EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT (this "AGREEMENT") is entered into on this
8th day of December, 2005, by and between
GMX RESOURCES INC., an Oklahoma
corporation (the "BUYER"), and McLachlan
Drilling Company, a Michigan
corporation (the "SELLER"), with reference
to the following circumstances:
RECITALS:
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A. The Seller is
the owner of that certain oil drilling rig more
particularly known as Rig No. 5 and all
related equipment, including collars,
and all associated components and tools
described on Exhibit A attached hereto
(collectively, the "EQUIPMENT"); and
B. The Seller
desires to sell the Equipment to the Buyer, and the Buyer
desires to purchase the Equipment from the
Seller, pursuant to the terms and
conditions described in this Agreement.
In consideration
of the premises and the terms, covenants and conditions
contained in this Agreement, the Seller and
the Buyer agree as follows:
1. SALE AND
PURCHASE OF EQUIPMENT. At the Closing (as hereinafter defined),
the Seller shall sell to the Buyer, and the
Buyer shall purchase from the
Seller, the Equipment free and clear of all
liens, encumbrances and other
liabilities of any kind whatsoever and on
the terms and conditions described in
this Agreement.
1.1 PURCHASE PRICE. The total purchase price to be paid by the
Buyer
to the Seller
for the purchase of the Equipment is Five Million One Hundred
Thousand Dollars
($5,100,000) (the "PURCHASE PRICE"), which shall be paid
at the Closing
by delivery of a promissory note payable on January 2, 2006,
with interest at
the rate of 7 percent (7%) per annum, and otherwise in
substantially
the form attached hereto as Exhibit B. The note shall be
secured by a
security interest in the Equipment pursuant to the terms of a
security
agreement to be executed at the Closing in mutually acceptable
form.
1.2 CONDITION OF EQUIPMENT. THE PARTIES AGREE AND ACKNOWLEDGE
THAT
BUYER IS
PURCHASING THE EQUIPMENT AS IS, WHERE IS, WITHOUT ANY
WARRANTIES
FROM SELLER,
EXPRESS OR IMPLIED, AS TO THE FITNESS OR CONDITION OF THE
EQUIPMENT.
1.3 BILL OF SALE. At the Closing, the Seller shall execute and
deliver
to the Buyer a
Bill of Sale for the Equipment in substantially the form
attached hereto
as Exhibit C.
1.4 DELIVERY OF POSSESSION. At the Closing, the Seller shall
relinquish
possession of the Equipment to the Buyer at its then current
location in
Harrison County, Texas. The Buyer and the Seller expressly
agree that title
to the Equipment, and the risk of loss with respect
thereto, shall
pass to the Buyer at the time of the Seller's tender of
delivery at such
location on the Closing Date. Notwithstanding the above,
the parties
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agree that a
sixteen (16) foot Candelabra Substructure Component of the
Equipment is
located in Evart, Michigan, and that Buyer will be responsible
for all costs
associated with the shipping of said Component to Harrison
County, Texas,
or another location of the Buyer's choosing.
1.5 TERMINATION OF CONTRACT. The existing drilling contract
between
Seller and Buyer
relating to the Equipment shall be terminated at the
Closing without
any further action by Buyer and Seller. Any amounts or
obligations owed
by either party as of Closing shall be paid by said party
within 15 days
of Closing.
2. CLOSING. The
closing of the transactions contemplated in this Agreement
(the "CLOSING") shall occur within 5 days
after execution of this Agreement at
such specific time and place as the parties
mutually agree. The day on which the
Closing occurs is referred to in this
Agreement as the "CLOSING DATE."
3.
REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and
warrants to the Buyer as follows:
3.1 ORGANIZATION. The Seller is a corporation duly organized,
validly
existing and in
good standing under the laws of the State of Michigan.
3.2 AUTHORIZATION. The Seller has all requisite power and authority
to
execute and
deliver this Agreement and to perform its obligations under
this Agreement.
The execution, delivery and performance by the Seller of
this Agreement
have been duly authorized by all necessary corporate action
on the part of
the Seller. This Agreement has been duly and validly
executed and
delivered by the Seller and constitutes the valid and binding
obligation of
the Seller, enforceable against it in accordance with its
terms, subject
to applicable bankruptcy, insolvency and other similar laws
affecting the
enforceability of creditors' rights generally, general
equitable
principles and the discretion of courts in granting equitable
remedies.
3.3 ABSENCE OF CONFLICTS. The execution, delivery and performance
by
the Seller of
this Agreement does not and will not, with or without the
giving of
notice, the taking of any action by a third party or the lapse
of
time, (a)
violate any law or order applicable to the Seller, (b) violate
any provision of
the certificate of incorporation or bylaws of the Seller
or (c) violate
or result in a breach of or constitute a default under, or
require the
consent or approval of any third party under, or result in or
permit the
termination or amendment of any provision of, or result in or
permit the
acceleration of the maturity or cancellation of performance of
any obligation
under, or result in the creation or imposition of any lien
upon the
Equipment, or give to others any interests or rights in the
Equipment under,
any indenture, deed of trust, mortgage, contract, lease or
other agreement,
instrument or commitment to which the Seller is a party or
by which the
Seller or the Equipment may be bound or affected.
3.4 TITLE TO EQUIPMENT. The Seller has, and at the Closing will
transfer to the
Buyer, good, valid and marketable title to the Equipment,
free and clear
of all liens, encumbrances and other liabilities.
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3.5 BROKERS. No broker or other party is entitled to any fee or
commission in
connection with the transactions contemplated by this
Agreement based
upon arrangements made by or on behalf of the Seller or any
of its
affiliates.
4.
REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and
warrants to the Seller as follows:
4.1 ORGANIZATION. The Buyer is a corporation duly organized,
validly
existing and in
good standing under the laws of the State of Oklahoma.
4.2 AUTHORIZATION. The Buyer has all requisite power and authority
to
execute, deliver
and perform this Agreement. The execution, delivery and
performance by
the Buyer of this Agreement have been duly authorized by all
necessary
corporate action on the part of the Buyer. This Agreement has
been duly and
validly executed and delivered by the Buyer and constitutes
the valid and
binding obligation of the Buyer, enforceable against it in
accordance with
its terms, subject to applicable bankruptcy, insolvency and
other similar
laws affecting the enforceability of creditors' rights
generally,
general equitable principles and the discretion of courts in
granting
equitable remedies.
4.3 ABSENCE OF CONFLICTS. The execution, delivery and performance
by
the Buyer of
this Agreement does not and will not, with or without the
giving of
notice, the taking of any action by a third party or the lapse
of
time, (a)
violate any law or order applicable to the Buyer, (b) violate
any
provision of the
certificate of incorporation or bylaws of the Buyer or (c)
violate or
result in a breach of or constitute a default under, or require
the consent or
approval of any third party under, or result in or permit
the termination
or amendment of any provision of, or result in or permit
the acceleration
of the maturity or cancellation of performance of any
obligation
under, or give to others any interests or rights under, any
indenture, deed
of trust, mortgage, contract, lease or other agreement,
instrument or
commitment to which the Buyer is a party or by which the
Buyer may be bound or
affected, except for any such violations that in the
aggregate would
not materially hinder, delay or impair the ability of the
Buyer to perform
its obligations under, or consummate the transactions
contemplated by,
this Agreement.
4.4 BROKERS. No broker or other party is entitled to any fee or
commission in
connection with the transactions contemplated by this
Agreement based
upon arrangements made by or on behalf of the Buyer or any
of its
affiliates.
4.5 CONDITION OF EQUIPMENT. THE BUYER ACKNOWLEDGES THAT THEY
ARE
PURCHASING THE
EQUIPMENT AS IS, WHERE IS, WITHOUT ANY WARRANTIES, EXPRESS
OR IMPLIED, OF
SELLER AS TO THE FITNESS OR CONDITION OF THE EQUIPMENT.
5. CONDITIONS TO
CLOSING.
5.1 OBLIGATION OF THE SELLER TO CLOSE. The Seller's obligation to
sell
the Equipment to
the Buyer is subject to the satisfaction of the following
conditions at or
prior to the Closing: (a) the Buyer shall not be in
default of any term or
condition of this
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Agreement, and
(b) each and every representation and warranty of the Buyer
contained in
Section 4 of this Agreement shall be true and correct on the
Closing Date as if
made at the Closing.
5.2 OBLIGATION OF THE BUYER TO CLOSE. The Buyer's obligation to
purchase the
Equipment from the Seller is subject to the satisfaction of
the following
conditions at or prior to the Closing: (a) the Seller shall
not be in
default of any term or condition of this Agreement, (b) each
and
every
representation and warranty of the Seller contained in Section 3
of
this Agreement
shall be true and correct on the Closing Date as if made at
the Closing, (c)
the Seller and any other appropriate parties shall have
executed and
delivered to the Buyer any and all documents reasonably
necessary to
ensure that the Buyer has obtained good, valid and marketable
title to the
Equipment, including releases of liens of Muskegon Development
Company and
Northwestern Bank; and (d) the Buyer shall have conducted such
inspections and
testing of the Equipment as Buyer determines to be
appropriate and
has determined that the condition of the Equipment is
satisfactory to
the Buyer.
6. MISCELLANEOUS
PROVISIONS.
6.1 SURVIVAL OF PROVISIONS. Each statement, representation,
warranty,
covenant and
agreement made by each of the parties to this Agreement shall
survive the
execution and delivery of this Agreement and the Closing.
6.2 NOTICES. All notices and other communications required or
permitted by
this Agreement shall be in writing and shall be deemed to have
been duly given
when personally delivered, received by facsimile or other
electronic
communication, or when received if sent by private courier or
first class
certified mail, return receipt requested, addressed to the
parties at the
addresses set forth below (or at such other address as any
party may
specify by notice to all other parties given as aforesaid):
If to the Buyer:
Ken L. Kenworthy, Jr.
Chief Executive Officer
GMX RESOURCES INC.
9400 North Broadway, Suite 600
Oklahoma City, Oklahoma 73114
fax: (405)
600-0600
with a copy to:
Michael M. Stewart, Esq.
Crowe & Dunlevy
20 North Broadway, Suite 1800
Oklahoma City, Oklahoma 73102
fax: (405)
272-5238
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If to the Seller:
James E. McLachlan, President
McLachlan Drilling Company
P.O. Box 548
815 W. 7th Street
Evart, MI 49631
fax: (231)
734-2199
with a copy to:
James B. Jensen, Jr.
Foster, Swift, Collins & Smith, P.C.
313 S. Washington Square
Lansing, MI 48933
fax: (517)
367-7384
6.3 INTEGRATION; AMENDMENT. This Agreement constitutes the
entire
agreement of the
parties with respect to the subject matter hereof and may
not be modified,
amended or terminated except by a written agreement
specifically
referring to this Agreement and signed by all of the parties
hereto.
6.4 WAIVER. No waiver of any breach or default hereunder shall
be
considered valid
unless in writing and signed by the party giving such
waiver, and no
such waiver shall be deemed a waiver of any subsequent
breach or
default of the same or similar nature.
6.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon
and shall inure
to the benefit of each party hereto and its successors and
assigns. The
Buyer may assign its rights under this Agreement to a
wholly-owned
subsidiary of the Buyer, but such assignment shall not relieve
the Buyer from
responsibility under this Agreement or the promissory note
to be delivered
for the Purchase Price. Seller may not assign its rights
and obligations
under this Agreement without the consent of Buyer.
6.6 SECTION HEADINGS. The section headings contained in this
Agreement
are for
convenience of reference only and are not intended to define or
limit the
contents of such sections.
6.7 COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be
executed
in multiple
counterparts (including by means of facsimile or other
electronic
medium), all of which taken together shall be deemed to be one
document.
6.8 GOVERNING LAW. This Agreement shall be governed by and
construed
in accordance
with the law of the State of Michigan applicable to contracts
made and to be
performed therein, without reference to its conflict of laws
provisions.
6.9 FORUM SELECTION. The parties agree that the state and
federal
courts of the
districts in which Lansing, Michigan, is located shall have
exclusive
jurisdiction over any case or controversy arising out of or in
any manner
relating to this Agreement or the parties' obligations
hereunder.
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6.10 LITIGATION EXPENSES. In the event either party hereto
commences
litigation
against the other to enforce its rights hereunder, the
prevailing party
in such litigation shall be entitled to recover from the
other its
reasonable attorneys' fees and expenses incidental to such
litigation.
SIGNATURE PAGE FOLLOWS THIS PAGE.
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IN WITNESS
WHEREOF, the parties have executed and delivered this Asset
Purchase Agreement on the date set forth in
the introductory paragraph of this
Agreement.
"BUYER"
GMX RESOURCES INC., an Oklahoma corporation
By: /s/ Ken L. Kenworthy, Jr.
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Ken L. Kenworthy, Jr., Chief Executive Officer
"SELLER"
McLACHLAN DRILLING COMPANY, a Michigan
corporation
By: /s/ James E. McLachlan
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James E. McLachlan, President
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EXHIBIT A
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LIST OF EQUIPMENT COMPONENTS
Exhibit A to Asset Purchase Agreement
Page 1 of 2
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DRAW WORKS
Ideco H-1000 single drum with circul. brake
flanges, Parmac double 22"
Hydro-matic brake, Crown-o-matic, spinning
cathead, hydraulic catworks,
Gearmatic hydraulic tugger winches -
Powered by: 2 ea Cummins NT A Diesel
engines w/ Allison 5860 five-speed
transmissions-1050 HP
MAST
Ideco KN117-358 AH-117ft, 358,000 lb on 10
lines, 4" standpipe, 3 1/2 x 55'
kelly hose
TRAVELING
Gardner Denver TWW -30 block assembly with
300 ton hydrahook. Unitized
block-hook w/5-42" sheaves 1-1/8" line, 96"
x 2 3/4' weldess bails
TWO SUBSTRUCTURES AVAILABLE
A) Custom 300 ton integrally loaded w/ 14'
x 24' floor space, 13' KB measurement
w/ 10' 6" clear height under rotary
beams-48' long cat walk w/V -Door
B) Custom 400 ton cantilever substructure
with 14' x 19' 11" floor space - 18'
11" KB measurement and 16' clear height
under the rotary beams - 48' long cat
walk w/V-Door. Substructure is fitted and
pinned to a 5' 7" high x 80' long pony
sub w/ ramp located in Evart, MI
ROTATING
Ideco SR 20.5 rotary table- 20 1/2 in
opening w/split master bushing Ideco TL
200 ton swivel Foster Model 77 kelly
spinner 5 1/4 x 40' Hex kelly Varco 4 r
oller drive bushing
MUD SYSTEM
2 ea 225 bbl steel pits w/7 compartments,
bypass trougbing, top mounted walkways
Harrisburg 10" two cone desander w/ 50 HP
electric motor, 5 x 6 centrfugal pump
w/ internal piping to charge either system
Derrick flow line cleaner shale
shaker Choke manifold & gas buster
WELL CONTROL EQUIPMENT
Cameron 11" 5000 Ib Type D Annular
Schaffer 11" 5000 Ib Type "LWS" double ram
w/4 1/2 & blind rams
Schaffer 13 5/8" 5000 Ib Annular
Schaffer 13 5/8" 5000 lb "LWS" double ram
w/ 4 1/2 and blind rams
Koomey Type 80 3000# 80 gal accumulator w/5
stations & remote, one 15 HP
electric tiplex & 2 air charge pumps
W/Nitrogen backup system
DRILL STRING
8 EA 8 x 2 1/4 drill collars
20 ea 6 1/2 x 2 1/4 drill collars
GENERATOR ACCUMULATOR TRAILER
2 ea 275 KW gen sets powered by John Deere
Cummins engine & power panel
DOG HOUSE, FUEL TRAILER
8' x 22' elevating dog house w/tool room
& knowledge box equipped w/Martin
Decker 3-pen recorder & Satellite
Automatic Driller 8,000 gal fuel tank with
lubster
AUXILIARY EQUIPMENT
Wooley Type "B" rotary tongs 3 1/2 x 13 3/8
heads, 2 ea 360 BBL water tanks w/
triplex high pressure wash down pump &
rig circulating s
