
XX
Xxx 000
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxx Xxxxxx
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Xxxxxxx0000@xxxxxxxxx.xxx
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Any
notice delivered in person, by courier service, facsimile or telecopy shall
be
deemed given when received by the Party to whom it is addressed. Each Party
has
the right to change its address by giving written notice thereof to the other
Parties.
3.7
Governing Law. The laws of the State of Texas shall govern the validity
of this Agreement, the construction of its terms, and the interpretation of
the
rights and duties of the Parties, and the validity construction and
interpretation of any conveyances executed pursuant to this Agreement, without
regard to the principles of conflicts of laws, including, but not limited to,
matters of performance, non-performance, breach, remedies, and procedures.
Forum
and venue shall be exclusively in state and federal courts located in Dallas,
Texas.
3.8
Dispute Resolution. In the event of any dispute, litigation or
arbitration between the Parties hereto with respect to the sale of the Assets,
the unsuccessful party to such dispute, litigation or arbitration shall pay
to
the successful party all costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred therein by the successful party, all of
which shall be included in and as a part of the judgment or award rendered
in
such dispute, litigation or arbitration. For purposes of this Agreement, the
term "successful party" shall mean the party which achieves substantially the
relief sought, whether by judgment, order, settlement or
otherwise
3
3.9
Amendment. This Agreement shall not be modified or amended except by an
instrument in writing and signed by authorized representatives of the Parties.
All notices and requests hereunder shall be in writing and shall be sent to
the
Parties' addresses herein above set forth or to such other address for any
party
as may hereafter be designated by such party in writing.
3.10
Entire Agreement. The Parties agree and understand that this Agreement
and all of its exhibits constitute their entire agreement among the Parties
respecting the subject matter of the transactions contemplated hereby and that
there are no other agreements among them other than the terms and conditions
contained herein.
3.11
No Third Party Beneficiaries. This Agreement is intended to benefit only
the Parties hereto and their respective successors and assigns.
3.12
Necessary Documents. The Parties further agree to prepare, execute and
deliver all such other documents that may be reasonably necessary to fully
effectuate all the terms and conditions herein required.
THIS
PURCHASE AGREEMENT is executed by each Party to be in effect upon the Effective
Date.
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By:
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Xxxxx
Xxxxxx
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XXXXXXX
XXXX DRILLING, INC.
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By:
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4
EXHIBIT
A:
ASSETS
TO BE PURCHASED
| I. |
DRILLING
RIG #1
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Inventory:
102’
Xxx
X. Xxxxx Xxxxxxx
T-20
National Draworks-powered by rebuilt 12V92 Detroit
9’
H
x
40’ L x 16’ W substructure-
150
ton
Ideal Blocks – 4 sheave W/B5 Hook
Top
Doghouse w/water tank
Roughneck
Doghouse (bottom)
2000
gal
& 3000 gal diesel tanks
5000’
4
½” drill pipe
16
drill
collars 6 ¼”
150
KW
light plant w/ 292 Xxxxxxx
X
X XXX
00” 12V92
C-250
15”
powered by 8V71 Detroit
Xxxxxxxx
150 ton swivel
Xxxxx
& Bushings
17
½
Emsco table
2
Pipe
Baskets
2
sets
pipe racks
Reagon
BOP w/new bladder
Hydraulic
hand pump
Tongs
Subs
New
Lights
Hand
Tools
Catwalk
Stairways
V-Door
New
Xxxxx
Hose
Auto
Driller – rebuilt
Recorder-rebuilt
Straight
Hole
Deviation
spool w/ new line
Jets –
new hoses
Rebuilt
Air Compressor
Mud
Xxxxxx
Two
(2)
300 bbl. steel mud pits (optional)
HORSEPOWER
IS 750
5
| II. |
DRILLING
RIG #2
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Inventory:
Xxx
X.
Xxxxx 102’ Derrick SN #T2702 with 4 sheaves
11’
Substructure
(2)
12V92
Detroit Engines compounded, SN #00XX0000000000000 & SN
#12VF0755281237B00,
re-manufactured
Ideco
H-40 Draw Works 800 HP w/ new Brakes complete w/air controls, 1” line
Ideal
000
Xxx Xxxxx/Xxxx
Xxxxxxxx
6200
Top
Doghouse 18’ X 8’ with knowledge box, bench and lockers.
Bottom
Doghouse 20’ X 8’ with lockers, heater and parts bin
3000
Gallon Fuel Tank
6
Pipe
Racks (3 sets)
Catwalk
45’ X 4’ X 4’
#1
Pump -
16V71 Detroit Engine on National 20P Pump w/20” Stroke SN #30056
#2
Pump – Xxxxxx Xxxxxx 14” pump powered by rebuilt 3406
175
KVW
Light Plant Powered By 671 Detroit Engine (Rebuilt)
45’
Xxxxx
w/Bushing and Hose
Xxxxxx
BOP w/Xxxxxx Hydraulic Pump unit
Geolograph
Recorder (3264) L-3485
Auto
Drill – SN #5072
Loading
ramp 9’ X 20’ X 5’
Xxxxxxxx
17 ½” Rotary Table (Just Rebuilt)
Geolograph
Weight Indicator
Tools –
(2) Tongs, Slips, 4 ½” Elevators, 8’ Xxxxx
300
Barrel Water Tank w/Tool Shed Combination
2000
Gallon Diesel Tank
(2)
Pipe
Baskets
Misc.
Others
Xxxxxx
makeup and breakout catheads
450
HP
twin disc torque converters
Screen
type shale shaker – new manufactured
(14)
Collars-5 7/8” 4” Full hole w/subs
NO
DEVIATION SURVEY TOOLS
ONLY
ONE
STEEL PIT, BARE NEEDS TO BE REWORKED
NO
DRILL
PIPE
BRAND
NEW
STRING OF 6 ½” DRILL COLLARS
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EXHIBIT
B:
SCHEDULE
OF LIENS ON THE ASSETS
| 1. |
Lien
numbers 16500005000, 16500005257, & 16500009705 held by First
Financial Bank, N.A.
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