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Exhibit
10.21
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE
AGREEMENT, dated as of November 17, 2006 (the “
Agreement ”), is by and among Turbeco, Inc., a Texas
corporation (the “Buyer”), and Teal Supply Co., a Texas
corporation d/b/a Triumph Drilling Tools, Inc. (the “
Company ”) and Michael E. Jensen (the “
Shareholder ”).
W I T N E S S E T H
:
WHEREAS, Buyer desires to
purchase from the Company, and the Company desires to sell to
Buyer, substantially all of the assets of the Company;
and
WHEREAS, the Shareholder owns
all of the issued and outstanding stock of the Company and thus
would derive a substantial benefit from the consummation of the
transaction contemplated herein;
NOW, THEREFORE, in
consideration of the premises and the representations, warranties,
covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
THE
PURCHASE
Section 1.1.
Purchase . On and subject to the terms and conditions
of this Agreement, at the Closing, Buyer will purchase from the
Company, and the Company will sell to Buyer, the following assets,
rights, properties, and interests of the Company (the “
Acquired Assets ”):
(a) The rental tools,
equipment, computers, office supplies, vehicles, and fixtures, and
other items of tangible personal property of the Company, including
specifically but not limited to the items described on Schedule
1.1(a) (the “ Tangible Personal Property
”);
(b) The leasehold rights of
the Company with respect to the real property described on Schedule
1.1(b) (the “ Leased Real Estate ”);
(c) The leasehold rights of
the Company with respect to the items of personal property which
are described on Schedule 1.1(c) (the “ Leased Personal
Property ”);
(d) The rights of the Company
under the agreements, instruments, and documents listed on Schedule
1.1(d) and all purchase orders, equipment rental agreements and
sales orders entered into by the Company in the ordinary course of
business subsequent to the execution of this Agreement but prior to
the Effective Time (collectively, the “ Assigned
Agreements ”);
(e) All of the files books,
and records of the Company;
(f) The inventories of
finished goods, tooling inventory, parts, work in progress and raw
materials of the Company as of the Effective Time;
(g) The accounts receivable
of the Company as of the Effective Time (the “ Accounts
Receivable ”);
(h) The cash and other
working capital of the Company as of the Effective Time;
and
(i) All of the goodwill of
the Company and all of the rights of the Company to use the
tradename “Triumph Drilling Tools, Inc.” or any similar
name (subject to the permitted use provided for in
Section 5.7).
Section 1.2.
Excluded Assets . Notwithstanding the foregoing, the
Acquired Assets shall not include the assets listed on Schedule
1.2.
Section 1.3.
Purchase Price for Acquired Assets . As consideration
for the sale to it of the Acquired Assets, at Closing, Buyer
shall:
(a) Pay in cash to Whitney
National Bank the amount necessary to satisfy the loans from
Whitney National Bank to the Company secured by the Acquired Assets
thereby obtaining a release of lien on the Acquired
Assets;
(b) Pay in cash to the
Company an amount equal to Thirty One Million Dollars and No/100
less the amount paid to Whitney National Bank described in
Section 1.3 (a) hereof;
(c) Assume from the Company
liability for the accounts payable of the Company set forth on the
December 31, 2006 Financial Statements; and
(d) Assume from the Company
liability for the accrued liabilities, including but not limited to
sales tax payable, payroll taxes (federal and state withholdings),
accrued year end bonuses, and accrued insurance audit of the
Company set for on the December 31, 2006 Financial
Statements.
Section 1.4.
Assumption of Liabilities . Except as provided for in
Section 1.3, Buyer has not and will not assume from the
Company any liability or obligation.
Section 1.5.
Allocation . The parties will allocate for all
purposes (including, but not limited to, financial accounting and
tax purposes) the purchase price of the Acquired Assets as
indicated on Schedule 1.5.
Section 1.6.
Closing . The closing (the “ Closing
”) of the transactions contemplated by this Agreement (the
“ Transaction ”) shall take place at the offices
of the attorneys for Buyer in
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Houston, Texas as promptly as
practicable (but in any event within five (5) business days)
following the date on which the last of the conditions set forth in
Article VI is fulfilled or waived, or at such other time and place
as Buyer and the Company shall agree. The date on which the Closing
occurs is referred to in this Agreement as the “ Closing
Date .” The Closing will be effective as of
January 4, 2007 (the “ Effective Time ”).
At the Closing, each of the parties hereto will perform such acts
and deliver such documents as are required pursuant to the terms
hereof to be delivered at Closing.
Section 1.7.
Property Taxes . Any general property and/or ad
valorem tax assessed against or pertaining to the Acquired Assets
for the taxable period that includes the date of the Closing shall
be prorated between Buyer and the Company.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer represents and warrants
to the Company and Shareholder as follows:
Section 2.1.
Organization and Qualification . Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the state of Texas and has the requisite
corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being
conducted.
Section 2.2.
Authority; Non-Contravention; Approvals .
(a) Buyer has full corporate
power and authority to execute and deliver this Agreement and to
consummate the Transaction. This Agreement has been approved by the
Board of Directors of Buyer and no other corporate proceedings on
the part of Buyer are necessary to authorize the execution and
delivery of this Agreement or the consummation by Buyer of the
Transaction, including, without limitation, under the applicable
requirements of any securities exchange. This Agreement has been
duly executed and delivered by Buyer, and, assuming the due
authorization, execution and delivery hereof by the Company,
constitutes a valid and legally binding agreement of Buyer
enforceable against it in accordance with its terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors’ rights generally and
(ii) general equitable principles.
(b) The execution and
delivery of this Agreement by Buyer and the consummation by Buyer
of the Transaction do not and will not violate or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of Buyer under any of the terms, conditions or provisions of
(i) the charter or bylaws of Buyer, (ii) any
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statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any court or governmental authority applicable to Buyer
or any of its respective properties or assets or (iii) any
note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Buyer is now a party or by which
Buyer or any of its respective properties or assets may be bound or
affected.
(c) No declaration, filing or
registration with, or notice to, or authorization, consent or
approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Buyer
or the consummation by Buyer of the Transaction.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES
OF THE COMPANY AND THE
SHAREHOLDER
The Shareholder and the
Company jointly and severally represent and warrant to Buyer
that:
Section 3.1.
Organization and Qualification . The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Texas and has the requisite
corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being
conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the properties owned, leased, or operated by it or the nature
of the business conducted by it makes such qualification necessary.
True, accurate and complete copies of the Company’s Articles
of Incorporation, as amended, and Bylaws, in each case as in effect
on the date hereof, including all amendments thereto, have
heretofore been delivered to Buyer.
Section 3.2. The
Shareholder . The Shareholder owns all of the issued and
outstanding stock of the Company.
Section 3.3.
Authority; Non-Contravention; Approvals .
(a) The Company has full
corporate power and authority to execute and deliver this Agreement
and to consummate the Transaction. This Agreement has been approved
by the Board of Directors and the shareholders of the Company, and
no other corporate proceedings on the part of the Company are
necessary to authorize the execution and delivery of this Agreement
or the consummation by the Company of the Transaction. This
Agreement has been duly executed and delivered by the Company and
the Shareholder, and, assuming the due authorization, execution and
delivery hereof by Buyer, constitutes a valid and legally binding
agreement of the Company and the Shareholder, enforceable against
the Company and the Shareholder in accordance with its terms,
except that such enforcement may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights
generally and (b) general equitable principles.
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(b) Except as set forth in
the Disclosure Schedule delivered by Seller to Buyer in connection
with this Agreement (the “ Disclosure Schedule
”), the execution and delivery of this Agreement by the
Company and the Shareholder and the consummation by the Company and
the Shareholder of the Transaction do not and will not violate or
result in a breach of any provision of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company under any of the terms,
conditions or provisions of (i) the charter or bylaws of the
Company, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to the Company or any of
its properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession,
or any agreement to which the Company is now a party or by which
the Company or any of its respective properties or assets may be
bound or affected.
Section 3.4.
Financial Statements . Company has furnished Buyer
with balance sheet, income statement and statement of cash flow for
Company as of December 31, 2005, and Company has furnished
Buyer its unaudited balance sheet and income statement for the nine
month period ended September 30, 2006 (collectively, the
“ Financial Statements ”). The Financial
Statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, and are accurate and
complete (except, in the unaudited statements, for the absence of
footnote disclosures and for the absence of normal year-end audit
adjustments which are not material in the aggregate) and fairly
present the financial condition and result of operations of the
Company.
Section 3.5.
Absence of Undisclosed Liabilities . The Company is
not subject to any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except liabilities
or obligations (a) which are provided for in the Financial
Statements or reflected in the notes thereto, (b) which were
incurred after September 30, 2006, and were incurred in the
ordinary course of business and consistent with past practices, or
(c) liabilities or obligations under this
Agreement.
Section 3.6.
Absence of Certain Changes or Events . Except as
disclosed in the Disclosure Schedule, since September 30,
2006, the business of the Company has been conducted in the
ordinary course of business consistent with past practices, and
there has not been any event, occurrence, development or state of
circumstances or facts which has had, or could reasonably be
anticipated to have, individually or in the aggregate, a material
adverse effect with respect to the Acquired Assets or the business
of the Company.
Section 3.7.
Accounts Receivable . The Accounts Receivable of the
Company are valid, genuine and subsisting, arise out of bona fide
sales and delivery of goods, performance of services or other
business transactions in the ordinary course of business and are
current and
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collectible. Each of such Accounts
Receivable will be collected in full, without any set-off and
without resort to litigation, within 180 days after the Closing
except for uncollectible invoices which are normally charged off as
bad debt expense on the financial statements of the Company in the
normal course of business activities.
Section 3.8.
Inventory . The inventory reflected in the
September 30, 2006 Financial Statements (the “
Inventory ”) consists of items that are usable and
saleable in the ordinary course of business by the Company. Except
as disclosed in the Disclosure Schedule, all items included in the
Inventory are owned by the Company free and clear of any lien or
encumbrance, and are not missing (except for sales made in the
ordinary course of business since September 30, 2006) or
obsolete, and are in good condition.
Section 3.9.
Tangible Assets . The Tangible Personal Property and
the Leased Personal Property constitute all of the tangible
personal property necessary for the conduct by the Company of its
business as now conducted. The Company has good and indefeasible
title to the Tangible Personal Property, free and clear of all
mortgages, liens, pledges, charges, or encumbrance of any nature
whatsoever. The Tangible Personal Property and Leased Personal
Property are in good, serviceable condition and fit for the
particular purposes for which they are used in the business of the
Company, subject only to normal maintenance requirements and wear
and tear reasonably expected in the ordinary course of business.
Schedule 1.1(d) contains an accurate description of the rental
agreements now in force with respect to the rental tools of the
Company, and the location of all such rental tools.
Section 3.10.
Intellectual Property . The Company does not possess,
own, or use any patents, trademarks, service marks, trade names,
copyrights, trade secrets and other proprietary rights and
processes that are material to the business of the Company as now
conducted other the trademark “Triumph Drilling Tools,
Inc.”
Section 3.11.
Employee Benefits . The Disclosure Schedule contains
a complete list of employee benefit or welfare plans of the
Company. All such plans have and are in compliance with applicable
law,
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