EXHIBIT 2.2
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "AGREEMENT") is
made and entered into as of the 1st day of January, 2000, by and among Lone Star
Technologies, Inc., a Delaware corporation ("LONE STAR"), Fintube Technologies,
Inc., an Oklahoma corporation and a wholly owned subsidiary of Lone Star
("PURCHASER"), and Fintube Limited Partnership, a Delaware limited partnership
("FINTUBE", together with Subsidiaries (as defined in Section 1.1 of the Asset
Purchase Agreement) hereinafter collectively referred to as the "SELLERS");
WHEREAS, on the 16th day of November, 1999, the parties hereto entered
into that certain Asset Purchase Agreement, whereby the Purchaser agreed to
acquire substantially all of the assets of the Sellers (the "ASSET PURCHASE
AGREEMENT"), and in connection therewith, the parties hereto have agreed that
certain amendments specified herein need to be made to the Asset Purchase
Agreement; and
WHEREAS, the partes hereto desire to amend the Asset Purchase
Agreement, as set forth herein.
NOW THEREFORE, in consideration of the mutual promises contained
herein, and for the exchange of TEN DOLLARS ($10.00), and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Section 1.1 of the Asset Purchase Agreement is hereby amended to add
the following definitions in alphabetical order:
""AyB INDEMNIFIED LIABILITIES" has the meaning specified in
Section 9.1."
""AyB MEXICANA" means Aletas y Birlos Mexicana, S.A. de C.V., a
corporation organized under the laws of the United Mexican
States and wholly owned by the Purchaser and Lone Star ST
Holdings, Inc."
""BANK" has the meaning specified in Section 5.27."
""XXXXX SHARES" means the three (3) shares of Series "A"
Minimum Capital stock, and the 1,160 shares of the Series "B"
Variable Capital stock, of AyB that is owned by Xxxxxxx Xxxxx
Portugal."
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""MEXICAN LIENS" has the meaning specified in Section 5.27"
""MEXICAN RETAINED LIABILITIES" has the meaning specified in
Section 5.27"
""PROFEPA" has the meaning specified in Section 5.27"
2. Section 2.1 of the Asset Purchase Agreement is hereby amended and
replaced with the following:
"2.1 PURCHASE AND SALE. At the Closing, upon the terms and
subject to the conditions contained herein, Fintube shall,
and shall cause the Subsidiaries to, sell, transfer, assign,
convey and deliver to Purchaser, and Purchaser shall
purchase, accept and acquire from Sellers, in exchange for
Purchaser's payment to Fintube of the Purchase Price and
assumption of the Assumed Liabilities, (or, with respect to
the stock of AyB, the payment of the cash portion of the
Purchase Price for said stock), all of Sellers' right, title
and interest in and to all of the asset, properties and
rights of Sellers, including all of the assets, properties
and rights described in this Section 2.1, but excluding the
Retained Asset (collectively and individually, the
"ASSETS"); provided, however, Purchaser may at its election
require Fintube: (i) to transfer the stock of AyB to a
subsidiary of Purchaser; and (ii) to convey those Assets
owned or used by its Biraghi Canada division to another
subsidiary of Purchaser:
(a) all Real Property set forth on SCHEDULE 2.1(a);
(b) all Tangible Personal Property, including the items set
forth on SCHEDULE 2.1(b);
(c) all Permits, including the items set forth on SCHEDULE
2.1(c), to the extent transferrable;
(d) all Contracts, including the items set forth on SCHEDULE
2.1(d);
(e) all of Sellers' Intellectual Property Rights, including the
items set forth on SCHEDULE 2.1(e);
(f) all Inventory of Sellers, including the items set forth on
SCHEDULE 2.1(f);
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(g) all Accounts Receivable, deposits, and prepaid expenses of
Sellers, including the items set forth on SCHEDULE 2.1(g);
(h) all rights of Sellers under warranties and guarantees,
express and implied;
(i) all software and computer programs and documentation,
including flow charts, diagrams, descriptive texts and
programs, computer printout tapes and databases of Sellers;
(j) all rights (including indemnification rights) and choses in
action of Sellers: (i) against third parties which affect
the use of, or title to, any of the Assets after the
Closing; or (ii) which may be asserted as counterclaims,
rights of setoff or defenses in any action brought by a
Third Party against Purchaser which relate to any of the
Assets or Assumed Liabilities;
(k) all other property of any kind, tangible and intangible,
real, personal and mixed (including those items set forth in
the books and records of Sellers) and all other rights and
benefits to which Sellers may be entitled relating to the
Assets or the Business;
(l) all books, records, files, documents, papers and agreements
of Sellers which relate to the Assets or the Business,
including all operating, maintenance, vendor, landowner,
computer, employee and environmental records and files;
(m) all Goodwill of the Sellers;
(n) all bank accounts of the Sellers, including the accounts set
forth on Schedule 2.1(n) (other than a new bank account
created specifically for the receipt of the cash portion of
the Purchase Price) including all cash on deposit in such
accounts and all uncleared deposits in such accounts, the
xxxxx cash of Sellers, all temporary cash investments of
Sellers and instruments representing same (including without
limitation marketable securities), and all other cash and
cash equivalents of Sellers on hand, in transit, or in
depositories, as of the Closing Date; and
(o) all of the outstanding capital stock of AyB except for the
Xxxxx Shares, together with all of Fintube's right, title
and interest in and to the promissory note of AyB payable to
Fintube."
3. Section 2.2 of the Asset Purchase Agreement is hereby amended and
replaced with the following:
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"2.2 RETAINED ASSETS. Notwithstanding the provisions of Section
2.1, Fintube shall retain the following assets, and such
assets shall not be included in the term "Assets" (the
"RETAINED ASSETS")
(a) all rights in and to the Employee Notes;
(b) all rights in the Interests (other than the Interests
in AyB); and
(c) all other items listed on Schedule 2.2."
4. The restrictive legend described in Section 2.3 of the Asset
Purchase Agreement is attached hereto as EXHIBIT 2.3(a).
5. The next to last sentence of the first paragraph of Section 2.3 of
the Asset Purchase Agreement is hereby amended and replaced with the
following:
"None of the shares, if any, of Lone Star Common Stock
issued as part of the Purchase Price shall be issued in
consideration of the stock of AyB, and all such stock shall
be deemed to be purchased for the cash portion of the
Purchase Price."
6. Section 2.3(a) of the Asset Purchase Agreement is hereby amended and
replaced with the following:
"(a) If there is a Securities Law Exemption (as herein defined),
Lone Star will issue the Stock Consideration: (i) to those
persons designated by Fintube on Schedule 1.1 hereto (the
"DESIGNATED RECIPIENTS"), as the persons to whom Fintube is
directing the Stock Consideration be paid; and (ii) in such
proportions among the Designated Recipients as Fintube shall
designate not less than five (5) business days prior to the
Closing Date; provided, however, that Lone Star will use its
best efforts to obtain a "discretionary exemption" under the
Canadian/Quebec securities laws for Xxxxxx Xxxxxxx as a
resident of Quebec, Canada. To the extent Lone Star is
unsuccessful in obtaining such exemption by February 1,
2000, Lone Star will pay in cash to
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Xxxxxx Xxxxxxx, by February 5, 2000, the sum of U.S.
$54,800, in lieu of delivering any Stock Consideration to
Xxxxxx Xxxxxxx."
7. Attached to this Agreement as EXHIBIT "A" is the Estimated Base
Purchase Price Adjustment delivered by Fintube to Lone Star.
8. The first sentence of Section 2.4(c) of the Asset Purchase Agreement
is hereby amended and replaced with the following:
"(c) Within forty-five (45) days after the Closing Date, Fintube
and its independent public accountants shall prepare and
deliver to all Parties a draft of a statement (the "DRAFT
CLOSING STATEMENT") consisting of the audited balance sheet
of the Business as of the Closing Date, prepared in
accordance with GAAP."
9. The following is added as a new paragraph after Section 2.6(i):
"Notwithstanding the foregoing, Fintube will assume all of
the AyB Indemnified Liabilities, subject to the limitations
set forth in Section 9.7(c), and all such AyB Indemnified
Liabilities shall be satisfied as a Purchaser Claim against
the Escrow Account, as described in Section 9.8."
10. Section 3.1 of the Asset Purchase Agreement is hereby amended and
replaced with the following:
"3.1 CLOSING. The Closing will take place at the offices of
NICHOLS, WOLFE, STAMPER, NALLY, XXXXXX & XXXXXXXXX, INC.,
000 X. 0xx Xxxxxx, Xxxxx, Xxxxxxxx, on JANUARY 3, 2000, at
10:00 a.m., C.S.T., unless the parties mutually agree on
another date, time and place. To the extent the Closing
takes place on January 3, 2000, the Closing shall be deemed,
for all purposes, to have occurred as of 12:01 a.m., C.S.T.,
on January 1, 2000 (the "CLOSING DATE")."
11. Section 3.2(a) of the Asset Purchase Agreement is hereby amended to
delete the "and" after clause (vi), to add "and" after clause (vii)
and to add the following clause (viii):
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"(viii) to the extent available, stock certificates
evidencing all of the outstanding capital stock of
AyB, except for the Xxxxx Shares, together with the
promissory note of AyB payable to Fintube."
12. Purchaser affirms to Sellers that the Purchaser declines to assume
the IRB Debt. Accordingly, the IRB Debt shall be paid and
discharged by the Sellers at Closing, as set forth in Section
3.2(b)(i).
13. The third sentence of Section 5.10 of the Asset Purchase Agreement
is hereby amended and replaced with the following:
"In addition, Fintube shall be responsible for any
United States, Canadian or Mexican federal, state or
provincial income taxes of the Sellers, resulting
from the transaction contemplated in this Agreement;
and Fintube shall cause the Designated Recipients to
be responsible for any United States, Canadian or
Mexican federal, state or provincial income taxes of
the Designated Recipients resulting from the
transaction contemplated in this Agreement."
14. Purchaser confirms to Sellers that all Environmental
Deficiencies identified in Section 5.25 of the Asset Purchase
Agreement have been satisfied, corrected or resolved to the
satisfaction of Purchaser. The foregoing notwithstanding,
nothing contained in this Agreement will modify or amend the
Sellers' representations and warranties contained in Section
4.1(q) of the Asset Purchase Agreement.
15. A new SECTION 5.27, "COVENANTS REGARDING AyB", shall be added
to the Asset Purchase Agreement, and shall state as follows:
"5.27 COVENANTS REGARDING AyB. Fintube covenants and agrees
that, at its own cost and expense, it will pay,
perform or otherwise discharge, as appropriate, those
known AyB liabilities listed below in clauses (i)
through (vii) inclusive (collectively the "MEXICAN
RETAINED LIABILITIES"), to be accomplished by the
respective target dates indicated below:
(i) Fintube will transfer the stock certificates
described in Section 3.2(a)(viii) of this Agreement
and not available at the Closing to AyB Mexicana,
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within one hundred and twenty (120) days of the
Closing and, to the extent necessary, will commence
and complete any Mexican judicial proceeding within
said period to effect said transfer;
(ii) Fintube will effect a recapitalization or other
mutually acceptable corporate reorganization of AyB
by February 15, 2000 that will: (a) cancel the Xxxxx
Shares; and (b) terminate any and all rights Xxxxxxx
Xxxxx Portugal may have in any of the equity of AyB,
except for his right to receive a pro rata share of
the purchase price of AyB;
(iii) Fintube will negotiate with, and make any
required payment to, Banco Internacional, S.A. (the
"BANK") to secure the complete and final release of
the three (3) liens (collectively the "MEXICAN
LIENS") against AyB or its assets in favor of the
Bank and securing credits in the respective amounts
of P$100,939 (recorded March 16, 1984), P$23,631
(recorded November 27, 1984) and P$15,542 (recorded
February 4, 1986). If through negotiation Fintube
does not obtain the complete and final release of the
Mexican Liens by February 15, 2000, Fintube will
initiate and prosecute a judicial proceeding on
behalf of AyB against the Bank to obtain the complete
and final release of the Mexican Liens by a date no
later than December 31, 2000;
(iv) Fintube will: (a) cooperate with Lone Star and
AyB, and will promptly review, in good faith, AyB's
records to determine whether AyB owes any unpaid
import duties or other payments in connection with
the Pitex program, with respect to any period
occurring prior to the Closing Date; and (b) pay any
duties or other payments due in connection therewith,
by January 31, 2000;
(v) Fintube will: (a) cooperate with Lone Star and
AyB, and will promptly review, in good faith, AyB's
records to determine whether AyB owes any unpaid
social security taxes or related payments due with
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respect to any period occurring prior to the Closing
Date; and (b) pay any such social security taxes or
related payments due in connection therewith, by
January 31, 2000;
(vi) Fintube will use its best efforts on behalf of
AyB to successfully litigate to a conclusion by June
30, 2000, all environmental fines, penalties and
other payments due the Mexican Federal Environmental
Protection Office ("PROFEPA") to eliminate AyB being
categorized as a habitual offender by PROFEPA. If
Fintube has not succeeded in its litigation with
PROFEPA by June 30, 2000, Fintube will on such date
pay all fines, penalties and other payments due
PROFEPA; and
(vii) Fintube will respond in good faith on behalf of
AyB to the Hacienda tax audit of AyB for 1995, and
will pay any additional taxes, interest or penalties
required to be paid as a result of such audit.
To the extent Fintube does not pay, perform or discharge any of the
Mexican Retained Liabilities, Purchaser may assert any such Mexican
Retained Liabilities against the Escrow Account, without regard to
the Basket."
16. A new SECTION 7.3(s), "MEXICAN OPINION", shall be added to the
Asset Purchase Agreement, and shall state as follows:
"(s) MEXICAN OPINION. Lone Star and Purchaser shall have
received the legal opinion(s) of Xxxxxxxx, Xxxxxxxxx y
Asociados, S.C. and Xxxxxxxxxxx y Trevio, S.C. in form
and substance reasonably satisfactory to Lone Star and
Purchaser."
17. Section 9.1 of the Asset Purchase Agreement is hereby amended and
replaced with the following:
"9.1 INDEMNIFICATION. After the Closing, both Fintube and
Purchaser (each an "INDEMNIFYING PARTY") hereby agree to
indemnify, defend and hold harmless the other Party, and its
directors, officers, employees and controlled and
controlling persons (hereinafter collectively "RELATED
PERSONS"), from and against all Claims asserted against,
resulting to, imposed upon or
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incurred by such Party or such Party's Related Persons
(collectively an "INDEMNIFIED PERSON"), subject to all of
the provisions and limitations contained in this Article IX,
to the extent resulting from: (a) the inaccuracy or breach
of any representation or warranty of the Indemnifying Party
contained in or made pursuant to this Agreement; (b) the
breach of any covenant of the Indemnifying Party contained
in or made pursuant to this Agreement; or (c) in the
circumstance where Fintube is the Indemnifying Party, the
AyB Indemnified Liabilities (as defined below); provided,
however, the AyB Indemnified Liabilities shall not be
subject to the limitations of Section 9.7(b), but will be
subject to the other provisions and limitations of Article
IX. For purposes of determining whether an Indemnified
Person is entitled to indemnification under this Article IX
due to the breach of an Indemnifying Party's representation
or warranty, the materiality qualification in such
representation or warranty shall be disregarded and such
representation or warranty shall be read for purposes of
this Article IX as though such qualification was not
included therein (it being agreed by the Parties that the
Basket described in Section 9.7(b) hereof was intended to
supplant such materiality qualification). As used in this
Article IX, the term "CLAIM" shall include, (x) all debts,
liabilities and obligations, (y) all losses, damages, costs
and expenses, including pre- and post-judgment interest,
penalties, court costs and attorneys' fees and expenses, and
(z) all demands, claims, actions, costs of investigation
causes of action, proceedings, arbitrations, judgments,
settlements and assessments.
"AyB INDEMNIFIED LIABILITIES" shall consist of any and all Claims
related to or resulting from the following:
(a) The operation, management or conduct of the Business by
AyB, or the ownership or use of the assets of AyB, prior
to the Closing Date and any Retained Liabilities
applicable to AyB; provided, however, AyB Indemnified
Liabilities shall not include : (i) any Claims to the
extent of reserves established in Sellers Financial
Statements with respect to AyB, or in the Subsidiary
Financial Statements for AyB; (ii) the Assumed
Liabilities; (iii) the obligations of AyB under its
collective bargaining agreements or otherwise to its
labor union; (iv) trade payables of AyB; (v) accrued
expenses and obligations of AyB incurred in the ordinary
course of business,
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including ongoing contractual obligations; and (vi)
liabilities of AyB, the factual basis of which is
disclosed in the Schedules to Article IV of this
Agreement; or
(b) Subject to the provisions of Section 9.4 hereof, any
defective products manufactured, designed, distributed
or sold by AyB on or prior to the Closing Date,
including any damages, costs and losses related to
product recalls; provided, however, AyB Indemnified
Liabilities shall not include: (i) any Claims to the
extent of reserves established in Sellers Financial
Statements with respect to AyB, or in the Subsidiary
Financial Statements for AyB; and (ii) liabilities of
AyB, the factual basis of which is disclosed in the
Schedules to Article IV of this Agreement."
18. The last sentence of Section 9.7(b) of the Asset Purchase Agreement
is hereby amended and replaced with the following:
"Notwithstanding anything in this Section 9.7 to the
contrary, Purchaser Claims made pursuant to Sections 4.3(a),
5.9, 5.10 (but only with respect to United States, Canadian
or Mexican federal, state or provincial income taxes of the
Sellers or the Designated Recipients resulting from the
transaction contemplated in this Agreement), 5.25, 5.27, 9.1
(but only with respect to the AyB Indemnified Liabilities),
and 9.4 shall not be subject to the Basket."
19. Section 9.7(c) of the Asset Purchase Agreement is hereby amended
and replaced with the following:
"(c) The total amount of Fintube's obligations with respect
to Purchaser Claims under this Article IX shall not exceed
forty percent (40%) of the Purchase Price (the "CAP");
provided, however, the total amount of Fintube's obligations
with respect to the Mexican Retained Liabilities and the AyB
Indemnified Liabilities shall not exceed U.S. $918,000
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20. The first sentence of Section 9.8 of the Asset Purchase Agreement
is hereby amended and replaced with the following:
"To satisfy any Purchaser Claim, any Warranty Claim to be
borne by Fintube, any amount due to Purchaser on account of
the Mexican Retained Liabilities, any claim for any
adjustment owed by Fintube for payment of real property
taxes, or any Brokers' Fees pursuant to Section 4.3(a) (any
of such Claims shall be an "ESCROW CLAIM") that the
Purchaser has the right to recover against Fintube
hereunder, Fintube agrees that Purchaser shall transfer at
Closing FIVE MILLION FORTY THOUSAND DOLLARS ($5,040,000) of
the Purchase Price, directly to an escrow account in the
name of Fintube (the "ESCROW ACCOUNT"), at a mutually agreed
bank or other suitable financial institution in Tulsa,
Oklahoma (the "ESCROW AGENT")."
21. The sixth sentence of Section 9.8 of the Asset Purchase
Agreement is hereby amended and replaced with the following
three (3) sentences:
"$15,000 of the Escrow Account will be disbursed to Fintube
from the Escrow Account when the Mexican Liens are
completely and finally released. An additional $25,000 of
the Escrow Account will be disbursed to Fintube from the
Escrow Account when the other Mexican Retained Liabilities,
described in clauses (i) through (vi) inclusive of Section
5.27 hereof have been paid, performed or discharged. Except
with respect to the $40,000 of the Escrow Account described
in the two preceding sentences, one-half of the balance of
the Escrow Account, less any unresolved Escrow Claims, will
be disbursed to Fintube on the 15th day after completion of
the audit of the calendar year 2000 financial statements of
the Business."
22. The last two sentences of Section 9.8 of the Asset Purchase
Agreement are hereby amended and replaced with the following:
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"The funds in the Escrow Account shall be invested in income
producing investments or securities to be selected by
Fintube, and all income produced thereby shall be
distributed to the Designated Recipients by the Escrow Agent
on a quarterly or other basis designated by Fintube. All
income produced by the Escrow Account shall be the sole and
exclusive property of Fintube, and shall not be subject to
any claim by Lone Star or the Purchaser. The terms of the
escrow arrangement shall be specified in the Escrow
Agreement attached hereto as EXHIBIT 9.8, and the former
EXHIBIT 9.7 shall be renumbered EXHIBIT 9.8."
23. Section 10.2 of the Asset Purchase Agreement is hereby amended and
replaced with the following:
"10.2 LONE STAR GUARANTY. Lone Star is the indirect parent of the
Purchaser, which is in turn the direct parent of both
Fintube Canada, Inc. and AyB Mexicana, and has significant
interest in ensuring that Lone Star, Purchaser, Fintube
Canada, Inc. and AyB Mexicana receive the benefit of the
terms of this Agreement. As an inducement to the Sellers to
enter into this Agreement, Lone Star has agreed to
guarantee, and does hereby absolutely and unconditionally
guarantee, the full and prompt performance of all of the
covenants, agreements, and obligations of Purchaser under
this Agreement. In addition, Lone Star hereby absolutely and
unconditionally guarantees the full and prompt performance
of all of the covenants, agreements and obligations of
Fintube Canada, Inc. in connection with the Sellers'
Canadian assets and liabilities under the Asset Purchase and
Sale Agreement, Biraghi-Canada, the Deed of Transfer and
Assignment of Lease, together with the full and prompt
performance of all of the covenants, agreements and
obligations of AyB Mexicana in connection with its purchase
of the AyB stock pursuant to the Stock Purchase and Sale
Agreement (Mexico), and of Purchaser in connection with the
purchase of AyB stock pursuant to the Individual Stock
Purchase Agreement (Mexico)."
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24. Section 10.5 of the Asset Purchase Agreement is hereby amended and
replaced with the following:
"10.5 ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFIT. Neither
this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any Party
(whether by operation of law or otherwise) without the prior
written consent of the other Parties, except that the rights
and obligations of Purchaser under this Agreement may be
assigned in whole or in part to an acquisition subsidiary of
Purchaser or an Affiliate thereof; and as a part thereof,
Purchaser does hereby assign to Fintube Canada, Inc. all of
the covenants, agreements and obligations of Purchaser
hereunder in connection with the Sellers' Canadian assets
and liabilities, and Purchaser does hereby assign to AyB
Mexicana all of the covenants, agreements and obligations of
Purchaser hereunder in connection with its purchase of the
AyB stock; provided, however, in no event shall such
assignment reduce Purchaser's duty to satisfy such
obligations. Subject to the preceding sentence, this
Agreement will be binding upon, and inure to the benefit of
and be enforceable by the Parties and their respective
successors and assigns. Except as provided in Article IX,
nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the Parties
hereto, and their respective successors and permitted
assigns, any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement."
25. A new SECTION 10.14 PERFORMANCE BY PURCHASER SUBSIDIARIES, shall be
added to the Asset Purchase Agreement, and shall state as follows:
"10.14 PERFORMANCE BY PURCHASER SUBSIDIARIES. Lone Star and
Purchaser agree to cause Fintube Canada, Inc. and AyB
Mexicana to fully and promptly perform all of the covenants,
agreements and obligations of the Purchaser described in
this Agreement."
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26. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Asset Purchase Agreement.
27. All other terms and conditions of the Asset Purchase Agreement
shall remain unchanged, and are hereby ratified and affirmed by the
Parties hereto.
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Executed and delivered as of the date set forth above.
"LONE STAR" "FINTUBE"
LONE STAR TECHNOLOGIES, INC. FINTUBE LIMITED PARTNERSHIP
BY: DIVISION FINTUBE CORPORATION,
ITS GENERAL PARTNER
By: /s/ Rhys J. Best By: /s/ Xxxxx X. Xxxx
---------------------------------- ---------------------
Rhys J. Best, Chairman of the Board, Xxxxx X. Xxxx,
Chief Executive Officer and President Chairman of the Board
"PURCHASER"
FINTUBE TECHNOLOGIES, INC.
By: /s/ Rhys J. Best
---------------------------
Rhys J. Best, President and
Chairman of the Board
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