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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated as of September
30, 2000, between AMBAR DRILLING FLUIDS LP, LLLP, a Delaware registered limited
liability limited partnership ("Purchaser"), an indirect wholly-owned subsidiary
of ▇▇▇▇▇▇▇▇▇ ENERGY, INC., a Delaware corporation ("PEC"), and AMBAR, INC., a
Delaware corporation ("Seller").
WITNESSETH:
WHEREAS, Seller, through its Fluid Services Division, is engaged in the
business of providing drilling and completion fluids to Gulf of Mexico and Gulf
Coast regional oil and gas producers and is operated out of the locations
described on Schedule A (the "Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the assets relating to the Business, and in connection
therewith and as additional consideration therefor, Purchaser is willing to
assume certain liabilities of Seller, all upon the terms and subject to the
conditions set forth in this Agreement (the purchase of such assets and the
assumption of such liabilities herein referred to as the "Transaction");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
Sale and Purchase of Assets
1.1 Assets to Be Sold. Upon the terms and subject to the conditions of
this Agreement, Seller will sell, assign, transfer, convey and deliver to
Purchaser and Purchaser will purchase from Seller all right, title and interest
of Seller in and to all assets of Seller used in the Business and owned by the
Seller on the Effective Time including, but not limited to, the following assets
of Seller (collectively, the "Purchased Assets") with such additions or
deletions in the ordinary course of business and as permitted by this Agreement
between the Effective Time or the date indicated on such schedule, whichever is
earlier, and the Closing Date:
(a) the machinery, equipment, parts and vehicles used in the
Business and listed on Schedule 1.1(a) attached hereto;
(b) the automobiles, trucks and other vehicles and rolling
stock used in the transportation segment of the Business and listed on
Schedule 1.1(b) attached hereto;
(c) the leasehold interests in the facility leases listed on
Schedule 1.1(c) attached hereto (collectively, the "Real Estate
Leases"), subject to the lease agreement(s) relating thereto;
(d) the leasehold improvements listed on Schedule 1.1(d)
attached hereto;
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(e) the intellectual property used in connection with or
relating to the Business (collectively, the "Intellectual Property")
including, without limitation, those items listed on Schedule 1.1(e)
attached hereto and the following:
(i) all trade names used by Seller in connection with
the Business and all registrations therefor;
(ii) all trademarks and service marks listed on
Schedule 1.1(e)(ii) used by Seller in connection with the
Business and all worldwide registrations therefor, together
with all goodwill associated therewith, the same to be held
and enjoyed by Purchaser for its own use, and for its
successors and assigns, as fully and entirely as the same
would have been held by Seller, their successors and assigns,
had a sale not have been made; and all claims for damages by
reason of past infringement of said trademarks and service
marks, with the right to ▇▇▇ for and collect the same for
Purchaser's own use and benefit and for the use by and on
behalf of its successors, assigns, or other legal
representatives; so long as it does not incur any additional
cost, Seller agrees to cooperate with Purchaser to cause the
recordation of the assignment of said trademarks and service
marks with the appropriate governmental authorities and to do
or cause to be done all other things or acts necessary for
Purchaser to enjoy the full benefits of the assignment of said
trademarks and service marks;
(iii) all domain name registrations held by Seller in
connection with the Business listed on Schedule 1.1(e)(iii);
so long as it does not incur any additional cost, Seller
agrees to cooperate with Purchaser to cause the assignment of
said domain name registrations with the relevant registrars
and to do or cause to be done all other things or acts
necessary for Purchaser to enjoy the full benefits of the
assignment of said domain names;
(iv) all copyrights held by Seller in connection with
the Business and all registrations therefor, including,
without limitation, the copyrights for all marketing materials
and sales materials used or created in connection with the
Business, whether such materials are fixed in traditional or
electronic formats;
(v) any and all worldwide patents and patent
applications owned by Seller in connection with the Business;
notwithstanding the foregoing, Seller represents that it owns
no such patents or patent applications;
(vi) all proprietary information and trade secrets
(e.g., information excluding Corporate Information, formulas,
patterns, compilations, program devices, methods, techniques
or processes) used or created in connection with the Business;
and
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(vii) all telephone numbers used in connection with
and generated from the Business and all telephone book and
directory listings therefor listed on Schedule 1.1(e)(vii),
and excluding ▇▇▇▇▇ Telephone Numbers.
(f) the inventory used in the Business and listed on Schedule
1.1(f) attached hereto;
(g) the accounts receivable (including those for work
completed at the Effective Time, but not billed) listed on Schedule
1.1(g) attached hereto and all accounts receivable generated after the
date of such schedule (collectively the "Accounts Receivable");
(h) to the extent assignable by Seller, the outstanding
contracts, pricing agreements, master service agreements, vendor/supply
agreements and purchase orders generated from the Business and listed
on Schedule 1.1(h) attached hereto and any and all ancillary schedules
and agreements thereto (collectively, the "Contracts");
(i) the real property listed on Schedule 1.1(i) attached
hereto, together with all buildings and improvements thereon, and all
rights of Seller in any easements, rights-of-way, privileges, licenses
or other interests related thereto (collectively, the "Real Property"),
subject to the Permitted Encumbrances as defined in Section 3.3 herein;
(j) to the extent assignable by Seller, the leasehold
interests in the equipment and vehicle leases (the "Personal Property
Leases") used in the Business and listed on Schedule1.1(j) attached
hereto;
(k) the prepaid accounts and prepaid expenses relating to the
Business and listed on Schedule 1.1(k) attached hereto;
(l) the rights of Seller in any outstanding warranties of
contractors, subcontractors, maintenance and servicing companies
relating to the repair, maintenance, servicing or renovation of the
Purchased Assets (the "Warranties");
(m) all office furniture located at Two Greenspoint Plaza,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, excluding ▇▇▇▇▇
Office Furniture (to be picked-up on or before October 25, 2000);
(n) all software, including without limitation, software and
programs utilized by Seller for accounting functions and related
computer hardware, specifically Seller's AS400 hardware and related
components; and
(o) all accounting records and supporting documentation
located at the locations described in Schedule A plus records in the
Houston corporate office for Accounts Receivable, Inventory, Prepaid
Fixed Assets, Accounts Payable and Accruals whether kept electronically
or otherwise.
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1.2 Excluded Assets. The Purchased Assets shall exclude the following
assets of the Seller (collectively, the "Excluded Assets"):
(a) all of Seller's right, title and interest in and to
properties and assets other than the Purchased Assets;
(b) all insurance policies and contracts maintained by Seller
with respect to the Business and the Purchased Assets and all rights,
claims and causes of action under such insurance policies and
contracts;
(c) all claims and causes of action relating to the Purchased
Assets or the Business and arising before the Effective Time, except
for claims and causes of action arising out of the Accounts Receivable
and the Warranties;
(d) the assets of any of Seller's employee benefit and medical
plans;
(e) the assets listed on Schedule 1.2(e) attached hereto;
(f) all cash, cash equivalents and bank accounts of Seller;
(g) all general corporate information, including without
limitation, information relating to all financial information not
included in Section 1.1(o), taxes, corporate records, books and
ledgers, lawsuits, employee files and other corporate matters
(collectively, the "Corporate Information");
(h) the telephone numbers listed on Schedule 1.2(h) attached
hereto (the "▇▇▇▇▇ Telephone Numbers");
(i) the office furniture listed on Schedule 1.2(i) (the "▇▇▇▇▇
Office Furniture").
ARTICLE II
Liabilities
2.1 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall assume and shall agree to pay,
perform and discharge the following liabilities (all such liabilities being the
"Assumed Liabilities") of the Business; however, the term "Assumed Liabilities"
expressly excludes any avoided or avoidable preferential transfer(s) as that
term is defined in the bankruptcy code, and Purchaser shall not have any
liability or obligation therefor:
(a) Purchaser agrees to make a one-time payment to the
holder(s) of the accounts payable and accrued liabilities to the extent
and in the amounts reflected on Schedule 2.1(a) attached hereto
(collectively, the "Accounts Payable");
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(b) provided that the rights thereunder have been duly and
effectively assigned to Purchaser, all obligations and liabilities of
Seller arising out of, accruing or resulting from performance
subsequent to the Closing Date under the Real Estate Leases listed in
Schedule 1.1(c) attached hereto, and all obligations and liabilities of
Seller arising in the ordinary course of business from the Effective
Time through the Closing Date, arising out of or resulting from
Seller's performance under the Real Estate Leases listed on Schedule
1.1(c) attached hereto;
(c) provided that the rights thereunder have been duly and
effectively assigned to Purchaser, all obligations and liabilities of
Seller arising out of, accruing or resulting from performance
subsequent to the Closing Date under the Personal Property Leases
listed in Schedule 1.1(j) attached hereto, and all obligations and
liabilities of Seller arising in the ordinary course of business from
the Effective Time through the Closing Date, arising out of or
resulting from Seller's performance under the Personal Property Leases
listed on Schedule 1.1(j) attached hereto;
(d) provided that the rights thereunder have been duly and
effectively assigned to Purchaser, all obligations and liabilities of
Seller arising out of, accruing or resulting from performance
subsequent to the Closing Date under the Contracts listed in Schedule
1.1(h) attached hereto, and all obligations and liabilities of Seller
arising in the ordinary course of business from the Effective Time
through the Closing Date, arising out of or resulting from Seller's
performance under the Contracts listed on Schedule 1.1(h) attached
hereto;
(e) all obligations and liabilities relating to the ownership
or operation of the Purchased Assets or the conduct of the Business
arising out of, accruing or resulting from an event, act or occurrence
occurring after the Closing Date, including without limitation, real
and personal property taxes; and all obligations and liabilities of
Seller relating to the ownership or operation of the Purchased Assets
in the ordinary course of business or the conduct of the Business
arising out of or resulting from an event, act or occurrence arising in
the ordinary course of business from the Effective Time through the
Closing Date; and
(f) Seller's obligation to such employees for accrued vacation
as listed on Schedule 2.1(f), provided that an employee accepts an
offer of employment extended by Purchaser and provided further, that
such employee begins such employment.
2.2 Excluded Liabilities. Purchaser is not assuming any liability of
Seller, other than the Assumed Liabilities, including without limitation the
following (the "Excluded Liabilities"):
(a) all obligations and liabilities of Seller arising out of
or resulting from performance under the Real Estate Leases, the
Personal Property Leases and the Contracts prior to the Effective Time,
and all obligations and liabilities of Seller not arising in the
ordinary course of business arising out of or resulting from
performance under the Real Estate Leases, the Personal Property Leases
and the Contracts from the Effective Time through the Closing Date;
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(b) all obligations and liabilities relating to the ownership
or operation of the Purchased Assets or the conduct of the Business
arising out of or resulting from an event, act or occurrence before the
Effective Time, and all obligations and liabilities relating to the
ownership or operation of the Purchased Assets or the conduct of the
Business arising out of or resulting from an event, act or occurrence
not arising in the ordinary course of business from the Effective Time
through the Closing Date; and
(c) any Taxes (defined herein) accruing or accrued on or
before the Effective Time.
(d) all Seller's obligations for accrued vacation to any
employees not listed on Schedule 2.1(f) or who are so listed but
decline to accept employment with Purchaser or who fail to begin such
employment after the Closing.
ARTICLE III
Title to the Real Property
3.1 Commitment for Title Insurance. Within five days before the Closing
Date, ▇▇▇▇▇▇▇ Title Company (the "Title Company") shall have delivered to
Purchaser and Seller title commitments (the "Title Commitments") covering the
Real Property and showing all matters affecting title to same, and binding the
Title Company to issue to Purchaser at Closing an owner's policy of title
insurance for each of the Real Properties in the amounts designated by
Purchaser. One-half of the cost of obtaining the Title Commitments shall be
borne by the Seller and the other half of such cost shall be borne by the
Purchaser. In no event shall Seller's portion of such cost exceed $5,000.00.
3.2 Title Review Period. Purchaser shall have three (3) business days
(the "Title Review Period") after the receipt of the Title Commitments for each
of the Real Properties, and copies of all instruments referred to therein, to
notify Seller, in writing, of such objections as Purchaser may have to anything
contained in the Title Commitment; provided, however, that Purchaser shall not
be entitled to object to any Permitted Exception described in paragraphs (a)
through (c) of Section 3.3 hereof. In the event Purchaser shall notify Seller of
objections to title prior to the expiration of the Title Review Period, Seller
shall have five (5) days after receipt of notification of such objections (the
"Cure Period"), within which Seller may, but shall not be obligated to cure or
remove such objections. If Seller fails either to cure or remove such objections
to the reasonable satisfaction of the Title Company prior to the expiration of
the Cure Period, Purchaser shall have two (2) days after the earlier of the
expiration of the Cure Period or written notice from Seller stating Seller will
not cure such objections (the "Election Period") in which either to terminate
this Agreement by written notice to Seller or to waive such objections and
accept such title as Seller is able to convey without any reduction in the
Purchase Price. Failure of Purchaser to send written notice of the election
available to it pursuant to the preceding sentence on or before the expiration
of the Election Period shall be deemed an election by Purchaser to waive its
objections and accept such title as Seller is able to convey without any
reduction in the Purchase Price. Any item contained in the Title Commitment to
which
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Purchaser does not object during the Title Review Period, or waives its
objections, shall be deemed a Permitted Exception.
3.3 Title Conveyed Subject to Certain Matters. Notwithstanding anything
contained herein to the contrary, the Real Property shall be conveyed subject to
the following matters, which shall be deemed to be permitted exceptions to title
(the "Permitted Encumbrances"):
(a) Building restrictions and zoning regulations heretofore or
hereafter adopted by any municipal or other public authority relating
to the Real Property, or other regulations or laws, if any, now or
hereafter in effect with respect to the Real Property;
(b) Rights, if any, relating to the construction and
maintenance, in connection with any public utility of wires, poles,
pipes, conduits and appurtenances thereto, on, under or across the
premises; and any consents prior to the date hereof by Seller or any
former owner of the premises in connection with any public utility for
the erection of any structure or structures on, under or above any
street or streets on which the premises may abut;
(c) All liens for real estate taxes on the Real Property for
the year 2000 which are not yet due and payable at the time of Closing;
and
(d) Any matters reflected on the Title Commitment and not
objected to by Purchaser in accordance with Section 3.2 hereof.
ARTICLE IV
Closing
4.1 Closing. The sale and purchase of the Purchased Assets contemplated
by this Agreement shall take place at a closing (the "Closing") in the offices
of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at
1:00 P.M. Central Standard time on the second business day following the day on
which the last conditions set forth in Article X hereof shall have been
fulfilled or waived or at such other time and place as Purchaser and Seller
shall agree (the "Closing Date"), and shall be deemed to be effective August 31,
2000, at 11:59 p.m. (such time being the "Effective Time").
4.2 Purchase Consideration. The consideration payable by Purchaser to
Seller for the Purchased Assets shall be $15.6 million to reflect the fair
market value as of the Effective Date as adjusted pursuant to Section 4.3 and as
additional consideration the Assumed Liabilities pursuant to the terms set forth
herein. (the Consideration").
4.3 Working Capital Adjustment. At Closing Seller shall credit
Purchaser $4,038,000 as an estimated working capital adjustment from August 31
until Closing (the "Estimated Adjustment"). Within ten (10) business days of
Closing Date, the Seller will present a profit and loss statement and closing
balance sheet which record the fluids division accounting activity from August
31 until closing. These reports will be used to calculate an actual Closing
accounting adjustment (the "Calculation"). The Calculation shall be equal to:
(a) Seller's
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EBITA (determined consistent with the past practice of June, July and August of
2000) for the period August 31 to closing; (b) minus a fixed expense charge for
September of $125,000.00; and (c) plus a decrease in working capital at Closing
versus August 31. Working capital at Closing will be equal to accounts
receivable plus inventory plus prepaid expenses minus accounts payable minus
accrued expenses each determined consistent with the past practice of July, 2000
and August, 2000. Working capital at August 31 is calculated in Exhibit A. The
Calculation less the Estimated Adjustment shall equal the final adjustment (the
"Final Adjustment'). A positive Final Adjustment is payable to Purchaser by
Seller and a negative Final Adjustment is payable to Seller by Purchaser.
Purchaser will have five (5) business days to review the Final Adjustment and to
note its agreement or adjustment. Whichever party owes the other based on the
Final Adjustment will make such payment within five (5) business days
thereafter. In the event of a dispute regarding the Final Adjustment, the
parties will endeavor to resolve the dispute themselves. If the dispute
continues, the parties will jointly select a third party to review the Final
Adjustment and to present their findings which will be binding on the parties.
ARTICLE V
Seller's Representations and Warranties
In order to induce Purchaser to enter into this Agreement, Seller
hereby warrants and represents to Purchaser as follows:
5.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to enter into this Agreement and the
Ancillary Agreements, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. Seller is in
good standing and qualified to conduct business in the states of Texas and
Louisiana. The Business is owned and operated directly by Seller.
5.2 Authority; Non-Contravention. The execution and delivery of this
Agreement by Seller, the performance by Seller of its obligations hereunder and
the consummation by Seller of the transactions contemplated hereby have been
duly authorized by all requisite action on the part of Seller and its
shareholders. No filing or registration with, or authorization, consent or
approval of, any Governmental Entity (defined below) is required by or with
respect to Seller in connection with the execution and delivery of this
Agreement by Seller or is necessary for the consummation by Seller of the
Transaction, except for such filings and approvals as may be required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 (the "Improvements Act").
For purposes of this Agreement, "Government Entity" means any domestic (federal
and state), foreign or supranational court, commission, governmental body,
regulatory agency, authority or tribunal.
5.3 Binding Agreement. This Agreement has been, and upon their
execution the Ancillary Agreements will be, duly executed and delivered by
Seller, and this Agreement constitutes legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
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5.4 No Violation. Except as set forth on Schedule 5.4, neither the
execution and delivery by Seller of this Agreement nor the performance by Seller
of its obligations hereunder and thereunder nor the consummation of the
Transaction will (a) violate or breach the terms of or cause a default under (i)
any law, regulation or order of any governmental authority applicable to Seller,
(ii) the articles of incorporation or bylaws of Seller, or (iii) any contract or
agreement to which Seller is a party or by which it or any of its properties or
assets is bound; or (b) with the passage of time, the giving of notice or the
taking of any action by a third person, have any of the effects set forth in
clause (a) of this Section, except in any such case for any matters described in
this Section (other than clause (ii) hereof) that could not reasonably be
expected to have a Material Adverse Effect on Seller. For purposes of this
Agreement, "Material Adverse Change" or "Material Adverse Effect" means any
change or effect that is or, so far as can reasonably be determined, likely to
be materially adverse to the assets, properties, condition (financial or
otherwise), business or results of operations of its subsidiaries taken as a
whole of Seller or Purchaser, as the case may be.
5.5 Labor Matters. (i) Seller is not a party to any collective
bargaining agreement or other material contract or agreement with any labor
organization or other representative of employees nor is any such contract being
negotiated; (ii) there is no material unfair labor practice charge or complaint
pending nor, to the knowledge of Seller, threatened with regard to employees of
Seller; (iii) there is no labor strike, material slowdown, material work
stoppage or other material labor controversy in effect, or, to the knowledge (as
hereinafter defined) of Seller, threatened against Seller; (iv) as of the date
hereof, no representation question exists nor, to the knowledge of Seller, are
there any campaigns being conducted to solicit cards from the employees of
Seller to authorize representation by a labor organization; and (v) Seller is
not party to, or is not otherwise bound by, any consent decree with any
governmental authority relating to employees or employment practices of Seller.
For purposes of this Agreement, the term "knowledge" when used in relation to
Seller means, with respect to any matter, the actual knowledge of the executive
officers listed on Schedule 5.5 attached hereto ("Executive Officers"), after
due and diligent inquiry of the individuals who are reasonably believed to have
knowledge of such matter
5.6 Legal Proceedings. Except as set forth in Schedule 5.6 as of the
date thereof, there is no litigation at law or in equity, no arbitration
proceeding and no proceeding or investigation before or by any commission,
agency or other administrative or regulatory body or authority pending, or to
the knowledge of Seller, threatened against and affecting the Business or the
Purchased Assets or challenging the validity or propriety of the Transaction.
Seller has no knowledge of any basis for any such litigation, proceeding or
investigation.
5.7 Title to Purchased Assets. Seller has or will have at Closing good
and marketable title to and possession of the Purchased Assets, free and clear
of all Liens except for Permitted Encumbrances in the case of the Real Property,
for the encumbrances described in Sections 3.3(a), (b) and (c) hereof in the
case of the Real Estate Leases, and for any other encumbrances listed on
Schedule 5.7 hereto. For purposes of this Agreement, "Liens" mean liens,
mortgages, deeds of trust, pledges, security interests, encumbrances, claims or
charges of any kind.
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5.8 No Material Adverse Change. Except as set forth in Schedule 5.8,
there has not been any loss, destruction, cancellation, revocation or
termination outside the normal course of business including normal wear and
tear, of any of the Purchase Assets listed on the Schedules attached hereto
which would cause a Material Adverse Change to the Business since the Effective
Time.
5.9 Accounts Receivable. Set forth in Schedule 5.9 is a complete and
accurate description of the Accounts Receivable of Seller as of the Effective
Time relating to the Business as reflected in Schedule 1.1(g), together with an
accurate aging of those accounts. Except as set forth in Schedule 5.9, Seller
has no knowledge that such accounts or any accounts receivable of Seller since
that date are not collectible in full.
5.10 Purchased Assets. The Schedules referenced in Section 1.1 contain
a complete listing and scheduling in all material respects of all of the assets,
contracts, etc. owned or used by Seller in the Business at the Effective Time.
There has been no material change in the items contained on such schedules since
that date other than the items listed in Schedules 1.1(f), 1.1(g) and 1.1(h).
5.11 No Defaults. Except as set forth in Schedule 5.11, Seller is not
in default in any material obligation or covenant on its part to be performed
under any Real Estate Lease, Contract, or Personal Property Lease and to the
knowledge of Seller, no breach, default or condition (which condition, with
notice or the passage of time or both, could become a breach or a default, or
result in termination) exists with respect to any such Real Estate Lease,
Contract, or Personal Property Lease.
5.12 Records. The minute books of Seller are complete and correct in
all material respects, and record all transactions required to be set forth
concerning all proceedings, consents, actions and meetings of the stockholders
and the Board of Directors of Seller.
5.13 Environmental Matters.
(a) Except as set forth in Schedule 5.13 and except to the
extent that the inaccuracy of any of the following, individually or in
the aggregate, would not have a Material Adverse Effect on Seller,
Seller has no knowledge that:
(i) Seller has not held or has not complied with and
has not been in compliance with for the last three years, all
Environmental Permits, and is not otherwise in substantial
compliance and has not been in substantial compliance for the
last three years with, all applicable Environmental Laws and
there is any condition that is reasonably likely to prevent or
materially interfere prior to the Effective Time with
compliance by Seller with Environmental Laws;
(ii) any modification, revocation, reissuance,
alteration, transfer or amendment of any Environmental Permit,
or any review by, or approval of, any third party of any
Environmental Permit required in connection with the execution
or delivery of this Agreement or the consummation by Seller of
the Transactions or the operation of the Business on the date
of the Closing;
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(iii) Seller has received any Environmental Claim in
respect of the Business, or that any Environmental Claim has
been threatened against Seller in respect of the Business;
(iv) there are any circumstances that are reasonably
likely to give rise to liability under any agreements with any
person pursuant to which Seller would be required to defend,
indemnify, hold harmless, or otherwise be responsible for any
violation by or other liability or expense of such person, or
alleged violation by or other liability or expense of such
person, arising out of any Environmental Law; or
(v) there are any other current circumstances or
conditions in effect that are reasonably likely to give rise
to liability of Seller in respect of the Business under any
Environmental Laws.
(b) For purposes of this Agreement, the terms below shall have
the following meanings:
"Environmental Claim" means any written complaint, notice,
claim, demand, action, suit or judicial, administrative or
arbitral proceeding by any person to Seller asserting
liability or potential liability (including without
limitation, liability or potential liability for investigatory
costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or
penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Materials at any location,
(ii) circumstances forming the basis of any violation or
alleged violation of any Environmental Laws or Environmental
Permits, or (iii) otherwise relating to obligations or
liabilities of Seller under any Environmental Law.
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental
authorizations required under Environmental Laws for Seller to
conduct the operations of the Business as presently conducted.
"Environmental Laws" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances,
orders, decrees and common law relating in any manner to
pollution or protection of the environment, to the extent and
in the form that such exist at the date hereof.
5.14 No Environmental Representations. Except as expressly provided
herein, Seller has not, does not and will not make any representations or
warranties with regard to compliance with any environmental protection,
pollution or land use or other environmental laws, rules, regulations, orders or
requirements including, but not limited to, those pertaining to the handling,
generating, treating, storing or disposing of any hazardous waste or substance.
5.15 Employees. There are not more than approximately 190 employees
employed in the Business.
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5.16 Disclaimer of Other Representations and Warranties. Except as
expressly provided in this Agreement or the Ancillary Agreements, to the maximum
extent permitted by law, Purchaser is purchasing the Purchased Assets in "as is"
condition "with all faults" and specifically and expressly without any
warranties, representations or guarantees of any kind, oral or written, express
or implied, from or on behalf of Seller concerning the Purchased Assets.
Except as expressly provided herein, and to the maximum extent
permitted by law, Seller has not, does not and will not make any
representations, warranties or guaranties, of any kind, oral or written, express
or implied, concerning the Purchased Assets, including, without limitation (i)
the condition, merchantability, habitability or profitability thereof, (ii) the
suitability or fitness for a particular use or purpose of the Purchased Assets,
and (iii) the collectability or enforcement of any of the accounts receivable.
5.17 Taxes.
(a) Seller has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by Seller (whether or not shown on any tax return) have
been paid. Seller currently is the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Seller does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
Liens on any of the assets of Seller that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(c) Seller does not expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax liability of Seller
either (A) claimed or raised by any authority in writing or (B) as to
which any the Seller's stockholders and the directors and officers (and
employees responsible for Tax matters) of Seller has knowledge based
upon personal contact with any agent of such authority. Schedule 5.17
lists all federal, state, local, and foreign income Tax Returns that
have been audited, and indicates those Tax Returns that currently are
the subject of audit. Seller has delivered to Purchaser correct and
complete copies of all federal income Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by Seller
since December 31, 1994.
(d) Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(e) The unpaid Taxes of Seller (A) did not, as of the most
recent fiscal month end, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the
most recent balance sheet (rather than in any notes thereto) and (B) do
not
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exceed that reserve as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of Seller
in filing its Tax Returns.
(f) None of the Assumed Liabilities is an obligation to make a
payment that will not be deductible under Code Section 280G. Seller has
disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662. Seller is not a party to
any Tax allocation or sharing agreement. Seller (A) has not been a
member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which is Seller) or (B)
has any Liability for the Taxes of any Person (other than Seller) under
Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(g) For purposes of this Agreement, (a) "Code" means the
Internal Revenue Code of 1986, as amended, (b) "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means any federal, state,
local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or
added minimum, ad valorem, transfer, severance or excise tax, or any
other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty,
imposed by any governmental authority, and (c) "Tax Return" means any
return, report or similar statement required to be filed with respect
to any Tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
ARTICLE VI
Purchaser's Representations and Warranties
In order to induce Seller to enter into this Agreement, Purchaser
hereby warrants and represents to Seller as follows:
6.1 Organization. Purchaser is a registered limited liability limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary power and authority to enter into
this Agreement and the Ancillary Agreements, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Purchaser is in good standing and qualified to conduct business in
the states of Texas and Louisiana.
6.2 Authority; Non-Contravention. The execution and delivery of this
Agreement and the Ancillary Agreements by Purchaser, the performance by
Purchaser of its obligations hereunder and thereunder and the consummation by
Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of Purchaser. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Purchaser in connection with the
execution and delivery of this Agreement by Purchaser or is necessary for the
consummation by Purchaser of the Transaction, except for such filings and
approvals as may be required under the Improvements Act.
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6.3 Binding Agreement. This Agreement has been duly executed and
delivered by Purchaser, and this Agreement constitutes legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with its
respective terms.
6.4 No Violation. Neither the execution and delivery by Purchaser of
this Agreement nor the performance by Purchaser of its obligations hereunder and
thereunder nor the consummation of the Transaction will (a) violate or breach
the terms of or cause a default under (i) any law, regulation or order of any
governmental authority applicable to Purchaser, (ii) the charter documents of
Purchaser, or (iii) any contract or agreement to which Purchaser is a party or
by which it or any of its properties or assets is bound; or (b) with the passage
of time, the giving of notice or the taking of any action by a third person,
have any of the effects set forth in clause (a) of this Section, except in any
such case for any matters described in this Section (other than clause (ii)
hereof) that could not reasonably be expected to have a Material Adverse Effect
on Purchaser.
6.5 Financial Wherewithal. Purchaser is financially capable and
properly capitalized to meet the obligations required by Purchaser in this
Agreement, including without limitation, the assumption of the Assumed
Liabilities.
ARTICLE VII
Mutual Representations, Warranties and Covenants
7.1 Cooperation and Assistance. Each party hereto shall use
commercially reasonable efforts to assist the other party in connection with
matters relating to the Purchased Assets and the Business at any time after the
Closing, including without limitation matters regarding work completed but not
billed as of the Effective Time, by making available all books and records
relating to and all employees having knowledge of the matters concerned, and
assisting with the transfer of any deposits or prepaid amounts; provided,
however, that the out-of-pocket costs for such assistance shall be paid by the
requesting party.
7.2 Correspondence and Payment. Seller shall remit to Purchaser
immediately following receipt thereof any correspondence in respect of or
relating to the Purchased Assets, the Assumed Liabilities or the Business.
Purchaser shall remit to Seller promptly following receipt thereof any
correspondence in respect of or relating to the Excluded Assets or the Excluded
Liabilities. On and after the Closing, (i) Seller shall remit or cause to be
remitted to Purchaser immediately following receipt thereof any payments in
respect of or relating to the Purchased Assets or the Assumed Liabilities,
including without limitation, payments of any Accounts Receivable; and (ii)
Purchaser shall remit or cause to be remitted to Seller promptly following
receipt thereof any payments in respect of or relating to the Excluded Assets or
the Excluded Liabilities.
7.3 Expenses. Each party hereto shall pay its own costs, expenses and
attorneys' fees (including, without limitation, the fees and expenses of any
broker, finder, investment advisor, investment banker or other professional
advisor) incurred in connection with the preparation, negotiation and delivery
of this Agreement, the Ancillary Agreements and the consummation of
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the transactions contemplated hereunder. Seller shall be exclusively responsible
for paying the fees and expenses of The PWS Group, Inc.
7.4 Brokers. Seller and Purchaser hereby represent and warrant each to
the other that neither has contacted or dealt with any broker, agent, dealer,
finder or other party in connection with this transaction, by whom any
brokerage, commission or other fees may be claimed, asserted, due or payable
with respect to the transaction contemplated by this Agreement, except with
respect to the Seller's agreement with the PWS Group, Inc.
7.5 Public Announcements. Before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement, Purchaser and Seller will consult each other, and will undertake
reasonable efforts to agree upon the terms of such press release, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law or by obligations
pursuant to any listing agreement with the Nasdaq National Market.
7.6 Taxes. Except as provided in Section 7.8, Seller agrees to pay any
and all Taxes due with respect to the Transaction.
7.7 Assessments and Other Charges. Seller and Purchaser agree that all
accrued and accruing rents, water and service charges, special assessments and
common interest charges relating to the Real Estate Leases not otherwise
accounted for in the Accrued Liabilities shall be prorated between Seller and
Purchaser to the Effective Time.
7.8 Personal Property Taxes. Seller and Purchaser agree that general
personal property taxes based on the notices of proposed assessment for ad
valorem taxes for the year of Closing not otherwise accounted for in the Accrued
Liabilities shall be prorated between Seller and Purchaser to the Effective
Time. If such notices of proposed assessment are not available at the time of
Closing, the parties hereby agree that the proration of such personal property
taxes, based on such notices of proposed assessment, shall be made promptly upon
receipt of such notices. Such prorations shall be final.
7.9 Access to Information.
(a) Seller shall afford to Purchaser, and to Purchaser's
accountants, counsel, financial advisers and other representatives,
reasonable access and permit them to make such inspections as they may
reasonably require during the period from the date of this Agreement
through the date of Closing to all books, contracts, commitments and
records relating to Seller and the Business and, during such period,
Seller shall furnish promptly to Purchaser (i) access to each report,
schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state laws; and
(ii) all other information concerning Seller and the Business as
Purchaser may reasonably request. Except as required by law, Purchaser
will hold, and will cause its affiliates, associates and
representatives to hold, any non-public information in confidence until
such time as such information otherwise becomes publicly available and
shall use its reasonable best efforts to ensure that such affiliates,
associates and
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representatives do not disclose such information to others without the
prior written consent of Seller. In the event of termination of this
Agreement for any reason, Purchaser shall promptly return or destroy
all non-public documents so obtained from Seller and any copies made of
such documents for Purchaser. Purchaser shall not, and shall cause its
affiliates, associates and representatives not to, use any non-public
information regarding Seller in any way detrimental to Seller. No
investigation pursuant to this Section shall affect any representation
or warranty by Seller in this Agreement or any condition to the
obligations of the Purchaser.
(b) After Closing, Purchaser shall allow Seller and Seller's
accountants, counsel or other representatives reasonable access to all
books, contracts, records, and information of Seller previously
delivered to Purchaser.
7.10 Name Change. At Closing, Seller shall file an amendment to its
Articles of Incorporation changing its name from Ambar, Inc. to ▇▇▇▇▇, Inc. and
effective at the Closing Date shall cease using "Ambar" in respect of its name,
etc. Notwithstanding the foregoing, Seller may use the name Ambar, Inc., as
required by law, in connection with lawsuits and for regulatory filings.
7.11 Employment. Purchaser agrees to make offers for employment to
approximately 190 employees in the Business with employment terms as follows:
same salary, same tenure for purposes of vacation, and otherwise same employment
benefits as other drilling fluids field personnel employed by Lone Star Mud LP,
LLLP, PEC's indirect wholly-owned drilling fluids subsidiary; provided that
Purchaser will not assume any employment agreements (either oral or written)
existing at the Closing Date between any of such employees and Seller.
7.12 Accounting Hardware and Software. Purchaser agrees to take all
action necessary, including without limitation, the payment of transfer fees, to
transfer to Purchaser (i) the licenses for software and programs utilized by
Seller for accounting functions and (ii) related hardware leases, specifically,
Seller's AS400 hardware and related leased components (collectively, the
"Accounting Licenses and Leases"). In addition, Purchaser agrees to maintain the
Accounting Licenses and Leases for one year from the Closing Date, including the
payment of all license and lease payments. Purchaser also agrees to allow Seller
and Seller's accountants, counsel and other representatives reasonable access
during normal business hours to the accounting system in Lafayette, Louisiana at
no charge to Seller for a period of one year from the Closing Date.
7.13 Lease Payments. In the event (i) a personal property lease or a
real property lease is not duly and effectively assigned to Purchaser, and (ii)
Purchaser is using the real or personal leased property (the "Leased Property"),
the Purchaser agrees that it shall satisfy all lease obligations that become due
after the Closing Date for so long as Purchaser uses the Leased Property. In
addition, Purchaser agrees it shall give Seller ten (10) days prior written
notice of the Purchaser's intent to cease using the Leased Property.
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7.14 Paid Tax Receipts. Purchaser shall provide Seller as soon as
possible after payment with a copy of a tax receipt marked "Paid" by the taxing
authority for each tax included in Assumed Liability.
ARTICLE VIII
Indemnification
8.1 Letter of Credit. Seller shall put up a $500,000 Citibank, N.A.
("Citibank") letter of credit in the form attached as Exhibit B (the Letter of
Credit") pursuant to which Citibank will have no right of offset. Seller's
indemnification obligations pursuant to this Article shall be limited to the
undrawn amount of the Letter of Credit. Purchaser may draw on the Letter of
Credit to the extent that it suffers a Purchaser Loss indemnified against
pursuant to Section 8.3. Prior to drawing on the Letter of Credit, Purchaser
must provide Seller with ten (10) business days advance notice of the Purchaser
Loss, including the monetary amount of the Purchaser Loss and all supporting
documentation. If Seller does not object to such Purchaser Loss within such ten
(10) day period, then Purchaser may draw on the Letter of Credit for the amount
of the Purchaser Loss stated in the notice. In the event Seller notifies
Purchaser that Seller disputes the amount of the Purchaser Loss, then the
parties shall attempt in good faith to resolve the dispute. If the parties
cannot resolve the dispute within five (5) business days, then, notwithstanding
Section 12.4, on the business day following the expiration of such five (5)
business day period, each party shall name a mediator and the two mediators so
named shall select a mutually agreeable third mediator, who shall conduct a
mediation to resolve the disputed Purchaser Loss. The mediation shall be held no
later than five (5) business days after the third mediator has been selected.
The mediation shall be held in Houston, Texas and each side shall pay one-half
of the cost of the mediation. The decision of the mediators shall be final and
shall be binding on Seller and Purchaser. Seller shall have no control over the
Letter of Credit, and the Letter of Credit shall not be considered to be
property of Seller.
8.2 Termination. The indemnification provided for in this Article shall
terminate and be of no further force and effect 150 days from the Closing Date,
except as to any event set forth in Sections 8.3(i), (ii) or (iii) as to which
written notice of claim of indemnification has been given to Seller prior to
expiration of the 150 day period; or Sections 8.4(i), (ii), (iii) (iv) or (v) as
to which written notice of claim of indemnification has been given to Purchaser
prior to the 150 day period.
8.3 Indemnification of the Purchaser. Seller shall defend, indemnify
and hold harmless Purchaser, PEC and its respective officers, directors,
employees, agents, successors and assigns (collectively, the "Purchaser
Indemnified Parties") from and against any and all liabilities, losses, damages,
claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, reasonable attorneys fees) actually suffered or
incurred by them (hereafter, the "Purchaser Loss" or "Purchaser Losses"),
arising out of or resulting from (i) the breach of any representation or
warranty of Seller set forth in this Agreement or the Ancillary Agreements; (ii)
the failure of Seller to perform any covenant in this Agreement (including with
respect to the payment of the Final Adjustment) or the Ancillary Agreements; and
(iii) the Excluded Liabilities. Except for any Loss arising out of or based on a
fraudulent
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misrepresentation by Seller, Seller's total liability for all Losses asserted by
the Purchaser Indemnified Parties shall not exceed the undrawn amount of the
Letter of Credit. In addition, Seller shall have no liability with respect to
any Losses which are covered by insurance, excluding any deductibles; or for any
Losses for which a claim is not asserted in accordance with this Article within
one hundred fifty (150) days after the Closing Date.
8.4 Indemnification of Seller. Purchaser shall defend, indemnify and
hold harmless Seller and its officers, directors, employees, agents, successors
and assigns (the "Seller Indemnified Parties") from and against any and all
Losses arising out of or resulting from (i) the breach of any representation or
warranty of Purchaser set forth in this Agreement or the Ancillary Agreements;
(ii) the failure of Purchaser to perform any covenant in this Agreement
(including with respect to the payment of the Final Adjustment) or the Ancillary
Agreements; (iii) the Assumed Liabilities; (iv) the use by Purchaser of any
Seller trade names or trademarks as contemplated by Section 1.1(e); and (v) the
operation of the Business by Purchaser following the Closing Date or Purchaser's
ownership, operation or use of the Purchased Assets. Except for any Loss arising
out of or based on a fraudulent misrepresentation by Purchaser, Purchaser's
total liability for all Losses asserted by Seller Indemnified Parties shall not
exceed a total of $500,000.
8.5 Indemnification Notice. Any party seeking indemnification under
this Article (an "Indemnified Party") shall give the party from whom the
indemnification is being sought (an "Indemnifying Party") notice of any matter
which an Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, within twenty (20) days of such
determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises.
8.6 Third Party Claims. The obligations and liabilities of an
Indemnifying Party under this Article with respect to Losses asserted against an
Indemnified Party by a third party ("Third Party Claims") shall be governed by
and contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnifying Party notice of such Third Party Claim within
ten (10) days of the receipt by the Indemnified Party of such notice. If the
Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Losses that may result from such Third
Party Claim, then the Indemnifying Party shall be entitled to assume and control
the defense of such Third Party Claim at its expense and through counsel of its
choice (such counsel to be reasonably satisfactory to the Indemnified Party). In
the event the Indemnifying Party exercises the right to undertake any such
defense against any such Third Party Claim as provided above, the Indemnified
Party shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party, all witnesses, pertinent records, materials
and information in the Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required by the Indemnifying
Party. Similarly, in the event the Indemnified Party is conducting the defense
against any such Third Party Claim, the Indemnifying Party shall cooperate with
the Indemnified Party in such defense and make available to the Indemnified
Party, all such witnesses, records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's control
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relating thereto as is reasonably required by the Indemnified Party. Under no
circumstances shall Purchaser be required or obligated under this Agreement to
make any further or additional payments to the holder(s) of any Accounts Payable
other than the one time payment to such holder(s) as specified in Section 2.1 of
Article II.
ARTICLE IX
Covenants Relating to Conduct of Business
9.1 Conduct of Business Pending the Transaction. During the period from
the date of this Agreement through the Closing Date, Seller: (i) shall use all
reasonable efforts to carry on the Business in the ordinary course and
consistent with past practice and, to the extent consistent therewith and with
the terms of this Agreement, use all reasonable efforts to keep available the
services of its employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing drilling fluids operations shall be unimpaired at the date
of Closing; (ii) shall not sell, lease, encumber, pledge or otherwise dispose of
or agree to sell, lease, encumber, pledge or otherwise dispose of any of the
Purchased Assets except in the ordinary course of business consistent with past
practice; and (iii) shall continue to account for the operations of the Business
within its own books of account in accordance with its customary accounting
practices until the routine accounting functions are transferred to the
Purchaser on the Closing Date. All revenue and expenses of the Business after
the Effective Time shall be the sole property and obligation of Purchaser.
ARTICLE X
Conditions Precedent to the Transaction
10.1 Conditions to Each Party's Obligation to Effect the Transaction.
The respective obligations of each party to effect the Transaction shall be
subject to the fulfillment or waiver (where permissible) at or prior to the date
of Closing of each of the following conditions:
(a) No Order. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction
or other order (whether temporary, preliminary or permanent) which is
then in effect and has the effect of prohibiting the Transaction or any
of the other transactions contemplated hereby; provided that, in the
case of any such decree, injunction or other order, each of the parties
shall have used reasonable best efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as practicable
any decree, injunction or other order that may be entered.
(b) Improvements Act Waiting Period. The applicable waiting
period under the Improvements Act shall have expired or been
terminated.
10.2 Conditions to Obligation of Seller to Effect the Transaction. The
obligation of Seller to effect the Transaction shall be subject to the
fulfillment at or prior to the Closing of the following additional conditions;
provided that Seller may waive any of such conditions in its sole discretion:
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(a) Performance of Obligations; Representations and
Warranties. Purchaser shall have performed in all material respects
each of its agreements contained in this Agreement required to be
performed on or prior to the Closing, each of the representations and
warranties of Purchaser contained in this Agreement shall be true and
correct on and as of the date of Closing as if made on and as of such
date.
(b) Officer's Certificate. Purchaser shall have furnished to
Seller a certificate, dated the Closing, certifying to the effect that
to the best of the knowledge and belief of Purchaser the conditions set
forth in Section 10.1 and 10.2(a) have been satisfied.
(c) Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP. Seller shall have
received an opinion from ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel to Purchaser,
dated the date of Closing, substantially in the form attached hereto as
Exhibit C. In rendering such opinion, counsel for Purchaser may rely as
to matters of fact upon the representations of officers of Purchaser
contained in any certificate delivered to such counsel and certificates
of public officials. Such opinion shall be limited to the laws of the
United States of America and the State of Texas.
(d) ▇▇▇▇ of Sale and Assignment. Purchaser shall have
delivered an executed counterpart of the ▇▇▇▇ of sale, assignment and
assumption agreement in the form attached hereto as Exhibit D (the
"▇▇▇▇ of Sale").
(e) PEC Letter. PEC shall have delivered an executed letter in
the form attached hereto as Exhibit E.
(f) Purchase Consideration. Purchaser shall have made payment
pursuant to the Settlement Statement of the cash portion of the
Consideration by wire transfer of immediately available funds to an
account or accounts designated by Seller in the Settlement Statement.
(g) Settlement Statements, etc. Purchaser shall have delivered
such affidavits and other documents as is customarily required by the
Title Company and the Settlement Statement attached hereto as Exhibit
"N"
(h) Guaranty Agreement. Purchaser shall have delivered and
executed a Guaranty Agreement attached hereto as Exhibit M.
10.3 Conditions to Obligations of Purchaser to Effect the Transaction.
The obligations of Purchaser to effect the Transaction shall be subject to the
fulfillment at or prior to the Closing of the following additional conditions,
provided that Purchaser may waive any such conditions in its sole discretion:
(a) Performance of Obligations; Representations and
Warranties. Seller shall have performed in all material respects each
of its agreements contained in this Agreement required to be performed
on or prior to the Closing and each of the respective
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representations and warranties of Seller contained in this Agreement
shall be true and correct on and as of the Closing as if made on and as
of such date.
(b) Officers' Certificate. Seller shall have furnished to
Purchaser a certificate, dated the Closing, certifying to the effect
that to the best of the knowledge and belief of Seller, the conditions
set forth in Section 10.1 and Section 10.3(a) have been satisfied.
(c) Employment Agreement; Non-Competition Agreement. The
Employment Agreement and the Non-Competition Agreement in the
respective forms attached hereto as Exhibits F-1 and F-2 shall have
been executed and delivered to Purchaser by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(d) Opinion of General Counsel. Purchaser shall have received
an opinion of counsel from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel to
Seller, dated the Closing, substantially in the form attached hereto as
Exhibit G. In rendering such opinion, counsel for Seller may rely as to
matters of fact upon the representations of officers of Seller
contained in any certificate delivered to such counsel and certificates
of public officials. Such opinion shall be limited to the laws of the
United States of America and the State of Texas.
(e) ▇▇▇▇ of Sale and Assignment. Seller shall have executed
and delivered a counterpart of the ▇▇▇▇ of Sale.
(f) Settlement Statements, etc. Seller shall have delivered
such executed affidavits and other documents as are customarily
required by the title company and the Settlement Statement attached
hereto as Exhibit "N".
(g) Non-Competition Agreement-Seller. Seller shall have
executed and delivered a counterpart of the Non-Competition Agreement
in the form attached hereto as Exhibit H.
(h) Letter of Credit. Seller shall have established a letter
of credit with Citibank attached hereto as Exhibit B, pursuant to which
Purchaser may draw upon in the event that Purchaser makes a bona fide
indemnification claim.
(i) Warranty Deeds. Seller shall have executed and delivered
the Warranty Deeds covering the Real Property in the respective forms
attached hereto as Exhibit I.
(j) Title Insurance. Purchaser shall have been issued the
title commitments for title insurance on the Real Property.
(k) Titles. Seller shall have endorsed and delivered the title
certificates to the vehicular rolling stock described on the various
Schedules referenced in Section 1.1.
(l) Amendment to Articles of Incorporation. Seller shall have
delivered to Purchaser a duly authorized and executed amendment to its
Articles of Incorporation
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which shall be filed with the Secretary of State of the State of
Delaware changing its name from "Ambar, Inc." to ▇▇▇▇▇, Inc.
(m) Clean Title. Seller shall have delivered good and
marketable title to the Purchased Assets, free and clear of all Liens,
including, but not limited to, the Real Estate Leases and the
improvements thereon, and any and all liens filed by ▇▇▇▇▇▇▇
International.
(n) Bankruptcy. Seller shall not be in Bankruptcy whether
voluntary or involuntary.
(o) Consent of Debtors. Seller shall have delivered to
Purchaser an agreement from Citibank in the form attached hereto as
Exhibit K, and from the subordinated debtholders in the form attached
hereto as Exhibit L.
(p) Payment to Greater Lafouche Port Commission. Payment of a
$52,645.54 transfer penalty to the Greater Lafouche Port Commission has
been made.
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The closing documents referenced in Section 10.2 and 10.3 are
collectively referred herein to the "Ancillary Agreements."
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ARTICLE XI
Termination, Amendment and Waiver
11.1 Termination. This Agreement may be terminated at any time prior to
the date of Closing, whether before or after any approval by the stockholders of
Seller:
(a) by mutual written consent of Purchaser and Seller;
(b) by Purchaser if Seller shall have failed to comply in any
material respect with any of its covenants or agreements contained in
this Agreement required to be complied with by Seller prior to the date
of such termination, which failure to comply has not been cured within
ten business days following receipt by Seller of notice of such failure
to comply;
(c) by Seller if Purchaser shall have failed to comply in any
material respect with any of its covenants or agreements contained in
this Agreement required to be complied with by Purchaser prior to the
date of such termination, which failure to comply has not been cured
within ten business days following receipt by Purchaser of notice of
such failure to comply;
(d) by either Purchaser or Seller if (i) the Transaction has
not been effected on or prior to the close of business on September 30,
2000; provided, however, that the right to terminate this Agreement
pursuant to this clause shall not be available to any party
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whose failure to fulfill any obligation of this Agreement has been the
cause of, or resulted in, the failure of the Transaction to have
occurred on or prior to the aforesaid date; or (ii) any court of
competent jurisdiction or any governmental, administrative or
regulatory authority, agency or body shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
(e) by either Purchaser or Seller if there has been (i) a
material breach by the other of any representation or warranty that is
not qualified as to materiality, or (ii) a breach by the other of any
representation or warranty that is qualified as to materiality, in each
case which breach has not been cured within five business days
following receipt by the breaching party of notice of the breach.
11.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or Seller, as provided in Section 11.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of Seller or Purchaser or their respective officers or directors. In
the event of termination of this Agreement caused by (i) willful breach by a
party of any agreement, covenant, or undertaking of such party contained herein
or in any exhibit hereto; (ii) any uncured material misrepresentations or breach
of warranty in any material respect by a party herein; or (iii) the failure of
any condition set forth in Article X hereof which has failed because a party did
not exercise good faith and best efforts towards the fulfillment of such
condition, then the other party shall be entitled to all its legal and equitable
remedies.
11.3 Amendment. This Agreement may be amended by the parties hereto
only by an instrument in writing signed on behalf of each of the parties hereto.
11.4 Waiver. At any time prior to the date of Closing, the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE XII
Miscellaneous
12.1 Record Retention. Seller agrees that, for a period of twenty-four
(24) months following the Closing, it shall not destroy, any of the books and
records of the Business and in its possession covering or prepared during the
twenty-four (24) month period ending on the Closing without furnishing prior
notice to Purchaser and a reasonable opportunity for Purchaser, at its cost, to
take custody of such books and records. Purchaser agrees that, for a period of
five (5) years following the Closing, it shall not destroy any of the books and
records it receives from Seller without furnishing prior notice to Seller and a
reasonable opportunity for Seller, at its cost, to take custody of such books
and records.
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12.2 Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, or
cause to be done all things necessary, proper or advisable under applicable
laws, and execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated by this Agreement.
12.3 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred. Purchaser shall pay all costs incurred by it with any due diligence
(including environmental due diligence), surveys, recording of the deeds, and
any filing fees imposed by any governmental or regulatory authority regarding
any notices or approvals required in connection with the sale of the Purchased
Assets.
12.4 Mediation. Upon the written request of any party hereto, whether
made before or after the institution of any legal proceedings, any dispute
arising out of this Agreement or the Ancillary Agreements between the parties
hereto shall be submitted for non-binding mediation before a mediator mutually
acceptable to both parties and licensed to practice law in the State of Texas.
If the parties are unable to select a mutually acceptable mediator within ten
(10) days after the written request for mediation, then each party shall name
one (1) mediator, and the two (2) mediators so named shall select a mutually
agreeable third mediator, who shall conduct the mediation. The mediation shall
be held no later than twenty (20) days after the mediator has been selected to
conduct the mediation. Each party shall pay one-half of the fees and other costs
charged by the mediator conducting the mediation. The mediation shall be held in
Houston, Texas.
12.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section):
(a) if to Seller:
▇▇▇▇▇, Inc.
Two Greenspoint Plaza
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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with a copy to:
▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) if to Purchaser:
Ambar Drilling Fluids LP, LLLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
12.6 Headings. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
12.8 Survival. All agreements, indemnifications, covenants,
representations and warranties set forth in this Agreement shall survive the
Closing.
12.9 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, and that certain Confidentiality Agreement dated March 22,
2000, by and between Seller and PEC constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, between and among the
parties hereto with respect to the subject matter hereof.
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12.10 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person any legal or equitable right, benefit or remedy of any
nature whatsoever.
12.11 Amendment. This Agreement may not be amended or modified except
by an instrument in writing signed by, or on behalf of, the parties hereto.
12.12 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any Texas state or federal court sitting in the City of Houston, and the parties
hereto hereby irrevocably submit to the exclusive jurisdiction of such courts in
any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action or proceeding. The
parties hereto agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
12.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto leave caused this Agreement to
be executed as of the date first above written by their respective officers
thereunto duly authorized.
SELLER:
AMBAR, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
PURCHASER:
AMBAR DRILLING FLUIDS LP, LLLP
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President - Finance, Secretary
and Treasurer
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Ambar, Inc.
Fluid Services Division
List of Schedules and Exhibits
Schedules
Schedule "A" Business Operation Locations
Schedule 1.1(a) Machinery, Equipment, Parts and Vehicles
Schedule 1.1(b) Automobiles, Trucks and Other Vehicles and Rolling Stock of
the Transportation Segment of the Business
Schedule 1.1(c) Real Estate Leases
Schedule 1.1(d) Leasehold Improvements
Schedule 1.1(e) Trademarks and Telephone Numbers
Schedule 1.1(f) Inventory
Schedule 1.1(g) Accounts Receivable
Schedule 1.1(h) Contracts
1. Pricing Agreements
2. Master Service Agreements
3. Vendor/Supply Agreements
4. Purchase Orders
Schedule 1.1(i) Real Property
Schedule 1.1(j) Personal Property Leases
Schedule 1.1(k) Prepaid Accounts and Expenses
Schedule 1.2(e) Excluded Assets
Schedule 1.2(h) ▇▇▇▇▇ Telephone Numbers
Schedule 1.2(i) ▇▇▇▇▇ Office Furniture
Schedule 2.1(a) Accounts Payable and Accruals
Schedule 2.1(f) Seller's Accrued Vacation Obligations
Schedule 4.3 Working Capital Calculation
Schedule 5.4 No Violations
Schedule 5.5 List of Executive Officers of Seller
Schedule 5.6 Legal Proceedings
Schedule 5.7 Encumbrances to Real Estate Leases
Schedule 5.8 Material Adverse Change
Schedule 5.9 Accounts Receivable
Schedule 5.11 Seller's Defaults
Schedule 5.13 Environmental Matters
Schedule 5.17 Taxes
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Exhibits
Exhibit A [Intentionally Left Blank]
Exhibit B $500,000 Letter of Credit from Citibank, N.A.
Exhibit C Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
Exhibit D ▇▇▇▇ of Sale
Exhibit E PEC Letter
Exhibit F-1 Employment Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit F-2 Non-Competition Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit G Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit H Non-Competition Agreement - Ambar
Exhibit ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Exhibit I-2 Warranty Deed - Victoria, Texas
Exhibit J [Intentionally Left Blank]
Exhibit K Consent of Citibank, N.A.
Exhibit L Subordinated Debtholders Consent
Exhibit M Guaranty Agreement
Exhibit N Settlement Statement
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