Stock Purchase Agreement

EXHIBIT
    10.1

    
      STOCK
        PURCHASE AGREEMENT

      


      


      This
        Stock Purchase Agreement ("Agreement") dated as of April 3, 2006, by
        Allis-Chalmers Energy Inc., a Delaware corporation ("Buyer") and Tommie L.
        Rogers, an individual resident in Broussard, Louisiana ("Seller").

      


      R
        E C I T A L S

      


      Seller
        desires to sell, and Buyer desires to purchase, all of the issued and
        outstanding shares ("Shares") of capital stock of Rogers Oil Tool Services,
        Inc., a Louisiana corporation ("Company"), for the consideration and on the
        terms set forth in this Agreement. In addition, Seller will sell, transfer,
        assign and convey all his right, title and interest in the Patents and
        Intellectual Property Assets owned by Seller and utilized by the Company
        in its
        business.

      


      AGREEMENT



    The
      parties, intending to be legally bound, agree as follows:

    


    1. DEFINITIONS

    


    For
      purposes of this Agreement, the following terms have the meanings specified
      or
      referred to in this Section 1:

    


    "Applicable
      Contract"--any
      Contract (a) under which the Company has or may acquire any rights, (b) under
      which the Company has or may become subject to any obligation or liability,
      or
      (c) by which the Company or any of the assets owned or used by it is or may
      become bound.

    


    "Balance
      Sheet"--as
      defined in Section 3.4.

    


    "Best
      Efforts"--the
      efforts that a prudent Person desirous of achieving a result would be reasonably
      expected to use in similar circumstances to ensure that such result is achieved
      as expeditiously as possible.

    


    "Breach"--a
      "Breach" of a representation, warranty, covenant, obligation, or other provision
      of this Agreement or any instrument delivered pursuant to this Agreement will
      be
      deemed to have occurred if there is or has been (a) any inaccuracy in or breach
      of, or any failure to perform or comply with, such representation, warranty,
      covenant, obligation, or other provision, or (b) any claim (by any Person)
      or
      other occurrence or circumstance that is or was inconsistent with such
      representation, warranty, covenant, obligation, or other provision, and the
      term
      "Breach" means any such inaccuracy, breach, failure, claim, occurrence, or
      circumstance.

    


    "Buyer"--as
      defined in the first paragraph of this Agreement.


    
      
         

        
        

      

      
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     "Closing"--as
      defined in Section 2.3.

    


    "Closing
      Date"--the
      date and time as of which the Closing actually takes place.

    


    "Company"--as
      defined in the Recitals of this Agreement.

    


    "Consent"--any
      approval, consent, ratification, waiver, or other authorization (including
      any
      Governmental Authorization).

    


    "Contemplated
      Transactions"--all
      of
      the transactions contemplated by this Agreement, including:

    


    (a) the
      sale
      of the Shares by Seller to Buyer;

    


    (b) the
      execution, delivery, and performance of the Promissory Note, the Employment
      Agreement, the Non-Competition Agreement, Patent Assignment and Intellectual
      Property Transfer and the Seller's Release;

    


    (c) the
      performance by Buyer and Seller of their respective covenants and obligations
      under this Agreement; and

    


    (d) Buyer's
      acquisition and ownership of the Shares, exercise of control over the Company
      and the Patents.

    


    "Contract"--any
      agreement, contract, obligation, promise, or undertaking (whether written or
      oral and whether express or implied) that is legally binding.

    


    "Damages"--as
      defined in Section 6.2.

    


    "Disclosure
      Letter"--the
      disclosure letter delivered by Seller to Buyer concurrently with the execution
      and delivery of this Agreement.

    


    "Employment
      Agreement"--as
      defined in Section 2.4(a)(iii).

    


    "Encumbrance"--any
      charge, claim, community property interest, condition, equitable interest,
      lien,
      option, pledge, security interest, right of first refusal, or restriction of
      any
      kind, including any restriction on use, voting, transfer, receipt of income,
      or
      exercise of any other attribute of ownership.

    


    "Environment"--soil,
      land surface or subsurface strata, surface waters (including navigable waters,
      ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters,
      drinking water supply, stream sediments, ambient air (including indoor air),
      plant and animal life, and any other environmental medium or natural
      resource.


    
      
         

        
        

      

      
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      "Environmental,
        Health, and Safety Liabilities"--any
        cost, damages, expense, liability, obligation, or other responsibility arising
        from or under Environmental Law or Occupational Safety and Health Law and
        consisting of or relating to:

    

     

    (a) any
      environmental, health, or safety matters or conditions (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, investigative, remedial, or
      inspection costs and expenses arising under Environmental Law or Occupational
      Safety and Health Law;

    


    (c) financial
      responsibility under Environmental Law or Occupational Safety and Health Law
      for
      cleanup costs or corrective action, including any investigation, cleanup,
      removal, containment, or other remediation or response actions ("Cleanup")
      required by applicable 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

    


    (d) any
      other
      compliance, corrective, investigative, or remedial measures required under
      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. § 9601 et seq., as amended ("CERCLA").

    


    "Environmental
      Law"--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 of 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;


    
      
         

        
        

      

      
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      (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.

    


    "ERISA"--the
      Employee Retirement Income Security Act of 1974 or any successor law, and
      regulations and rules issued pursuant to that Act or any successor
      law.

    


    "Facilities"--any
      real property, leaseholds, or other interests currently or formerly owned or
      operated by the Company and any buildings, plants, structures, or equipment
      (including motor vehicles, tank cars, and rolling stock) currently or formerly
      owned or operated by the Company. 

    


    "GAAP"--generally
      accepted United States accounting principles, applied on a basis consistent
      with
      the basis on which the Balance Sheet and the other financial statements referred
      to in Section 3.4 were prepared.

    


    "Governmental
      Authorization"--any
      approval, consent, license, permit, waiver, or other authorization issued,
      granted, given, or otherwise made available by or under the authority of any
      Governmental Body or pursuant to any Legal Requirement.

    


    "Governmental
      Body"--any:

    


    (a) nation,
      state, county, city, town, village, district, or other jurisdiction of any
      nature;

    


    (b) federal,
      state, local, municipal, foreign, or other government;

    


    (c) governmental
      or quasi-governmental authority of any nature (including any governmental
      agency, branch, department, official, or entity and any court or other
      tribunal);


    
      
         

        
        

      

      
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    (d) multi-national
      organization or body; or

    


    (e) body
      exercising, or entitled to exercise, any administrative, executive, judicial,
      legislative, police, regulatory, or taxing authority or power of any
      nature.

    


    "Hazardous
      Activity"--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, or that may affect the
      value of the Facilities or the Company.

    


    "Hazardous
      Materials"--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.

     

    "Intellectual
      Property Assets"
      --as
      defined in Section 3.22.

    


    "Interim
      Balance Sheet"--as
      defined in Section 3.4.

    


    "IRC"--the
      Internal Revenue Code of 1986 or any successor law, and regulations issued
      by
      the IRS pursuant to the Internal Revenue Code or any successor law.

    


    "IRS"--the
      United States Internal Revenue Service or any successor agency, and, to the
      extent relevant, the United States Department of the Treasury.

    


    "Knowledge"--an
      individual will be deemed to have "Knowledge" of a particular fact or other
      matter 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 a reasonably comprehensive
      investigation concerning the existence of such fact or other
      matter.

    


    The
      Company will be deemed to have "Knowledge" of a particular fact or other matter
      if any individual who is currently serving, as a director or officer of the
      Company has, or at any time had, Knowledge of such fact or other
      matter.


    
      
         

        
        

      

      
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    "Legal
      Requirement"--any
      federal, state, local, municipal, foreign, international, multinational, or
      other administrative order, constitution, law, ordinance, principle of common
      law, regulation, statute, or treaty.

    


    "Non-Competition
      Agreement"--as
      defined in Section 2.4(a)(iv).

    


    "Occupational
      Safety and Health Law"--any
      Legal Requirement designed to provide safe and healthful working conditions
      and
      to reduce occupational safety and health hazards, and any program, whether
      governmental or private (including those promulgated or sponsored by industry
      associations and insurance companies), designed to provide safe and healthful
      working conditions.

    


    "Order"--any
      award, decision, injunction, judgment, order, ruling, subpoena, or verdict
      entered, issued, made, or rendered by any court, administrative agency, or
      other
      Governmental Body or by any arbitrator.

    


    "Ordinary
      Course of Business"--an
      action taken by a Person will be deemed to have been taken in the "Ordinary
      Course of Business" only if:

    


    (a) such
      action is consistent with the past practices of such Person and is taken in
      the
      ordinary course of the normal day-to-day operations of such Person;

    


    (b) such
      action is not required to be authorized by the board of directors of such Person
      (or by any Person or group of Persons exercising similar authority);
      and

    


    (c) such
      action is similar in nature and magnitude to actions customarily taken, without
      any authorization by the board of directors (or by any Person or group of
      Persons exercising similar authority), in the ordinary course of the normal
      day-to-day operations of other Persons that are in the same line of business
      as
      such Person.

    


    "Organizational
      Documents"--(a) the
      articles or certificate of incorporation and the bylaws of a corporation;
      (b) the partnership agreement and any statement of partnership of a general
      partnership; (c) the limited partnership agreement and the certificate of
      limited partnership of a limited partnership; (d) any charter or similar
      document adopted or filed in connection with the creation, formation, or
      organization of a Person; and (e) any amendment to any of the
      foregoing.

    


    "Patent
      Assignment"--as
      defined in Section 2.4(a)(vii).


    
      
         

        
        

      

      
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      "Person"--any
        individual, corporation (including any non-profit corporation), general or
        limited partnership, limited liability company, joint venture, estate, trust,
        association, organization, labor union, or other entity or Governmental
        Body.

       

    

    "Plan"--as
      defined in Section 3.13.

    


    "Proceeding"--any
      action, arbitration, audit, hearing, investigation, litigation, or suit (whether
      civil, criminal, administrative, investigative, or informal) commenced, brought,
      conducted, or heard by or before, or otherwise involving, any Governmental Body
      or arbitrator.

    


    "Promissory
      Note"--as
      defined in Section 2.4(b)(ii).

    


    "Related
      Person"--with
      respect to a particular individual:

    


    (a) each
      other member of such individual's Family;

    


    (b) any
      Person that is directly or indirectly controlled by such individual or one
      or
      more members of such individual's Family;

    


    (c) any
      Person in which such individual or members of such individual's Family hold
      (individually or in the aggregate) a Material Interest; and

    


    (d) any
      Person with respect to which such individual or one or more members of such
      individual's Family serves as a director, officer, 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);

    


    (d) any
      Person in which such specified Person holds a Material Interest;

    


    (e) any
      Person with respect to which such specified Person serves as a general partner
      or a trustee (or in a similar capacity); and

    


    (f) any
      Related Person of any individual described in clause (b) or
      (c).


    
      
        
        

      

      
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    For
      purposes of this definition, (a) the "Family" of an individual includes (i)
      the
      individual, (ii) the individual's spouse, (iii) any other natural person who
      is
      related to the individual or the individual's spouse within the second degree,
      and (iv) any other natural person who resides with such individual, and (b)
      "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"--any
      spilling, leaking, emitting, discharging, depositing, escaping, leaching,
      dumping, or other releasing into the Environment, whether intentional or
      unintentional.

    


    "Representative"--with
      respect to a particular Person, any director, officer, employee, agent,
      consultant, advisor, or other representative of such Person, including legal
      counsel, accountants, and financial advisors.

    


    "Securities
      Act"--the
      Securities Act of 1933 or any successor law, and regulations and rules issued
      pursuant to that Act or any successor law.

    


    "Seller"--as
      defined in the first paragraph of this Agreement.

    


    "Seller's
      Release"--as
      defined in Section 2.4.

    


    "Shares"--as
      defined in the Recitals of this Agreement.

    


    "Subsidiary"--with
      respect to any Person (the "Owner"), any corporation or other Person of which
      securities or other interests having the power to elect a majority of that
      corporation's or other Person's board of directors or similar governing body,
      or
      otherwise having the power to direct the business and policies of that
      corporation or other Person (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; when used without
      reference to a particular Person, "Subsidiary" means a Subsidiary of the
      Company.

    


    "Tax"--any
      tax
      (including any income tax, capital gains tax, value-added tax, sales tax,
      property tax, gift tax, or estate tax), levy, assessment, tariff, duty
      (including any customs duty), deficiency, or other fee, and any related charge
      or amount (including any fine, penalty, interest, or addition to tax), imposed,
      assessed, or collected by or under the authority of any Governmental Body or
      payable pursuant to any tax-sharing agreement or any other Contract relating
      to
      the sharing or payment of any such tax, levy, assessment, tariff, duty,
      deficiency or fee.

    


    "Tax
      Return"--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.

    


    
      
        
        

      

      
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    "Threat
      of Release"--a
      substantial likelihood of a Release that may require action in order to prevent
      or mitigate damage to the Environment that may result from such
      Release.

    


    "Threatened"--a
      claim, Proceeding, dispute, action, or other matter will be deemed to have
      been
      "Threatened" if any demand or statement has been made (orally or in writing)
      or
      any notice has been given (orally or in writing), or if any other event has
      occurred or any other circumstances exist, that would lead a prudent Person
      to
      conclude that such a claim, Proceeding, dispute, action, or other matter is
      likely to be asserted, commenced, taken, or otherwise pursued in the
      future.

    


    2. SALE
      AND TRANSFER OF SHARES AND PATENTS; CLOSING

     

    
      2.1 SHARES
        AND PATENTS

    

     

    Subject
      to the terms and conditions of this Agreement, Seller will sell and transfer
      the
      Shares to Buyer, and Buyer will purchase the Shares from Seller. In addition,
      Seller will sell, transfer and assign to Buyer pursuant to the Patent Assignment
      all Seller's right, title and interest in the Patents and Intellectual Property
      Assets owned by Seller and used by the Company in its business. 

     

    
      2.2 PURCHASE
        PRICE

       

    

    The
      purchase price (the "Purchase Price") for the Shares and the Patents will be
      $13,850,000.

     

    
      2.3 CLOSING

       

    

    The
      purchase and sale (the "Closing") provided for in this Agreement will take
      place
      at the offices of Buyer at 5075 Westheimer, Suite 890, Houston, Texas 77056
      at
      10:00 a.m. (local time) on April 3, 2006, or at such other time and place as
      the
      parties may agree.

     

    
      2.4 CLOSING
        OBLIGATIONS

       

    

    At
      the
      Closing:

    


    (a) Seller
      will deliver to Buyer:

    


    (i) certificates
      representing the Shares, duly endorsed (or accompanied by duly executed stock
      powers) for transfer to Buyer;

    


    (ii) release
      in the form of Exhibit 2.4(a)(ii) executed by Seller ("Seller's
      Release");


    
      
        
        

      

      
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    (iii) employment
      agreement in the form of Exhibit 2.4(a)(iii), executed by Seller ("Employment
      Agreement");

    


    (iv) non-competition
      agreement in the form of Exhibit 2.4(a)(iv), executed by Seller (the
      "Non-Competition Agreements"); 

    


    (v) lease
      agreement in the form of Exhibit 2.4(a)(v), executed by Seller (the “Lease
      Agreement); 

    


    (vi) a
      certificate executed by Seller representing and warranting to Buyer that each
      of
      Seller's representations and warranties in this Agreement are accurate in all
      respects as of the Closing Date;

    


    (vii) assignment
      of Patents and Trademarks in the form of Exhibit 2.4(a)(vii) executed by Seller
      ("Patent Assignment");

    


    (viii) an
      opinion of counsel to Seller in the form of Exhibit 2.4(a)(viii) attached
      hereto, with qualifications and assumptions which are agreed to by Buyer;
      and

    


    (ix) all
      other
      items required to be delivered hereunder. 

    


    (b) Buyer
      will deliver to Seller:

    


    (i) the
      amount of $11,300,000 by wire transfer to an account specified by Seller less
      such amount to be wired to the Company's bank to pay off secured
      indebtedness;

    


    (ii) promissory
      note payable to Seller in the principal amount of $750,000.00 in the form of
      Exhibit 2.4(b) (the "Promissory Note");

    


    (iii) a
      total
      of $1,650,000.00 in shares of common stock, $.01 par value ("Common Stock")
      of
      Buyer calculated based on the average of the closing price for the Common Stock
      on the American Stock Exchange for the ten (10) trading days immediately prior
      to the Closing. The shares of Common Stock will be issued to Seller by the
      Buyer's transfer agent within two weeks following the Closing. At Closing,
      Seller will be provided copies of the Company's instruction letter to its
      transfer agent;

    


    (iv) Non-Competition
      Agreement executed by the Company;

    


    (v) a
      certificate executed by Buyer to the effect that each of Buyer's representations
      and warranties in this Agreement was accurate in all respects as of the Closing
      Date;


    
      
         

        
        

      

      
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    (vi) the
      Employment Agreement executed by the Company; 

    


    (vii) the
      Lease
      Agreement executed by the Company; and

    


    (viii) all
      other
      items required to be delivered hereunder.

    


    3. REPRESENTATIONS
      AND WARRANTIES OF SELLER

    


    Seller
      represents and warrants to Buyer as follows:

     

    
      3.1 ORGANIZATION
        AND GOOD STANDING

       

    

    (a) Part
      3.1
      of the Disclosure Letter contains a complete and accurate list for the Company
      of its name, its jurisdiction of incorporation, other jurisdictions in which
      it
      is authorized to do business, and its capitalization (including the identity
      of
      each stockholder and the number of shares held by each). The Company is a
      corporation duly 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 or use
      the properties and assets that it purports to own or use, and to perform all
      its
      obligations under Applicable Contracts. The Company is duly qualified to do
      business as a foreign corporation and is in good standing under the laws of
      each
      state or other jurisdiction in which either the ownership or use of the
      properties owned or used by it, or the nature of the activities conducted by
      it,
      requires such qualification.

    


    (b) Seller
      has delivered to Buyer copies of the Organizational Documents of the Company,
      as
      currently in effect.

     

    
      3.2 AUTHORITY;
        NO CONFLICT

       

    

    (a) 
      This
      Agreement constitutes the legal, valid, and binding obligation of Seller,
      enforceable against Seller in accordance with its terms. Upon the execution
      and
      delivery by Seller of the Employment Agreement, the Seller's Release, the
      Non-Competition Agreement and the Patent Assignment (collectively, the "Seller's
      Closing Documents"), the Seller's Closing Documents will constitute the legal,
      valid, and binding obligations of Seller, enforceable against Seller in
      accordance with their respective terms. Seller has the absolute and unrestricted
      right, power, authority, and capacity to execute and deliver this Agreement
      and
      the Seller's Closing Documents and to perform his obligations under this
      Agreement and the Seller's Closing Documents.

    


    (b) Except
      as
      set forth in Part 3.2 of the Disclosure Letter, 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) 
      contravene, conflict with, or result in a violation of (A) any provision of
      the Organizational Documents of the Company, or (B) any resolution adopted
      by the board of directors or the stockholders of the Company; 


    
      
        
        

      

      
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    (ii) contravene,
      conflict with, or result in a violation of, 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 the Company or either Seller, or any of the assets owned or
      used
      by the Company, may be subject;

    


    (iii) contravene,
      conflict with, or result in a violation 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 the Company
      or that otherwise relates to the business of, or any of the assets owned or
      used
      by, the Company;

    


    (iv) cause
      the
      Company to become subject to, or to become liable for the payment of any
      Tax;

    


    (v) contravene,
      conflict with, or result in a violation or breach of any provision of, or give
      any Person the right to declare a default or exercise any remedy under, or
      to
      accelerate the maturity or performance of, or to cancel, terminate, or modify,
      any Applicable Contract; or

    


    (vi) 
      result
      in the imposition or creation of any Encumbrance upon or with respect to any
      of
      the assets owned or used by the Company.

    


    Except
      as
      set forth in Part 3.2 of the Disclosure Letter, neither Seller or the Company
      is
      or will be 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.

    


    (c) Seller
      is
      acquiring the Promissory Note for his own account and not with a view to
      distribution within the meaning of Section 2(11) of the Securities Act. Seller
      is an "accredited investor" as such term is defined in Rule 501(a) under the
      Securities Act.

     

    
      3.3 CAPITALIZATION

       

    

    The
      authorized equity securities of the Company consist of 1,000 shares of common
      stock, no par value per share, of which 700 shares are issued and outstanding
      and constitute the Shares and are owned by Seller. Seller is and will be on
      the
      Closing Date the record and beneficial owner and holder of the Shares, free
      and
      clear of all Encumbrances. No legend or other reference to any purported
      Encumbrance appears upon any certificate representing equity securities of
      the
      Company. All of the outstanding equity securities of the Company have been
      duly
      authorized and validly issued and are fully paid and nonassessable. There are
      no
      Contracts relating to the issuance, sale, or transfer of any equity securities
      or other securities of the Company. None of the outstanding equity securities
      or
      other securities of the Company was issued in violation of the Securities Act
      or
      any other Legal Requirement. The Company does not own, or have any Contract
      to
      acquire, any equity
      securities or other securities of any Person or any direct or indirect equity
      or
      ownership interest in any other business.


    
      
         

        
        

      

      
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      3.4 FINANCIAL
        STATEMENTS

       

    

    Seller
      have delivered to Buyer: (a) audited consolidated balance sheets of the Company
      as of December 31 in each of the years 2003 through 2004, and the related
      audited consolidated statements of income, changes in stockholders' equity,
      and
      cash flow for each of the fiscal years then ended together with the report
      thereon of Darnall,
      Sikes, Gardes & Frederick, independent
      certified public accountants, (b) an audited consolidated balance sheet of
      the
      Company as of October 31, 2005 (including the notes thereto, the "Balance
      Sheet"), and the related audited consolidated statements of income, changes
      in
      stockholders' equity, and cash flow for the ten months then ended together
      with
      the report thereon of Darnall,
      Sikes, Gardes & Frederick,
      independent certified public accountants, and (c)  unaudited consolidated
      balance sheet of the Company as of January 31, 2006 (the "Interim Balance
      Sheet") and the related unaudited consolidated statements of income, changes
      in
      stockholders equity, and cash flow for the three months then ended, including
      in
      each case the notes thereto. Such financial statements and notes fairly present
      the financial condition and the results of operations, changes in stockholders
      equity, and cash flow of the Company as at 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 Balance Sheet); the
      financial statements referred to in this Section 3.4 reflect the consistent
      application of such accounting principles throughout the periods involved,
      except as disclosed in the notes to such financial statements. No financial
      statements of any Person other than the Company is required by GAAP to be
      included in the consolidated financial statements of the Company.

    


    3.5 BOOKS
      AND RECORDS

    


    The
      books
      of account, minute books, stock record books, and other records of the Company,
      all of which have been made available to Buyer, are complete and correct and
      have been maintained in accordance with sound business practices and the
      requirements, including the maintenance of an adequate system of internal
      controls. The minute books of the Company contain accurate and reasonably
      complete records of all meetings held of, and corporate action taken by, the
      stockholders, the Boards of Directors, and committees of the Boards of Directors
      of the Company, and no meeting of any such stockholders, Board of Directors,
      or
      committee has been held for which minutes have not been prepared and are not
      contained in such minute books. At the Closing, all of those books and records
      will be in the possession of the Company.


    
      
         

        
        

      

      
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    3.6 TITLE
      TO PROPERTIES; ENCUMBRANCES

    


    Part 3.6
      of the Disclosure Letter contains a complete and accurate list of all real
      property, leaseholds, or other interests therein owned or leased by the Company.
      The Company has distributed to the Seller the real property in Broussard,
      Louisiana prior to the Closing from which the Company operates its business
      (the
“Broussard Property”). The Company owns all the properties and assets (whether
      tangible or intangible) that they purport to own located in the facilities
      operated by the Company or reflected as owned in the books and records of the
      Company, including all of the properties and assets reflected in the Balance
      Sheet and the Interim Balance Sheet (except for assets held under capitalized
      leases disclosed or not required to be disclosed in Part 3.6 of the
      Disclosure Letter and personal property sold since the date of the Balance
      Sheet
      and the Interim Balance Sheet, as the case may be, in the Ordinary Course of
      Business and the Broussard Property), and all of the properties and assets
      purchased or otherwise acquired by the Company since the date of the Balance
      Sheet (except for personal property acquired and sold since the date of the
      Balance Sheet in the Ordinary Course of Business and consistent with past
      practice) are listed in Part 3.6 of the Disclosure Letter. All material
      properties and assets reflected in the Balance Sheet and the Interim Balance
      Sheet are free and clear of all Encumbrances as of the Closing and are not
      subject to any reservations or limitations of any nature except, with respect
      to
      such properties and assets, (a)  security interests incurred in connection
      with the purchase of property or assets after the date of the Interim Balance
      Sheet (such mortgages and security interests being limited to the property
      or
      assets so acquired), with respect to which no default (or event that, with
      notice or lapse of time or both, would constitute a default) exists and
      (b) liens for current taxes not yet due. All buildings, plants, and
      structures utilized by the Company lies wholly within the boundaries of the
      real
      property leased by the Company from the Seller and to the Knowledge of Seller
      do
      not encroach upon the property of, or otherwise conflict with the property
      rights of, any other Person.

    


    3.7 CONDITION
      AND SUFFICIENCY OF ASSETS

    


    The
      buildings, plants, structures, and equipment of the Company are structurally
      sound, are in good operating condition and repair (reasonable wear and tear
      excepted), and are adequate for the uses to which they are being put, and none
      of such buildings, plants, structures, and equipment is in need of maintenance
      or repairs except for ordinary, routine maintenance and repairs that are not
      material in nature or cost. The buildings, plants, structures, and equipment
      of
      the Company are sufficient for the continued conduct of the Company's businesses
      after the Closing in substantially the same manner as conducted prior to the
      Closing.

    


    3.8
       ACCOUNTS
      RECEIVABLE

    


    All
      accounts receivable of the Company that are reflected on the Balance Sheet
      or
      the Interim Balance Sheet or on the accounting records of the Company as of
      the
      Closing Date (collectively, the "Accounts Receivable") represent or will
      represent valid obligations arising from sales actually made or services
      actually performed in the Ordinary Course of Business. Unless paid prior to
      the
      Closing Date, the Accounts Receivable are or will be as of the Closing Date
      current and collectible net of the respective reserves shown on the Balance
      Sheet or the Interim Balance Sheet or on the accounting records of the Company
      as of the Closing Date (which reserves are adequate and calculated
      consistent with past practice and, in the case of the reserve as of the Closing,
      will not represent a greater percentage of the Accounts Receivable as of the
      Closing Date than the reserve reflected in the Interim Balance Sheet represented
      of the Accounts Receivable reflected therein and will not represent a material
      adverse change in the composition of such Accounts Receivable in terms of
      aging). Subject to such reserves, each of the Accounts Receivable either has
      been or will be collected in full, without any set-off, within ninety days
      after
      the day on which it first becomes due and payable. There is no contest, claim,
      or right of set-off, other than returns in the Ordinary Course of Business,
      under any Contract with any obligor of an Accounts Receivable relating to the
      amount or validity of such Accounts Receivable. Part 3.8 of the Disclosure
      Letter contains a complete and accurate list of all Accounts Receivable as
      of
      the date of the Interim Balance Sheet, which list sets forth the aging of such
      Accounts Receivable.

    


    
      
        
        

      

      
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    3.9 INVENTORY

    


    All
      inventory of the Company, whether or not reflected in the Balance Sheet or
      the
      Interim Balance Sheet, consists of a quality and quantity usable and salable
      in
      the Ordinary Course of Business, except for obsolete items and items of
      below-standard quality, all of which have been written off or written down
      to
      net realizable value in the Balance Sheet or the Interim Balance Sheet or on
      the
      accounting records of the Company as of the Closing Date, as the case may be.
      All inventories not written off have been priced at a lower of cost or market
      on
      a weighted average cost. The quantities of each item of inventory (whether
      raw
      materials, work-in-process, or finished goods) are not excessive, but are
      reasonable in the present circumstances of the Company.

    


    3.10
       NO
      UNDISCLOSED LIABILITIES

    


    Except
      as
      set forth in Part 3.10 of the Disclosure Letter, the Company has no liabilities
      or obligations of any nature (whether known or unknown and whether absolute,
      accrued, contingent, or otherwise) except for liabilities or obligations
      reflected or reserved against in the Balance Sheet or the Interim Balance Sheet
      and current liabilities incurred in the Ordinary Course of Business since the
      respective dates thereof. Except for the Net Working Capital Amount and the
      distribution of the Broussard Property, the Company does not owe Seller any
      distributions, advances or loans.

    


    3.11
       TAXES

    


    (a) The
      Company has filed or caused to be filed (on a timely basis since 2001) all
      Tax
      Returns that are or were required to be filed by or with respect the Company,
      pursuant to applicable Legal Requirements. Seller has delivered to Buyer copies
      of, and Part 3.11 of the Disclosure Letter contains a complete and accurate
      list of, all such Tax Returns relating to income or franchise taxes filed since
      2002. The Company has paid, or made provision for the payment of, all Taxes
      that
      have or may have become due pursuant to those Tax Returns or otherwise, or
      pursuant to any assessment received by Seller or the Company, except such Taxes,
      if any, as are listed in Part 3.11 of the Disclosure Letter and are being
      contested in good faith and as to which adequate reserves (determined in
      accordance with GAAP) have been provided in the Balance Sheet and the Interim
      Balance Sheet.


    
      
         

        
        

      

      
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    (b) Part
      3.11
      of the Disclosure Letter contains a complete and accurate list of all audits
      of
      all such Tax Returns, including a reasonably detailed description of the nature
      and outcome of each audit. All deficiencies proposed as a result of such audits
      have been paid, reserved against, settled, or, as described in Part 3.11 of
      the Disclosure Letter, are being contested in good faith by appropriate
      proceedings. Part 3.11 of the Disclosure Letter describes all adjustments
      to the United States federal income Tax Returns filed by the Company or any
      group of corporations including the Company for all taxable years since 2001,
      and the resulting deficiencies proposed by the IRS. Except as described in
      Part 3.11 of the Disclosure Letter, neither Seller or the Company has given
      or been requested to give waivers or extensions (or is or would be subject
      to a
      waiver or extension given by any other Person) of any statute of limitations
      relating to the payment of Taxes of the Company or for which the Company may
      be
      liable.

    


    (c) The
      charges, accruals, and reserves with respect to Taxes on the respective books
      of
      the Company are adequate (determined in accordance with GAAP) and are at least
      equal to the Company's liability for Taxes. There exists no proposed tax
      assessment against the Company except as disclosed in the Balance Sheet or
      in
      Part 3.11 of the Disclosure Letter. No consent to the application of
      Section 341(f)(2) of the IRC has been filed with respect to any property or
      assets held, acquired, or to be acquired by the Company. All Taxes that the
      Company is or was required by Legal Requirements to withhold or collect have
      been duly withheld or collected and, to the extent required, have been paid
      to
      the proper Governmental Body or other Person.

    


    (d) All
      Tax
      Returns filed by (or that include on a consolidated basis) the Company or Seller
      for income from the Company are true, correct, and complete. There is no tax
      sharing agreement that will require any payment by the Company after the date
      of
      this Agreement. During the consistency period (as defined in
      Section 338(h)(4) of the IRC with respect to the sale of the Shares to
      Buyer), the Company or target affiliate (as defined in Section 338(h)(6) of
      the IRC with respect to the sale of the Shares to Buyer) has not sold or will
      sell any property or assets to Buyer or to any member of the affiliated group
      (as defined in Section 338(h)(5) of the IRC) that includes Buyer.
      Part 3.11 of the Disclosure Letter lists all such target
      affiliates.

    


    (e) The
      Company is an S corporation as defined in the Code Section 1361 and has been
      treated in a similar manner for purposes of the income tax laws for all states
      in which it has been subject to taxation where such treatment is legally
      available, and the Company is not and has not been subject to either the
      built-in gains tax under Code Section 1374 or the passive income tax under
      Code
      Section 1375. Part 3.11(e) of the Disclosure Letter lists all the states and
      localities with respect to which the Company is required to file any corporate
      income or franchise tax returns and sets forth whether the Company is treated
      as
      the equivalent of an S corporation by or with respect to each such state or
      locality. The Company has properly filed Tax Returns with and paid and
      discharged any liabilities for Taxes in any states or localities in which it
      is
      subject to Tax. 

    


    (f) Seller
      and the Company have disclosed on their federal income Tax Returns all positions
      taken therein that could give rise to a substantial understatement of federal
      income Tax within the meaning of Code Section 6662.


    
      
         

        
        

      

      
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    (g) The
      disallowance of a deduction under Code Section 162(m) for employee remuneration
      will not apply to any amount paid or payable by Seller under any contractual
      arrangement currently in effect. 

    


    3.12
       NO
      MATERIAL ADVERSE CHANGE

    


    Since
      the
      date of the Balance Sheet, there has not been any material adverse change in
      the
      business, operations, properties, prospects, assets, or condition of the
      Company, and no event has occurred or circumstance exists that may result in
      such a material adverse change.

    


    3.13
       EMPLOYEE
      BENEFITS

    


    The
      Seller has delivered to the Buyer a true, correct and complete list (which
      is
      set forth on Part 3.13 of the Disclosure Letter) of all employee benefit plans
      of the Company, including all written employment agreements and all other
      agreements or arrangements that could obligate the Company or any affiliate
      of
      the Company to make any severance, change-of-control or other, similar payments
      and all deferred compensation agreements, together with true, correct and
      complete copies of such plans, agreements and any trusts related thereto, and
      classifications of employees covered thereby. Except for the employee benefit
      plans, if any, described on Part 3.13 of the Disclosure Letter, the Company
      does
      not sponsor, maintain or contribute to any plan program, fund or arrangement
      that constitutes an "employee pension benefit plan," and the Company does not
      have any obligation to contribute to or accrue or pay any benefits under any
      deferred compensation or retirement funding arrangement on behalf of any
      employee or employees (such as, for example, and without limitation, any
      individual retirement account or annuity, any "excess benefit plan" (within
      the
      meaning of Section 3(36) of the Employee Retirement Income Security Act of
      1974,
      as amended "ERISA") or any non-qualified deferred compensation arrangement).
      For
      the purposes of this Agreement, the term "employee pension benefit plan" shall
      have the same meaning as is given that term in Section 3(2) of ERISA. The
      Company has not sponsored, maintained or contributed to any employee pension
      benefit plan, nor is the Company required to contribute to any retirement plan
      pursuant to the provisions of any collective bargaining agreement establishing
      the terms and conditions of employment of any of the Company's employees, other
      than the plans set forth on Part 3.13 of the Disclosure Letter. The Company
      is
      not now, nor as a result of its past activities can it reasonably be expected
      to
      become, liable to the Pension Benefit Guaranty Corporation (other than for
      premium payments) or to any multi employer employee pension benefit plan under
      the provisions of Title IV of ERISA. All employee benefit plans listed in Part
      3.13 of the Disclosure Letter and the administration thereof are in substantial
      compliance with their terms and all applicable provisions of ERISA and the
      regulations issued thereunder, as well as with all other applicable federal,
      state and local statutes, ordinances and regulations. All accrued contribution
      obligations of the Company or any subsidiary with respect to any plan listed
      in
      Part 3.13 of the Disclosure Letter have either been fulfilled in their entirety
      or are fully reflected on the Unaudited Balance Sheets of the
      Company.

    


    Compliance
      with the Code and ERISA
      . All
      employee benefit plans listed in Part 3.13 of the Disclosure Letter that are
      intended to qualify under Section 401(a) of the Code (the "Qualified Plans")
      are, and have been so qualified and have been determined by the Internal Revenue
      Service to be so qualified, and copies of such determination letters are
      included as part of Part 3.13 of
      the
      Disclosure Letter. Except as disclosed in Part 3.13 of the Disclosure Letter,
      all reports and other documents required to be filed with any governmental
      agency or distributed to plan participants or beneficiaries (including, but
      not
      limited to, actuarial reports, audits or Returns) have been timely filed or
      distributed, and copies thereof are included as part of Part 3.13 of the
      Disclosure Letter. No plan listed in Part 3.13 of the Disclosure Letter, or
      the
      Company has engaged in any transaction prohibited under the provisions of
      Section 4975 of the Code or Section 406 of ERISA. No employee benefit plan
      listed in Part 3.13 of the Disclosure Letter has incurred an accumulated funding
      deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
      ERISA; and the Company has not incurred (i) any liability for excise tax or
      penalty payable to the Internal Revenue Service, or (ii) any liability to the
      Pension Benefit Guaranty Corporation (other than for premium payments). In
      addition:

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    


    (i) there
      have been no terminations or discontinuance of contributions to any Qualified
      Plan without notice to and approval by the Internal Revenue
      Service;

    


    (ii) no
      plan
      listed in Part 3.13 of the Disclosure Letter that is subject to the provisions
      of Title IV of ERISA has been terminated;

    


    (iii) there
      have been no "reportable events" (as that phrase is defined in Section 4043
      of
      ERISA) with respect to employee benefit plans listed in Part 3.13 to the
      Disclosure Letter;

    


    (v) the
      Company has not incurred liability under Section 4062 of ERISA; and

    


    (vi) no
      circumstances exist pursuant to which the Company could reasonably be expected
      to have any direct or indirect liability whatsoever (including, but not limited
      to, any liability to any multi employer plan or the Pension Benefit Guaranty
      Corporation under Title IV of ERISA or to the Internal Revenue Service for
      any
      excise tax or penalty, or being subject to any statutory Lien to secure payment
      of any such liability) with respect to any plan now or heretofore maintained
      or
      contributed to by any entity other than the Company that is, or at any time
      was,
      a member of a "controlled group" (as defined in Section 412(n)(6)(B) of the
      Code) that includes the Company ("Controlled Group").

    


    The
      transactions contemplated by this Agreement together with any amounts paid
      or
      payable by the Company or any member of the Controlled Group have not resulted
      in and will not result in payments to "disqualified individuals" (as defined
      in
      Section 280G(c) of the Code) of the Company or any member of the Controlled
      Group which, individually or in the aggregate will constitute "excess parachute
      payments" (as defined in Section 280G(b) of the Code) resulting in the
      imposition of the excise tax under Section 4999 of the Code or the
      disallowance of deductions under Section 280G of the Code.


    
      
         

        
        

      

      
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      3.14 COMPLIANCE
        WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS

    

     

    (a) Except
      as
      set forth in Part 3.14 of the Disclosure Letter and except where a failure
      to do
      so could not be reasonably expected to cause a material adverse effect on the
      Company:

    


    (i) the
      Company is, and at all times since January 1, 2005 has been, in substantial
      compliance with each Legal Requirement that is or was applicable to it or to
      the
      conduct or operation of its business or the ownership or use of any of its
      assets;

     

    (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 the Company of, or a
      failure on the part of the Company to comply with, any Legal Requirement, or
      (B)
      may give rise to any obligation on the part of the Company to undertake, or
      to
      bear all or any portion of the cost of, any remedial action of any nature;
      and

    


    (iii) the
      Company has not received, at any time since January 1, 2005, 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 Legal Requirement, or (B) any actual, alleged,
      possible, or potential obligation on the part of the Company to undertake,
      or to
      bear all or any portion of the cost of, any remedial action of any
      nature.

    


    (b) Part
      3.14
      of the Disclosure Letter contains a complete and accurate list of each
      Governmental Authorization that is held by the Company or that otherwise relates
      to the business of, or to any of the assets owned or used by, the Company.
      Each
      Governmental Authorization listed or required to be listed in Part 3.14 of
      the
      Disclosure Letter is valid and in full force and effect. Except as set forth
      in
      Part 3.14 of the Disclosure Letter:

    


    (i) the
      Company is, and at all times since January 1, 2005 has been, in substantial
      compliance with all of the terms and requirements of each Governmental
      Authorization identified or required to be identified in Part 3.14 of the
      Disclosure Letter;

    


    (ii) no
      event
      has occurred or circumstance exists that may (with or without notice or lapse
      of
      time) (A) constitute or result directly or indirectly in a material violation
      of
      or a failure to substantially comply with any term or requirement of any
      Governmental Authorization listed or required to be listed in Part 3.14 of
      the
      Disclosure Letter, or (B) result directly or indirectly in the revocation,
      withdrawal, suspension, cancellation, or termination of, or any modification
      to,
      any Governmental Authorization listed or required to be listed in Part 3.14
      of
      the Disclosure Letter;

    


    (iii) the
      Company has received, at any time since January 1, 2005, 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 term or requirement of any Governmental
      Authorization, or (B) any actual, proposed, possible, or potential revocation,
      withdrawal, suspension, cancellation, termination of, or modification to any
      Governmental Authorization; and


    
      
         

        
        

      

      
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    (iv) to
      the
      Knowledge of Seller all applications required to have been filed for the renewal
      of the Governmental Authorizations listed or required to be listed in Part
      3.14
      of the Disclosure Letter have been duly filed on a timely basis with the
      appropriate Governmental Bodies, and all other filings required to have been
      made with respect to such Governmental Authorizations have been duly made on
      a
      timely basis with the appropriate Governmental Bodies.

    


    The
      Governmental Authorizations listed in Part 3.14 of the Disclosure Letter
      collectively constitute all of the Governmental Authorizations necessary to
      permit the Company to lawfully conduct and operate its businesses in the manner
      they currently conduct and operate such businesses and to permit the Company
      to
      own and use its assets in the manner in which it currently owns and uses such
      assets except where a failure to do so could not be reasonably expected to
      cause
      a material adverse effect on the Company

    


    3.15 LEGAL
      PROCEEDINGS; ORDERS

    


    (a) Except
      as
      set forth in Part 3.15 of the Disclosure Letter, there is no pending
      Proceeding:

    


    (i) that
      has
      been commenced by or against the Company or that otherwise relates to or may
      affect the business of, or any of the assets owned or used by, the Company;
      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 Seller and the Company, (1) no such Proceeding has been Threatened,
      and (2) no event has occurred or circumstance exists that may give rise to
      or
      serve as a basis for the commencement of any such Proceeding. Seller has
      delivered to Buyer copies of all pleadings, correspondence, and other documents
      relating to each Proceeding listed in Part 3.15 of the Disclosure Letter. The
      Proceedings listed in Part 3.15 of the Disclosure Letter will not have a
      material adverse effect on the business, operations, assets, condition, or
      prospects of the Company.

    


    (b) Except
      as
      set forth in Part 3.15 of the Disclosure Letter:

    


    (i) there
      is
      no Order to which any of the Company, or any of the assets owned or used by
      the
      Company, is subject;

    


    (ii) Seller
      is
      not subject to any Order that relates to the business of, or any of the assets
      owned or used by, the Company; and


    
      
         

        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (iii) to
      the
      Knowledge of Seller and the Company, no officer, director, agent, or employee
      of
      the Company is subject to any Order that prohibits such officer, director,
      agent, or employee from engaging in or continuing any conduct, activity, or
      practice relating to the business of the Company.

    


    (c) Except
      as
      set forth in Part 3.15 of the Disclosure Letter:

    


    (i) the
      Company is, and at all times since January 1, 2005, has been in substantial
      compliance with all of the terms and requirements of each Order to which it,
      or
      any of the assets owned or used by it, is or has been subject;

    


    (ii) no
      event
      has occurred or circumstance exists that may constitute or result in (with
      or
      without notice or lapse of time) a violation of or failure to substantially
      comply with any term or requirement of any Order to which the Company, or any
      of
      the assets owned or used by the Company, is subject; and

    


    (iii) the
      Company has not received, at any time since January 1, 2005, any notice or
      other
      communication (whether oral or written) from any Governmental Body or any other
      Person regarding any actual, alleged, possible, or potential violation of,
      or
      failure to comply with, any term or requirement of any Order to which the
      Company, or any of the assets owned or used by the Company, is or has been
      subject.

    


    3.16 ABSENCE
      OF CERTAIN CHANGES AND EVENTS

    


    Except
      as
      set forth in Part 3.16 of the Disclosure Letter, since the date of the Balance
      Sheet, the Company has conducted its businesses only in the Ordinary Course
      of
      Business and there has not been any:

    


    (a) change
      in
      the Company's authorized or issued capital stock; grant of any stock option
      or
      right to purchase shares of capital stock of the Company; issuance of any
      security convertible into such capital stock; grant of any registration rights;
      purchase, redemption, retirement, or other acquisition by the Company of any
      shares of any such capital stock; or declaration or payment of any dividend
      or
      other distribution or payment in respect of shares of capital stock (other
      than
      the distribution of Net Working Capital and the Broussard
      Property);

    


    (b) amendment
      to the Organizational Documents of the Company;

    


    (c) payment
      or increase by the Company of any bonuses, salaries, or other compensation
      to
      any “employee (other than those bonuses, raises or other compensation listed in
      Part 3.16 of Disclosure Schedule), stockholder, director, officer or” entry into
      any employment, severance, or similar Contract with any director, officer,
      or
      employee;


    
      
         

        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    (d) adoption
      of, or increase in the payments to or benefits under, any profit sharing, bonus,
      deferred compensation, savings, insurance, pension, retirement, or other
      employee benefit plan for or with any employees of the Company;

    


    (e) damage
      to
      or destruction or loss of any asset or property of the Company, whether or
      not
      covered by insurance, materially and adversely affecting the properties, assets,
      business, financial condition, or prospects of the Company, taken as a
      whole;

    


    (f) entry
      into, termination of, or receipt of notice of termination of (i) any license,
      distributorship, dealer, sales representative, joint venture, credit, or similar
      agreement, or (ii) any Contract or transaction involving a total remaining
      commitment by or to the Company of at least $25,000.00;

    


    (g) sale
      (other than sales of inventory in the Ordinary Course of Business and the
      Broussard Property), lease, or other disposition of any asset or property of
      the
      Company or mortgage, pledge, or imposition of any lien or other encumbrance
      on
      any material asset or property of the Company, including the sale, lease, or
      other disposition of any of the Intellectual Property Assets;

    


    (h) cancellation
      or waiver of any claims or rights with a value to the Company in excess of
      $25,000.00;

    


    (i) material
      change in the accounting methods used by the Company; or

    


    (j) agreement,
      whether oral or written, by the Company to do any of the foregoing.

    


    3.17 CONTRACTS;
      NO DEFAULTS

    


    (a) Part
      3.17(a) of the Disclosure Letter contains a complete and accurate list, and
      Seller has delivered to Buyer true and complete copies, of:

    


    (i) each
      Applicable Contract that involves performance of services or delivery of goods
      or materials by the Company of an amount or value in excess of
      $25,000.00.

    


    (ii) each
      Applicable Contract that involves performance of services or delivery of goods
      or materials to the Company of an amount or value in excess of
      $25,000.00.

    


    (iii) each
      Applicable Contract that was not entered into in the Ordinary Course of Business
      and that involves expenditures or receipts of the Company in excess of
      $25,000.00.

    


    (iv) each
      lease (other than the “Lease Agreement”), rental or occupancy agreement,
      license, installment and conditional sale agreement, and other Applicable Contract
      affecting the ownership of, leasing of, title to, use of, or any leasehold
      or
      other interest in, any real or personal property (except personal property
      leases and installment and conditional sales agreements having a value per
      item
      or aggregate payments of less than $25,000.00 and with terms of less than one
      year);


    
      
         

        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (v) each
      licensing agreement or other Applicable Contract with respect to patents,
      trademarks, copyrights, or other intellectual property, including agreements
      with current or former employees, consultants, or contractors regarding the
      appropriation or the non-disclosure of any of the Intellectual Property
      Assets;

    


    (vi) each
      collective bargaining agreement and other Applicable Contract to or with any
      labor union or other employee representative of a group of
      employees;

    


    (vii) each
      joint venture, partnership, and other Applicable Contract (however named)
      involving a sharing of profits, losses, costs, or liabilities by the Company
      with any other Person;

    


    (viii) each
      Applicable Contract containing covenants that in any way purport to restrict
      the
      business activity of the Company or any Affiliate of the Company or limit the
      freedom of the Company or any Affiliate of the Company to engage in any line
      of
      business or to compete with any Person;

    


    (ix) each
      Applicable Contract providing for payments to or by any Person based on sales,
      purchases, or profits, other than direct payments for goods;

    


    (x) each
      power of attorney that is currently effective and outstanding;

    


    (xi) each
      Applicable Contract entered into other than in the Ordinary Course of Business
      that contains or provides for an express undertaking by the Company to be
      responsible for consequential damages;

    


    (xii) each
      Applicable Contract for capital expenditures in excess of
      $25,000.00;

    


    (xiii) each
      written warranty, guaranty, and or other similar undertaking with respect to
      contractual performance extended by the Company other than in the Ordinary
      Course of Business; and

    


    (xiv) each
      amendment, supplement, and modification (whether oral or written) in respect
      of
      any of the foregoing.

    


    Part
      3.17(a) of the Disclosure Letter sets forth reasonably complete details
      concerning such Contracts, including the parties to the Contracts, the amount
      of
      the remaining commitment of the Company under the Contracts, and the Company's
      office where details relating to the Contracts are located.


    
      
         

        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    


    (b) Except
      as
      set forth in Part 3.17(b) of the Disclosure Letter:

    


    (i) Seller
      (and no Related Person of Seller) has not or will not acquire any rights under,
      and Seller has not or will not become subject to any obligation or liability
      under, any Contract that relates to the business of, or any of the assets owned
      or used by the Company; and

    


    (ii) to
      the
      Knowledge of Seller and the Company, no officer, director, agent, employee,
      consultant, or contractor of the Company is bound by any Contract that purports
      to limit the ability of such officer, director, agent, employee, consultant,
      or
      contractor to (A) engage in or continue any conduct, activity, or practice
      relating to the business of the Company, or (B) assign to the Company or to
      any
      other Person any rights to any invention, improvement, or
      discovery.

    


    (c) Except
      as
      set forth in Part 3.17(c) of the Disclosure Letter, each Contract identified
      or
      required to be identified in Part 3.17(a) of the Disclosure Letter is in full
      force and effect and is valid and enforceable in accordance with its
      terms.

    


    (d) Except
      as
      set forth in Part 3.17(d) of the Disclosure Letter:

    


    (i) the
      Company is, and at all times since January 1, 2005, has been in full compliance
      with all applicable terms and requirements of each Contract under which the
      Company has or had any obligation or liability or by which the Company or any
      of
      the assets owned or used by the Company is or was bound;

    


    (ii) each
      other Person that has or had any obligation or liability under any Contract
      under which the Company has or had any rights is, and at all times since January
      1, 2005, has been in full compliance with all applicable terms and requirements
      of such Contract;

    


    (iii) no
      event
      has occurred or circumstance exists that (with or without notice or lapse of
      time) may contravene, conflict with, or result in a violation or breach of,
      or
      give the Company or other Person the right to declare a default or exercise
      any
      remedy under, or to accelerate the maturity or performance of, or to cancel,
      terminate, or modify, any Applicable Contract; and

    


    (iv) the
      Company has not given to or received from any other Person, at any time since
      January 1, 2005, any notice or other communication (whether oral or written)
      regarding any actual, alleged, possible, or potential violation or breach of,
      or
      default under, any Contract.

    


    (e) There
      are
      no renegotiations of, attempts to renegotiate, or outstanding rights to
      renegotiate any material amounts paid or payable to the Company under current
      or
      completed Contracts
      with any Person and, to the Knowledge of Seller and the Company, no such Person
      has made written demand for such renegotiation.


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (f) The
      Contracts relating to the sale, design, manufacture, or provision of products
      or
      services by the Company have been entered into in the Ordinary Course of
      Business and have been entered into without the commission of any act alone
      or
      in concert with any other Person, or any consideration having been paid or
      promised, that is or would be in violation of any Legal
      Requirement.

    


    3.18 INSURANCE

    


    (a) Seller
      has delivered to Buyer:

    


    (i) true
      and
      complete copies of all policies of insurance to which the Company is a party
      or
      under which the Company, or any director of the Company, is or has been covered
      at any time within the 3 years preceding the date of this
      Agreement;

    


    (ii) true
      and
      complete copies of all pending applications for policies of insurance;
      and

    


    (iii) any
      statement by the auditor of the Company's financial statements with regard
      to
      the adequacy of such entity's coverage or of the reserves for
      claims.

    


    (b) Part
      3.18(b) of the Disclosure Letter describes:

    


    (i) any
      self-insurance arrangement by or affecting the Company, including any reserves
      established thereunder;

    


    (ii) any
      contract or arrangement, other than a policy of insurance, for the transfer
      or
      sharing of any risk by the Company; and

    


    (iii) all
      obligations of the Company to third parties with respect to insurance (including
      such obligations under leases and service agreements) and identifies the policy
      under which such coverage is provided.

    


    (c) Part
      3.18(c) of the Disclosure Letter sets forth, by year, for the current policy
      year and each of the 2 preceding policy years:

    


    (i) a
      summary
      of the loss experience under each policy;

    


    (ii) a
      statement describing each claim under an insurance policy for an amount in
      excess of $25,000.00, which sets forth:

    


    (A) the
      name
      of the claimant;


    
      
         

        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    


    (B) a
      description of the policy by insurer, type of insurance, and period of coverage;
      and

    


    (C) the
      amount and a brief description of the claim.

    


    (d) Except
      as
      set forth on Part 3.18(d) of the Disclosure Letter:

    


    (i) All
      policies to which the Company is a party or that provide coverage to Seller,
      the
      Company, or any director or officer of the Company:

    


    (A) are
      valid, outstanding, and enforceable;

    


    (B) to
      the
      Knowledge of Seller are
      issued by an insurer that is financially sound and reputable;

    


    (C) to
      the
      Knowledge of Seller taken together, provide adequate insurance coverage for
      the
      assets and the operations of the Company in such reasonable amounts as would
      be
      carried by a Person carrying on the same business or businesses as the
      Company;

    


    (D) are
      sufficient for compliance with all Legal Requirements and Contracts to which
      the
      Company is a party or by which any of them is bound.

    


    (E) do
      not
      provide for any retrospective premium adjustment or other experienced-based
      liability on the part of the Company.

    


    (ii) Neither
      Seller or the Company have 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 insurance policy is no longer
      in
      full force or effect or will not be renewed or that the issuer of any policy
      is
      not willing or able to perform its obligations thereunder.

    


    (iii) The
      Company has paid all premiums due, and has otherwise performed all of their
      respective obligations, under each policy to which the Company is a party or
      that provides coverage to the Company or director thereof.

    


    (iv) The
      Company has given notice to the insurer of all claims that may be insured
      thereby.

    


    3.19 ENVIRONMENTAL
      MATTERS

    


    Except
      as
      set forth in part 3.19 of the Disclosure Letter:

     


    
      
         

        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    (a) The
      Company is, and at all times has been, in full compliance with, and has not
      been
      and is not in violation of or liable under, any Environmental Law. Neither
      Seller or the Company 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 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 Seller
      or
      the Company 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 Seller, the Company, or any other
      Person for whose conduct they are 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 Seller and the Company, 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 (whether real, personal, or mixed) in which Seller
      or the Company has or had an interest.

    


    (c) Neither
      Seller or the Company have Knowledge of 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 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 other properties or assets (whether
      real, personal, or mixed) in which Seller or the Company had an interest, or
      with respect to any property or facility to which Hazardous Materials generated,
      manufactured, refined, transferred, imported, used, or processed by Seller,
      the
      Company, or any other Person for whose conduct they are or may be held
      responsible, have been transported, treated, stored, handled, transferred,
      disposed, recycled, or received.

    


    (d) Neither
      Seller or the Company, or any other Person for whose conduct they are or may
      be
      held responsible, have any Environmental, Health, and Safety Liabilities with
      respect to the Facilities or, to the Knowledge of Seller and the Company, with
      respect to any other properties and assets (whether real, personal, or mixed)
      in
      which Seller or the Company (or any predecessor), 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
      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 moveable 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. Neither Seller, the
      Company, any other Person for whose conduct they are or may be held responsible,
      or to the Knowledge of Seller and the Company, any other Person, has permitted
      or conducted, or is aware of, any Hazardous Activity conducted with respect
      to
      the Facilities or any other properties or assets (whether real, personal, or
      mixed) in which Seller or the Company has or had an interest except in full
      compliance with all applicable Environmental Laws.


    
      
         

        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (f) There
      has
      been no Release or, to the Knowledge of Seller and the Company, 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 or by any other properties and assets (whether real, personal, or mixed)
      in which Seller or the Company has or had an interest, or to the Knowledge
      of
      Seller and the Company any geologically or hydrologically adjoining property,
      whether by Seller, the Company, or any other Person.

    


    (g) Seller
      has delivered to Buyer true and complete copies and results of any reports,
      studies, analyses, tests, or monitoring possessed or initiated by Seller or
      the
      Company pertaining to Hazardous Materials or Hazardous Activities in, on, or
      under the Facilities, or concerning compliance by Seller, the Company, or any
      other Person for whose conduct they are or may be held responsible, with
      Environmental Laws.

    


    3.20 EMPLOYEES

    


    (a) Part
      3.20
      of the Disclosure Letter contains a complete and accurate list of the following
      information for each employee or director of the Company, including each
      employee on leave of absence or layoff status: employer; name; job title;
      current compensation paid or payable and any change in compensation since
      January 1, 2005; vacation accrued; and service credited for purposes of vesting
      and eligibility to participate under the Company's pension, retirement,
      profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
      option, cash bonus, employee stock ownership (including investment credit or
      payroll stock ownership), severance pay, insurance, medical, welfare, or
      vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
      Plan, or any other employee benefit plan or any Director Plan.

    


    (b) No
      employee or director of the Company is a party to, or is otherwise bound by,
      any
      agreement or arrangement, including any confidentiality, non-competition, or
      proprietary rights agreement, between such employee or director and any other
      Person ("Proprietary Rights Agreement") that in any way adversely affects or
      will affect (i) the performance of his duties as an employee or director of
      the
      Company, or (ii) the ability of the Company to conduct its business, including
      any Proprietary Rights Agreement with Seller or the Company by any such employee
      or director. To Seller's Knowledge, no director, officer, or other key employee
      of the Company intends to terminate his employment with the
      Company.

    


    (c) Part
      3.20
      of the Disclosure Letter also contains a complete and accurate list of the
      following information for each retired employee or director of the Company,
      or
      their dependents, receiving benefits or scheduled to receive benefits in the
      future: name, pension benefit, pension option
      election, retiree medical insurance coverage, retiree life insurance coverage,
      and other benefits.


    
      
         

        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    3.21 LABOR
      RELATIONS; COMPLIANCE

    


    Since
      January 1, 2005, the Company has not been or is a party to any collective
      bargaining or other labor Contract. Since January 1, 2005, there has not been,
      there is not presently pending or existing, and to Seller's Knowledge there
      is
      not Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
      grievance process, (b) any Proceeding against or affecting the Company relating
      to the alleged violation of any Legal Requirement pertaining to labor relations
      or employment matters, including any charge or complaint filed by an employee
      or
      union with the National Labor Relations Board, the Equal Employment Opportunity
      Commission, or any comparable Governmental Body, organizational activity, or
      other labor or employment dispute against or affecting the Company or its
      premises, or (c) any application for certification of a collective bargaining
      agent. To Seller's Knowledge no event has occurred or circumstance exists that
      could provide the basis for any work stoppage or other labor dispute. There
      is
      no lockout of any employees by the Company, and no such action is contemplated
      by the Company. The Company has complied in all respects with all Legal
      Requirements relating to employment, equal employment opportunity,
      nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
      the payment of social security and similar taxes, occupational safety and
      health, and plant closing. The Company is not liable for the payment of any
      compensation, damages, taxes, fines, penalties, or other amounts, however
      designated, for failure to comply with any of the foregoing Legal
      Requirements.

    


    3.22 INTELLECTUAL
      PROPERTY

    


    (a) Intellectual
      Property Assets--The
      term "Intellectual Property Assets" includes:

    


    (i) the
      name
      "Rogers Oil Tool Services, Inc.", "CYBER-EYE" and "We'll Put a Grip on Things",
      all fictional business names, trading names, registered and unregistered
      trademarks, service marks, and applications (collectively,
      "Marks");

    


    (ii) all
      U.S.
      and foreign patents and patent applications, of the Company or Seller
      (collectively, "Patents");

    


    (iii) all
      copyrights in both published works and unpublished works (collectively,
      "Copyrights"); and

    


    (iv) all
      know-how, trade secrets, confidential information, customer lists, software,
      technical information, data, process technology, plans, drawings, and blue
      prints (collectively, "Trade Secrets"); owned, used, or licensed by the Company
      or Seller as licensee or licensor.

    


    The
      Seller and the Company are also transferring all inventions and discoveries
      related to the business of the Company to Buyer, and Seller and the Company
      are
      the owner of all right, title and interest
      to such inventions and discoveries and to Seller's Knowledge, such inventions
      and discoveries are free of any Encumbrances.


    
      
         

        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (b) Agreements--Part
      3.22(b) of the Disclosure Letter contains a complete and accurate list and
      summary description, including any royalties paid or received by the Company
      or
      Seller, of all Contracts relating to the Intellectual Property Assets to which
      the Company is a party or by which the Company is bound, except for any license
      implied by the sale of a product and perpetual, paid-up licenses for commonly
      available software programs with a value of less than $5,000 under which the
      Company is the licensee. There are no outstanding and no Threatened disputes
      or
      disagreements with respect to any such agreement.

    


    (c) Know-How
      Necessary for the Business

    


    (i) The
      Intellectual Property Assets are all those necessary for the operation of the
      Company's businesses as they are currently conducted. The Company and/or Seller
      are the owners of all right, title, and interest in and to each of the
      Intellectual Property Assets, as indicated, free and clear of all liens,
      security interests, charges, encumbrances, equities, and other adverse claims,
      and the Company has the right to use without payment to Seller or a third party
      all of the Intellectual Property Assets.

    


    (ii) No
      employee of the Company has entered into any Contract that restricts or limits
      in any way the scope or type of work in which the employee may be engaged or
      requires the employee to transfer, assign, or disclose information concerning
      his work to anyone other than the Company.

    


    (iii) No
      employee has made an invention used by the Company that has not been assigned
      to
      the Company or to the Seller. There are no agreements with employees that
      require payment of any royalty or fee for an invention made by an
      employee.

    


    (d) Patents

    


    (i) Part
      3.22(d) of the Disclosure Letter contains a complete and accurate list and
      summary description of all Patents. The Seller is the owner of all right, title,
      and interest in and to each of the Patents, free and clear of all liens,
      security interests, charges, encumbrances, entities, and other adverse claims.
      In connection with this Agreement and the Patent Assignment, the Seller is
      transferring all right, title and interest Seller may have in the Patents and
      Intellectual Property Assets to Buyer.

    


    (ii) Except
      as
      noted on Section 3.22(d) of the Disclosure Letter, all of the issued Patents
      are
      currently in compliance with formal legal requirements (including payment of
      filing, examination, and maintenance fees and proofs of working or use), and
      are
      not subject to any maintenance fees or taxes or actions falling due within
      ninety days after the Closing except as noted in Section 3.22(d) of the
      Disclosure Letter,
      there are no facts known to the Seller or Company that would render the patents
      invalid or unenforceable.
       

    


    
      
         

        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (iii) No
      Patent
      has been or is now involved in any interference, reissue, reexamination, or
      opposition proceeding. There is no potentially interfering patent or patent
      application of any third party.

    


    (iv) To
      the
      Knowledge of Seller, no Patent has been or is infringed by any third party
      or
      has been challenged or threatened in any way by any third party. None of the
      products manufactured and sold or used, or any process or know-how used, by
      the
      Company infringes or is alleged to infringe any patent or other proprietary
      right of any - third party.

    


    (v) Certain
      promotional materials for products made, used and sold under the patents have
      contained patent information.

    


    (e) Trademarks

    


    (i) Part
      3.22(e) of the Disclosure Letter contains a complete and accurate list and
      summary description of all Marks. The Company is the owner of all right, title,
      and interest in and to each of the Marks, free and clear of all liens, security
      interests, charges, encumbrances, equities, and other adverse
      claims.

    


    (ii) All
      Marks
      that have been registered with the United States Patent and Trademark Office
      are
      currently in compliance with all formal legal requirements (including the timely
      post-registration filing of affidavits of use and incontestability and renewal
      applications), are valid and enforceable, and are not subject to any maintenance
      fees or taxes or actions falling due within ninety days after the Closing
      Date.

    


    (iii) To
      the
      Knowledge of Seller, no Mark has been or is now involved in any opposition,
      invalidation, or cancellation and, to Seller's or Company’s Knowledge, no such
      action has been threatened with the respect to any of the Marks.

    


    (iv) To
      Seller's Knowledge, there is no potentially interfering trademark or trademark
      application of any third party.

    


    (v) To
      the
      Knowledge of Seller, no Mark on the List of Marks is being infringed by Third
      Parties or, to Seller's or Company’s Knowledge, has been challenged or
      threatened in any way. None of the Marks used by the Company infringes or is
      alleged to infringe any trade name, trademark, or service mark of any third
      party.


    
      
        
        

      

      
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    (vi) All
      marks
      on the List of Marks are used on Company’s goods or on advertisements for
      Company’s services with a federal registration notice as appropriate for
      registered marks. 

    


    (f) Copyrights

    


    (i) Part
      3.22(f) of the Disclosure Letter contains a complete and accurate list and
      summary description of all Copyrights for works of authorship used by Company
      whether registered or not. The Company is the owner of all right, title, and
      interest in and to each of the Copyrights, free and clear of all liens, security
      interests, charges, encumbrances, equities, and other adverse claims.


    


    (ii) All
      the
      Copyrights that have been registered and are currently in compliance with formal
      legal requirements, are valid and enforceable, and are not subject to any
      maintenance fees or taxes or actions falling due within ninety days after the
      date of Closing. A list of Federal Copyright registrations is included in the
      list referenced above 3.22(f)(i).

    


    (iii) No
      Copyright is infringed or, has been challenged or threatened in any way. None
      of
      the subject matter of any of the Copyrights infringes or is alleged to infringe
      any copyright of any third party or is a derivative work based on the work
      of a
      third party.

    


    (g) Trade
      Secrets

    


    (i) With
      respect to each documented Trade Secret, the documentation relating to such
      Trade Secret is current, accurate, and sufficient in detail and content to
      identify and explain it and to allow its full and proper use without reliance
      on
      the knowledge or memory of any individual.

    


    (ii) Seller
      and the Company have taken reasonable precautions to protect the secrecy,
      confidentiality, and value of their Trade Secrets.

    


    (iii) The
      Company has good title and an absolute (but not necessarily exclusive) right
      to
      use the Trade Secrets. The Trade Secrets are not part of the public knowledge
      or
      literature, and, to Seller's Knowledge, have not been used, divulged, or
      appropriated either for the benefit of any Person or to the detriment of the
      Company. No Trade Secret is subject to any adverse claim or has been challenged
      or threatened in any way.

    


    3.23 CERTAIN
      PAYMENTS

    


    Since
      January 1, 2005, neither the Company or director, officer, agent, or employee
      of
      the Company, or any other Person associated with or acting for or on behalf
      of
      the Company, has directly or indirectly (a) made any contribution, gift, bribe,
      rebate, payoff, influence payment, kickback, or other payment to any Person,
      private or public, regardless of form, whether in money, property,
      or services (i) to obtain favorable treatment in securing business, (ii) to
      pay
      for favorable treatment for business secured, (iii) to obtain special
      concessions or for special concessions already obtained, for or in respect
      of
      the Company or any Affiliate of the Company, or (iv) in violation of any Legal
      Requirement, or (b) established or maintained any fund or asset that has not
      been recorded in the books and records of the Company.

    


    
      
        
        

      

      
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    3.24 DISCLOSURE

    


    (a) No
      representation or warranty of Seller in this Agreement and no statement in
      the
      Disclosure Letter omits to state a material fact necessary to make the
      statements herein or therein, in light of the circumstances in which they were
      made, not misleading.

    


    (b) There
      is
      no fact known to Seller that has specific application to either Seller or the
      Company (other than general economic or industry conditions) and that materially
      adversely affects or, as far as Seller can reasonably foresee, materially
      threatens, the assets, business, prospects, financial condition, or results
      of
      operations of the Company (on a consolidated basis) that has not been set forth
      in this Agreement or the Disclosure Letter.

    


    3.25 RELATIONSHIPS
      WITH RELATED PERSONS

    


    Neither
      Seller or any Related Person of Seller or the Company has, or since the first
      day of the next to last completed fiscal year of the Company has had, any
      interest in any property (whether real, personal, or mixed and whether tangible
      or intangible), used in or pertaining to the Company's businesses. Neither
      Seller or any Related Person of Seller or the Company is, or since the first
      day
      of the next to last completed fiscal year of the Company has owned (of record
      or
      as a beneficial owner) an equity interest or any other financial or profit
      interest in, a Person that has (i) had business dealings or a material financial
      interest in any transaction with the Company, or (ii) engaged in competition
      with the Company with respect to any line of the products or services of the
      Company (a "Competing Business") in any market presently served by the Company
      except for 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 Part 3.25 of the Disclosure
      Letter, no Seller or any Related Person of Seller or the Company is a party
      to
      any Contract with, or has any claim or right against, the Company.

    


    3.26 BROKERS
      OR FINDERS

    


    Seller
      is
      his agents have incurred no obligation or liability, contingent or otherwise,
      for brokerage or finders' fees or agents' commissions or other similar payment
      in connection with this Agreement.

    


    3.27 INVESTMENT
      INTENT AND INVESTIGATION

    


    Seller
      is
      acquiring the shares of common stock, $.01 par value, of the Buyer ("Buyer
      Stock") for his own account for investment and not with a view to, or for resale
      in connection with, any "distribution" thereof for purposes of the Securities
      Act. The Seller is an "accredited investor" as such term is defined in
      Regulation D under the Securities Act. Seller acknowledges that the shares
      of
      Buyer Stock shall be "restricted securities" within the meaning of Rule 144
      ("Rule 144") under the Securities Act, will contain a transfer restriction
      legend and may only be resold pursuant to an effective registration statement
      filed with the SEC under the Securities Act, or pursuant to Rule 144 or another
      valid exemption from the registration requirements of the Securities Act as
      established by an opinion of counsel reasonably acceptable to the Buyer. Seller
      has been given full access by the Buyer to all information concerning the
      business and financial condition, properties, operations and prospects of the
      Buyer that the Seller has deemed relevant in connection with the issuance of
      the
      shares of Buyer Stock to him. By reason of the Seller's knowledge and experience
      in financial and business matters in general, the Seller is capable of
      evaluating the merits and risks of making the investment in the shares of Buyer
      Stock and is able to bear the economic risk of the investment (including a
      complete loss of its investment in the shares of Buyer Stock). The Seller
      acknowledges that the Buyer files reports with the Securities and Exchange
      Commission that are publicly available, and has provided the Seller with an
      Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and
      a
      Quarterly Report on Form 10-Q for the quarter ended September 30,
      2005.

    


    
      
        
        

      

      
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    4. REPRESENTATIONS
      AND WARRANTIES OF BUYER

    


    Buyer
      represents and warrants to Seller as follows:

    


    4.1 ORGANIZATION
      AND GOOD STANDING

    


    Buyer
      is
      a corporation duly organized, validly existing, and in good standing under
      the
      laws of the State of Delaware with full corporate power and authority to conduct
      its business as it is now being conducted, to own or use the property and assets
      and is duly qualified to do business as a foreign corporation.

    


    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 Employment Agreement, Non-Competition Agreement and
      the
      Promissory Note (collectively, the "Buyer's Closing Documents"), the Buyer's
      Closing Documents will constitute the legal, valid, and binding obligations
      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.

    


    (b) Except
      as
      set forth in Schedule 4.2, neither the execution and 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 Organizational Documents;


    
      
         

        
        

      

      
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    (ii) any
      resolution adopted by the board of directors or the stockholders 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.

    


     Except
      as
      set forth in Schedule 4.2, 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.

    


    4.3 CAPITALIZATION

    


    (a) The
      authorized capital stock of Buyer consists of 20,000,000 shares of common stock,
      par value $.01 per share, 17,223,142 shares of which have been validly issued
      and are outstanding as of the date hereof (and such shares are fully paid and
      non-assessable), and 10,000,000 shares of preferred stock, par value $.01 per
      share, of which no shares are outstanding as of the date hereof. 

    


    (b) All
      certificates representing shares of Buyer Stock to be issued to the Seller
      shall
      bear the following legend:

    


    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
      ANY STATE. THESE SECURITIES MAY NOT BE SOLD, OFFERRED FOR SALE, ASSIGNED,
      TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED PURSUANT TO THE
      PROVISIONS OF THE ACT AND THE LAWS OF SUCH STATES UNDER WHOSE LAWS A TRANSFER
      OF
      SECURITIES WOULD BE SUBJECT TO A REGISTRATION REQUIREMENT OR AN OPINION OF
      COUNSEL TO THE CORPORATION IS DELIVERED STATING THAT SUCH DISPOSITION IS IN
      COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION".

    


    All
      certificates representing such shares of Buyer Stock above will be subject
      to a
      stop transfer order with the Buyer's transfer agent that restricts the transfer
      of such shares except in compliance with applicable law.

    


    4.4 INVESTMENT
      INTENT

    


    Buyer
      is
      acquiring the Shares for its own account and not with a view to their
      distribution within the meaning of Section 2(11) of the Securities
      Act.


    
      
         

        
        

      

      
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    4.5 CONFORMITY
      WITH LAW; LITIGATION

    


    To
      the
      best of the Buyer's Knowledge, the Buyer is not in violation of any law or
      regulation or any order of any court or Federal, state, municipal or other
      governmental department, commission, board, bureau, agency or instrumentality
      having jurisdiction over it; and there are no material claims, actions, suits
      or
      proceedings, pending or, to the Knowledge of the Buyer, threatened, against
      or
      affecting Buyer, at law or in equity, or before or by any Federal, state,
      municipal or other governmental department, commission, board, bureau, agency
      or
      instrumentality having jurisdiction over it, or before any arbitrator or
      mediator, and no notice of any claim, action, suit or proceeding, whether
      pending or threatened, has been received.

    


    4.6 BROKERS
      OR FINDERS

    


    Except
      for the finders agreement with Mahfooz Mustafa, Buyer and its officers and
      agents have incurred no obligation or liability, contingent or otherwise, for
      brokerage or finders' fees or agents' commissions or other similar payment
      in
      connection with this Agreement and will indemnify and hold Seller harmless
      from
      any such payment alleged to be due by or through Buyer as a result of the action
      of Buyer or its officers or agents.

    


    4.7 STOCK 

    


    The
      shares of Common Stock deliverable to Seller pursuant to this Agreement will
      have been duly authorized prior to the Closing, and upon consummation of the
      Contemplated Transactions, will be validly issued, fully paid and non assessable
      and free of any preemptive rights. The Common Stock will be issued pursuant
      to
      an exemption from registration under the Securities Act of 1933, as amended
      (the
      "Securities Act") and all applicable federal and state securities laws, rules
      and regulations. The Buyer has filed all required forms, reports and documents
      with the SEC and, at the time of its filing with the SEC, each such form, report
      and document complied in all material respects with all applicable requirements
      of the Securities Act and the Securities Exchange Act of 1934, as amended,
      each
      as then in effect. 

    


    4.8 NO
      338 ELECTION

    


    Buyer
      shall not make an election under Section 338(g) or 338(h)(10) of the Code and
      the applicable regulations thereunder or any similar or any applicable provision
      of federal, state or local law that would elect to treat the transactions
      contemplated hereby as an asset sale.

    


    4.9 INSURANCE

    


    Buyer
      agrees to maintain policies of insurance on the Company and assets of the
      Company in such amounts and types greater than or equal to the coverage in
      effect immediately prior to the Closing.


    
      
         

        
        

      

      
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    5. PAYMENT
      OF INDEBTEDNESS BY SELLER AND RELATED PERSONS

    


    Seller
      will cause all indebtedness owed to the Company by Seller or any Related Person
      of Seller to be satisfied in full at the Closing.

    


    6. INDEMNIFICATION;
      REMEDIES

     

    

      6.1 SURVIVAL;
        RIGHT TO INDEMNIFICATION NOT AFFECTED BY
        KNOWLEDGE

    

     

    All
      representations, warranties, covenants, and obligations in this Agreement,
      the
      Disclosure Letter, the certificates delivered pursuant to Section 2.4, and
      any
      other certificate or document delivered pursuant to this Agreement will survive
      the Closing. The right to indemnification, payment of Damages or other remedy
      based on such representations, warranties, covenants, and obligations will
      not
      be affected by any investigation conducted with respect to, or any Knowledge
      acquired (or capable of being acquired) at any time, whether before or after
      the
      execution and delivery of this Agreement with respect to the accuracy or
      inaccuracy of or compliance with, any such representation, warranty, covenant,
      or obligation. The waiver of any condition based on the accuracy of any
      representation or warranty, or on the performance of or compliance with any
      covenant or obligation, will not affect the right to indemnification, payment
      of
      Damages, or other remedy based on such representations, warranties, covenants,
      and obligations.

    


    6.2 INDEMNIFICATION
      AND PAYMENT OF DAMAGES BY SELLER

    


    Seller
      will indemnify and hold harmless Buyer, the Company, and their respective
      Representatives, stockholders, controlling persons, and affiliates
      (collectively, the "Indemnified Persons") for, and will pay to the Indemnified
      Persons the amount of, any loss, liability, claim, damage, expense (including
      costs of investigation and defense and reasonable attorneys' fees) whether
      or
      not involving a third-party claim (collectively, "Damages"), arising, directly
      or indirectly, from or in connection with:

    


    (a) any
      Breach of any representation or warranty made by Seller in this Agreement,
      the
      Disclosure Letter, or any other certificate or document delivered by Seller
      pursuant to this Agreement; provided, however, that for purposes of this Section
      6.2, any potential Breach of any representation or warranty made in Sections
      3.13, 3.15, 3.18, 3.19 and 3.22 shall be determined without regard to any
      qualification as to Knowledge;

    


    (b) any
      Breach by Seller of any covenant or obligation of such Seller in this Agreement;
      

    


    (c) any
      product shipped or manufactured by, or any services provided by, the Company
      prior to the Closing Date;

    


    (d) 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 Seller or the Company (or any Person acting on their behalf) in connection
      with any of the Contemplated Transactions; 


    
      
         

        
        

      

      
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    (e) any
      litigation of the Company pending as of the date hereof; or

    


    (f) any
      matter disclosed in the Disclosure Letter regarding sales taxes for the State
      of
      Louisiana and/or its parishes for periods prior to Closing that exceed
      $25,000.

    


    The
      remedies provided in this Section 6.2 will be the exclusive remedy that may
      be
      available to Buyer or the other Indemnified Persons.

     

    
      6.3 INDEMNIFICATION
        AND PAYMENT OF DAMAGES BY SELLER-- ENVIRONMENTAL
        MATTERS

       

    

    In
      addition to the provisions of Section 6.2, Seller will indemnify and hold
      harmless Buyer, the Company, and the other Indemnified Persons for, and will
      pay
      to Buyer, the Company, and the other Indemnified Persons the amount of, any
      Damages (including costs of cleanup, containment, or other remediation) arising,
      directly or indirectly, from or in connection with:

    


    (a) any
      Environmental, Health, and Safety Liabilities arising out of or relating to:
      (i)
      (A) the ownership, operation, or condition at any time on or prior to the
      Closing Date of the Facilities or any other properties and assets (whether
      real,
      personal, or mixed and whether tangible or intangible) in which Seller or the
      Company has or had an interest, or (B) any Hazardous Materials (except those
      disclosed in Part 3.19 of the Disclosure Letter) or other contaminants that
      were
      present on the Facilities or such other properties and assets at any time on
      or
      prior to the Closing Date; or (ii) (A) any Hazardous Materials (except those
      disclosed in Part 3.19 of the Disclosure Letter) or other contaminants, wherever
      located, that were, or were allegedly, generated, transported, stored, treated,
      Released, or otherwise handled by Seller or the Company or by any other Person
      for whose conduct they are or may be held responsible at any time on or prior
      to
      the Closing Date, or (B) any Hazardous Activities that were, or were allegedly,
      conducted by Seller or the Company or by any other Person for whose conduct
      they
      are or may be held responsible; or

    


    (b) any
      bodily injury (including illness, disability, and death, and regardless of
      when
      any such bodily injury occurred, was incurred, or manifested itself), 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,
      including any employee or former employee of Seller or the Company or any other
      Person for whose conduct they are or may be held responsible, in any way arising
      from any Hazardous Activity (not in compliance with legal requirements)
      conducted with respect to the Facilities or the operation of the Company prior
      to the Closing Date, or from Hazardous Material (except those disclosed in
      Part
      3.19 of the Disclosure Letter) that was (i) present on or before the Closing
      Date on or at the Facilities (or present on any other property, if such
      Hazardous Material (except those disclosed in Part 3.19 of the Disclosure
      Letter) 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 (ii) Released or allegedly Released by Seller or the Company
      or any other Person for whose conduct they are or may be held responsible,
      at
      any time on or prior to the Closing Date.


    
      
         

        
        

      

      
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    Buyer
      and
      Seller agree to jointly cooperate as to any Cleanup, any related Proceeding,
      and, except as provided in the following sentence, any other Proceeding with
      respect to which indemnity may be sought under this Section 6.3. The procedure
      described in Section 6.9 will apply to any claim solely for monetary damages
      relating to a matter covered by this Section 6.3. Buyer shall have a reasonable
      right of review and comment on any plan, writing or any other document, which
      is
      in any way related to the indemnity being provided herein, prior to its
      submission to any Governmental Authority. Any such liability for indemnification
      hereunder shall be limited to the minimum requirements necessary to comply
      with
      applicable Environmental Laws.

    


    6.4 INDEMNIFICATION
      AND PAYMENT OF DAMAGES BY BUYER

    


    Buyer
      will indemnify and hold harmless Seller, and will pay to Seller the amount
      of
      any Damages arising, directly or indirectly, from or in connection with (a)
      any
      Breach of any representation or warranty made by Buyer in this Agreement or
      in
      any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach
      by
      Buyer of any covenant or obligation of Buyer in this Agreement, or (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 its behalf) in connection with any
      of
      the Contemplated Transactions.

    


    6.5 TIME
      LIMITATIONS

    


    (a) Seller's
      liability (for indemnification or otherwise) with respect to any representation
      or warranty, or covenant or obligation to be performed and complied with prior
      to the Closing Date, shall survive for a period of two (2) years after the
      Closing Date, other than liability with respect to (i) Sections 3.3 and 3.19,
      which shall survive indefinitely, (ii) Section 3.11 which shall survive for
      a
      period that is 90 days after the expiration of the applicable statutes of
      limitations relating to the matters in Section 3.11, and (iii) Section 3.22
      which shall survive for a period of four (4) years from the date hereof.


    


    (b) Buyer's
      liability (for indemnification or otherwise) with respect to any representation
      or warranty, or covenant or obligation to be performed and complied with prior
      to the Closing Date, shall survive for a period of two (2) years from the
      Closing Date.

    


    6.6 LIMITATIONS
      ON AMOUNT--SELLER

    


    Seller
      will have no liability (for indemnification or otherwise) with respect to the
      matters described in Section 6.2 or 6.3 until the total of all Damages with
      respect to such matters exceeds $75,000.00 in the aggregate ("Threshold"),
      but
      then for all Damages, except with respect to any Breaches of any representations
      and warranties set forth in Sections 3.3, 3.11 and 3.19, for which there shall
      be no Threshold and the liability of Seller shall be limited to the Purchase
      Price. However, this Section 6.6 will not apply to any Breach of any of Seller's
      representations and warranties of  which either Seller had knowledge prior
      to the Closing Date and misrepresented such representation or warranty or any
      intentional Breach by Seller of any covenant or obligation. In no event shall
      the aggregate indemnification (except for breaches of Sections 3.3, 3.11 and
      3.19) to be provided by Seller pursuant to Section 6.2 and 6.3 exceed
      $6,000,000. Notwithstanding the foregoing (except as described in 6.2(f)),
      the
      Seller shall be liable for all Damages for the matters described in Section
      6.2(f) for which there shall be no Threshold, and Seller shall indemnify Buyer
      above $25,000 incurred relating to such matters.


    
      
         

        
        

      

      
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    6.7 LIMITATIONS
      ON AMOUNT--BUYER

    


    Buyer
      will have no liability (for indemnification or otherwise) with respect to the
      matters described in Section 6.4 until the total of all Damages with respect
      to
      such matters exceeds $50,000.00, and then for all Damages. In no event shall
      the
      aggregate indemnification to be provided by Buyer pursuant to the matter
      described in Section 6.4 exceed $4,000,000.

    


    6.8 RIGHT
      OF SET-OFF

    


    Upon
      notice to Seller specifying in reasonable detail the basis for such set-off,
      Buyer may set off any amount to which it may be entitled under this Section
      6
      against amounts otherwise payable under the Promissory Note. The exercise of
      such right of set-off by Buyer in good faith, whether or not ultimately
      determined to be justified, will not constitute an event of default under the
      Promissory Note. Neither the exercise of nor the failure to exercise such right
      of set-off or to give a notice of a Claim will constitute an election of
      remedies or limit Buyer in any manner in the enforcement of any other remedies
      that may be available to it.

    


    6.9 PROCEDURE
      FOR INDEMNIFICATION--THIRD PARTY CLAIMS

    


    (a) Promptly
      after receipt by an indemnified party under Section 6.2, 6.4, or (to the extent
      provided in the last sentence of Section 6.3) Section 6.3 of notice of the
      commencement of any Proceeding against it, such indemnified party will, if
      a
      claim is to be made against an indemnifying party under such Section, give
      notice to the indemnifying party of the commencement of such claim, but the
      failure to notify the indemnifying party will not relieve the indemnifying
      party
      of any liability that it may have to any indemnified party, except to the extent
      that the indemnifying party demonstrates that the defense of such action is
      prejudiced by the indemnifying party's failure to give such notice.

    


    (b) If
      any
      Proceeding referred to in Section 6.9(a) is brought against an indemnified
      party
      and it gives notice to the indemnifying party of the commencement of such
      Proceeding, the indemnifying party will, unless the claim involves Taxes, be
      entitled to participate in such Proceeding and, to the extent that it wishes
      (unless (i) the indemnifying party is also a party to such Proceeding and the
      indemnified party determines in good faith that joint representation would
      be
      inappropriate, or (ii) the indemnifying party fails to provide reasonable
      assurance to the indemnified party 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 reasonably satisfactory
      to
      the indemnified party and, after notice from the indemnifying party to the
      indemnified party of its election to assume the defense of such Proceeding,
      the
      indemnifying party will not, as long as it diligently conducts such defense,
      be
      liable to the indemnified party under this Section 6 for any fees of other
      counsel or any other expenses with respect to the defense of such Proceeding,
      in
      each case subsequently incurred by the indemnified party in connection with
      the
      defense of such Proceeding, other than reasonable costs of investigation. If
      the
      indemnifying party assumes the defense of a Proceeding, (i) no compromise or
      settlement of such claims may be effected by the indemnifying party without
      the
      indemnified party's consent unless (A) 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 indemnified party,
      and (B) the sole relief provided is monetary damages that are paid in full
      by
      the indemnifying party; and (ii) the indemnified party will have no liability
      with respect to any compromise or settlement of such claims effected without
      its
      consent.

    


    
      
        
        

      

      
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    (c) Notwithstanding
      the foregoing, if an indemnified party determines in good faith that there
      is a
      reasonable probability that a Proceeding may adversely affect it or its
      affiliates other than as a result of monetary damages for which it would be
      entitled to indemnification under this Agreement, the indemnified party may,
      by
      notice to the indemnifying party, assume the exclusive right to defend,
      compromise, or settle such Proceeding, but the indemnifying party will not
      be
      bound by any determination of a Proceeding so defended or any compromise or
      settlement effected without its consent (which may not be unreasonably
      withheld).

    


    6.10 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.

    


    7. GENERAL
      PROVISIONS

    


    7.1 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 agents, representatives, counsel, and
      accountants. Buyer will pay all amounts payable to Mahfooz Mustafa in connection
      with this Agreement and the Contemplated Transactions. Seller will cause the
      Company not to incur any out-of-pocket expenses in connection with this
      Agreement unless agreed to in writing by Buyer. 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 such party arising from a breach of this Agreement
      by
      another party. Notwithstanding the limitations contained in this Agreement
      to
      the contrary, in the event of any dispute arising out of or relating to this
      Agreement or the agreements executed in connection with the Agreement, whether
      it concerns the performance by any party hereunder, the interpretation of any
      provision or otherwise, the prevailing party shall recover reasonable attorney's
      fees in the pursuit and/or defense, as the case may be, of such action in
      addition to all other remedies afforded herein or by law.


    
      
         

        
        

      

      
        41

        
          

        

      

      
        
        

      

    


    7.2 PUBLIC
      ANNOUNCEMENTS

    


    Any
      public announcement 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. Unless consented to by Buyer in advance or required
      by Legal Requirements, prior to the Closing Seller shall, and shall cause the
      Company to, keep this Agreement strictly confidential and may not make any
      disclosure of this Agreement to any Person. Seller and Buyer will consult with
      each other concerning the means by which the Company's employees, customers,
      and
      suppliers and others having dealings with the Company will be informed of the
      Contemplated Transactions, and Buyer will have the right to be present for
      any
      such communication.

    


    7.3 CONFIDENTIALITY

    


    Upon
      the
      Closing the confidentiality agreement executed by the parties hereto and the
      letter of intent dated February 14, 2006, between the parties shall terminate
      and be of no further force and effect.

    


    Upon
      the
      Closing taking place, Seller waives, and will upon Buyer's request cause the
      Company to waive, any cause of action, right, or claim arising out of the access
      of Buyer or its representatives to any trade secrets or other confidential
      information of the Company except for the intentional competitive misuse by
      Buyer of such trade secrets or confidential information.

    


    7.4 NOTICES

    


    All
      notices, consents, waivers, and other communications under this Agreement must
      be in writing and will be deemed to have been duly given when (a) delivered
      by
      hand (with written confirmation of receipt), (b) sent by telecopier (with
      written confirmation of receipt), provided that a copy is mailed by registered
      mail, return receipt requested, or (c) when received by the addressee, if sent
      by a nationally recognized overnight delivery service (receipt requested),
      in
      each case to the appropriate addresses and telecopier numbers set forth below
      (or to such other addresses and telecopier numbers as a party may designate
      by
      notice to the other parties):

    


    Seller:  Tommie
      L.
      Rogers

    1530
      St.
      Etienne Rd

    Broussard,
      LA  70518

    Facsimile
      No.: (__) _________

    


    with
      a copy to:      
Richard
      Matheny

    Phelps
      Dunbar LLP

    445
      North
      Blvd., Suite 701

    Baton
      Rouge, LA 70802

    Facsimile
      No.: (225) 381-9197


    
      
         

         

        
        

      

      
        42

        
          

        

      

      
        
        

      

    


    Buyer:     Allis-Chalmers
      Energy Inc.

    5075
      Westheimer, Suite 890

    Houston,
      Texas 77056

    Attention:
      Theodore F. Pound III, General Counsel

    Facsimile
      No.: (713)
      369-0555

    Email:
      tpound@alchenergy.com

    


    7.5 JURISDICTION;
      SERVICE OF PROCESS

    


    Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this Agreement shall be brought against any of the parties
      in
      the courts of the State of Texas, County of Harris or, if it has or can acquire
      jurisdiction, in the United States District Court for the Southern District
      of
      Texas, and each of the parties consents to the jurisdiction of such courts
      (and
      of the appropriate appellate courts) in any such action or proceeding and waives
      any objection to venue laid therein. Process in any action or proceeding
      referred to in the preceding sentence may be served on any party anywhere in
      the
      world.

    


    7.6 FURTHER
      ASSURANCES

    


    The
      parties agree (a) to furnish upon request to each other such further
      information, (b) to execute and deliver to each other such other documents,
      and (c) to do such other acts and things, all as the other party may
      reasonably request for the purpose of carrying out the intent of this Agreement
      and the documents referred to in this Agreement.

    


    7.7 WAIVER

    


    The
      rights and remedies of the parties to this Agreement are cumulative and not
      alternative. Neither the failure nor any delay by any party in exercising any
      right, power, or privilege under this Agreement or the documents referred to
      in
      this Agreement will operate as a waiver of such right, power, or privilege,
      and
      no single or partial exercise of any such right, power, or privilege will
      preclude any other or further exercise of such right, power, or privilege or
      the
      exercise of any other right, power, or privilege. To the maximum extent
      permitted by applicable law, (a) no claim or right arising out of this
      Agreement or the documents referred to in this Agreement can be discharged
      by
      one party, in whole or in part, by a waiver or renunciation of the claim or
      right unless in writing signed by the other party; (b) no waiver that may
      be given by a party will be applicable except in the specific instance for
      which
      it is given; and (c) no notice to or demand on one party will be deemed to
      be a waiver of any obligation of such party or of the right of the party giving
      such notice or demand to take further action without notice or demand as
      provided in this Agreement or the documents referred to in this
      Agreement.


    
      
         

        
        

      

      
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    7.8 ENTIRE
      AGREEMENT AND MODIFICATION

    


    This
      Agreement supersedes all prior agreements between the parties with respect
      to
      its subject matter (including the Confidentiality Agreement and the Letter
      of
      Intent) between Buyer and Seller dated February 14, 2006) and constitutes (along
      with the documents referred to in 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.

    


    7.9 DISCLOSURE
      LETTER

    


    In
      the
      event of any inconsistency between the statements in the body of this Agreement
      and those in the Disclosure Letter (other than an exception expressly set forth
      as such in the Disclosure Letter with respect to a specifically identified
      representation or warranty), the statements in the body of this Agreement will
      control.

    


    7.10 ASSIGNMENTS,
      SUCCESSORS, AND NO THIRD-PARTY RIGHTS

    


    Neither
      party may assign any of its rights under this Agreement without the prior
      consent of the other parties. Subject to the preceding sentence, 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 in this Agreement will be construed to give any Person other than the parties
      to this Agreement any legal or equitable right, remedy, or claim under or with
      respect to this Agreement or any provision of this Agreement. This Agreement
      and
      all of its provisions and conditions are for the sole and exclusive benefit
      of
      the parties to this Agreement and their successors and assigns.

    


    7.11 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. 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.

    


    7.12 SECTION
      HEADINGS, CONSTRUCTION

    


    The
      headings of Sections in this Agreement are provided for convenience only and
      will not affect its construction or interpretation. All references to "Section"
      or "Sections" refer to the corresponding Section or Sections of this Agreement.
      All words used in this Agreement will be construed to be of such gender or
      number as the circumstances require. Unless otherwise expressly provided, the
      word "including" does not limit the preceding words or terms.


    
      
         

         

        
        

      

      
        44

        
          

        

      

      
        
        

      

    


    7.13 TIME
      OF ESSENCE

    


    With
      regard to all dates and time periods set forth or referred to in this Agreement,
      time is of the essence.

    


    7.14 GOVERNING
      LAW

    


    This
      Agreement will be governed by the laws of the State of Texas without regard
      to
      conflicts of laws principles.

    


    7.15 COUNTERPARTS

    


    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.

    


    IN
      WITNESS WHEREOF, the parties have executed and delivered this Agreement as
      of
      the date first written above.

    


    BUYER:                                                                               
      ALLIS-CHALMERS
      ENERGY INC.,

    a
      Delaware corporation

    


    


    /s/
      Dave Wilde

    Dave
      Wilde

    President
      and Chief Operating Officer

    


    SELLER:

    


    


    /s/
      Tommie L. Rogers

    TOMMIE
      L. ROGERS

     

     

    45