Document:

Exhibit 10.1

 

ASSET PURCHASE
AGREEMENT

 

BY AND AMONG

 

KEY ENERGY PRESSURE PUMPING SERVICES,
LLC,

 

LEADER ENERGY SERVICES LTD.,

 

LEADER ENERGY SERVICES USA LTD.

 

AND

 

CEMENTRITE, INC.

 

JULY 22, 2008

 

 

TABLE
OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Definitions

  	
   

  	
  1

  
	
  Certain Interpretive Matters

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE II SALE AND
  PURCHASE OF ASSETS

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchased Assets

  	
  9

  
	
  2.2

  	
  Excluded Assets

  	
  11

  
	
  2.3

  	
  Nonassignable
  Contracts, Leases and Permits

  	
  12

  
	
  2.4

  	
  Liabilities Assumed by
  Purchaser

  	
  12

  
	
  2.5

  	
  Liabilities Not Assumed
  by Purchaser

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE III PURCHASE
  PRICE AND CLOSING PAYMENTS

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Purchase Price

  	
  13

  
	
  3.2

  	
  Post-Closing Purchase
  Price Adjustment

  	
  14

  
	
  3.3

  	
  Adjustments to Purchase
  Price

  	
  15

  
	
  3.4

  	
  Allocation of Purchase
  Price

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV CLOSING AND
  CLOSING DELIVERIES

  	
  15

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  The Closing

  	
  15

  
	
  4.2

  	
  Deliveries of Sellers

  	
  15

  
	
  4.3

  	
  Deliveries by Purchaser

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  REPRESENTATIONS AND WARRANTIES OF SELLERS

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Representations and
  Warranties of Sellers

  	
  17

  
	
  5.1.1.

  	
  Corporate Existence
  and Power

  	
  17

  
	
  5.1.2.

  	
  Corporate
  Authorization; Enforceability

  	
  17

  
	
  5.1.3.

  	
  Governmental
  Authorization

  	
  18

  
	
  5.1.4.

  	
  Non-Contravention;
  Consents

  	
  18

  
	
  5.1.5.

  	
  Capitalization

  	
  18

  
	
  5.1.6.

  	
  Subsidiaries

  	
  18

  
	
  5.1.7.

  	
  Financial
  Statements

  	
  18

  
	
  5.1.8.

  	
  Liabilities

  	
  19

  
	
  5.1.9.

  	
  Tax Matters

  	
  19

  
	
  5.1.10.

  	
  Absence of
  Certain Changes

  	
  20

  
	
  5.1.11.

  	
  Assigned
  Contracts

  	
  20

  
	
  5.1.12.

  	
  Litigation

  	
  20

  
	
  5.1.13.

  	
  Compliance with
  Laws; Permits

  	
  20

  
	
  5.1.14.

  	
  Purchased
  Assets; Properties; Sufficiency of Assets

  	
  21

  
	
  5.1.15.

  	
  Intellectual
  Property

  	
  23

  
	
  5.1.16.

  	
  Environmental
  Matters

  	
  23

  
	
  5.1.17.

  	
  Plans and
  Material Documents

  	
  24

  
					

 

i

 

	
  5.1.18.

  	
  Affiliate
  Transactions

  	
  25

  
	
  5.1.19.

  	
  Customer,
  Supplier and Employee Relations

  	
  26

  
	
  5.1.20.

  	
  Other Employment
  Matters

  	
  26

  
	
  5.1.21.

  	
  Inventory

  	
  27

  
	
  5.1.22.

  	
  Service
  Warranties; Liability

  	
  27

  
	
  5.1.23.

  	
  Finders’ Fees

  	
  27

  
	
  5.1.24.

  	
  Solvency

  	
  27

  
	
  5.1.25.

  	
  Disclosure

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
  28

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Corporate Existence and
  Power

  	
  28

  
	
  6.2

  	
  Corporate Authorization;
  Enforceability

  	
  28

  
	
  6.3

  	
  Non-Contravention

  	
  28

  
	
  6.4

  	
  Finders’ Fees

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII ADDITIONAL
  AGREEMENTS

  	
  29

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Employees and Benefit
  Plans

  	
  29

  
	
  7.2

  	
  Books and Records

  	
  31

  
	
  7.3

  	
  Transfer of Certain
  Purchased Assets and Excluded Assets

  	
  32

  
	
  7.4

  	
  Michigan Property

  	
  32

  
	
  7.5

  	
  Collection of Payments

  	
  32

  
	
  7.6

  	
  Further Assurances

  	
  33

  
	
  7.7

  	
  Certain Tax Matters

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII SURVIVAL; INDEMNIFICATION

  	
  34

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Survival

  	
  34

  
	
  8.2

  	
  Indemnification

  	
  34

  
	
  8.3

  	
  Procedures

  	
  35

  
	
  8.4

  	
  Payment of
  Indemnification Payments

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  MISCELLANEOUS

  	
  36

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Notices

  	
  36

  
	
  9.2

  	
  Amendments and Waivers

  	
  37

  
	
  9.3

  	
  Expenses

  	
  37

  
	
  9.4

  	
  Successors and Assigns

  	
  38

  
	
  9.5

  	
  No Third-Party
  Beneficiaries

  	
  38

  
	
  9.6

  	
  Governing Law

  	
  38

  
	
  9.7

  	
  Jurisdiction

  	
  38

  
	
  9.8

  	
  Counterparts

  	
  38

  
	
  9.9

  	
  Table of Contents; Headings

  	
  39

  
	
  9.10

  	
  Entire Agreement

  	
  39

  
	
  9.11

  	
  Severability;
  Injunctive Relief

  	
  39

  
	
  9.12

  	
  Arbitration

  	
  39

  
					

 

ii

 

ASSET
PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT, dated as of July 22,
2008, by and among KEY ENERGY PRESSURE PUMPING SERVICES, LLC, a Texas limited
liability company (“Purchaser”), LEADER ENERGY SERVICES LTD., an Alberta
corporation (“Leader Canada”), LEADER ENERGY SERVICES USA LTD., a North
Dakota corporation (“Leader USA”), and CEMENTRITE, INC., a Michigan
corporation (“CementRite”, and collectively with Leader Canada and
Leader USA, “Sellers”).

 

RECITALS

 

A.            Sellers
are in the business of providing coiled tubing, nitrogen, cementing, acidizing,
fracturing and other oilfield services in the United States (the “Business”).

 

B.            Purchaser
wishes to purchase from Sellers, and Sellers wish to sell to Purchaser, all of
the assets, properties and rights of Sellers related to or used or useful in
the operation of the Business (other than the Excluded Assets), subject to the
Assumed Liabilities, upon the terms and conditions of this Agreement.

 

Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Definitions.  In
addition to the terms defined elsewhere herein, the terms below are defined as
follows:

 

“Accounts Receivable” has the meaning set forth
in Section 2.2(b).

 

“Adjustment Notice” has the meaning set forth
in Section 3.2(a).

 

“Affiliate” means, with respect to any Person,
any other Person directly or indirectly controlling, controlled by or under
common control with the first Person and, if such first Person is an
individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such individual’s immediate family and any
Person who is controlled by any such member or trust.  For the purposes of this Agreement, “control,”
when used with respect to any Person, means the possession, directly or
indirectly, of the power to (a) vote 10% or more of the securities having
ordinary voting power for the election of directors (or comparable positions)
of such Person or (b) direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.

 

“Agreement” means this Asset Purchase
Agreement, as the same may be amended from time to time in accordance with the
terms hereof.

 

1

 

“Ancillary Agreements” means the Lease
Agreement, Non-Competition Agreement, the Transition Services Agreement and all
other instruments, certificates, bills of sale and other agreements entered
into by Sellers in connection with the consummation of the transactions
contemplated by this Agreement.

 

“Assigned Contracts” has the meaning set forth
in Section 2.1(a)(iii).

 

“Assumed Liabilities” has the meaning set forth
in Section 2.4(b).

 

“Balance Sheet Date” means December 31,
2007.

 

“Benefit Plan” means any employee benefit plan
within the meaning of Section 3(3) of ERISA, and any other plan,
program, agreement, arrangement, policy, contract, commitment or scheme,
written or oral, statutory or contractual, that provides for compensation or
benefits, including any retirement benefits, deferred compensation, employment
agreement, consulting agreement, employee leasing agreement, labor agreement,
stock options or other equity arrangements, executive compensation, bonus or
incentive plan, severance, change in control payment, any cafeteria plan or any
holiday or vacation plan or practice.

 

“Bulk Transfer Laws” means the Laws of any
jurisdiction relating to bulk transfers which may be applicable in connection
with the transfer of the Purchased Assets to Purchaser.

 

“Business” has the meaning set forth in Recital
A.

 

“Business Day” means a day that is not a
Saturday, Sunday or a day on which commercial banking institutions located in
Houston, Texas are authorized or required to close.

 

“Capitalized Lease Obligations” means, for any
applicable period, the obligations of such Person that are required to be
classified and accounted for as capital lease obligations under GAAP, together
with all obligations to make termination payments under such capitalized lease
obligations.

 

“Capital Stock” means (a) with respect to
any Person that is a corporation, any and all shares, interests, participation
or other equivalents (however designated and whether or not voting) of
corporate stock, including the common stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.

 

“Cash and Cash Equivalents” means all available
cash and cash equivalents of Sellers, including marketable securities.

 

“CERCLA” means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601, et
seq., as amended.

 

2

 

“CementRite” has the meaning set forth in the
introductory paragraph of this Agreement.

 

“Closing” has the meaning set forth in Section 4.1.

 

“Closing Cash Consideration” has the meaning
set forth in Section 3.1.

 

“Closing Date” has the meaning set forth in Section 4.1.

 

“COBRA” has the meaning set forth in Section 5.1.17(c).

 

“Code” means the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.

 

“Constituent of Concern” means any substance
defined as a hazardous substance, hazardous waste, hazardous material,
pollutant or contaminant by any Environmental Law, any petroleum hydrocarbon
and any degradation product of a petroleum hydrocarbon, asbestos, PCB or
similar substance, the generation, recycling, use, treatment, storage,
transportation, Release, disposal or exposure of or to which is subject to
regulation under any Environmental Law.

 

“Damages” has the meaning set forth in Section 8.2(a).

 

“Direct Claim” has the meaning set forth in Section 8.3(c).

 

“Employee Benefit Plan” has the meaning set
forth in Section 5.1.17(a).

 

“Environmental Assessment” means the right of
Purchaser and its Affiliates or their respective contractors or agents to: (a) review
Sellers’ environmental records; (b) submit a pre-inspection environmental
questionnaire to Sellers; (c) make a site assessment to visually inspect
the problems and operations of the Sellers; (d) conduct interviews with
Sellers’ personnel responsible for environmental matters; and (e) copy any
governmental documents regarding the properties and operations of Sellers.

 

“Environmental Claims” means administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
citations, summonses, notices of non-compliance or violation, requests for
information, investigations or proceedings relating in any way to the Release
of Constituents of Concern or any Environmental Law, including (a) Environmental
Claims by Governmental Authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable Environmental
Law and (b) Environmental Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Constituents of Concern or arising from an alleged injury or
threat of injury to human health and safety or the environment.

 

“Environmental Condition” means a condition
with respect to the environment which has resulted or could reasonably be
expected to result in a material loss, liability, cost or expense to Sellers.

 

3

 

“Environmental Law” means any Law, regulation,
administrative interpretation, administrative order, consent decree or
judgment, or common law relating to the environment, human health and safety,
including CERCLA, and any state, foreign, provincial and local counterparts or
equivalents.

 

“Environmental Permits” means all Permits,
licenses, authorizations, certificates and approvals of Governmental
Authorities relating to or required by Environmental Laws.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.

 

“ERISA Affiliate” means any Person that,
together with any other Person, would be considered a single employer within
the meaning of Section 4001 of ERISA or Section 414 of the Code.

 

“Excluded Assets” has the meaning set forth in Section 2.2.

 

“GAAP” means Canadian generally accepted
accounting principles, consistently applied.

 

“General Holdback Amount” has the meaning set
forth in Section 3.1.

 

“Governmental Authority” means any domestic or
foreign governmental or regulatory agency, authority, bureau, commission,
department, official or similar body or instrumentality thereof, or any
governmental court, arbitral tribunal or other body administering alternative
dispute resolution.

 

“Hire Date” has the meaning set forth in Section 7.1(b).

 

“Holdback Amount” has the meaning set forth in Section 3.1.

 

“Indebtedness” means with respect to any
Person, at any date, without duplication, (a) all obligations of such
Person for borrowed money, including all principal, interest, premiums, fees,
expenses, overdrafts and penalties with respect thereto, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of the property or services, except trade payables
incurred in the Ordinary Course of Business, (d) all obligations of such
Person to reimburse any bank or other Person in respect of amounts paid under a
letter of credit or similar instrument, (e) all Capitalized Lease
Obligations, (f) all other obligations of a Person which would be required
to be shown as indebtedness on a balance sheet of such Person prepared in
accordance with GAAP, and (g) all indebtedness of any other Person of the
type referred to in clauses (a) to (f) above directly or indirectly
guaranteed by such Person or secured by any assets of such Person, whether or
not such Indebtedness has been assumed by such Person.

 

“Indemnified Party” has the meaning set forth
in Section 8.3(a).

 

4

 

“Indemnifying Party” has the meaning set forth
in Section 8.3(a).

 

“Intellectual Property Right” means any trademark,
service mark, trade name, product designation, logo, slogan, invention, patent,
trade secret, copyright, know-how, proprietary design or process, computer
software and database, Internet address or domain name (including any
registrations or applications for registration or renewal of any of the
foregoing), research in progress, or any other similar type of proprietary
intellectual property right.

 

“Inventory” mean items of tangible personal
property that (a) are held for sale in the ordinary course of business
(finished goods), (b) are in process of production for such sale (work in
progress), or (c) are to be currently consumed (and have not previously
been consumed in whole or in part) either directly or indirectly in the
production of goods or services to be available for sale (raw materials and
supplies).

 

“Inventory Adjustment” shall mean the aggregate
value of the Inventory relating to the Business (determined using the fair
market value approach) as determined by Purchaser pursuant to the Post-Closing
Review.  The aggregate value of such
Inventory shall be the lesser of (i) the value determined using the
accounting method described in the preceding sentence as of the date hereof,
and (ii) $1,000,000.00; provided, however, that any
Inventory that is (A) obsolete, (B) not in good condition or repair
or (C) not otherwise usable and salable in the Ordinary Course of Business
shall be valued at zero.

 

“IRS” means the Internal Revenue Service.

 

“Jarman Matter” means all liabilities,
penalties, judgments, fines and damages associated with the facts and
circumstances surrounding the lawsuit styled: Leader Energy Services Ltd,
CementRite, Inc. v. Patrick Jarman, Jarman LLC, Coil Drilling Technologies, Inc.
and Antech Technical Services, LLC, Case No. 08-6359-CK, in the Circuit
Court for the County of Isabella, State of Michigan.

 

“Law” means any federal, foreign (including the
laws of the Province of Alberta and the federal laws of Canada applicable
therein), provincial, state or local statute, law, including common law, rule,
regulation, ordinance, code, permit or license.

 

“Leader Canada” has the meaning set forth in
the introductory paragraph of this Agreement.

 

“Leader Canada Reference Balance Sheet” means
the balance sheet of Leader Canada as of March 31, 2008, attached hereto
as Schedule 5.1.7(a).

 

“Leader Canada Reference Financial Statements”
means the balance sheets of Leader Canada as December 31, 2006 and 2007,
together with the related statements of operations and deficit and cash flows
for the periods then ended, and the Leader Canada Reference Balance Sheet,
together with the related statements of operations and deficit, cash flows and
comprehensive income (loss) and accumulated other comprehensive income for the
three-month period then ended, all of which are attached hereto as Schedule 5.1.7(a).

 

5

 

“Leader Designated Employees” has the meaning
set forth in Section 7.1(a).

 

“Leader Employees” has the meaning set forth in
Section 7.1(a).

 

“Leader Intellectual Property Right” means any
Intellectual Property Right which is used or held for use or otherwise
necessary in connection with the conduct of the Business.

 

“Leader Property” means any real property and
improvements at any time owned, leased, used, operated or occupied (whether for
storage, disposal or otherwise) by Sellers in connection with the conduct of
the Business.

 

“Leader USA” has the meaning set forth in the
introductory paragraph of this Agreement.

 

“Leader USA Reference Financial Statements”
means the financial statements of the Business for each of the monthly periods
in the year ended December 31, 2007 and for each of the monthly periods in
the five-month period ended May 31, 2008, all of which are attached hereto
as Schedule 5.1.7(b).

 

“Lease Agreement” means the lease agreement
between Purchaser and CementRite in substantially the form of Exhibit B
hereto.

 

“Lease Holdback Amount” has the meaning set
forth in Section 3.1.

 

“Leased Real Property”
has the meaning set forth in Section 5.1.14(c).

 

“Lien” means, with respect to any property or
asset, any mortgage, lien, pledge, charge, security interest, encumbrance or
other adverse claim of any kind in respect of such property or asset.  For the purposes of this Agreement, a Person
will be deemed to own, subject to a Lien, any property or asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.

 

“Lien Holdback Amount” has the meaning set
forth in Section 3.1.

 

“Material Adverse Effect” means a material
adverse effect on the business, assets, liabilities, condition (financial or
otherwise), results of operations or prospects of Sellers or the Business.

 

“MDEQ” means the Michigan Department of
Environmental Quality.

 

“Michigan Property” means the Leased Property
(as defined in the Lease Agreement).

 

“Non-Competition Agreement” means the
non-competition agreement between Purchaser and Sellers in substantially the
form of Exhibit A hereto.

 

6

 

“Non-Leader Designated Employees” has the
meaning set forth in Section 7.1(a).

 

“Order” means any judgment, injunction,
judicial or administrative order or decree.

 

“Ordinary Course of Business” means, with
respect to any Person, the ordinary course of business of such Person,
consistent with such Person’s past practice and custom, including, with respect
to any category, quantity or dollar amount, term and frequency of payment,
delivery, accrual, expense or any other accounting entry.

 

“Owned Real Property” has the meaning set forth
in Section 5.1.14(b).

 

“Permit” has the meaning set forth in Section 5.1.13(b).

 

“Person” means an individual, corporation,
partnership, limited liability company, joint venture, association, trust or
other entity or organization or Governmental Authority.

 

“Post-Closing Review” has the meaning set forth
in Section 3.2(a).

 

“Post-Closing Tax Period” means any Tax period
(or portion thereof) ending after the Closing Date.

 

“Potential Liability” means (a) an
Environmental Condition identified in the Environmental Assessment of the
Michigan Property, (b) any Environmental Claim from the MDEQ with respect
to the Michigan Property or (c) any other condition, fact or item
identified by Purchaser that, in either case, would make a representation or
warranty contained in Section 5.16 untrue in any respect.

 

“Pre-Closing Tax Period” means any Tax period
(or portion thereof) that ends on or before the Closing Date.

 

“Purchase Price” has the meaning set forth in Section 3.1.

 

“Purchased Assets” has the meaning set forth in
Section 2.1(a).

 

“Purchaser” has the meaning set forth in the
introductory paragraph of this Agreement.

 

“Release” means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the environment (including ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Constituents of Concern through or in
the air, soil, surface water, groundwater or property.

 

“Remediation Plan” has the meaning set forth in
Section 7.4.

 

“Retained Liabilities” has the meaning set
forth in Section 2.5(b).

 

7

 

“Selected Seller Representations and Warranties”
means the representations and warranties contained in Sections 5.1.1 (Corporate
Existence and Power), 5.1.2 (Corporate Authorization; Enforceability), 5.1.3
(Governmental Authorization), 5.1.4 (Non-Contravention; Consents), 5.1.5
(Capitalization), 5.1.14 (Purchased Assets; Properties; Sufficiency of Assets),
5.1.16 (Environmental Matters) and 5.1.23 (Finders’ Fees).

 

“Sellers” has the meaning set forth in the
introductory paragraph of this Agreement.

 

“Subsidiary” means, with respect to any Person,
(a) any corporation 50% or more of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time stock
of any class or classes of such corporation have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person, directly or indirectly through Subsidiaries, and (b) any
partnership, limited liability company, association, joint venture, trust or
other entity in which such Person, directly or indirectly through Subsidiaries,
is either a general partner, has a 50% or greater equity interest at the time
or otherwise owns a controlling interest.

 

“Tax” means (a) any income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad  valorem,
value added, transfer, franchise, profits, license, withholding on amounts paid
to or by Sellers, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty, addition to tax or additional
amount imposed by any Taxing Authority, (b) any liability of Sellers for
the payment of any amounts of any of the foregoing types as a result of being a
member of an affiliated, consolidated, combined or unitary group, or being a
party to any agreement or arrangement whereby liability of Sellers for payment
of such amounts was determined or taken into account with reference to the
liability of any other Person, and (c) any liability of Sellers for the
payment of any amounts as a result of being a party to any Tax-Sharing
Agreements or with respect to the payment of any amounts of any of the
foregoing types as a result of any express or implied obligation to indemnify
any other Person.

 

“Tax Returns” has the meaning set forth in Section 5.1.9(a)(i).

 

“Tax-Sharing Agreements” means all existing
Tax-sharing agreements or arrangements (whether or not written) that are
binding on Sellers.

 

“Taxing Authority” means any Governmental
Authority having jurisdiction over the assessment, determination, collection or
other imposition of any Tax.

 

“Third-Party Claim” means any claim, demand,
action, suit or proceeding made or brought by any Person who or which is not a
party to this Agreement or who or which is not an Affiliate of any party to
this Agreement.

 

“Transfer” has the meaning set forth in Section 2.1(a).

 

8

 

“Transition Services Agreement” means the
transition services agreement between Purchaser and Sellers in substantially
the form of Exhibit D hereto.

 

“WARN” has the meaning set forth in Section 5.1.20(c).

 

Certain
Interpretive Matters.  (a) 
When a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference will be to an Article or Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated.  Whenever the words, “include,” “includes” or “including”
are used in this Agreement, they will be deemed to be followed by the words “without
limitation.”  The words “hereof,” “herein”
and “hereunder” and words of similar import when used in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement.  All terms defined in this
Agreement have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.  The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term.  All references to “$” or dollar amounts will
be to lawful currency of the United States of America.  Any agreement, instrument or statute defined
or referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. 
References to a Person are also to its permitted successors and
assigns.  Each of the Schedules will
apply only to its corresponding Section or subsection of this
Agreement.  Each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in
accordance with GAAP.  To the extent the
term “day” or “days” is used, it will mean calendar days unless referred to as
a “Business Day.”

 

(b)                                 No
provision of this Agreement will be interpreted in favor of, or against, any of
the parties hereto by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to
which any such provision is inconsistent with any prior draft hereof or
thereof.

 

ARTICLE II

 

SALE AND PURCHASE OF ASSETS

 

2.1                                 Purchased
Assets.   (a)  At the Closing, Sellers will sell,
assign, transfer, convey and deliver (“Transfer”), free and clear of all
Liens to Purchaser, and Purchaser will purchase and accept from Sellers on the
terms and subject to the conditions hereinafter set forth, all of the assets,
properties, rights and interests owned, claimed, used or held by Sellers in
connection with the conduct of the Business to the extent existing as of the
Closing Date, other than the Excluded Assets (all of such assets, properties,
rights and interests being hereinafter collectively referred to as the “Purchased
Assets”), including all right, title and interest of Sellers in:

 

9

 

(i)                                     the
personal property described in Schedule 2.1(a)(i), together with the
fixtures, furnishings, furniture, equipment, motor vehicles, tools, supplies,
spare parts, computers, printers, software, files, and all other tangible
personal property owned, claimed, used or held by Sellers in connection with
the conduct of the Business, wherever located;

 

(ii)                                  all
Inventory relating to the Business, wherever located, including inventories of
work-in-progress, stores and supplies of Sellers held in connection with the
conduct of the Business;

 

(iii)                               the
contracts set forth in Schedule 2.1(a)(iii) (collectively, the “Assigned
Contracts”);

 

(iv)                              all
licenses, Permits, registrations, and authorizations of Sellers and held by or
on behalf of Sellers in connection with the conduct of the Business set forth
in Schedule 2.1(a)(iv);

 

(v)                                 the
leases of real property described in Schedule 2.1(a)(v), together with
all rights thereunder to all leasehold improvements thereon and all easements,
rights-of-way, transferable licenses and permits and other appurtenances
thereof;

 

(vi)                              all
books and records of Sellers relating to the Purchased Assets and the Assumed
Liabilities, including all customer and supplier files and lists, sales
information, equipment maintenance and warranty information, operating manuals,
all correspondence with any customers, suppliers, employees or Governmental
Authority, all personnel records related to the Leader Designated Employees,
and any other reports, promotional materials, marketing studies, plans and
documents prepared by or on behalf of Sellers related to the Business,
including data stored electronically, but excluding the corporate books and
records listed as Excluded Assets;

 

(vii)                           except
as described in Section 2.2(c) and (d), all prepaid claims, prepaid
expense items and deferred charges, credits, advance payments, security and other
deposits made by Sellers to any other Person relating to the Purchased Assets
or the conduct of the Business, in each case other than to the extent relating
to the Retained Liabilities or Excluded Assets;

 

(viii)                        all
third-party indemnities where any Seller is an indemnified party and the
proceeds afforded thereby, in each case other than to the extent relating to
the Retained Liabilities or Excluded Assets;

 

(ix)                                all
rights of Sellers to manufacturers’ warranties and indemnities with respect to
any Purchased Asset;

 

(x)                                   the
goodwill of Sellers with respect to the Business;

 

10

 

(xi)                                all
telephone (including cellular telephone) and facsimile numbers (together with
all other similar numbers) relating to the Business;

 

(xii)                             all
rights of Sellers pertaining to any causes of action, lawsuits, judgments,
claims, demands, counterclaims, set-offs or defenses Sellers may have with
respect to the Assumed Liabilities or any of the Purchased Assets, except for
the Jarman Matter and except to the extent relating to the Retained Liabilities
or Excluded Assets;

 

(xiii)                          except
for the Excluded Assets, all other assets, properties and rights of every kind
and nature of Sellers or in which Sellers have an interest on the Closing Date,
known or unknown, fixed or unfixed, accrued, absolute, contingent or otherwise,
whether or not specifically referred to in this Agreement, that, in each case,
relate to the Business.

 

(b)                                 In
confirmation of the foregoing sale, assignment and transfer, Sellers will
execute and deliver to Purchaser at the Closing such bills of sale and other
instruments of assignment and Transfer as Purchaser may reasonably deem
necessary or desirable.

 

2.2                                 Excluded
Assets.  Anything in this Agreement
to the contrary notwithstanding, the following assets of Sellers (the “Excluded
Assets”), each to the extent existing on the Closing Date, are being
retained by Sellers and will not be included in the Purchased Assets:

 

(a)                                  Cash
and Cash Equivalents;

 

(b)                                 all
accounts and notes receivable (including billed and unbilled) (“Accounts
Receivable”) of Sellers relating to the Business;

 

(c)                                  prepaid
federal income Tax deposits;

 

(d)                                 all
Owned Real Property;

 

(e)                                  deposits
held by lessors for property used in Sellers’ Jane Lew, West Virginia
operations up to a maximum amount of $155,000.00;

 

(f)                                    all
Leader Intellectual Property Rights;

 

(g)                                 all
books and records of Sellers relating to the Excluded Assets or Retained
Liabilities, including the certificate of incorporation, bylaws and other
similar constituent documents, minute books and Tax Returns of Sellers;

 

(h)                                 the
Jarman Matter and all rights of Sellers pertaining to any causes of action,
lawsuits, judgments, claims, demands, counterclaims, set-offs or defenses
Sellers may have solely with respect to the Retained Liabilities or any of the
Excluded Assets;

 

(i)                                     all
assets in possession of Sellers but owned by third parties, excluding any
personal property included as Purchased Assets in Schedule 2.1(a)(i);

 

11

 

(j)                                     any
Employee Benefit Plan; and

 

(k)                                  the
rights of Sellers under this Agreement and under any Ancillary Agreement to
which any Seller is a party and the proceeds payable to Sellers pursuant to
this Agreement.

 

2.3                                 Nonassignable
Contracts, Leases and Permits.  If
any Purchased Assets constituting contracts, leases or Permits are not by their
terms assignable or require the consent of a third party in connection with the
Transfer by any  Seller and such consent
is not obtained prior the Closing Date, such contracts, leases or Permits will
be deemed not to have been Transferred as of the Closing Date.  If the Closing occurs notwithstanding the
failure to obtain such consent, Sellers will use their reasonable commercial
efforts to assist Purchaser in such manner as may reasonably be requested by
Purchaser for the purpose of obtaining such consent promptly, and Sellers
acknowledge and agree that Purchaser’s efforts in this regard will be limited
to participating in discussions and negotiations with all persons or entities
with the authority to grant or withhold such consent, and such reasonable
commercial efforts shall not require the expenditure of any funds by Purchaser
to such third party or other commitment other than time and out -of -pocket
expenses.  During such period in which
the applicable contract, lease or Permit is not capable of being assigned to
Purchaser due to the failure to obtain any required consent, Sellers will make
such arrangements as may be necessary to enable Purchaser to receive all the
economic benefits under such contract, lease or Permit accruing on and after
the Closing Date (including, to the extent permissible, through a
sub-contracting, sub-licensing, sub-participation or sub-leasing arrangement, or
an arrangement under which Sellers would enforce such contract, lease or Permit
for the benefit of Purchaser, with Purchaser, to the extent permissible,
assuming Sellers’ executory obligations and any and all rights of Sellers
against the other party thereto).  If the
approval of the other party to such contract, lease or Permit is obtained, such
approval will, as between Sellers and Purchaser, constitute a confirmation
(automatically and without further action of the parties) that such contract,
lease or Permit is assigned to Purchaser as of the Closing Date, and
(automatically and without further action of the parties) that the liabilities
with respect to such contract, lease or Permit are, subject to the terms of
this Agreement, assumed as of the Closing Date.

 

2.4                                 Liabilities
Assumed by Purchaser.  (a) 
Subject to Section 2.2, at the Closing, Purchaser will assume, as of the
Closing Date, all liabilities and obligations of Sellers (other than the
Retained Liabilities) arising under the terms of the Assigned Contracts set
forth in Schedule 2.1(a)(iii), but only to the extent not delinquent or
otherwise accrued; provided, however, the Assumed Liabilities
shall not include (a) any liability for federal, provincial or state
income Tax or Tax liability of Sellers and (b) all attorneys’ and
accountants fees and expenses and any other fees and expenses incurred by
Sellers in connection with the consummation of the transactions contemplated
hereby.  Notwithstanding anything to the
contrary contained in this Agreement or any document delivered in connection
herewith, Purchaser’s obligations in respect of the Assumed Liabilities will
not extend beyond the extent to which Sellers were obligated in respect thereof
and will be subject to Purchaser’s right to contest in good faith the nature
and extent of any liability or obligation.

 

12

 

(b)                                 The
liabilities to be assumed by Purchaser pursuant to Section 2.1(a) are
hereinafter sometimes collectively referred to as “Assumed Liabilities.”

 

2.5                                 Liabilities
Not Assumed by Purchaser.  (a) 
Anything in this Agreement to the contrary notwithstanding, Purchaser will not
assume, cause to be assumed or be deemed to have assumed, or in any way be
liable or responsible for, any liabilities or obligations of Sellers, except as
specifically provided in Section 2.1(a). 
Without limiting the generality or effect of the foregoing, Purchaser
will not assume, or be responsible or liable with respect to, any liabilities
or obligations of Sellers or their respective Affiliates or their respective
predecessors-in-interest (except for the Assumed Liabilities), whether or not
arising out of or relating to the conduct of the Business or associated with or
arising from any of the Purchased Assets or any other rights, properties or
assets used in or associated with the Business at any time, and whether fixed
or contingent or known or unknown.

 

(b)                                 All
liabilities or obligations of Sellers other than Assumed Liabilities are
hereinafter sometimes collectively referred to as the “Retained Liabilities.”

 

ARTICLE
III

 

PURCHASE
PRICE AND CLOSING PAYMENTS

 

3.1                                 Purchase
Price.  In consideration for the
Transfer by Sellers to Purchaser of the Purchased Assets and the assumption by
Purchaser of the Assumed Liabilities, Purchaser will deliver to Leader Canada,
for the benefit of each Seller, at the Closing the aggregate purchase price (as
adjusted pursuant to this Article III, the “Purchase Price”) in an
amount equal to $34,500,000.00 (such amount, the “Closing Cash Consideration”),
payable in cash by wire transfer in immediately available funds to an account
designated in writing by Leader Canada at least two days prior to the Closing
Date.

 

Notwithstanding the
foregoing, Purchaser shall retain out of the Closing Cash Consideration the
aggregate amount of $1,500,000.00 (the “Holdback Amount”) to secure the
indemnification and other obligations of Sellers pursuant to this
Agreement.  Of the Holdback Amount, up to
$750,000.00 (the “General Holdback Amount”) may be used by Purchaser to
satisfy any amounts which are payable to Purchaser pursuant to Section 7.4
and Section 8.2 and which have not otherwise been satisfied by
Sellers.  Six months after the Closing
Date, the balance of the General Holdback Amount shall be paid to Leader
Canada, for the benefit of each Seller, less any amounts which relate to
unresolved claims under Section 8.2. 
Upon settlement or resolution of such unresolved claims, the balance of
the General Holdback Amount, if any, shall be paid to Leader Canada, for the
benefit of each Seller.

 

Of the Holdback Amount,
$250,000.00 (the “Lease Holdback Amount”) shall be paid to Leader
Canada, for the benefit of the Sellers, upon the earlier to occur of (i) such
time as Sellers can establish to the sole satisfaction of Purchaser that
CementRite has good and indefeasible title to the Michigan Property and has the
full power and authority to convey the Michigan Property to Purchaser pursuant
to the terms of the Lease 

 

13

 

Agreement or (ii) such time as Purchaser
voluntarily terminates the Lease Agreement without exercising its option to
purchase the Michigan Property contained therein; provided,
however, that if at any time during the term of the Lease Agreement,
Purchaser’s right to possession and use of the Michigan Property pursuant to
the Lease Agreement is terminated, materially impaired, or limited such that
Purchaser is prevented conducting its business on the Michigan Property in a
manner reasonably comparable to that conducted immediately before the
imposition of such limitation, in each case due to CementRite’s failure to have
good and indefeasible title to the Michigan Property, than the Lease Holdback
Amount shall be paid to Purchaser.

 

Of the Holdback Amount,
$500,000.00 (the “Lien Holdback Amount”) may be used by Purchaser to
satisfy the Indebtedness of Sellers to TFS Capital Funding and GMAC as
disclosed on Schedule 5.1.14(a). 
Upon the satisfaction of such Indebtedness, the balance of the Lien
Holdback Amount, if any, shall be paid to Leader Canada, for the benefit of
each Seller.

 

All amounts received by
Leader Canada for the benefit of each Seller pursuant to this Section 3.1
shall be paid by Leader Canada to each Seller in accordance with the allocation
of the Purchase Price pursuant to Section 3.4.

 

3.2                                 Post-Closing
Purchase Price Adjustment.  (a) 
As soon as practicable after the Closing Date, Purchaser shall commence a
review of the Inventory relating to the Business that is on-hand at the Closing
Date (the “Post-Closing Review”). 
Purchaser shall use its commercially reasonable efforts to complete the
Post-Closing Review within ten days of the Closing Date.  Within seven days of Purchaser’s completion
of the Post-Closing Review, Purchaser shall determine the amount of the
Inventory Adjustment and will prepare and deliver, or cause to be prepared and
delivered, to Sellers a written notice (the “Adjustment Notice”) of the
amount of the Inventory Adjustment and briefly describing the basis for such
adjustment.

 

(b)                                 If,
within 15 days after the date of Purchaser’s delivery of the Adjustment Notice,
Sellers determine in good faith that the Inventory Adjustment has not been
determined in accordance with this Agreement, Sellers will give written notice
to Purchaser within such 15-day period (i) setting forth Sellers’ proposed
changes to the Inventory Adjustment as prepared by Purchaser and the
determination by Sellers of the Inventory Adjustment and (ii) specifying
in reasonable detail Sellers’ basis for disagreement with Purchaser’s
determination of the Inventory Adjustment. 
The failure by Sellers to so express disagreement and provide such
notice within such 15-day period will constitute the acceptance of Purchaser’s
determination of the Inventory Adjustment. 
If Purchaser and Sellers are unable to resolve any disagreement between
them with respect to the determination of the Inventory Adjustment within 15
days after the giving of notice by Sellers to Purchaser of such disagreement,
the items in dispute may be submitted to arbitration pursuant to Section 9.12
of this Agreement.  Notwithstanding
anything in this Agreement to the contrary, the arbitrators may not in any
arbitration of any disagreement over the amount of the Inventory Adjustment
determine that the amount of the Inventory Adjustment shall be more than
$1,000,000.00.

 

14

 

3.3                                Adjustments
to Purchase Price.  Upon the final
determination of the Inventory Adjustment, the Purchase Price shall be
increased by, and Purchaser will pay to each applicable Seller, the amount of
the Inventory Adjustment.  Such payment
will be made by Purchaser in cash by wire transfer of immediately available
funds to one account specified by each applicable Seller, in writing, within
five Business Days following the final determination with respect to the
Inventory Adjustment.

 

3.4                                Allocation
of Purchase Price.  As soon as
practicable after the Closing Date, the Purchaser shall retain a valuation firm
to provide a written appraisal of the Purchased Assets as of the Closing Date.
Purchaser and Sellers shall be permitted to review and discuss such written
appraisal with such valuation firm prior to its finalization. Purchaser and
Sellers agree that (i) the aggregate Purchase Price will be allocated
among the Purchased Assets as set forth in such written appraisal, (ii) any
adjustments to the Purchase Price pursuant to Section 3.3 will be
allocated by Purchaser to Inventory, (iii) they will file all Tax returns
and related forms (including Form 8594) in accordance with such written
appraisal, and (iv) they will not make any inconsistent statement or take
any inconsistent position on any Tax returns, in any refund claim or during the
course of any IRS or other tax audit. 
Each party will notify the other party if it receives notice that the
IRS proposes any allocation that is different from the allocation as set forth
in such written appraisal.

 

ARTICLE IV

 

CLOSING AND CLOSING DELIVERIES

 

4.1                                The
Closing.  The closing of the sale and
purchase of the Purchased Assets (the “Closing”) will take place at the
offices of Porter & Hedges, L.L.P. located at 1000 Main Street, 36th
Floor, Houston, Texas 77002, at 10:00 a.m., Central Time, on July 22,
2008, or such other place, time or date mutually agreed by the Purchaser and
Sellers.  The date upon which the Closing
occurs is herein called the “Closing Date.”  Notwithstanding any other provision hereof,
the Closing will be deemed effective for accounting, tax and all other purposes
as of 11:59 p.m., Central Time, on the day immediately preceding the
Closing Date.

 

4.2                                Deliveries
of Sellers.  At the Closing, Sellers
will deliver or cause to be delivered to Purchaser:

 

(i)                                     such
instruments of assignment, assumption and Transfer as Purchaser may deem necessary
or desirable to Transfer any of the Purchased Assets, duly executed by Sellers;

 

(ii)                                  all
required certificates and documents of title relating to the Purchased Assets
duly executed and endorsed for transfer to the Purchaser;

 

(iii)                               a
certificate of each Seller’s authorized officer certifying as to each Seller’s
certificate of incorporation and bylaws or other similar constituent documents
and to the due adoption of resolutions adopted by its board of directors 

 

15

 

and stockholders
(in respect of Leader USA and CementRite) authorizing the execution of this
Agreement and each Ancillary Agreement to which it will be a party at Closing
and the taking of any and all actions deemed necessary or advisable to
consummate the transactions contemplated herein and therein;

 

(iv)                              evidence  or  copies  of  the  consents,  approvals,  orders,  qualifications  or  waivers  required  by  any  third  party  or  Governmental  Authority  to  consummate  the  transactions  contemplated  by  this  Agreement  that  are  listed  in  Schedule  4.2(iv);

 

(v)                                 each
Ancillary Agreement required to be duly executed and delivered by parties other
than Purchaser or its Affiliates;

 

(vi)                              terminations
and releases of all Liens on any of the Purchased Assets, including UCC-3
termination statements and personal property security discharges in form and
substance reasonably satisfactory to Purchaser;

 

(vii)                           estoppel
letters, duly executed by the landlords of each of the Leased Real Property,
stating that there are no unsecured defaults under the applicable leases, that
the leases are in full force and effect, and such other matters as Purchaser
shall reasonably request;

 

(viii)                        an
opinion of counsel for Sellers, Macleod Dixon LLP and Miller, Johnson, Snell &
Cummiskey, P.L.C., in the form attached hereto as Exhibit C;

 

(ix)                                a
non-foreign person affidavit as required by Section 1445 of the Code in
substantially the form of Exhibit E hereto;

 

(x)                                   evidence
of the conditional approval of the TSX Venture Exchange Inc. of the transactions
contemplated hereby; and

 

(xi)                                such
other documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements and to
comply with the terms hereof and thereof.

 

4.3                                Deliveries
by Purchaser.  At the Closing,
Purchaser will deliver or cause to be delivered to Sellers:

 

(i)                                     the
Closing Cash Consideration, less the Holdback Amount, by wire transfer of
immediately available funds to the account specified pursuant to Section 3.1;

 

(ii)                                  each
Ancillary Agreement required to be duly authorized and delivered by Purchaser
or its Affiliates;

 

(iii)                               documents
evidencing the assumption by Purchaser of the Assumed Liabilities; and

 

16

 

(iv)                              such
other documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements and to
comply with the terms hereof and thereof.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF SELLERS

 

5.1                                Representations
and Warranties of Sellers.  Sellers
jointly and severally represent and warrant to Purchaser as of the Closing Date
as follows:

 

5.1.1.                    Corporate
Existence and Power.  Leader Canada
is a corporation duly incorporated, validly existing and in good standing under
the laws of the Province of Alberta. 
Leader USA is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of North Dakota.  CementRite is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Michigan.  Sellers have all corporate
power required to carry on the Business as now conducted.  Each Seller is duly qualified to conduct
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where the
failure to be so qualified or in good standing could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.  Each Seller has previously delivered to
Purchaser true and complete copies of the certificate of incorporation, bylaws
or other similar constituent documents of such Seller, in each case as amended
to date.

 

5.1.2.                    Corporate
Authorization; Enforceability.  The
execution, delivery and performance by each Seller of this Agreement and each
of the Ancillary Agreements to which it will be a party at the Closing are, and
will be at the Closing, within such Seller’s corporate powers and have been
duly authorized by the board of directors and stockholders, as applicable, of
such Seller, and no other corporate action or director or shareholder
resolution on the part of such Seller is necessary to authorize this Agreement
or any of the Ancillary Agreements to which such Seller will be a party at the
Closing or to complete the transactions contemplated hereby and thereby,
including the sale and conveyance of the Purchased Assets to Purchaser.  This Agreement has been, and each of the
Ancillary Agreements to which each Seller will be a party at the Closing will
have been, duly executed and delivered by such Seller, as applicable.  Assuming the due execution and delivery by
Purchaser of this Agreement and each of the Ancillary Agreements to which each
Seller will be a party at the Closing, this Agreement constitutes, and each
Ancillary Agreement to which such Seller will be a party at the Closing will
constitute at the Closing, valid and binding agreements of such Seller, as
applicable, enforceable against each in accordance with their terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).

 

17

 

5.1.3.                     Governmental
Authorization.  The execution,
delivery and performance by each Seller of this Agreement and each Ancillary
Agreement to which such Seller will be a party at the Closing require no
consent, approval, order, authorization or action by or in respect of, or
filing with, any Governmental Authority.

 

5.1.4.                     Non-Contravention;
Consents.  Except as disclosed in Schedule
5.1.4, the execution, delivery and performance by each Seller of this
Agreement and each Ancillary Agreement to which such Seller will be a party at
the Closing, and the consummation of the transactions contemplated hereby and
thereby do not and will not at the Closing (a) violate the certificate of
incorporation or bylaws or other similar constituent documents of such Seller, (b) violate
any applicable Law or Order, (c) require any filing with or Permit,
consent or approval of, or the giving of any notice to, any Person (including
filings, consents or approvals required under any Permits of such Seller or any
licenses to which such Seller is a party), (d) result in a violation or
breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of such Seller or to a
loss of any benefit to which such Seller is entitled under, any contract,
agreement or other instrument binding upon such Seller or any license, franchise,
Permit or other similar authorization held by such Seller, (e) result in
the creation or imposition of any Lien on any asset of such Seller, or (f) constitute
a sale of all or substantially all of the assets of Leader Canada.

 

5.1.5.                     Capitalization.  All the outstanding shares of Capital Stock
of Leader USA have been validly issued to Leader Canada and are fully paid and
nonassessable.  All the outstanding
shares of Capital Stock of CementRite have been validly issued to Leader USA
and are fully paid and nonassessable.

 

5.1.6.                     Subsidiaries.  Except as disclosed in Schedule 5.1.6,
Sellers do not own any Capital Stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity.  All activities
that constitute the Business that are conducted by each Seller are conducted by
and through Leader USA and CementRite.

 

5.1.7.                     Financial
Statements.  (a)  Sellers have
heretofore furnished Purchaser with a true and complete copy of the Leader Canada
Reference Financial Statements which are attached hereto as Schedule 5.1.7(a).  The Leader Canada Reference Financial
Statements have been derived from the books and records of Leader Canada, have
been prepared in accordance with GAAP (except for, with respect to the Leader
Canada Reference Balance Sheet and the related statements of operations and
deficit, cash flows and comprehensive income (loss) and accumulated other
comprehensive income, normal year-end adjustments and the absence of footnote disclosure)
and fairly present in all material respects the financial position of Leader
Canada at the respective dates thereof and the results of the operations of
Leader Canada for the periods indicated.

 

(b)                                 Sellers
have heretofore furnished Purchaser with a true and complete copy of the Leader
USA Reference Financial Statements which are attached hereto as Schedule
5.1.7(b).  The Leader USA Reference
Financial Statements have been derived from the 

 

18

 

books and records of Leader Canada and fairly present in all material
respects the financial position of the Business at the respective dates thereof
and the results of the operations of the Business for the periods indicated.

 

(c)                                 The
books of account, minute books, stock record books and other records of
Sellers, all of which have been made available to Purchaser, are complete and
correct in all material respects.

 

5.1.8.                  Liabilities.  There are no liabilities or obligations or
any facts or circumstances which could give rise to liabilities or obligations,
whether accrued, contingent, absolute, determined, determinable or otherwise,
of Sellers that would adversely affect the value of the Purchased Assets or,
other than the Assumed Liabilities, become a liability of the Purchaser as a
result of the transactions contemplated by this Agreement, by operation of Law
or otherwise.

 

5.1.9.                  Tax
Matters.  (a)  Except as
disclosed in Schedule 5.1.9(a):

 

(i)                                     All
Tax returns, statements, reports and forms (including estimated tax or
information returns and reports) required to be filed by or on behalf of each
Seller and its respective Subsidiaries with any Taxing Authority with respect
to any Pre-Closing Tax Period (collectively, the “Tax Returns”) have, to
the extent required to be filed on or before the date hereof, been filed when
due in accordance with all applicable Laws and all such Tax Returns are current
and complete in all material respects.

 

(ii)                                  All
Taxes owed by Sellers (whether or not shown as due and payable on the Tax
Returns that have been filed) have been timely paid, or withheld (including
withholding for employees, independent contractors, consultants, note holders,
shareholders and others) and remitted to the appropriate Taxing Authority.

 

(iii)                               No
claim has ever been made by any Governmental Authority in a jurisdiction where
any Seller or any of its respective Subsidiaries does not file a Tax return
that it is or may be subject to taxation in that jurisdiction;

 

(iv)                              There
is no action, suit, proceeding, audit or investigation pending or, to the
knowledge of any Seller (or its directors, officers or employees responsible
for Tax matters), threatened against or with respect to any Seller in respect
of any Tax;

 

(v)                                 There
are no Liens for Taxes upon the assets of any Seller, except Liens for current
Taxes not yet due.

 

(b)                                Schedule
5.1.9(b) contains a list of all jurisdictions (whether foreign or
domestic) to which any Tax imposed is properly payable by any Seller in
connection with any Seller’s ownership or use of the Purchased Assets or
conduct of the Business.

 

19

 

5.1.10.               Absence of Certain Changes.  Except as disclosed in Schedule 5.1.10,
since the Balance Sheet Date, Sellers have conducted the Business in the
Ordinary Course of Business and there has not been any event, occurrence,
development or circumstances which has had or which could reasonably be
expected to have a Material Adverse Effect. 
Since the Balance Sheet Date, there has not occurred any damage,
destruction or casualty loss (whether or not covered by insurance) with respect
to any of the Purchased Assets.

 

5.1.11.               Assigned Contracts.  Each Assigned Contract is a valid and binding
agreement of each Seller party thereto and, to the knowledge of any Seller,
each other party thereto, enforceable in accordance with its respective terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors’ rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity). 
No such Seller or, to the knowledge of any Seller, any other party to
any such Assigned Contract is in default or breach (with or without due notice
or lapse of time or both) in any material respect under the terms of any such
Assigned Contract.  To the knowledge of any
Seller, there is no event, occurrence, condition or act which, individually or
in the aggregate, with the giving of notice or the passage of time or both, or
the happening of any other event or condition, could reasonably be expected to
become a material default or event of default under any such Assigned
Contract.  The Assigned Contracts
constitute all of the contracts, leases, agreements, commitments or other
legally binding contractual rights or obligations necessary to conduct the
Business in all material respects. 
Sellers have delivered or made available to Purchaser true and complete
originals or copies of all Assigned Contracts disclosed in Schedule
2.1(a)(iii).

 

5.1.12.               Litigation.  (a)  Except as disclosed in Schedule
5.1.12(a), there is no action, suit, investigation, arbitration or
administrative or other proceeding pending or, to the knowledge of any Seller,
threatened, against or affecting Sellers, the Purchased Assets or the Business
before any court or arbitrator or any Governmental Authority or which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement and any Ancillary Agreements to
which any Seller will be a party at Closing. 
No Seller knows of any valid basis for any such action, suit,
investigation, arbitration or proceeding against or affecting the Purchased
Assets or the Business.  Except as
disclosed in Schedule 5.1.12(a), there are no outstanding judgments,
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court, administrative agency, arbitral body or Governmental Authority) against
any Seller, the Purchased Assets or the Business.

 

(b)                                 All
claims, whether in contract or tort, for defective or allegedly defective
products or workmanship pending or, to the knowledge of any Seller, threatened,
against any Seller are listed or described in Schedule 5.1.12(b).

 

5.1.13.               Compliance with Laws; Permits.  (a)  Except as described in Schedule
5.1.13(a), each Seller has complied with all Laws.  No Seller knows of any fact, circumstance,
condition or situation existing which, after notice or lapse of time or both,
would constitute noncompliance by any Seller or give rise to any future
liability of any 

 

20

 

Seller with respect to any Law heretofore or currently in effect.  No Seller is required to make any material
expenditure to achieve or maintain compliance with any Law.  Neither the use, condition nor other aspect
of any of the Purchased Assets or other right, property or asset used in or
associated with the Business is or has been in violation of any applicable
Law.  Except as set forth in Schedule 5.1.13(a),
no Seller has received notice of any violation of any Law, or any potential
liability under any Law, relating to the operation of the Business or to any of
its assets (including the Purchased Assets), operations, processes, results or
products, nor is any Seller aware of any such violation or potential liability.  No Seller is aware of any present requirement
of any applicable Law which is due to be imposed on any Seller or the Business
that is reasonably likely to increase the cost of complying with such Law.

 

(b)                                 Schedule
2.1(a)(iv) sets forth a list of each government or regulatory license,
authorization, permit, franchise, consent and approval (the “Permits”)
issued and held by or on behalf of any Seller and required to be so issued and
held to carry on the Business as currently conducted.  Except as disclosed in Schedule 5.1.13(b),
such Seller is the authorized legal holder of the Permits, and each Permit is
valid and in full force and effect.   No
Seller is in default under, and no condition exists that with notice or lapse
of time or both could constitute a default or could give rise to a right of
termination, cancellation or acceleration under, any material Permit held by
such Seller.

 

5.1.14.               Purchased Assets; Properties;
Sufficiency of Assets.  (a) 
Except for Inventory disposed of in the Ordinary Course of Business of Sellers,
Sellers have good title to, or in the case of leased property has valid
leasehold interests in, the Purchased Assets and all other property and assets
(whether real or personal, tangible or intangible) reflected in the Leader
Canada Reference Balance Sheet or acquired after the date thereof, free and
clear of all Liens, except for Liens disclosed in Schedule 5.1.14(a).

 

(b)                                 Schedule 5.1.14(b) sets
forth a list of all real property and improvements owned in fee simple title by
the Sellers in connection with the Business and all easements, rights and
appurtenances thereto (collectively, the “Owned Real Property”).  Except as set forth on Schedule 5.1.14(b),
Sellers have good and indefeasible title to all Owned Real Property.  None of the Owned Real Property is located
within an area that has been designated by the Federal Insurance
Administration, the Army Corps of Engineers, or any other governmental agency
or body as being subject to special flooding hazards. Neither the Owned Real
Property, nor any portion thereof, is classified as “wetlands” as defined in
the Clean Water Act (33 U.S.C. §1251 et seq.), as amended, and related
regulations, as amended, and subject to federal regulation thereunder or
similar state laws and regulations. The improvements on the Owned Real Property
(i) have been constructed in a good and workmanlike manner, free from
defects in workmanship and material and, to any of the Sellers’ knowledge, do
not require any repair or replacement other than minor, routine maintenance;
and (ii) have been constructed and are being occupied, maintained, and
operated in compliance with all applicable laws, regulations, insurance
requirements, contracts, leases, permits, licenses, ordinances, restrictions,
building setback lines, covenants, reservations, and easements, and none of the
Sellers have received any notice, written or oral, claiming any violation of
any of the same or requesting or requiring the performance of any repairs,
alterations, or other work in order 

 

21

 

to so comply. Except for the Lease Agreement, none of the Sellers is a
landlord with respect to any of the Owned Real Property. Except as set forth on
Schedule 5.1.14(b), following the date hereof the Purchaser will be
the only person with the right to possession and use of the Owned Real
Property, subject to the terms of the Lease Agreement. The current zoning
classification of the Owned Real Property, if any, permits the construction,
maintenance and operation of the improvements thereon and the business
currently being operated on the Owned Real Property; the improvements thereon
have been constructed and are being occupied and maintained in compliance
therewith; and there are no proceedings pending or contemplated to alter such
zoning classification. Each item of Owned Real Property has adequate Utilities
(hereinafter defined) of a capacity and condition to serve adequately such
Owned Real Property (with due regard for the use to which such Owned Real
Property is presently being put).  None of
the Sellers have knowledge of any fact or condition which would result in the
termination of the current access to or from the Owned Real Property to any
presently existing highways, roads, and rights-of-way on or adjoining the Owned
Real Property. There are no obligations in connection with the Owned Real
Property or any so called “recapture agreement” involving refund for sewer
extension, oversizing utility lines, lighting or similar expenses or charges
for work or services done upon or relating to the Owned Real Property which
will bind Purchaser or the Owned Real Property from and after the date hereof.
Final certificates of occupancy have been issued for the improvements on the
Owned Real Property, and Sellers have all necessary licenses, approvals and
permits for the existing use of the Owned Real Property.

 

(c)                                  Schedule
5.1.14(c) sets forth a list of all real property assets leased by each
Seller (the “Leased Real Property”). 
Each Seller is a tenant or possessor in good standing thereunder (with a
right of quiet enjoyment therein) and all rents due under such leases have been
paid.  No Seller nor, to the knowledge of
such Seller, any other party to any such lease is in default or breach (with or
without due notice or lapse of time or both) in any material respect under the
terms of any such lease.  Each Seller is
in peaceful and undisturbed possession of the space and/or estate under each
lease of which it is a tenant.  No Seller
has received any notice of any appropriation, condemnation or like proceeding,
or of any violation of any applicable zoning Law or Order relating to or
affecting the Leased Real Property, and to such Seller’s knowledge, no such
proceeding has been threatened or commenced. 
To each Seller’s knowledge, each item of Leased Real Property has
adequate Utilities (as hereinafter defined) of a capacity and condition to
serve adequately such Leased Real Property (with due regard for the use to
which such Leased Real Property is presently being put).  For purposes of this Agreement, the term “Utilities”
means all of the following: water distribution and service facilities; sanitary
sewers and associated installations; storm sewers; storm retention ponds and
other drainage facilities; electrical distribution and service facilities;
telephone, and similar communication facilities; heating, ventilating, cooling
and air conditioning systems and facilities; natural gas distribution and
service facilities; fire protection facilities; garbage compaction and
collection facilities; and all other utility lines, conduit, pipes, ducts,
shafts, equipment, apparatus and facilities.

 

22

 

(d)                                 The
tangible property comprising the Purchased Assets is in all material respects
in good repair and operating condition (subject to normal maintenance
requirements and normal wear and tear excepted).

 

(e)                                  The
Purchased Assets constitute all of the assets used in connection with the
Business and are adequate to conduct the Business as currently conducted.

 

5.1.15.            Intellectual
Property.  (a)  Schedule
5.1.15(a) sets forth a list of all Leader Intellectual Property Rights
which are owned by any Seller or which such Seller is a licensor or licensee,
and all material licenses, sublicenses and other written agreements as to which
such Seller or any of its Affiliates is a party and pursuant to which any
Person is authorized to use such Leader Intellectual Property Right, including
the identity of all parties thereto.

 

(b)                              Except
as disclosed in Schedule 5.1.15(b), (i) the conduct of the Business
by each Seller as currently conducted does not infringe upon any Intellectual
Property Right of any third party, and there is no claim, suit, action or
proceeding that is either pending or, to the knowledge of such Seller,
threatened, that, in either case, involves a claim of infringement by such
Seller of any Intellectual Property Right of any third party, or challenging
such Seller’s ownership, right to use, or the validity of any Leader
Intellectual Property Right; and (ii) no Leader Intellectual Property
Right is subject to any outstanding order, judgment, decree, stipulation or
agreement restricting the use thereof by any Seller or restricting the
licensing thereof by such Seller to any Person, other than with respect to
standard and customary restrictions associated with commercially available
third party software to which such Seller has a valid right to use in
connection with the Business.

 

5.1.16.            Environmental
Matters.  (a)  Except as
disclosed in Schedule 5.1.16(a):

 

(i)                                     No
Seller has, and to any Seller’s knowledge no other party has, generated,
recycled, used, treated or stored on, transported to or from, or Released or
disposed on, Leader Property any Constituents of Concern or, to the knowledge
of any Seller, on any property adjoining or adjacent to any Leader Property,
except in compliance with Environmental Laws;

 

(ii)                                  No
Seller has disposed of Constituents of Concern from Leader Property at any
off-site facility except in compliance with Environmental Laws;

 

(iii)                               Each
Seller is in compliance with (a) Environmental Laws, except where
non-compliance would not be expected to have a Material Adverse Effect and (b) the
requirements of Permits issued under such Environmental Laws with respect to
the Leader Property;

 

(iv)                              There
are no pending or, to the knowledge of any Seller, threatened Environmental
Claims against any Seller or any Leader Property;

 

(v)                                 No
Seller has knowledge of any facts, circumstances, conditions or occurrences
regarding any Seller’s past or present business or operations or with 

 

23

 

respect to any
Leader Property or any property adjoining any Leader Property that could
reasonably be expected to (i) form the basis of an Environmental Claim
against any Seller or any of the Leader Property or assets or (ii) cause
any Leader Property or assets to be subject to any restrictions on its
ownership, occupancy, use or transferability under any Environmental Law;

 

(vi)                              There
are no underground storage tanks or sumps located on any Leader Property or on
any property that adjoins or is adjacent to any Leader Property;

 

(vii)                           No
Seller nor any Leader Property is listed or, to the knowledge of any Seller,
proposed for listing on the National Priorities List under CERCLA or on any
similar federal, state or foreign list of sites requiring investigation or
clean-up, and no Seller has received any requests for information pursuant to
104(e) of CERCLA or any state counterpart or equivalent;

 

(viii)                        Each
Seller has obtained all required Environmental Permits and is in compliance
with the terms of each Environmental Permit. 
There are no Environmental Permits of any Seller that are
nontransferable or require consent, notification or other action to remain in
full force and effect following the consummation of the transactions
contemplated hereby; and

 

(ix)                                No
Seller has any liability under any Environmental Law (including an obligation
to remediate any Environmental Condition whether caused by any Seller or any
other Person).

 

(b)                                 Each
Seller has delivered or made available to Purchaser true and complete copies of
all environmental investigations, studies, audits, tests, reviews or other
analyses commenced or conducted by or on behalf of such Seller (or by a third
party of which such Seller has knowledge) in relation to the current or prior
business of such Seller or any Leader Property.

 

(c)                                  For
purposes of this Section 5.1.16, the term “Seller” (including the
use of such term in the term “Leader Property”) will include any entity which is,
in whole or in part, a predecessor of Seller.

 

5.1.17.               Plans and Material Documents.  (a)  Schedule 5.1.17(a) sets
forth a list of all Benefit Plans with respect to which any Seller or any ERISA
Affiliate of any Seller has or has had prior to the date hereof any obligation
or liability or which are or were prior to the date hereof maintained,
contributed to or sponsored by any Seller or any ERISA Affiliate of any Seller
for the benefit of any current or former employee, officer or director of any
Seller or any ERISA Affiliate of any Seller (“Employee Benefit Plans”).  No Seller has an express or implied
commitment to create, incur liability with respect to or cause to exist any
Employee Benefit Plan or to modify any Employee Benefit Plan, other than as required
by Law.

 

(b)                                 No
Employee Benefit Plan is a plan that is or has ever been subject to Title IV of
ERISA, Section 302 of ERISA or Section 412 of the Code.  No Employee 

 

24

 

Benefit Plan is a “multiemployer plan” as defined in Section 3(37)
of ERISA.  No Seller, ERISA Affiliate of
any Seller or Person that was ever an ERISA Affiliate of any Seller or any
ERISA Affiliate of Seller in the preceding seven years has ever, has or could
have any liability with respect to a multiemployer plan or any plan subject to
Title IV of ERISA.  Except as disclosed
in Schedule 5.1.17(b), none of the Employee Benefit Plans provides for
the payment of separation, severance, termination or similar-type benefits to
any person or provides for or, except to the extent required by Law, promises
retiree medical or life insurance benefits to any current or former employee,
officer or director of any Seller or any ERISA Affiliate of Seller.

 

(c)                                  Except
as disclosed in Schedule 5.1.17(c), each Employee Benefit Plan is
in compliance with, and has been operated in accordance with, its terms and the
requirements of all applicable Law, and each Seller and the ERISA Affiliates of
Seller have satisfied all of their statutory, regulatory and contractual
obligations with respect to each such Employee Benefit Plan, including the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).  No legal action, suit, investigation or
audit, (including by any Governmental Authority) or claim is pending or, to the
knowledge of any Seller, threatened with respect to any Employee Benefit Plan
(other than claims for benefits in the ordinary course) and no fact or event
exists that could, individually or in the aggregate, reasonably be expected to
give rise to any such action, suit or claim.

 

(d)                                 Each
Employee Benefit Plan or trust which is intended to be qualified or exempt from
taxation under Section 401(a), 401(k) or 501(a) of the Code has
received a favorable determination letter from the IRS that it is so qualified
or exempt, and, to the knowledge of any Seller, nothing has occurred since the
date of such determination letter that would adversely affect the qualified or
exempt status of any Employee Benefit Plan or related trust.

 

(e)                                  No
Seller or any ERISA Affiliate of any Seller has any current or future
obligation or liability with respect to an Employee Benefit Plan pursuant to
the provisions of a collective bargaining agreement.  No Seller employees are subject to an
employee leasing agreement or similar arrangement.

 

(f)                                    No
Person that was engaged by any Seller or any ERISA Affiliate of any Seller as
an independent contractor or in any other non-employee capacity can or will be
characterized or deemed to be an employee of any Seller or any ERISA Affiliate
of any Seller under any applicable Laws for any purpose whatsoever including,
without limitation, for purposes of federal, state and local income taxation,
workers’ compensation and unemployment insurance and eligibility for any Employee
Benefit Plan.

 

5.1.18.               Affiliate Transactions.  Except as disclosed in Schedule 5.1.18(a),
there are no outstanding payables, receivables, loans, advances and other
similar accounts between any Seller, on the one hand, and any of its
Affiliates, on the other hand, relating to the Purchased Assets.

 

25

 

5.1.19.               Customer, Supplier and Employee
Relations.  Schedule 5.1.19
includes a complete and correct list of (a) all customers of the Business
who have made aggregate purchases in excess of 5% of the total revenues of the
Business to date in calendar year 2008 and (b) all suppliers from whom
Sellers have purchased in excess of $25,000 in equipment or supplies to date in
calendar year 2008.  The relationships of
Sellers with such customers and suppliers and the employees of Sellers are good
commercial working relationships and, except as disclosed in Schedule 5.1.19,
none of such customers, suppliers or employees has canceled, terminated or
otherwise materially altered or notified any Seller of any intention to cancel,
terminate or materially alter its relationship with any Seller since January 1,
2008 and, to the knowledge of any Seller, there will not be any such change as
a result of the transactions contemplated by this Agreement.

 

5.1.20.               Other Employment Matters.  (a)  No Seller is a party to any labor
or collective bargaining agreement; there are no labor or collective bargaining
agreements which pertain to any Leader Designated Employee (as defined below); and
no Leader Designated Employee is represented by any labor organization.

 

(b)                                 No
labor organization or group of Leader Designated Employees has made a pending
demand for recognition, there are no representation proceedings or petitions
seeking a representation proceeding presently pending or, to the knowledge of
any Seller, threatened to be brought or filed with the National Labor Relations
Board or other labor relations tribunal, and there is no organizing activity
involving any Seller pending or, to the knowledge of any Seller, threatened by
any labor organization or group of Leader Designated Employees.

 

(c)                                  There
are no (i) strikes, work stoppages, slow-downs, lockouts or arbitrations, (ii) events,
including the transactions contemplated by this Agreement, that are subject to
the Workers’ Adjustment Retraining and Notification Act (“WARN”), or (iii) grievances
or other labor disputes pending or, to the knowledge of any Seller, threatened
against any Seller or involving any Seller or any of its employees.

 

(d)                                 There
are no complaints, charges or claims against any Seller pending or, to the
knowledge of any Seller, threatened to be brought or filed with any
Governmental Authority based on, arising out of, in connection with, or
otherwise relating to the employment by any Seller, of any Leader Designated
Employee, including any claim for workers’ compensation.

 

(e)                                  Each
Seller is in compliance with all Laws and Orders in respect of employment and
employment practices and the terms and conditions of employment and wages and
hours, and has not, and is not, engaged in any unfair labor practice.

 

(f)                                    Schedule
5.1.20(f) contains a complete and accurate list of the following
information for each employee, officer or director of any Seller related to the
Business, including each employee on leave of absence or layoff status:
employer; name; job title; location; current compensation paid or payable and
any change in compensation since the Balance Sheet Date; vacation accrued as of
a recent date; and service credited as of a recent date for purposes of vesting
and eligibility to participate under any pension, 

 

26

 

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 or other Employee Benefit Plan of any
Seller; and all bonuses and any other amounts to be paid by any Seller at or in
connection with the Closing.

 

(g)                                 Except
as set forth in Schedule 5.1.20(g), to the knowledge of any Seller, no
employee, officer or director of any Seller related to the Business is a party
to, or is otherwise bound by, any confidentiality, non-competition, proprietary
rights agreement or similar agreement that would affect (i) the
performance of his or her duties as an employee, officer or director or (ii) the
ability of Purchaser to conduct the Business after the Closing Date.

 

5.1.21.               Inventory.  Except as set forth in Schedule 5.1.21,
all inventories reflected on the Leader Canada Reference Balance Sheet (net of
any applicable reserves set forth on the Leader Canada Reference Balance Sheet)
and all inventories which have been acquired or produced since the Balance
Sheet Date (net of any additional applicable reserves established since such
date in the Ordinary Course of Business of Sellers) are in good condition,
conform in all material respects with the applicable specifications and
warranties of Sellers, are not obsolete, and are usable and salable in the
Ordinary Course of Business.  The values
at which such inventories are carried are consistent with the past business
practices of Sellers.

 

5.1.22.               Service Warranties; Liability.  Schedule 5.1.22 includes copies of the
standard terms and conditions of the sale for the services of Sellers
(containing applicable guaranty, warranty, and indemnity provisions).  Except as disclosed in Schedule 5.1.22,
none of such services is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease.

 

5.1.23.               Finders’ Fees.  There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of any Seller who might be entitled to any fee or other commission in
connection with the transactions contemplated by this Agreement or any of the
Ancillary Agreements, other than any finder’s fee payable to Canaccord Capital
Corporation.

 

5.1.24.               Solvency.  Immediately after giving effect to the
transactions contemplated by this Agreement, as of the Closing Date, (i) the
aggregate “fair saleable value” of the assets of each of the Sellers, taken as
a whole, as of such date, exceeds (A) the value of all “liabilities” of
such Seller, taken as a whole, on its existing debts (including contingent
liabilities) as such debts become absolute and matured, (ii) each Seller,
taken as a whole, does not have, as of such date, an unreasonably small amount
of capital for the operation of its businesses in which it is engaged or
proposed to be engaged following such date, (iii) each Seller, taken as a
whole, will be able to pay its liabilities, including contingent and other
liabilities, as they mature, (iv) none of the Sellers is insolvent or
unable to pay its debts within the meaning of the insolvency legislation
applicable to such Seller and (v) no Seller has stopped paying its debts
as they are due.

 

27

 

5.1.25.               Disclosure.  None of (i) the information contained in
the Schedules, (ii) any other written information furnished to Purchaser
by any Seller under this Agreement, or (iii) the representations and
warranties of each Seller contained in this Agreement contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements contained therein, in
light of the circumstances under which they were or are made, not false or
misleading.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to Sellers as of the
Closing Date as follows:

 

6.1                                 Corporate
Existence and Power.  Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Texas. 
Purchaser has all corporate power required to carry on its business as
now conducted.  Purchaser is duly
qualified to conduct business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified or in good standing could
not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, assets, liabilities, condition
(financial or otherwise), or results of operations of Purchaser or its
business.

 

6.2                                 Corporate
Authorization; Enforceability.  The
execution, delivery and performance by Purchaser of this Agreement and each of
the Ancillary Agreements to which it will be a party at the Closing are, and
will be at the Closing, within Purchaser’s corporate power and have been duly
authorized by the manager of Purchaser and no other corporate action on the
part of Purchaser is necessary to authorize this Agreement or any of the
Ancillary Agreements to which Purchaser will be a party at the Closing.  This Agreement has been, and each of the
Ancillary Agreements to which Purchaser will be a party at the Closing will
have been, duly executed and delivered by Purchaser.  Assuming the due execution and delivery by
Sellers of this Agreement and each of the Ancillary Agreements to which
Purchaser will be a party at the Closing, this Agreement constitutes, and each
Ancillary Agreement to which Purchaser will be a party at the Closing will
constitute at the Closing, valid and binding agreements of Purchaser,
enforceable against Purchaser in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).

 

6.3                                 Non-Contravention.  The execution, delivery and performance by
Purchaser of this Agreement and each Ancillary Agreement to which Purchaser
will be a party at the Closing do not and will not at the Closing (a) violate
the certificate of incorporation or bylaws or other similar constituent
documents of Purchaser, (b) violate any applicable Law or Order, (c) require
any filing with or Permit, consent or approval of, or the giving of any notice
to, any Person (including filings, consents or approvals required under any
Permits of Purchaser or any licenses to which Purchaser is a party), or 

 

28

 

(d) result in a
violation of or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of
Purchaser or to a loss of any benefit to which Purchaser is entitled under, any
contract, agreement or other instrument binding upon Purchaser or any license,
franchise, Permit or other similar authorization held by Purchaser.

 

6.4                              Finders’
Fees.  There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Purchaser who might be entitled to any fee or
other commission in connection with the transactions contemplated by this
Agreement or any of the Ancillary Agreements.

 

ARTICLE VII

 

ADDITIONAL AGREEMENTS

 

7.1                              Employees
and Benefit Plans.  (a)  Offers
of Employment.  Schedule 7.1
lists, as of the date hereof, all persons (together with their respective
titles, current salaries and vacation accrued through the date hereof) who are
employees of Sellers related to the Business (“Leader Employees”)
(including those Leader Employees, if any, on sick leave, short-term or
long-term disability, workers’ compensation, vacation, leave of absence or
military leave of absence).  Purchaser
agrees to offer on the Closing Date employment to all Leader Employees listed
in Schedule 7.1, subject to such employees meeting Purchaser’s
standard employment eligibility requirements and mutual agreement between such
employees and Purchaser as to their compensation levels.  All Leader Employees who become employees of
Purchaser pursuant to this Section 7.1 are referred to hereinafter as “Leader
Designated Employees.”  All Leader
Employees who decline employment with Purchaser are referred to hereinafter as “Non-Leader
Designated Employees.”

 

(b)                              Employee
Benefits.

 

(i)                                     Except
as expressly provided otherwise herein, continued coverage of all Leader
Designated Employees, their dependents and beneficiaries under any Benefit Plan
will in all respects terminate effective as of the Closing Date, and Sellers
will cause the Leader Designated Employees to cease actively participating in
the Employee Benefit Plans effective as of the Closing Date except to the
extent required by COBRA or other applicable law.  From and after the Closing Date, each Seller
and its ERISA Affiliates will be and remain responsible for any benefits due to
the Leader Designated Employees under the Employee Benefit Plans, and Purchaser
will have no responsibility whatsoever therefor.  Sellers will have no liability or
responsibility for any coverage or non-coverage of the Leader Designated
Employees under Purchaser’s benefit plans. 
Purchaser will have no liability with respect to any Non-Leader
Designated Employees.  Sellers shall
calculate and pay within five (5) days of the Closing Date all accrued and
unpaid compensation, bonuses and vacation pay for all Leader Designated
Employees.

 

29

 

(ii)                                  Sellers
will remain liable for and continue to pay all benefits and claims under any
Employee Benefit Plan, including medical, dental, vision and life insurance
plan expenses and benefits for each Leader Employee (including the Leader
Designated Employees) with respect to claims incurred or attributable to any
period, prior to the Closing Date in respect of such Leader Employees or their
covered dependents and all such expenses and benefits for each Non-Leader
Designated Employee with respect to claims incurred on or after the Closing
Date in respect of such Non-Leader Designated Employees or their covered
dependents.  Purchaser will assume and
become liable for all medical, dental, vision and life insurance plan expenses
and benefits in respect to all Leader Designated Employees or their covered
dependents thereof in accordance with the terms of any applicable employee
benefit plan of Purchaser (or, at Purchaser’s option, any of its Affiliates)
from and after their respective dates of hire by Purchaser (the “Hire Date”).  For purposes of this Section 7.1, a
claim is deemed to be incurred when the service(s) giving rise to such
claim are performed.  Each Seller and its
ERISA Affiliates shall be and are solely responsible for providing COBRA
continuation of health coverage to Seller’s employees, their dependents and any
other person covered by the Seller’s or its ERISA Affiliates’ health plan,
including coverage for qualified beneficiaries prior to Closing and individuals
who become qualified beneficiaries under COBRA as a result of the transactions
contemplated by this Agreement.  Sellers
shall take all necessary actions to arrange for and provide the COBRA
continuation coverage required in the preceding sentence.

 

(iii)                               Sellers
will remain liable for and will pay all short-term disability benefits payable
to all Leader Designated Employees with respect to any period commencing prior
to the Closing Date in accordance with the terms of any applicable employment
benefit plan of Sellers.  Purchaser will
be liable for and will pay all short-term disability benefits payable to all
Leader Designated Employees with respect to any period commencing on or after
their respective Hire Dates thereof in accordance with the terms of any
applicable employee benefit plan of Purchaser.

 

(c)                                  Other
Benefit Plans.  With respect to any
other Employee Benefit Plans not specifically addressed in this Agreement,
including but not limited to pension plans, deferred compensation plans,
post-retirement plans, incentive plans, bonus plans, equity-based compensation
plans, severance and fringe benefit plans, Sellers will retain all liability
therefor and Purchaser will have no liability therefor.

 

(d)                                 WARN
Liabilities.  Sellers shall retain
all liabilities under WARN that exist prior to Closing or that arise in
connection with the transactions contemplated by this Agreement.

 

(e)                                  Workers’
Compensation.  Sellers will retain
all liability for any workers’ compensation claims of the employees of any
Seller arising from or relating to any injury, illness or condition incurred or
existing prior to the Closing Date.

 

30

 

(f)            No
Third Party Beneficiaries.  No third
party benefits in favor of any person, including the employees of any Seller,
will be created, implied or inferred from the provisions of this Section 7.1.

 

7.2           Books
and Records.  (a)  From and
after the Closing Date, Purchaser will give Sellers’ representatives reasonable
access to such documentation and information and reasonable access to, and
cause the cooperation of, employees of Purchaser which Sellers may reasonably
require (i) to prepare and file Tax Returns and to respond to any issues
which may arise with respect to Taxes for which Sellers are responsible to the
extent relating to the Purchased Assets or Assumed Liabilities, (ii) with
respect to any Retained Liabilities, and (iii) to defend any claim which
Sellers are required to defend pursuant to this Agreement or in connection with
the operation of the Business prior to the Closing Date.  Prior to the third anniversary of the Closing
Date, Purchaser will give Sellers at least ten days’ prior written notice of
Purchaser’s intention to dispose of any books, records or other documentation
which are delivered to Purchaser under the terms of this Agreement.  Sellers will have the opportunity to obtain
possession, at their own expense, of any such books, records or documentation
as Sellers may reasonably require prior to Purchaser’s disposition thereof
prior to the third anniversary of the Closing Date.  In the absence of bad faith or willful
misconduct, Purchaser will have no liability arising out of or in connection
with its retention and handling of such records.

 

(b)           From
and after the Closing Date, Sellers will give Purchaser’s representatives
reasonable access to such documentation and information and reasonable access
to, and cause the cooperation of, employees of Sellers which Purchaser may
reasonably require to (i) prepare and file Tax Returns and respond to any
issues which may arise with respect to Taxes for which Purchaser is responsible
to the extent relating to the Purchased Assets or Assumed Liabilities or (ii) defend
any claim which Purchaser is required to defend pursuant to this Agreement or
in connection with the operation of the Business after the Closing Date.  Prior to the third anniversary of the Closing
Date, Sellers will give Purchaser at least ten days’ prior written notice of
Sellers’ intention to dispose of any books, records or other documentation
which Sellers are entitled to retain pursuant to this Agreement, and Purchaser
will have the opportunity to obtain possession, at its own expense, of any such
books, records or documentation as Purchaser may reasonably request prior to
Sellers’ disposition thereof prior to the third anniversary of the Closing
Date.  In the absence of bad faith or
willful misconduct, Sellers will not have any liability arising out of or in
connection with its retention and handling of such records.

 

(c)           Information
which is obtained by either party pursuant to this Section 7.2 will be
kept confidential by such party; provided, however, that in the
event the party or any of its representatives is requested or required pursuant
to applicable Law by any Governmental Authority to disclose any such
information, the party may do so after providing the other party with notice of
the request or requirement so that the other party may attempt, at its own
expense, to obtain a protective order. 
Each party will use reasonable efforts to limit access to such
information on a “need to know” basis. 
Neither party may use information obtained from the other party pursuant
to this subsection to compete with the other party.

 

31

 

7.3           Transfer
of Certain Purchased Assets and Excluded Assets. Within 30 days of the
Closing Date, Sellers shall, at their sole cost, expense and risk, cause the
coiled tubing strings indentified by Purchaser, which coiled tubing strings
constitute a portion of the Excluded Assets, to be removed from the facilities
of Purchaser and any of its Affiliates in whole, and not in part, and not
disassembled, dismantled or otherwise taken apart prior to their removal from
such facilities.

 

(b)           Sellers
shall, at their sole cost, expense and risk, cause the previously scheduled
repairs to be completed on the coiled tubing unit indentified on Schedule
7.3(b), which coiled tubing unit constitutes a portion of the Purchased
Assets, and shall deliver, at their sole cost, expense and risk, such coiled
tubing unit to Purchaser’s facility located in Minot, North Dakota by August 15,
2008.

 

(c)           Sellers
shall, at their sole cost, expense and risk, cause the storage trailers
indentified on Schedule 7.3(c), which storage trailers constitute a
portion of the Purchased Assets, to be delivered to Purchaser’s facility
located in Minot, North Dakota within seven (7) days of the Closing Date.

 

(d)           Purchaser
shall use reasonable commercial efforts to arrange for the return of deposits
held by lessors for property used in Sellers’ Jane Lew, West Virginia
operations up to a maximum amount of $155,000.00, which deposits constitute a
portion of the Excluded Assets.

 

7.4           Michigan
Property.  Following the Closing,
Purchaser shall conduct or have conducted an Environmental Assessment of the
Michigan Property. Purchaser shall use its commercially reasonable efforts to
complete such Environmental Assessment as soon as practicable after the Closing
Date. Following Purchaser’s completion of such Environmental Assessment,
Purchaser shall deliver to Sellers a written notice setting forth Purchaser’s
plan and cost estimate to remedy the Potential Liability (the “Remediation
Plan”). The cost estimate shall include investigation, removal, monitoring,
remedial or other costs typically associated with the proposed remedy set forth
in the Remediation Plan and the investigation costs incurred by Purchaser pursuant
to the Environmental Assessment of the Michigan Property. Sellers shall be
permitted to review and discus the Remediation Plan with the Purchaser prior to
its finalization by Purchaser. Thereafter, Purchaser shall conduct or have
conducted the finalized Remediation Plan and shall be entitled to pay for the
cost thereof by retention of the General Holdback Amount.  Nothing herein shall limit or prohibit
Purchaser, in Purchaser’s sole discretion, from submitting a Baseline
Environmental Assessment to the MDEQ for the Michigan Property.

 

7.5           Collection
of Payments.  Following the Closing, (a) Sellers
will promptly, and in any event, not later than seven days following receipt,
forward to Purchaser any payments received by Sellers with respect to any of
the Purchased Assets, and any checks, drafts or other instruments payable to
Sellers will, when so delivered, bear all endorsements required to effectuate
the transfer of the same to Purchaser, (b) Sellers will promptly forward
to Purchaser any mail or other communications received by Sellers relating to
the Purchased Assets or the Assumed Liabilities, (c) Purchaser will
promptly, 

 

32

 

and in any event, not
later than seven days following receipt, forward to Sellers any payments
received by Purchaser with respect to any of the Excluded Assets, and any
checks, drafts or other instruments payable to Purchaser shall, when so
delivered, bear all endorsements required to effect the transfer of the same to
Sellers, and (d) Purchaser will promptly forward to Sellers any mail or
other communications received by Purchaser relating to the Excluded Assets or
the Retained Liabilities.

 

7.6           Further
Assurances.  From time to time, as
and when requested by either party hereto, the other party will execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and will take, or cause to be taken, all such further actions, as
the requesting party may reasonably deem necessary or desirable to consummate
the transactions contemplated by this Agreement.

 

7.7           Certain
Tax Matters.  (a)  Any sales
(including Goods and Services Tax), use, transfer, vehicle transfer, stamp,
conveyance, value added or other similar Taxes that may be imposed by any
Governmental Authority, and all recording or filing fees, notarial fees and
other similar costs of Closing with respect to the purchase and sale of the
Purchased Assets or on account of this Agreement or the transactions
contemplated hereby, will be borne by Sellers.

 

(b)           Sellers
will cause to be included in their income Tax Returns for all periods or
portions thereof ending on or before the Closing Date, all revenue and expense
relating to the operations of the Business during such periods or portions
thereof (including revenue attributable to the consummation of the transactions
contemplated hereby).  Sellers will
prepare and timely file or cause to be prepared and timely filed all such Tax
Returns with the appropriate Governmental Entities.  Seller will make all payments of Tax shown to
be due and owing in such Tax Returns.

 

(c)           Sellers
and Purchaser will (i) each provide the other with such assistance as may
reasonably be requested by any of them in connection with the preparation of
any Return, audit or other examination by any Taxing authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) each
retain and provide the other with any records or other information that may be
relevant to such Return, audit or examination, proceeding or determination, and
(iii) each provide the other with any final determination of any such
audit or examination, proceeding or determination that affects any amount
required to be shown on any Return of the other for any period.  In addition, Sellers will retain until the
applicable statutes of limitations (including any extensions) have expired
copies of all Tax Returns, supporting work schedules, and other records or
information that may be relevant to such Tax Returns for all Tax periods or
portions thereof ending on or before or which include the Closing Date and will
not destroy or otherwise dispose of any such records without first providing
Purchaser with a reasonable opportunity to review and copy the same.

 

33

 

ARTICLE VIII

 

SURVIVAL; INDEMNIFICATION

 

8.1           Survival.  The representations and warranties of the
parties contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith will survive the Closing
for twenty-four months; provided, however, that (i) the
representations and warranties contained in Section 5.1.9 (Tax Matters)
shall survive until 180 days after the expiration of the applicable statute of
limitations covered thereby (after giving effect to any waiver, mitigation or
extension thereof granted by Sellers) and (ii) the Selected Seller
Representations and Warranties will survive the Closing indefinitely.  Notwithstanding the immediately preceding
sentence, any representation or warranty in respect of which indemnity may be
sought under this Agreement will survive the time at which it would otherwise
terminate pursuant to the immediately preceding sentence if written notice of
the inaccuracy or breach thereof giving rise to such right of indemnity shall
have been given to the party against whom such indemnity may be sought prior to
such time; provided, however, that the applicable representation or warranty
will survive only with respect to the particular inaccuracy or breach specified
in such written notice.  All covenants
and agreements of the parties contained in this Agreement will survive the
Closing indefinitely.  The
representations and warranties will not be affected or reduced as a result of
any investigation or knowledge of Purchaser.

 

8.2           Indemnification.  (a)  Sellers will jointly and severally
indemnify, defend and hold harmless Purchaser and its officers, directors,
employees, affiliates, stockholders and agents, and the successors to the
foregoing (and their respective officers, directors, employees, affiliates,
stockholders and agents) against any and all liabilities, damages and losses,
including diminution in value of the Business to Purchaser, and, but only to
the extent asserted in a Third-Party Claim, punitive damages, and all costs or
expenses, including reasonable attorneys’ and consultants’ fees and expenses
incurred in respect of Third-Party Claims or claims between the parties hereto
(“Damages”), incurred or suffered as a result of or arising out of (i) the
failure of any representation or warranty made by Sellers in Article V to
be true and correct as of the date of this Agreement and as of the Closing Date
as if made anew at and as of the Closing Date, (ii) the breach of any
covenant or agreement made or to be performed by Sellers pursuant to this
Agreement or the Lease Agreement, (iii) any Retained Liabilities, and (iv) any
claims under any Bulk Transfer Laws, (v) any Environmental Claims or
Environmental Conditions which relate to the business of Sellers prior to the
Closing Date or the use or operation of the Purchased Assets prior to the
Closing Date, and (vi) personal injury, death or property damage arising
out of any product manufactured or sold by Sellers prior to the Closing Date.

 

(b)           Purchaser
will indemnify, defend and hold harmless each Seller and its respective
officers, directors, employees, affiliates, stockholders and agents and the
successors to the foregoing (and their respective officers, directors,
employees, affiliates, stockholders and agents) against Damages incurred or
suffered as a result of or arising out of (i) the failure of any
representation or warranty made by Purchaser in Article VI to be true and
correct as of the Closing Date, (ii) the breach of any covenant or
agreement made or to be performed by Purchaser pursuant to this Agreement, or (iii) any
Assumed Liabilities.

 

34

 

8.3           Procedures.  (a)  If any Person who or which is
entitled to seek indemnification under Section 8.2 (an “Indemnified
Party”) receives notice of the assertion or commencement of any Third-Party
Claim against such Indemnified Party with respect to which the Person against
whom or which such indemnification is being sought (an “Indemnifying Party”)
is obligated to provide indemnification under this Agreement, the Indemnified
Party will give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than 20 days after receipt of such written
notice of such Third-Party Claim.  Such
notice by the Indemnified Party will describe the Third-Party Claim in
reasonable detail, will include copies of all available material written
evidence thereof and will indicate the estimated amount, if reasonably
estimable, of the Damages that have been or may be sustained by the Indemnified
Party.  The Indemnifying Party will have
the right to participate in, or, by giving written notice to the Indemnified
Party, to assume, the defense of any Third-Party Claim at such Indemnifying
Party’s own expense and by such Indemnifying Party’s own counsel (which will be
reasonably satisfactory to the Indemnified Party), and the Indemnified Party
will cooperate in good faith in such defense.

 

(b)           If,
within 20 days after giving notice of a Third-Party Claim to an Indemnifying
Party pursuant to Section 8.3(a), an Indemnified Party receives written
notice from the Indemnifying Party that the Indemnifying Party has elected to
assume the defense of such Third-Party Claim as provided in the last sentence
of Section 8.3(a), the Indemnifying Party will not be liable for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof; provided, however, that if the Indemnifying
Party fails to take reasonable steps necessary to defend diligently such Third-Party
Claim within ten days after receiving written notice from the Indemnified Party
or if the Indemnified Party reasonably believes the Indemnifying Party has
failed to take such steps or if the Indemnifying Party has not undertaken fully
to indemnify the Indemnified Party in respect of all Damages relating to the
matter, the Indemnified Party may assume its own defense, and the Indemnifying
Party will be liable for all reasonable costs and expenses paid or incurred in
connection therewith; provided, however, that the Indemnifying
Party shall not be liable for the costs and expenses of more than one counsel
for all Indemnified Parties in any one jurisdiction.  Without the prior written consent of the
Indemnified Party, the Indemnifying Party will not enter into any settlement of
any Third-Party Claim which would lead to liability or create any financial or
other obligation on the part of the Indemnified Party for which the Indemnified
Party is not entitled to indemnification hereunder, or which provides for
injunctive or other non-monetary relief applicable to the Indemnified Party, or
does not include an unconditional release of all Indemnified Parties.  If a firm offer is made to settle a
Third-Party Claim without leading to liability or the creation of a financial
or other obligation on the part of the Indemnified Party for which the
Indemnified Party is not entitled to indemnification hereunder and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party will give written notice to the Indemnified Party to that effect.  If the Indemnified Party fails to consent to
such firm offer within ten days after its receipt of such notice, the
Indemnified Party may continue to contest or defend such Third-Party Claim and,
in such event, the maximum liability of the Indemnifying Party as to such
Third-Party Claim will not exceed the amount of such settlement offer.  The Indemnified Party will provide the
Indemnifying Party with reasonable access during 

 

35

 

normal business hours to books, records and employees of the
Indemnified Party necessary in connection with the Indemnifying Party’s defense
of any Third-Party Claim which is the subject of a claim for indemnification by
an Indemnified Party hereunder.

 

(c)           Any
claim by an Indemnified Party on account of Damages which does not result from
a Third-Party Claim (a “Direct Claim”) will be asserted by giving the
Indemnifying Party reasonably prompt written notice thereof, but in any event not
later than 20 days after the Indemnified Party becomes aware of such Direct
Claim.  Such notice by the Indemnified
Party will describe the Direct Claim in reasonable detail, will include copies
of all available material written evidence thereof and will indicate the
estimated amount, if reasonably practicable, of Damages that has been or may be
sustained by the Indemnified Party.  The
Indemnifying Party will have a period of 20 days within which to respond in
writing to such Direct Claim.  If the
Indemnifying Party does not so respond within such 20 day period, the
Indemnifying Party will be deemed to have rejected such claim, in which event
the Indemnified Party will be free to pursue such remedies as may be available
to the Indemnified Party on the terms and subject to the provisions of this
Agreement.

 

(d)           A
failure to give timely notice or to include any specified information in any
notice as provided in Section 8.3(a), 8.3(b) or 8.3(c) will not
affect the rights or obligations of any party hereunder, except and only to the
extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise materially prejudiced as a result
of such failure.

 

8.4           Payment
of Indemnification Payments.  All
indemnifiable Damages under this Agreement will be paid in cash in immediately
available funds unless otherwise satisfied by a retention of all or part of the
General Holdback Amount by Purchaser. 
All indemnifiable Damages payable by Sellers under this Article VIII
shall be net of amounts actually recovered by Purchaser or its Affiliates under
any insurance policy.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1           Notices.  All notices and other communications required
or permitted hereunder will be in writing and, unless otherwise provided in
this Agreement, will be deemed to have been duly given when delivered in person
or when dispatched by electronic facsimile transfer (receipt confirmed) or one
Business Day after having been dispatched by a nationally recognized overnight
courier service to the appropriate party at the address specified below:

 

(a)           If
to Purchaser to:

 

Key Energy Pressure Pumping Services, LLC

1301 McKinney Street, Suite 1800

Houston, Texas 77010

Facsimile:  (713) 651-4559

Attention:  General Counsel

 

36

 

with a copy to:

 

Porter & Hedges, L.L.P.

1000 Main Street, 36th Floor

Houston, Texas 77002

Facsimile:  (713) 228-1331

Attention:  William W. Wiggins, Jr.
and E. James Cowen

 

(b)           If
to Sellers, to:

 

Leader Energy Services Ltd.

210, 703 - 6 Avenue S.W. 

Calgary, AB T2P 0T9

Facsimile:  (403) 263-6789 

Attention:  Don Baird

 

with a copy to:

 

Macleod Dixon LLP

3700 Canterra Tower

400 Third Avenue SW

Calgary, AB T2P 4H2

Facsimile:  (403) 264-5973

Attention:  D. Richard Skeith

 

or to such other address or addresses as any such
party may from time to time designate as to itself by like notice.

 

9.2           Amendments
and Waivers.  (a)  Any provision
of this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.

 

(b)           No
failure or delay by any party in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies herein provided will be cumulative and not
exclusive of any rights or remedies provided by Law.

 

9.3           Expenses.  Whether or not the transactions contemplated
by this Agreement are consummated, except as otherwise expressly provided for
herein, the parties will pay or cause to be paid all of their own fees and
expenses incident to this Agreement and in preparing to consummate and in
consummating the transactions contemplated hereby, including the fees and
expenses of any broker, finder, financial 

 

37

 

advisor, investment
banker, legal advisor, accountant or similar person engaged by such party.

 

9.4           Successors
and Assigns.  The provisions of this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
No party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement (including any transfer by way of merger or
operation of law) without the consent of each other party hereto; provided,
however, that Purchaser may assign its rights and obligations under this
Agreement to a wholly-owned Affiliate of Purchaser, it being understood that
such assignment will not relieve Purchaser from its obligations hereunder.  Any assignment in violation of the preceding
sentence will be void ab  initio.

 

9.5           No
Third-Party Beneficiaries.  Except as
provided in Article VIII and Section 9.4, this Agreement is for the
sole benefit of the parties hereto and their permitted successors and assigns,
and nothing herein expressed or implied will give or be construed to give to
any Person, other than the parties hereto and such permitted successors and
assigns, any legal or equitable rights hereunder.

 

9.6           Governing
Law.  This Agreement will be governed
by, and construed in accordance with, the laws of the State of Texas,
regardless of the Laws that might otherwise govern under principles of conflict
of laws thereof.

 

9.7           Jurisdiction.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in the courts of the State of Texas, in Harris County, and the federal courts
in the Southern District of Texas.  Each
of the parties (i) consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding, (ii) irrevocably waives, to the fullest extent permitted by
Law, any objection which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in any such court or that any such
suit, action or proceeding which is brought in any such court has been brought
in an inconvenient forum, (iii) will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iv) will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any other court.  Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. 
Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 9.1 will be deemed effective service
of process on such party.

 

9.8           Counterparts.  This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.

 

38

 

9.9           Table
of Contents; Headings.  The table of
contents and headings in this Agreement are for convenience of reference only
and will not control or affect the meaning or construction of any provisions
hereof.

 

9.10         Entire
Agreement.  This Agreement (including
the Schedules and Exhibits hereto) and the Ancillary Agreements constitute the
entire agreement among the parties with respect to the subject matter of this
Agreement.  This Agreement (including the
Schedules and Exhibits hereto) and the Ancillary Agreements supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof of this Agreement.

 

9.11         Severability;
Injunctive Relief.  If any provision
of this Agreement or the application of any such provision to any Person or
circumstance is held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, the remainder of the provisions of this
Agreement (or the application of such provision in other jurisdictions or to
Persons or circumstances other than those to which it was held invalid, illegal
or unenforceable) will in no way be affected, impaired or invalidated, and to
the extent permitted by applicable Law, any such provision will be restricted
in applicability or reformed to the minimum extent required for such provision
to be enforceable.  This provision will
be interpreted and enforced to give effect to the original written intent of
the parties prior to the determination of such invalidity or unenforceability.

 

9.12         Arbitration.  Any dispute between the parties hereto with
respect to any claim for indemnification or otherwise arising under this
Agreement shall be resolved by binding arbitration in accordance with the
following provisions, provided, however, that either party may
seek injunctive relief or other equitable relief to preserve the status quo
pending arbitration.

 

(a)           Either
party to this Agreement may submit any dispute that is subject to arbitration
by giving written notice to the other party hereto.  Within 30 days after receipt of such notice
by such other party, the parties hereto shall mutually select an
arbitrator.  If the parties are unable to
agree upon such selection within such 30 days, then either party may, upon at
least five days prior written notice to the other party, request the American
Arbitration Association to appoint the arbitrator.  The American Arbitration Association may
thereupon appoint the arbitrator.  The
arbitrator shall be impartial and unrelated, directly or indirectly, so far as
rendering of services is concerned to either of the parties or any of their
respective Affiliates.  The arbitration
shall be conducted in Houston, Texas in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, as then in
effect, except as otherwise provided in this Section 9.12, and the
arbitrator shall be paid on an hourly basis, except as otherwise mutually
agreed.

 

(b)           The
arbitrator shall investigate the facts and may, in his or her discretion, hold
hearings, at which the parties hereto may present evidence and arguments, be
represented by counsel and conduct cross-examination.  The arbitrator shall render a written
decision on the matter presented as soon as practicable after his or her
appointment and in any event not more than 90 days after such appointment.  The decision of the arbitrator, which may
include equitable relief, shall be final and binding 

 

39

 

on the parties hereto, and judgment upon the decision may be entered in
any court having jurisdiction thereof. 
If the arbitrator shall fail to render a decision within such 90 day
period, either party may institute such action or proceeding in such court as
shall be appropriate in the circumstances and upon the institution of such
action, the arbitration proceeding shall be terminated and shall be of no
further force and effect.  The prevailing
party shall be awarded reasonable attorneys’ fees, expert and non-expert
witness costs and expenses incurred in connection with the arbitration, and the
fees and costs of the arbitrator shall be borne by the nonprevailing party
unless, in either case, the arbitrator for good cause determines
otherwise.  In resolving any dispute, the
arbitrator shall apply the provisions of this Agreement and applicable law,
without varying therefrom in any respect. 
The arbitrator shall not have the power to add to, modify or change any
of the provisions of this Agreement.

 

[Remainder of page intentionally left blank.]

 

40

 

The parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

 

	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  KEY ENERGY PRESSURE PUMPING 

  SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William M. Austin

  
	
   

  	
  Name:

  	
  William M. Austin

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
  SELLERS:

  
	
   

  	
   

  
	
   

  	
  LEADER ENERGY SERVICES LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rodney Hauser

  
	
   

  	
  Name:

  	
  R. Hauser

  
	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  LEADER ENERGY SERVICES USA LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rodney Hauser

  
	
   

  	
  Name:

  	
  R. Hauser

  
	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  CEMENTRITE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rodney Hauser

  
	
   

  	
  Name:

  	
  R. Hauser

  
	
   

  	
  Title: President & CEO

  
								

 

 

[Signature page to Asset
Purchase Agreement]Exhibit 10.1

 

June 30, 2008

 

Archie M. Brown, Jr.

2570 Mansitique Lakes Drive

Lebanon, Ohio 45036

 

Dear
Archie:

 

This
letter confirms our revised employment offer (“Offer”) for the position of
President and Chief Executive Officer of MainSource Financial Group, Inc. (“MainSource”)
based in Greensburg, Indiana.  A start date will be determined based on your
earliest availability and approved by MainSource’s Board of Directors.

 

The
terms of the Offer are as follows:

 

	
  Date
  of Hire:

  	
   

  	
  To be determined

  
	
   

  	
   

  	
   

  
	
  Job
  Title:

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Board
  Status:

  	
   

  	
  Member
  of Board of Directors of MainSource

  
	
   

  	
   

  	
   

  
	
  Employment
  Term:

  	
   

  	
  At-will

  
	
   

  	
   

  	
   

  
	
  Base
  Salary:

  	
   

  	
  $315,000.00 annually

  
	
   

  	
   

  	
   

  
	
  Bonus:

  	
   

  	
  Participation in Executive Bonus Program (70% potential)
  prorated for the remainder of 2008

  
	
   

  	
   

  	
   

  
	
  Relocation:

  	
   

  	
  $25,000.00
  relocation benefit payable at time of relocation to a permanent residence
  within 25 miles of MainSource’s headquarters, preferably in a county within
  MainSource’s footprint (Decatur, Rush, Shelby or Franklin), including for payment of closing costs on
  sale or purchase of home, plus payment of up to 6% of the commissions on the
  sale of your current house. Relocation to a
  permanent residence is anticipated to occur by June 30, 2009, after
  which time the relocation benefit is no longer available. You must repay the
  relocation benefit if you do not complete 12 months of service with
  MainSource as a result of your voluntary separation. MainSource will provide
  a temporary housing allowance of up to $1,000.00 per month through the
  earlier of June 30, 2009 or your purchase of a permanent residence. The
  Board, in its discretion, may permit a good faith extension of this
  relocation benefit if you have made a bona fide effort to market and sell
  your house and it has not sold at or just below its appraised value by
  June 30, 2009.

  
	
   

  	
   

  	
   

  
	
  Car:

  	
   

  	
  $40,000.00 benefit plus the value of any trade-in provided
  by MainSource, as approved by the Compensation Committee of the Board, toward
  the purchase of an automobile of your choice, to be traded at more than
  60,000 miles. Usual and customary operating costs will be paid by MainSource.
  You will be responsible for income taxes on any personal use.

  

 

 

	
  Stock Option:

  	
   

  	
  An incentive stock option to purchase 25,000 shares of
  MainSource’s stock will be granted to you at the fair market value of
  MainSource’s stock determined at the close of the market on the date you
  become a MainSource employee. The form of the stock option agreement is
  attached hereto.

  
	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
  Country Club membership fees will be paid subject to
  approval by the Board of Directors

  
	
   

  	
   

  	
   

  
	
  Review
  Schedule:

  	
   

  	
  Performance
  appraisals will be scheduled at 90 and 180 days and a salary review will be conducted by March 1, 2009.

  
	
   

  	
   

  	
   

  
	
  Benefits:

  	
   

  	
  Health &
  Dental insurance eligibility on the first day of the month which follows your
  initial 30 days of employment.

  
	
   

  	
   

  	
   

  
	
  Paid
  Time Off:

  	
   

  	
  316
  hours annually

  
	
   

  	
   

  	
   

  
	
  Change
  in Control

  	
   

  	
   

  
	
  Agreement:

  	
   

  	
  Standard
  Change in Control Agreement in the form attached hereto which generally
  provides for severance of 2.99 times your salary and bonus as well as
  continued health care coverage for a 12-month period following termination in
  the event you terminate employment for “good reason” or are terminated
  without “cause” following a “change in control.”

  

 

During
your first day of employment, you will need to complete benefits enrollment
forms.  Please bring your social security
card, your driver’s license, license plate number, social security numbers and
dates of birth for anyone you will be placing on our health insurance or
designating as a beneficiary, the name of your current health plan carrier and
effective date(s) of the coverage(s).

 

You
are eligible to make elective pre-tax deferrals into MainSource’s 401(k) and
employee stock ownership plan (“Plan”) beginning on your first payroll.  You also will be eligible to participate in MainSource’s match program after you have met
the eligibility requirements of completing one year and 1,000 hours of
service.  Our Plan offers participant
directed investment elections, daily valuation and voice and web response
systems.  Sales incentives and bonus
payments are disregarded for purposes of calculating the amount of MainSource’s
matching and profit sharing contributions. 
MainSource currently matches $.80 for every dollar you defer into the
Plan (up to maximum of 8% salary deferral) which match may be made in the form
of cash or stock.  The Plan will be
explained in detail during orientation and you will receive an enrollment
packet and Summary Plan Description at that time.  You also will receive an employee handbook
containing detailed information regarding all benefits and policies.

 

This Offer is contingent
upon you providing MainSource with a written acknowledgement, in a form
acceptable to MainSource, that your current employer, Integra Bank Corporation
(“Integra”), will not pursue either you or MainSource for violating any
non-competition obligations you may owe to Integra.  Further, this Offer as well as your
employment at MainSource are contingent upon you being able to perform your
duties at MainSource without violating any other restrictive covenant,
including but not limited to non-solicitation

 

 

of Integra’s customers and
employees, non-interference with Integra’s contractors and vendors, and non-disclosure
of Integra’s trade secrets and other protected information, to which you are
obligated during the two (2) years after you terminate employment with
Integra.

 

This
Offer also is conditional upon a satisfactory security investigation.   Your signature below constitutes acceptance
of this Offer and the stated terms and conditions.  This Offer is conditioned upon your written
acceptance and the return of this Offer letter to Human Resources by July 3, 2008.

 

Archie,
we welcome you and Sharon into the MainSource family and look forward to
working with you at MainSource Financial Group!

 

Sincerely,

 

 

Robert
E. Hoptry

Board
Chairman and Chief Executive Officer

 

 

	
  /s/
  Robert E. Hoptry

  	
   

  	
  June 30,
  2008

  
	
  Signature

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  cc:
  Personnel File

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