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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) May 23, 1996
PONDER INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-18656 75-2268672
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
511 Commerce Road, P.O. Drawer 2229, Alice, Texas 78333
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 664-5831
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 1. Change in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On May 13, 1996, Ponder Energy Services, Inc., a Delaware corporation
("PES"), and wholly-owned subsidiary of Ponder Industries, Inc., a Delaware
corporation ("Issuer"), acquired all of the outstanding shares of common stock
and cumulative redeemable preferred stock of Panther Oil Tools (UK) Ltd., an
England corporation ("Panther (UK)"), and acquired certain assets of Villain
Ltd., a Guernsey corporation ("Villain") (collectively referred to herein as
the "Acquisitions"). The Acquisitions were consummated pursuant to a Stock
Purchase Agreement dated May 23, 1996 (the "Stock Agreement"), among PES,
Panther (UK) and Panther Oil Tools, Ltd., a Jersey corporation ("Seller"), as
sole stockholder of Panther (UK), and the Asset Purchase Agreement dated May
23, 1996 (the "Asset Agreement"), among PES, Villain and John Le Seelleur, Mel
Maitland and Wayne Tynon, as the sole shareholders of Villain (the
"Stockholders").
Pursuant to the terms of the Stock Agreement, 1,200,000 shares of the
common stock, $.01 par value of Issuer ("Issuer Common Stock") were issued to
Seller along with an additional $250,000 in cash. Pursuant to the terms of the
Asset Agreement, $1,000,000 in cash was paid to the Stockholders. In
determining the amount of such consideration, a multiple of fair market value
was used and subsequently adjusted based on the results of the due diligence
efforts of Issuer. The source of funds for the acquisition was a portion of
the proceeds from the issuance of convertible debentures pursuant to Regulation
S of the Securities Act of 1933, as amended. In connection with the issuance of
the Issuer Common Stock pursuant to the terms of the Stock Agreement, Issuer
granted to Seller piggy-back registration rights.
The assets acquired by PES through the Acquisitions relate to the
business of renting specialized tools designed to recover unwanted obstructions
from the bore holes of oil wells. The assets acquired include leased property,
certain intellectual property rights and equipment utilized in the rental of
down hole recovery tools. PES intends to continue to use such leased property,
intellectual property and equipment in the same manner as used prior to the
Acquisitions. The Acquisitions were accounted for using the purchase method.
Item 3. Bankruptcy or Receivership.
Not Applicable.
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Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
Not Applicable.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Combined Financial Statements.
It is impractical to provide the required financial statements of
Panther (UK) and Villain at the time of filing this Report. It is anticipated
that such financial statements will be filed by amendment as soon as
practicable but in no event later than 60 days following the date on which this
Report must be filed.
(b) Combined Pro Forma Financial Information.
It is impractical to provide the required pro forma financial
information with respect to Panther (UK) and Villain combined at the time of
filing this Report. It is anticipated that such financial information will be
filed by amendment as soon as practicable but in no event later than 60 days
following the date on which this Report must be filed.
(c) Exhibit Index.
Exhibit 2.1 Stock Purchase Agreement dated May 23, 1996, among
Ponder Energy Services, Inc., Panther Oil Tools (UK)
Ltd. and Panther Oil Tools Ltd.
Exhibit 2.2 Asset Purchase Agreement dated May 23, 1996, among
Ponder Energy Services, Inc., Villain Ltd. and John
Le Seelleur, Mel Maitland and Wayne Tynon.
Item 8. Change in Fiscal Year.
Not Applicable.
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STOCK PURCHASE AGREEMENT
DATED MAY 23, 1996
BY AND AMONG
PONDER ENERGY SERVICES, INC.,
A WHOLLY OWNED SUBSIDIARY OF
PONDER INDUSTRIES, INC.
AND
PANTHER OIL TOOLS LTD.
COVERING THE PURCHASE
OF SPECIFIED STOCK OF
PANTHER OIL TOOLS (UK) LTD.
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TABLE OF CONTENTS
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1. GENERAL DEFINITIONS
1.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Governmental Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Ponder Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF THE STOCK; CLOSING DATE
2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery and Endorsement of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. PURCHASE SHARES
4. REPRESENTATIONS AND WARRANTIES BY SELLER
4.1 Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.4 Events Since Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.5 Directors, Officers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.6 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.7 Taxes and Governmental Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.8 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.9 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.10 Properties, Assets and Leasehold Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.11 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.12 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.13 Suits, Actions and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.14 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.15 Licenses and Permits; Compliance with Governmental Requirements . . . . . . . . . . . . . . . . . . 4
4.16 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.17 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.18 Environmental Protection Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.19 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.20 Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.21 Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Ponder Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNITIES, GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLER
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7. COVENANTS OF SELLER PRIOR TO CLOSING DATE
7.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.2 General Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.3 General Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.4 No Transfer of the Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.5 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. CONDITIONS TO OBLIGATIONS OF PURCHASER
8.1 Accuracy of Representations and Warranties and Fulfillment of Covenants . . . . . . . . . . . . . . 7
8.2 No Governmental Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.3 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.4 Board of Directors Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.5 Execution of Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
9.1 Accuracy of Representations and Warranties and Fulfillment of Covenants . . . . . . . . . . . . . . 8
10. INDEMNITY BY SELLER
10.1 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10.2 Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.3 Right of Seller to Participate in Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.4 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. REQUIREMENTS OF SECURITIES LAWS
11.1 Accredited Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11.2 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11.3 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11.4 Incidental Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. NON-COMPETITION AGREEMENT
13. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
14. EXPENSES
15. NOTICES
16. REMEDIES FOR BREACH
16.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17. GENERAL PROVISIONS
17.1 Governing Law; Interpretation; Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17.2 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17.6 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17.8 Telecopy Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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18. TERMINATION
18.1 Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
18.2 Failure of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
18.3 Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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LIST OF SCHEDULES
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Schedule 4.1 - Incorporation being copies of the Articles of Incorporation and bylaws of Target
and all amendments thereto to date.
Schedule 4.3 - Financial Statements being copies of financial statements for Target including Audited
Balance Sheet as of March 31, 1996 and March 31, 1995 as well as
Income Statement and Statement of Changes in Financial Position for
fiscal year ended March 31, 1996 and March 31, 1995.
Schedule 4.5 - Directors, Officers
and Employees being a true and complete list of names and current annual
compensation paid by Target to each director, officer and employee of
Target.
Schedule 4.6 - Inventories being a true and complete list of current inventory of Target as
reflected on Reference Balance Sheet.
Schedule 4.8 - Employee Benefit Plans being a list of all existing employee benefit plans including, but
not limited to, pension plans and health or welfare plans.
Schedule 4.9 - Contracts and Agreements being a true and complete list of all material contracts, agreements,
leases, licenses, plans, arrangements of commitments, written or
oral, to which Target is a party or is in any way bound or obligated.
Schedule 4.10 - Properties, Assets,
and Leasehold Estates being a true and complete list of all property Target owns or has the
right to use, real or personal, tangible or intangible as of the date
hereof.
Schedule 4.12 - Bank Accounts being a true and complete list of all bank or financial accounts and
safe deposit boxes of Target and of the credit and debit balances of
such accounts as of the most recent practicable date. Also lists all
persons having signatory authority over such accounts and safe
deposit boxes.
Schedule 4.13 - Suits, Actions and Claims being a complete list of all suits, actions, claims, inquiries o
investigations by any Person or any legal administrative or
arbitration proceedings in which Target is engaged or which are
pending, threatened against or affecting Target or any of its
properties, assets or business.
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Schedule 4.14 - Insurance Policies being a list of all insurance policies maintained by Target on it
properties, assets, business or personnel, specifying the insurer,
the amount of coverage, the type of insurance and the policy number.
Schedule 4.15 - Licenses and Permits;
Compliance with
Governmental Requirements being a true and complete list of all licenses and permits necessary
for the conduct of Target's business.
Schedule 4.20 - Customer List being a true, correct and complete list of all customers of Target to
which Target has sold or provided products or services during the 2
years immediately preceding the date hereof. This list provides a
statement of gross revenues received from each such customer by
Target during the fiscal year ended March 31, 1996.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into this 23rd day
of May, 1996, by and between Panther Oil Tools (UK) Ltd., an England
corporation ("Target"), Panther Oil Tools Ltd., a Jersey corporation
("Seller"), and Ponder Energy Services, Inc., a Delaware corporation
("Purchaser"), Purchaser being a wholly owned subsidiary of Ponder Industries,
Inc., a Delaware corporation ("Ponder").
W I T N E S S E T H :
WHEREAS, Seller owns all of the outstanding shares of capital stock of
Target (the "Stock"), and Seller desires to sell the Stock to Purchaser
pursuant to this Agreement as hereinafter provided; and
WHEREAS, Purchaser desires to acquire the Stock from Seller pursuant
to this Agreement as hereinafter provided;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person
controlling, controlled by or under common control with such Person.
1.2 Governmental Authority. "Governmental Authority" shall mean
any and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any divisions or instrumentalities thereof,
whether permanent or ad hoc and whether now or hereafter constituted and/or
existing.
1.3 Governmental Requirement. "Governmental Requirement" shall
mean any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.4 Material Adverse Effect. "Material Adverse Effect" shall mean
a material adverse effect on the business, financial condition, operation,
performance or prospects of the Target.
1.5 Person. "Person" shall mean any natural person, any
Governmental Authority and any entity the separate existence of which is
recognized by any Governmental Authority or Governmental Requirement,
including, but not limited to, corporations, partnerships, joint ventures,
joint stock companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
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1.6 Ponder Stock. "Ponder Stock" shall mean the common stock,
$.01 par value of Ponder.
1.7 Schedule. "Schedule" to mean Schedules to this Agreement,
unless otherwise stated, and the Schedule may be attached to the Agreement or
set forth in a separate document denoted as the Schedule to this Agreement.
1.8 Taxes. "Tax" and "Taxes" shall mean any and all income,
excise, franchise or other taxes and all other charges or fees imposed or
collected by any Governmental Authority or pursuant to any Governmental
Requirement, and shall also include any and all penalties, interest,
deficiencies, assessments and other charges with respect thereto.
2. PURCHASE AND SALE OF THE STOCK; CLOSING DATE.
2.1 Purchase and Sale. Subject to the terms and conditions herein
contained, Seller agrees to sell, assign, transfer and deliver to Purchaser at
the Closing (as hereinafter defined) all right, title and interest in and to
the Stock, the Stock being all of the issued and outstanding capital stock of
Target. Subject to the terms and conditions herein contained, Purchaser agrees
to purchase from Seller the Stock and to deliver at the Closing the Purchase
Shares and the Purchase Cash (as hereinafter defined) pursuant to the
provisions of Section 3 below.
2.2 Delivery and Endorsement of Certificates. At the Closing,
Seller shall deliver to Purchaser certificates representing the Stock, duly
endorsed in blank by Seller, or accompanied by stock powers duly executed in
blank by Seller, and with all necessary transfer tax and other revenue stamps,
acquired at Seller's expense, affixed and canceled.
2.3 Closing Date. Subject to the terms and conditions herein
contained, the consummation of the transactions referred to above shall take
place (the "Closing") on or before May 31, 1996, at 10:00 a.m., local time, at
the offices of Ponder in Houston, Texas, or at such other time, date and place
as Purchaser and Seller shall in writing designate (the "Closing Date").
3. PURCHASE SHARES. The aggregate consideration for the Stock is
1,200,000 shares of Ponder Stock (the "Purchase Shares"), fully paid and
nonassessable, to be delivered by Purchaser to Seller at the Closing and US
$250,000 in cash (the "Purchase Cash").
4. REPRESENTATIONS AND WARRANTIES BY SELLER. Seller represents
and warrants to Purchaser as follows:
4.1 Incorporation. Target is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly authorized, qualified and licensed under all
applicable Governmental Requirements to carry on its business in the places and
in the manner as now conducted, except where the failure to so qualify or be
licensed would not individually or in the aggregate have a Material Adverse
Effect. Target has full corporate power and lawful authority to carry on its
business as it is now being conducted and to own and operate its assets,
properties and business. The copies of the Articles of Incorporation and bylaws
of Target and all amendments thereto to date, each of which are included in
Schedule 4.1 hereto, are true, complete and correct.
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4.2 Share Capital. The authorized share capital of Target
consists of 10,000 shares of common stock, L.1 par value, of which 10,000
shares are issued and outstanding and 375,000 shares of cumulative redeemable
preferred stock, L.1 par value, of which 375,000 shares are issued and
outstanding. All of such issued and outstanding shares are validly issued and
outstanding, fully paid and nonassessable. There are no outstanding
subscriptions, options, warrants, calls, commitments, obligations or agreements
relating to any of the authorized or outstanding capital stock of Target.
Seller owns all of the issued and outstanding shares of the Stock free and
clear of all liabilities, liens, encumbrances, pledges, trusts, voting trusts
or stockholders' agreements, equities, charges, options, conditional sale or
title retention agreements, covenants, restrictions, reservations, commitments,
obligations or other burdens or encumbrances of any nature whatsoever, and the
consummation of the purchase and sale contemplated by this Agreement will
transfer to Purchaser good and marketable title to the Stock free and clear of
any such items.
4.3 Financial Statements. Seller has delivered to Purchaser
copies of the following financial statements for Target, all of which financial
statements are included in Schedule 4.3 hereto:
(a) Audited Balance Sheet (the "Reference Balance Sheet") as
of March 31, 1996 and March 31, 1995 (the "Balance Sheet Date").
(b) Income Statement and Statement of Changes in Financial
Position for the fiscal year ended March 31, 1996 and March 31, 1995.
All financial statements supplied Purchaser by Seller are true and
accurate in all material respects, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, and present fairly the financial condition
and the results of the operations of Target as of the dates and for the periods
indicated thereon. The Reference Balance Sheet reflects, as of the Balance
Sheet Date, all liabilities, debts and obligations of any nature of Target,
whether accrued, absolute, contingent or otherwise, and whether due, or to
become due, including, but not limited to, liabilities, debts or obligations on
account of Taxes to the extent such items are required to be reflected on such
balance sheet under generally accepted accounting principles consistently
applied.
4.4 Events Since Balance Sheet Date. Since the Balance Sheet Date
there has not been:
(a) any material change in the financial condition or in the
properties, assets, liabilities or business of Target, except normal
and usual changes in the ordinary course of business, none of which
has been materially adverse and all of which in the aggregate have not
been materially adverse;
(b) any declaration, setting aside, or payment of any
dividend or other distribution on or in respect of the capital stock
of Target, or any direct or indirect redemption, purchase or other
acquisition of any of such stock or any issuance of any shares of such
stock or any granting or entering into of any option or commitment
relating to any of such stock;
(c) any transaction entered into or engaged in by Target
other than transactions in the ordinary course of business; or
(d) to the best of Seller's knowledge (after due inquiry of
Target), any other occurrence, event or condition that has resulted in
a Material Adverse Effect (or can
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reasonably be expected to result in a Material Adverse Effect) on the
properties, assets or business of Target.
4.5 Directors, Officers and Employees. Schedule 4.5 hereto sets
forth a true and complete list of the names of and current annual compensation
paid by Target to each director, officer and employee of Target.
4.6 Inventories. Schedule 4.6 hereto sets forth a true and
complete list of the current inventory of Target. The inventories of Target
reflected on the Reference Balance Sheet consist of items of a quality and
quantity usable and saleable in the normal course of business of Target at an
aggregate value at least equal to the value at which such inventories are
reflected on the Reference Balance Sheet.
4.7 Taxes and Governmental Returns. As of the date hereof, all
Tax returns, information returns and governmental reports of every nature
required by any Governmental Authority or Governmental Requirement to be filed
by Target or which include or should include Target, ("Governmental Returns")
have been filed for all periods ending on or before the date hereof, and all
Taxes shown to be due and payable on such Governmental Returns or on any
assessments related to such Governmental Returns have been paid, except for
taxes or assessments reasonably contested by Target or as to which the
nonpayment individually or in the aggregate would not have a Material Adverse
Effect. All Governmental Returns and reports and the information and data
contained therein have been properly and accurately compiled and completed,
fairly present the information purported to be shown therein, and reflect all
Tax liabilities of Target for the periods covered by such Governmental Returns
and reports. Target has no unpaid liability for any Taxes of any nature
whatsoever for any period prior to the date hereof, except for taxes or
assessments reasonably contested by Target or as to which the nonpayment
individually or in the aggregate would not have a Material Adverse Effect. The
charges, accruals and reserves on the Reference Balance Sheet in respect of all
accrued Taxes are adequate to provide fully for all Taxes, if any, payable by
Target with respect to periods ended on or before the date of this Agreement.
4.8 Employee Benefit Plans. Except as set forth on Schedule 4.8
hereto, Target has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
whether formal or informal.
4.9 Contracts and Agreements. Schedule 4.9 hereto sets forth a
true and complete list of all of the material contracts, agreements, leases,
licenses, plans, arrangements or commitments, written or oral, to which Target
is a party or by which Target or any of its assets or properties is in any way
bound or obligated (including all amendments, supplements and modifications
thereto) (the "Contracts").
All of the Contracts are valid, binding and in full force and effect
in accordance with their terms and conditions and there is no existing default
thereunder or breach thereof by Target, or, to the best knowledge of Seller
(after due inquiry of Target), by any other party to the Contracts. Copies of
all of the documents (or in the case of oral commitments, descriptions of the
material terms thereof) relevant to the Contracts have been delivered by Seller
to Purchaser.
4.10 Properties, Assets and Leasehold Estates. Target owns or has
the right to use all property, real or personal, tangible or intangible, (i)
reflected on the Reference Balance Sheet (other than items sold by Target since
the Balance Sheet Date in the ordinary course of its business) or (ii) utilized
in or necessary for the operation of its business. Schedule 4.10 hereto sets
forth a true
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and complete list of all such property as of the date hereof. Target has good
and marketable title to all the properties, interests in properties, assets and
leasehold estates, real and personal, set forth in Schedule 4.10, free and
clear of all mortgages, liens, pledges, conditional sales agreements, charges,
easements, covenants, assessments, restrictions and encumbrances of any
nature whatsoever.
4.11 Intangible Property. The operation of the business of Target
as now conducted does not require the use of or consist of any rights under any
patents, inventions, trademarks, trade names, brand names or copyrights, and
the operation of the business of Target as presently conducted does not violate
or infringe upon any such items owned by others.
4.12 Bank Accounts. Schedule 4.12 hereto sets forth a true and
complete list of all bank or financial accounts and safe deposit boxes of
Target and of the credit and debit balances of such bank and financial accounts
as of the most recent practicable date. Schedule 4.12 also lists all persons
having signatory authority over or access to such bank and financial accounts
and safe deposit boxes.
4.13 Suits, Actions and Claims. Except as set forth in Schedule
4.13 hereto, (i) there are no suits, actions, claims, inquiries or
investigations by any Person, or any legal, administrative or arbitration
proceedings in which Target is engaged or which are pending or, to the best
knowledge of Seller (after due inquiry of Target), threatened against or
affecting Target or any of its properties, assets or business, or to which
Target is or might become a party, or which question the validity or legality
of the transactions contemplated hereby, (ii) no basis or grounds for any such
suit, action, claim, inquiry, investigation or proceeding exists, and (iii)
there is no outstanding order, writ, injunction or decree of any Governmental
Authority against or affecting Target or any of its properties, assets or
business. Without limiting the foregoing, neither Seller nor any officer of
Target has any knowledge of any state of facts or the occurrence of any event
forming the basis of any present claim against Target.
4.14 Insurance Policies. Schedule 4.14 hereto contains a list of
all insurance policies (specifying the insurer, the amount of coverage, the
type of insurance and the policy number) maintained by Target on its
properties, assets, business and personnel.
4.15 Licenses and Permits; Compliance with Governmental
Requirements. Schedule 4.15 hereto sets forth a true and complete list of all
licenses and permits necessary for the conduct of Target's business. Target
has complied with all material Governmental Requirements applicable to its
business, and all Governmental Requirements with respect to the distribution
and sale of products and services by it.
4.16 Authorization. Seller has full legal right, power and
authority to enter into and deliver this Agreement and to consummate the
transactions set forth herein and to perform all the terms and conditions
hereof to be performed by it. The execution and delivery of this Agreement by
Seller and the performance of the transactions contemplated herein have been
duly and validly authorized by all requisite action of Seller, and this
Agreement has been duly and validly executed and delivered by Seller and is the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as limited by applicable bankruptcy,
moratorium, insolvency or other similar laws affecting generally the rights of
creditors or by principles of equity.
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4.17 Accounts Receivable. All notes and accounts receivable of
Target shown on the Reference Balance Sheet or that have arisen since the
Balance Sheet Date ("Accounts Receivable") have arisen in the ordinary course
of business. All Accounts Receivable either (i) have been collected or (ii)
are collectible on the respective due dates thereof, or, if no due date is
stated with respect thereto, 90 days of their creation in the ordinary course
of business, in each case in the aggregate recorded amounts thereof.
4.18 Environmental Protection Laws. None of Target, its business
or its assets are now, nor have any of Target, its business or its assets been
in the past, in violation of any applicable Governmental Requirement related to
environmental protection, air pollution, hazardous materials or other similar
matters except for such violations which individually or in the aggregate would
not have a Material Adverse Effect.
4.19 Brokers and Finders. No broker or finder has acted for Target
or Seller in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Target or Seller.
4.20 Customer List. Schedule 4.20 hereto sets forth a true,
correct and complete list of all customers of Target to which Target has sold
or provided products or services during the two (2) years immediately preceding
the date hereof. This list provides an accurate statement of the gross
revenues received from each such customer by Target during the fiscal year
ended March 31, 1996.
4.21 Adverse Facts. Seller is not aware (after having made all
reasonable inquiries) of any material fact or matter not disclosed in this
Agreement or in the Schedules hereto which might reasonably affect the
willingness of a purchaser to acquire the Stock on the terms (including price)
contained herein or that might be expected to adversely affect the assets or
the business of Target after Closing.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller as follows:
5.1 Incorporation. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2 Authorization. Purchaser has full legal right and corporate
power and authority to enter into and deliver this Agreement and to consummate
the transactions set forth herein and to perform all the terms and conditions
hereof to be performed by it. This Agreement has been duly executed and
delivered by Purchaser and is a legal, valid and binding obligation of
Purchaser enforceable in accordance with its terms, except as limited by
applicable bankruptcy, moratorium, insolvency or other laws affecting generally
the rights of creditors or by principles of equity. Except for the approval of
the Board of Directors of Purchaser, no approvals are required for the issuance
of the Purchase Shares under the operative corporate documents of Purchaser.
5.3 Brokers and Finders. No broker or finder has acted for
Purchaser in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Purchaser.
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5.4 Ponder Common Stock. The authorized share capital of Ponder
consists of 50,000,000 shares of common stock, $.01 par value ("Ponder Common
Stock"), of which 8,912,484 shares of Ponder Common Stock are issued and
outstanding. All of the Purchase Shares, when issued in accordance with the
terms of this Agreement, will be duly authorized, validly issued and
outstanding, fully paid and nonassessable.
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNITIES, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLER. All statements of fact contained in
this Agreement or in any written statement (including financial statements),
certificate, schedule or other document delivered by or on behalf of Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed representations and warranties of Seller hereunder. All
indemnities, guarantees, covenants, agreements, representations and warranties
made by Seller hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing, regardless of any
investigation at any time made by or on behalf of Purchaser.
7. COVENANTS OF SELLER PRIOR TO CLOSING DATE. Seller hereby
covenants and agrees that between the date of this Agreement and the Closing
Date:
7.1 Access to Information. Target shall and Seller shall, and
shall cause Target to, afford to the officers and authorized representatives of
Purchaser access to the plants, properties, books and records of Target and
furnish Purchaser with such financial and operating data and other information
regarding the business, assets and properties of Target as Purchaser may from
time to time reasonably request, including, but not limited to, true and
correct unaudited monthly financial statements for all months ending after the
Balance Sheet Date and prior to the Closing Date.
7.2 General Affirmative Covenants. Target shall and Seller shall
cause Target to:
(a) conduct its business only in the ordinary course;
(b) maintain its properties and facilities in good working
order and condition, ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to
or affecting its business, assets, properties and rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage acceptable to and approved in
writing by Purchaser; provided, however, that any incremental increase
in insurance coverage shall be paid by Purchaser;
(e) use its best efforts to maintain and preserve its
business organization intact and to retain its present employees,
customers and others having business relations with it;
(f) duly and timely file all reports or returns required to
be filed with any Governmental Authority, and promptly pay all Taxes
levied or assessed upon it or its properties or upon any part thereof
subject to the right to contest such taxes and assessments;
(g) duly observe and conform to all laws and requirements of
any Governmental Authority relating to its assets or properties or to
the operation and conduct of its business and all covenants, terms and
conditions upon or under which any of its properties are held;
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<PAGE> 14
(h) duly and timely take all actions necessary to carry out
the transactions contemplated hereby;
(i) deliver to Purchaser on or before the 15th day of each
month true and correct unaudited monthly balance sheets and statements
of income of Target for the immediately preceding month; and
(j) preserve and maintain the goodwill of Target.
7.3 General Negative Covenants. Target shall not take, and Seller
shall prohibit and prevent Target from taking, any of the following actions
without the prior written consent of Purchaser (except with respect to
subparagraph (e) below):
(a) making or approving any changes in Target's Articles of
Incorporation or other charter documents or bylaws;
(b) issuing any shares of stock or securities or any rights
with respect thereto;
(c) declaring or paying any dividend or making any
distribution in respect of Target's stock, whether now or hereafter
outstanding, or purchasing, redeeming or otherwise acquiring or
retiring, directly or indirectly, for value any shares of stock or
securities of Target;
(d) without the prior written or oral consent of Purchaser,
entering into or assuming any contract, agreement, obligation, lease,
license or commitment related to the business or assets of Target, not
in the ordinary course of business, that can be expected to generate
gross revenues or expenses in excess of US $50,000;
(e) except under existing credit facilities and in the
ordinary course of business, entering into or assuming any mortgage,
pledge, conditional sale or other title retention agreement, lien,
encumbrance or charge of any kind upon any of the properties or assets
of Target, whether now owned or hereafter acquired, or creating or
assuming any obligation for borrowed money, or making any loans or
advances to or assuming, guaranteeing, endorsing or otherwise becoming
liable with respect to the obligations, stock or dividends of any
person, firm, association or corporation, or purchasing or otherwise
acquiring any stocks, bonds or other securities of any person, firm,
association or corporation, or selling, leasing, abandoning or
otherwise disposing of any of the assets of Target, including, but not
limited to, real property, machinery, equipment or other operating
properties;
(f) engaging in any activities or transactions that might
result in a Material Adverse Effect; or
(g) merging or consolidating with any other corporation or
acquiring all or substantially all of the business or assets of any
other person, firm, association or corporation.
7.4 No Transfer of the Stock. Seller shall not sell, transfer,
assign, pledge or otherwise dispose of or encumber any right, title or interest
in or to any of the Stock or enter into any agreement, trust or commitment
relating to any of the Stock.
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<PAGE> 15
7.5 Approvals and Consents. Seller shall, and shall cause Target
to, obtain, in writing and without penalty to Purchaser, all necessary
approvals and consents required in order to authorize, approve and consummate
this Agreement.
8. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are, at the option of Purchaser, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Purchaser in its sole discretion):
8.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date. Each and all of the agreements and
covenants of Seller and Target to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed. Seller shall have
delivered to Purchaser a certificate dated the Closing Date and executed by
Seller to all such effects.
8.2 No Governmental Actions. No action or proceeding before a
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Purchaser reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
8.3 No Material Adverse Effect. No Material Adverse Effect shall
have occurred and no material loss or damage to any of the properties or assets
of Target, whether or not covered by insurance, shall have occurred since the
Balance Sheet Date, and Seller shall have delivered to Purchaser a certificate
dated the Closing Date and executed by Seller to all such effects.
8.4 Board of Directors Approval. The board of directors of
Purchaser, in its sole discretion, shall have approved this Agreement and the
consummation by Purchaser of the transactions contemplated hereby.
8.5 Execution of Asset Purchase Agreement. Purchaser and Villain
Ltd., a Guernsey corporation ("Villain"), shall have consummated the
transactions contemplated by the Asset Purchase Agreement dated
_______________, 1996, between Purchaser and Villain.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The
obligations of Seller hereunder are, at its option, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Seller, in its sole discretion):
9.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date. Each of the agreements and covenants of
Purchaser to be performed on or before the Closing Date shall have been
performed. Purchaser shall have delivered to Seller a certificate dated the
Closing Date and executed by Purchaser to all such effects.
10. INDEMNITY BY SELLER.
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10.1 Indemnity. Seller covenants and agrees that it will
indemnify, hold harmless and defend Purchaser and Target and their respective
officers, directors, employees, agents, consultants, representatives and
Affiliates (collectively, the "Indemnified Parties"), at all times from and
after the date of this Agreement, from and against any and all penalties,
demands, damages, punitive damages, losses, liabilities, suits, costs, costs of
any settlement or judgment, claims of any and every kind whatsoever (including,
without limitation, interest and penalties thereon), and expenses (including,
without limitation, reasonable attorneys' fees) of or to any of the Indemnified
Parties ("Damages"), which may now or in the future be paid, incurred or
suffered by or asserted against the Indemnified Parties by any Person resulting
or arising from or incurred in connection with any one or more of the
following:
(a) any material misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of Seller
under this Agreement or from any material misrepresentation in or
omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Purchaser pursuant to the terms of
this Agreement, which individually or in the aggregate are material.
Solely for purposes of determining whether any party is entitled to
indemnification under this Section 10.1 or whether any representation
or warranty or any covenant or agreement herein has been breached, if
any representation or warranty or any covenant or agreement herein
contains any materiality qualifier with respect thereto, then any
materiality qualifier in such provision with respect thereto shall be
deemed not to apply and shall be read and interpreted as if the
qualification stated herein with respect to materiality was not
contained therein; and
(b) all material actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including costs of court
and reasonable attorneys' fees) incident to any of the foregoing;
provided that no such obligation of indemnity shall accrue and Sellers shall
only be obligated hereunder, to the extent Damages exceed $100,000, and then
only for the amounts in excess of $100,000 and; provided further in no event
shall the amounts due hereunder exceed $4,000,000.00.
10.2 Notice of Claim. Purchaser agrees that upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including receipt by it or any Indemnified Party of notice of any
demand, assertion, claim, action or proceeding, judicial or otherwise, by any
Person with respect to any matter as to which any of the Indemnified Parties
are entitled to indemnity under the provisions of this Agreement (such actions
being collectively referred to herein as the "Claim"), Purchaser will give
prompt notice thereof in writing to Seller together with a statement of such
information respecting any of the foregoing as it shall then have; provided
that any delay in giving or failure to give such notice shall not limit
Purchaser's or Target's rights to indemnity hereunder except to the extent that
Seller is shown to have been damaged by such delay or failure.
10.3 Right of Seller to Participate in Defense. With respect to
any Claim as to which Purchaser seeks indemnity hereunder, Seller shall assume
the defense of any such proceeding, and shall have the sole discretion to
settle or defend any proceeding; provided that Purchaser shall have the right
to approve any such settlement, which approval shall not be unreasonably
withheld and Seller shall pay the fees of one firm of defense counsel unless
such counsel determines a conflict exists in which case Purchaser shall have
the right to engage separate counsel.
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10.4 Payment. Seller shall promptly pay to Purchaser or such other
Indemnified Parties as may be entitled to indemnity hereunder in cash the
amount of any Damages to which Purchaser or such Indemnified Parties may become
entitled by reason of the provisions of this Agreement.
11. REQUIREMENTS OF SECURITIES LAWS.
11.1 Accredited Investors. Seller recognizes that the Purchase
Shares are not being registered under the Securities Act of 1933, as amended
(the "Securities Act") in reliance upon an exemption from the Securities Act
which is predicated, in part, on the representations and agreements of Seller
set forth in this Agreement. Seller represents and warrants to the Purchaser
and Ponder that Seller is an "accredited investor" as that term is defined in
Rule 501(a) of the Securities Act and that the Purchase Shares are being
acquired solely for their own account for investment and not with a view to, or
for offer or resale in connection with, a distribution thereof within the
meaning of the Securities Act. Seller understands that the effect of such
representation and warranty is that the Purchase Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available at the time for any proposed sale
or other transfer thereof. Seller also understands that the Purchaser is under
no obligation to file a registration statement under the Securities Act
covering the Purchase Shares or to take any other action to enable Seller to
transfer or otherwise dispose of the Purchase Shares. Seller represents that
it has consulted with counsel in regard to the Securities Act and that it is
fully familiar with the circumstances under which it is required to hold the
Purchase Shares and the limitations upon the transfer or other disposition
thereof. Seller acknowledges that the Purchaser is relying upon the truth and
accuracy of the foregoing representations and warranties in issuing the
Purchase Shares under the Securities Act. Seller agrees to indemnify and hold
the Purchaser and Ponder harmless against all liabilities, costs and expenses,
including reasonable attorneys' fees, incurred by the Purchaser and Ponder as a
result of any sale, transfer or other disposition by Seller of all or any part
of the Purchase Shares in violation of the Securities Act.
11.2 Legend. The Purchase Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT."
11.3 SEC Documents. Seller acknowledges that it has been furnished
by the Purchaser and Ponder with (a) a copy of the Annual Report on Form 10-K
of Ponder for the fiscal year ended August 31, 1995, in the form filed with the
Securities and Exchange Commission ("SEC"), (b) definitive proxy statement
relating to the most recent meeting of shareholders, (c) copies of all filings
since August 31, 1995, by Ponder with the SEC in compliance with Section 13 or
14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
(d) any other relevant financial, business or operational information
reasonably requested by Seller. Seller represents that it has reviewed the
foregoing documents and acknowledges that it has been afforded the opportunity
to obtain any additional information necessary to verify the accuracy of the
information contained in the foregoing documents, including the opportunity to
ask questions of, and receive answers from, officers and representatives of
Ponder concerning the Purchaser and Ponder and the terms and conditions of the
transactions contemplated by this Agreement. Seller acknowledges that Seller
has
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been advised by counsel during the course of the negotiation of this Agreement,
with respect to the transactions contemplated by this Agreement.
11.4 Incidental Registration. If, at any time after the Closing
Date, Ponder proposes to register any of the Ponder Stock (whether unissued,
yet to be authorized or held by any person) under the Securities Act, it shall,
at least 30 days prior to the filing under the Securities Act of the
registration statement relating thereto, give written notice to Seller of its
intention to do so, and, upon the written request of Seller given within 10
days after the giving of any such notice (which request shall state the
proposed method of distribution), Ponder shall include or cause to be included
in any such registration statement the Purchase Shares; provided, however, that
Ponder may at any time withdraw or cease proceeding with any such registration
if it shall at the time withdraw or cease proceeding with the registration of
such Ponder Stock originally proposed to be registered; and provided further,
that if the registration proposed by Ponder relates to an underwritten
offering, Seller shall not have any right to sell the Purchase Shares in any
manner or through any underwriter other than in the manner and through the
managing underwriter or underwriters being used by Ponder.
(a) Notwithstanding any other provision of this Section
11.4, if a registration pursuant to this Section 11.4 involves a firm
commitment, underwritten offering of the securities so being registered and if
the managing underwriter of such offering informs Ponder and Seller by letter
of its belief that marketing factors require a limitation of the number of
shares to be underwritten, Ponder may limit the amount of Purchase Shares to be
included in the registration and underwriting; provided that no such reduction
shall reduce the securities being offered by Ponder for its own account; and
provided that those shares which are excluded from the underwritten offering
shall be withheld from the market by the holders thereof for a period, not to
exceed 180 days, which the managing underwriter reasonably determines as
necessary in order to effect the underwritten offering.
(b) Registration Procedures and Expenses. If and
whenever Ponder is required to include the Purchase Shares in a registration
statement under the Securities Act, as provided in Section 11.4 hereof, Ponder
shall, as expeditiously as is reasonably practicable, do each of the following:
(i) prepare and file with the SEC a registration
statement with respect to the Purchase Shares and, subject to the
limitations under Section 11.4 hereof, use its best efforts to cause
such registration statement to become effective;
(ii) cooperate with Seller and any underwriter who shall
sell the Purchase Shares in connection with their review of Ponder
made in connection with such registration;
(iii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for 120 days from the date of its effectiveness,
and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all the Purchase
Shares covered by such registration statement for such period;
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<PAGE> 19
(iv) furnish to Seller such number of copies of the
prospectus forming a part of such registration statement (including
each preliminary prospectus), in conformity with the requirements of
the Securities Act, and such other documents as Seller may reasonably
request in order to facilitate the disposition of the Purchase Shares;
and
(v) Ponder shall (a) notify Seller at any time when a
prospectus relating to the Purchase Shares is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus forming a part of such registration statement, as
then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing, and (b) at the request of Seller,
prepare and furnish to Seller a reasonable number of copies of any
supplement to or any amendment of such prospectus that may be
necessary so that, as thereafter delivered to the purchasers of the
Purchase Shares such prospectus shall not include any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(c) Agreement by Seller. In the event that Seller
participates, pursuant to this Section 11.4, in the offering of the Purchase
Shares Seller shall;
(i) furnish Ponder all material information reasonably
requested by Ponder concerning Seller and the proposed method of sale
or other disposition of the Purchase Shares and such other information
and undertakings as shall be reasonably required in connection with
the preparation and filing of the registration statement covering the
Purchase Shares in order to ensure full compliance with the Securities
Act and the rules and regulations of the SEC thereunder;
(ii) cooperate in good faith with Ponder and its underwriters,
if any, in connection with such registration, including placing the
Purchase Shares in escrow or custody to facilitate the sale and
distribution thereof provided that such escrow or custody arrangement
shall be no more restrictive upon Seller than upon any other holder of
Ponder Stock for the benefit of whom such registration is undertaken;
and
(iii) make no further sales or other dispositions, or offers
therefor, of the Purchase Shares under such registration statement if,
during the effectiveness of such registration statement, an
intervening event should occur which, in the opinion of counsel to
Ponder, makes the prospectus included in such registration statement
no longer comply with the Securities Act, so long as written notice
containing the facts and legal conclusions relied upon by Ponder in
this regard has been received by Seller from Ponder, until such time
as Seller has received from Ponder copies of a new, amended or
supplemented prospectus complying with the Securities Act, which
prospectus shall be delivered to Seller by Ponder as soon as
practicable after such notice.
(d) Allocation of Expenses. If and whenever Ponder is
required by the provisions of this Section 11.4 to use its best efforts to
effect the registration of the Purchase Shares under the Securities Act, Ponder
shall pay the costs and expenses in connection therewith; provided, however,
that Seller shall pay all underwriting discounts, selling commissions and stock
transfer taxes attributable to the Purchase Shares under such registration
statement.
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(e) Indemnification. In the event of any registration of
any of the Purchase Shares under the Securities Act pursuant to this Section
11.4, Seller shall indemnify and hold harmless, Ponder, each director of
Ponder, each officer of Ponder who shall sign such registration statement, each
underwriter and any person who controls Ponder or such underwriter within the
meaning of the Securities Act, with respect to any statement in or omission
from such registration statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to Ponder or its underwriter through an instrument duly
executed by any of Seller specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus or amendment
or supplement.
12. NON-COMPETITION AGREEMENT. For a period of two (2) years from
the date hereof, neither Seller nor any Affiliate of Seller shall, within the
areas in which Ponder and Target have each conducted business in the two years
preceding the Closing Date (i) compete directly or indirectly with the business
engaged in by Target as of the Closing Date, (ii) solicit directly or
indirectly any of the accounts of Target or (iii) become the employee or
consultant of or otherwise render services to, or own any interest in, any
enterprise that directly or indirectly competes with the business engaged in by
Target as of the Closing Date. For purposes of this Section 12, the term
"accounts" shall mean any Person for which Target has performed or does perform
services or to which Target has sold or does sell merchandise during the period
beginning two years immediately prior to the date of this Agreement and ending
one year after the date of this Agreement.
13. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Seller recognizes
and acknowledges that it has and will have access to certain confidential
information of Target, such as lists of customers and costs and financial
information, that is valuable, special and unique property of Target. Seller
agrees that it will not disclose, and Seller will use its best efforts to
prevent disclosure by any other Person of, any such confidential information to
any Person or for any purpose or reason whatsoever, except to authorized
representatives of Purchaser.
14. EXPENSES. Whether or not the transactions contemplated hereby
are consummated, each of the parties will pay all costs and expenses of its
performance of and compliance with this Agreement.
15. NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally, given by
prepaid telex or telegram or by facsimile or other similar instantaneous
electronic transmission device or mailed first class, postage prepaid,
certified United States mail, return receipt requested, as follows:
(a) If to Purchaser, at:
Ponder Industries, Inc.
P. O. Drawer 2229
Alice, Texas 78333
Attention: Larry Armstrong
Facsimile No.: 512-664-8451
-14-
<PAGE> 21
With a copy to:
Phillip M. Renfro
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Facsimile No.: 210-224-8336
(b) If to Seller, at:
Panther Oil Tools Ltd.
c/o Sydney Vane House
P. O. Box 201
Rue du Commerce
St. Peter Port
Guernsey
Channel Islands
Attention: John Le Seelleur
Facsimile No.: 44 1481 725 054
With a copy to:
Charles D. Powell
Brown, Parker & Leahy, L.L.P.
Citicorp Center
1200 Smith, Suite 3600
Houston, Texas 77002-4595
Facsimile No.: 713-654-1871
provided that any party may change its address for notice by giving to the
other party written notice of such change. Any notice given under this Section
14 shall be effective (i) if delivered personally, when delivered, (ii) if sent
by telex or telegram or by facsimile or other similar instantaneous electronic
transmission device, 24 hours after sending and (iii) if mailed, 48 hours after
mailing.
16. REMEDIES FOR BREACH.
16.1 Arbitration. The parties agree that any dispute or
controversy arising out of or in connection with this Agreement or any alleged
breach hereof shall be settled by arbitration in Houston, Texas pursuant to the
rules of the American Arbitration Association. If Purchaser on the one hand
and Seller, on the other hand cannot jointly select a single arbitrator to
determine the matter, one arbitrator shall be chosen by Purchaser on the one
hand and Seller, on the other hand (or, if either fails to make a choice, by
the American Arbitration Association on behalf of such party) and the two
arbitrators so chosen will select a third. The decisions of the single
arbitrator jointly selected by the parties, or, if three arbitrators are
selected, the decision of any two of them, will be final and binding upon the
parties and the judgment of a court of competent jurisdiction may be entered
thereon. Fees of the arbitrators and costs of arbitration shall be borne by
the parties in such manner as shall be determined by the arbitrator or
arbitrators.
17. GENERAL PROVISIONS.
-15-
<PAGE> 22
17.1 Governing Law; Interpretation; Section Headings. This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Texas. The section headings contained herein are for
purposes of convenience only, and shall not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
17.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intentions of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or severance,
except that if any severance materially alters the intentions of the parties
hereto as expressed herein (a modification being permitted only if there is no
material alteration), then the parties hereto shall use commercially reasonable
effort to agree to appropriate equitable amendments to this Agreement in light
of such severance, and if no such agreement can be reached within a reasonable
time, any party hereto may initiate arbitration under the then current rules of
the American Arbitration Association to determine and effect such appropriate
equitable amendments.
17.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the
transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
any party hereto which is not embodied in this Agreement, and no party hereto
shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth.
17.4 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns.
17.5 Assignment. Except as specifically permitted herein, this
Agreement and the rights and obligations of the parties hereto shall not be
assigned or delegated by either party hereto without the prior written consent
of the other party hereto.
17.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance.
17.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
17.8 Telecopy Execution and Delivery. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic
-16-
<PAGE> 23
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes.
18. TERMINATION. This Agreement may be terminated without further
obligation of the parties, as follows:
18.1 Mutual Consent. This Agreement may be terminated at any time
prior to Closing by mutual written consent of the parties hereto.
18.2 Failure of Conditions. By either party hereto, if the
conditions, as set forth in this Agreement, to such party's obligations under
this Agreement are not fulfilled on or prior to the Closing Date; provided that
any such termination shall not limit the remedies otherwise available to such
party as a result of misrepresentations of or breaches by the other party.
18.3 Failure to Close. This Agreement will automatically terminate
at the end of the day on May 31, 1996, if the Closing shall not have occurred
on or before such date, unless the parties shall have otherwise agreed in
writing prior to such date. No party will be liable in damages to any other
party as a result of termination pursuant to this Section 18.3 unless the
failure of the Closing was due to the failure of such party to comply with the
terms of this Agreement or the failure of a party to close the transaction if
all conditions had otherwise been satisfied.
[signatures on next page]
-17-
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PURCHASER:
PONDER ENERGY SERVICES, INC.
By: /s/ Ponder Energy Services, Inc.
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TARGET:
PANTHER OIL TOOLS (UK) LTD.
By: /s/ Panther Oil Tools (UK) Ltd.
--------------------------------
Name: John Le Seelleur
Title: Managing Director
SELLER:
PANTHER OIL TOOLS LTD.
By: /s/ Panther Oil Tools Ltd.
--------------------------------
Name: John Le Seelleur
Title: Managing Director
-18-
<PAGE> 1
ASSET PURCHASE AGREEMENT
DATED MAY 23, 1996
BY AND AMONG
PONDER ENERGY SERVICES, INC.,
A WHOLLY OWNED SUBSIDIARY OF
PONDER INDUSTRIES, INC.
AND
THE SHAREHOLDERS OF
VILLAIN LTD.
COVERING THE PURCHASE OF
SPECIFIED ASSETS OF VILLAIN LTD.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
1. GENERAL DEFINITIONS
<S> <C> <C>
1.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.2 Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------------
1.3 Governmental Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------------------------
1.4 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------------------
1.5 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------
1.6 Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------
1.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE
2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------
2.2 Delivery and Endorsement of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------------------------------
2.3 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------
3. PURCHASE PRICE
4. REPRESENTATIONS AND WARRANTIES BY SELLER
4.1 Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------
4.2 Properties, Assets and Leasehold Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------------------------------
4.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
4.4 Events Since Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------------------
4.5 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
4.6 Taxes and Governmental Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------------
4.7 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------
4.8 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------
4.9 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------
4.10 Suits, Actions and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------------
4.11 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------
4.12 Licenses and Permits; Compliance with Governmental Requirements . . . . . . . . . . . . . . . . . . 5
---------------------------------------------------------------
4.13 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------
4.14 Environmental Protection Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------------------
4.15 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------
4.16 Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
4.17 Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
5.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------------
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNITIES, GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLERS
7. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
7.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------
7.2 General Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------------
7.3 General Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------------------
7.4 No Transfer of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------
7.5 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------
8. CONDITIONS TO OBLIGATIONS OF PURCHASER
8.1 Accuracy of Representations and Warranties and Fulfillment of Covenants . . . . . . . . . . . . . . 8
-----------------------------------------------------------------------
8.2 No Governmental Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------------
8.3 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
8.4 Board of Directors Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------------
8.5 Execution of Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------------------------------
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
9.1 Accuracy of Representations and Warranties and Fulfillment of Covenants . . . . . . . . . . . . . . 9
-----------------------------------------------------------------------
10. INDEMNITY BY SELLERS
10.1 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------
10.2 Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------
10.3 Right of Sellers to Participate in Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------------------------
10.4 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------
11. NON-COMPETITION AGREEMENT
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
13. EXPENSES
14. NOTICES
15. REMEDIES FOR BREACH
15.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------
16. GENERAL PROVISIONS
16.1 Governing Law; Interpretation; Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------------------------
16.2 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------
16.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------
16.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------
16.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
16.6 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------
16.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------
16.8 Telecopy Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------
17. TERMINATION
17.1 Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------
17.2 Failure of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------
17.3 Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------
</TABLE>
<PAGE> 4
LIST OF SCHEDULES
<TABLE>
<S> <C>
SCHEDULE 2.1 - Purchase and Sale being substantially all of the assets of Villain to be transferred to
the Purchaser at the Closing.
SCHEDULE 4.1 - Incorporation being copies of the Articles of Incorporation and bylaws of Villain
SCHEDULE 4.3 - Financial Statements being copies of financial statements for Villain.
SCHEDULE 4.5 - Inventories being a true and complete list of the current inventory of Villain as
reflected on the Reference Balance Sheet
SCHEDULE 4.7 - Employee Benefit Plans employee benefit plans (including, but not limited to, pension plans
and health or welfare plans).
SCHEDULE 4.8 - Contracts and Agreements being a true and complete list of all of the material contracts,
agreements, leases, licenses, plans, arrangements or commitments,
written or oral, to which Villain is a party
SCHEDULE 4.9 - Intangible Property being a true and complete list of all intangible assets being patents
now owned or to be acquired by Villain prior to the Closing Date and
to include inventions, trademarks, trade names, brand names or
copyrights.
SCHEDULE 4.10 - Suits, Actions and Claims being a complete list of all suits, actions, claims, inquiries or-
investigations by any Person, or any legal, administrative or
arbitration proceedings in which Villain is engaged or which are
pending.
SCHEDULE 4.11 - Insurance Policies being a list of all insurance policies (specifying the insurer, the
amount of coverage, the type of insurance and the policy number)
maintained by Villain on its properties, assets, business and
personnel.
SCHEDULE 4.12 - Licenses and Permits;
Compliance with Governmental Requirements being a complete list of all licenses and permits necessary for the
conduct of Villain's business.
SCHEDULE 4.16 - Customer List being a complete list of all customers of Villain to which Villain
has sold or provided products or services during the past two years
</TABLE>
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this 23rd day
of May, 1996, by and between Villain Ltd., a Guernsey corporation ("Villain")
and the shareholders of Villain listed on Exhibit A attached hereto
("Sellers"), and Ponder Energy Services, Inc., a Delaware corporation
("Purchaser"), being a wholly owned subsidiary of Ponder Industries, Inc., a
Delaware corporation ("Ponder").
W I T N E S S E T H :
WHEREAS, Sellers own substantially all of the assets of Villain, and
desire to sell such assets to Purchaser pursuant to this Agreement as
hereinafter provided; and
WHEREAS, Purchaser desires to acquire substantially all of the assets
of Villain from Sellers pursuant to this Agreement as hereinafter provided;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person
controlling, controlled by or under common control with such Person.
1.2 Governmental Authority. "Governmental Authority" shall mean
any and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any divisions or instrumentalities thereof,
whether permanent or ad hoc and whether now or hereafter constituted and/or
existing.
1.3 Governmental Requirement. "Governmental Requirement" shall
mean any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.4 Material Adverse Effect. "Material Adverse Effect" shall mean
a material adverse effect on the business, financial condition, operation,
performance or prospects of the Villain.
1.5 Person. "Person" shall mean any natural person, any
Governmental Authority and any entity the separate existence of which is
recognized by any Governmental Authority or Governmental Requirement,
including, but not limited to, corporations, partnerships, joint ventures,
joint stock companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
-1-
<PAGE> 6
1.6 Schedule. "Schedule" to mean Schedules to this Agreement,
unless otherwise stated, and the Schedule may be attached to the Agreement or
set forth in a separate document denoted as the Schedule to this Agreement.
1.7 Taxes. "Tax" and "Taxes" shall mean any and all income,
excise, franchise or other taxes and all other charges or fees imposed or
collected by any Governmental Authority or pursuant to any Governmental
Requirement, and shall also include any and all penalties, interest,
deficiencies, assessments and other charges with respect thereto.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE.
2.1 Purchase and Sale. Subject to the terms and conditions herein
contained, Villain agrees to sell, assign, transfer and deliver to Purchaser at
the Closing (as hereinafter defined) all right, title and interest in and to
all of the assets, rights and properties set forth and described on Schedule
2.1, being substantially all of the assets of Villain (all such assets, rights
and properties being collectively referred to herein as the "Assets"). Subject
to the terms and conditions herein contained, Purchaser agrees to purchase from
Villain the Assets and to pay at the Closing the Purchase Price (as hereinafter
defined) pursuant to the provisions of Section 3 below.
2.2 Delivery and Endorsement of Certificates. At the Closing,
Villain shall deliver to Purchaser such deeds, bills of sale, endorsements,
assignments and other documents of transfer, conveyance and assignment valid as
necessary to transfer all of its right, title and interest in and to the Assets
to Purchaser and to vest in Purchaser good and indefeasible title to the
Assets, in form and substance satisfactory to Purchaser and Purchaser's
counsel.
2.3 Closing Date. Subject to the terms and conditions herein
contained, the consummation of transactions referred to above shall take place
(the "Closing") on or before May 31, 1996, at 10:00 a.m. local time, at the
offices of Brown, Parker & Leahy, L.L.P. in Houston, Texas, or at such other
time, date and place as Purchaser and Sellers shall in writing designate (the
"Closing Date").
3. PURCHASE PRICE. The aggregate consideration for the Assets is
US $1,000,000 (the "Purchase Price"), payable by Purchaser to Villain at the
Closing by delivery of a bank certified or cashier's check or by wire transfer.
4. REPRESENTATIONS AND WARRANTIES BY SELLERS. Sellers, jointly
and severally, represent and warrant to Purchaser as follows:
4.1 Incorporation. Villain is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly authorized, qualified and licensed under all
applicable Governmental Requirements to carry on its business in the places and
in the manner as now conducted, except where the failure to so qualify or be
licensed would not individually or in the aggregate have a Material Adverse
Effect. Villain has full corporate power and lawful authority to carry on its
business as it is now being conducted and to own and operate its assets,
properties and business. The copies of the Articles of Incorporation and bylaws
of Villain and all amendments thereto to date, each of which are included in
Schedule 4.1 hereto, are true, complete and correct.
-2-
<PAGE> 7
4.2 Properties, Assets and Leasehold Estates. Villain owns or has
the right to use all property, real or personal, tangible or intangible,
utilized in or necessary for the operation of its business with all of such
property comprising the Assets except for such deficiencies in title or
mortgage, liens, pledges, conditional sales agreements, charges easements,
covenants, assessments, restrictions and encumbrances of any nature whatsoever
which do not individually or in the aggregate, constitute a Material Adverse
Effect. Schedule 2.1 hereto sets forth a true and complete list of all such
property constituting the Assets as of the date hereof. Villain has good and
marketable title to all the Assets, free and clear of all mortgages, liens,
pledges, conditional sales agreements, charges, easements, covenants,
assessments, restrictions and encumbrances of any nature whatsoever except for
such deficiencies in title or mortgage, liens, pledges, conditional sales
agreements, charges easements, covenants, assessments, restrictions and
encumbrances of any nature whatsoever which do not individually or in the
aggregate, constitute a Material Adverse Effect.
4.3 Financial Statements. Sellers have delivered to Purchaser
copies of the following financial statements for Villain, all of which
financial statements are included in Schedule 4.3 hereto:
(a) Audited Balance Sheet (the "Reference Balance Sheet") as
of March 31, 1996 (the "Balance Sheet Date"); and
(b) Statement of Income and Statement of Changes in Financial
Position for the fiscal year ended March 31, 1996.
All financial statements supplied to Purchaser by Sellers are true and accurate
in all material respects, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, and present fairly the financial condition and the results
of the operations of Villain as of the dates and for the periods indicated
thereon. The Reference Balance Sheet reflects, as of the Balance Sheet Date,
all liabilities, debts and obligations of any nature of Villain, whether
accrued, absolute, contingent or otherwise, and whether due, or to become due,
including, but not limited to, liabilities, debts or obligations on account of
Taxes to the extent such items are required to be reflected on such balance
sheet under generally accepted accounting principles consistently applied.
4.4 Events Since Balance Sheet Date. Since the Balance Sheet Date
there has not been:
(a) any material change in the financial condition or in the
properties, assets or business of Villain, except normal and usual
changes in the ordinary course of business, none of which has been
materially adverse and all of which in the aggregate have not been
materially adverse;
(b) any declaration, setting aside, or payment of any
dividend or other distribution on or in respect of the capital stock
of Villain, or any direct or indirect redemption, purchase or other
acquisition of any of such stock or any issuance of any shares of such
stock or any granting or entering into of any option or commitment
relating to any of such stock;
(c) any transaction entered into or engaged in by Villain
other than transactions in the ordinary course of business; or
(d) to the best of Sellers' knowledge (after due inquiry of
Villain), any other occurrence, event or condition that has resulted
in a Material Adverse Effect (or can
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reasonably be expected to result in a Material Adverse Effect) or the
properties, assets or business of Villain.
4.5 Inventories. Schedule 4.5 hereto sets forth a true and
complete list of the current inventory of Villain. The inventories of Villain
reflected on the Reference Balance Sheet consist of items of a quality and
quantity usable and saleable in the normal course of business of Villain at an
aggregate value at least equal to the value at which such inventories are
reflected on the Reference Balance Sheet.
4.6 Taxes and Governmental Returns. As of the date hereof, all
Tax returns, information returns and governmental reports of every nature
required by any Governmental Authority or Governmental Requirement to be filed
by Villain or which include or should include Villain, ("Governmental Returns")
have been filed for all periods ending on or before the date hereof, and all
Taxes shown to be due and payable on such Governmental Returns or on any
assessments related to such Governmental Returns have been paid, except for
taxes or assessments reasonably contested by Villain or as to which the
nonpayment individually or in the aggregate would not have a Material Adverse
Effect. All Governmental Returns and reports and the information and data
contained therein have been properly and accurately compiled and completed,
fairly present the information purported to be shown therein, and reflect all
Tax liabilities of Villain for the periods covered by such Governmental Returns
and reports. Villain has no unpaid liability for any Taxes of any nature
whatsoever for any period prior to the date hereof, except for taxes or
assessments reasonably contested by Villain or as to which the nonpayment
individually or in the aggregate would not have a Material Adverse Effect. The
charges, accruals and reserves on the Reference Balance Sheet in respect of all
accrued Taxes are adequate to provide fully for all Taxes, if any, payable by
Villain with respect to periods ended on or before the date of this Agreement.
4.7 Employee Benefit Plans. Except as set forth on Schedule 4.7
hereto, Villain has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
whether formal or informal.
4.8 Contracts and Agreements. Schedule 4.8 hereto sets forth a
true and complete list of all of the material contracts, agreements, leases,
licenses, plans, arrangements or commitments, written or oral, to which Villain
is a party and by which any of the assets or properties of Villain are in any
way bound or obligated (including all amendments, supplements and modifications
thereto) (the "Contracts").
All of the Contracts are valid, binding and in full force and effect
in accordance with their terms and conditions and there is no existing default
thereunder or breach thereof by Villain, or, to the best knowledge of Sellers
(after due inquiry of Villain), by any other party to the Contracts. Copies of
all of the documents (or in the case of oral commitments, descriptions of the
material terms thereof) relevant to the Contracts have been delivered by
Sellers to Purchaser.
4.9 Intangible Property. Schedule 4.9 hereto sets forth a true
and complete list of all patents now owned or to be acquired by Villain prior
to the Closing Date. Except as set forth on Schedule 4.9 hereto, the operation
of the business of Villain as now conducted does not require the use of or
consist of any rights under any patents, inventions, trademarks, trade names,
brand names or copyrights, and the operation of the business of Villain as
presently conducted does not violate or infringe upon any such items owned by
others.
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4.10 Suits, Actions and Claims. Except as set forth in Schedule
4.10 hereto, (i) there are no suits, actions, claims, inquiries or
investigations by any Person, or any legal, administrative or arbitration
proceedings in which Villain is engaged or which are pending or, to the best
knowledge of Sellers (after due inquiry of Villain), threatened against or
affecting Villain or any of its properties, assets or business, or to which
Villain is or might become a party, or which question the validity or legality
of the transactions contemplated hereby, (ii) no basis or grounds for any such
suit, action, claim, inquiry, investigation or proceeding exists, and (iii)
there is no outstanding order, writ, injunction or decree of any Governmental
Authority against or affecting Villain or any of its properties, assets or
business. Without limiting the foregoing, neither Sellers nor any officer of
Villain has any knowledge of any state of facts or the occurrence of any event
forming the basis of any present claim against Villain.
4.11 Insurance Policies. Schedule 4.11 hereto contains a list of
all insurance policies (specifying the insurer, the amount of coverage, the
type of insurance and the policy number) maintained by Villain on its
properties, assets, business and personnel.
4.12 Licenses and Permits; Compliance with Governmental
Requirements. Schedule 4.12 hereto sets forth a true and complete list of all
licenses and permits necessary for the conduct of Villain's business. Villain
has complied with all material Governmental Requirements applicable to its
business, and all Governmental Requirements with respect to the distribution
and sale of products and services by it.
4.13 Authorization. Villain and each of Sellers has full legal
right, power and has authority to enter into and deliver this Agreement and to
consummate the transactions set forth herein and to perform all the terms and
conditions hereof to be performed by it or him. The execution and delivery of
this Agreement by Villain and the performance of the transactions contemplated
herein have been duly and validly authorized by all requisite action of
Villain, and this Agreement has been duly and validly executed and delivered by
Villain and each of Sellers and is the legal, valid and binding obligation of
Villain and each of Sellers, enforceable against Sellers in accordance with its
terms, except as limited by applicable bankruptcy, moratorium, insolvency or
other similar laws affecting generally the rights of creditors or by principles
of equity.
4.14 Environmental Protection Laws. None of Villain, its business
or its assets are now, nor have any of Villain, its business or its assets been
in the past, in violation of any applicable Governmental Requirement related to
environmental protection, air pollution, hazardous materials or other similar
matters except for such violations which individually or in the aggregate would
not have a Material Adverse Effect.
4.15 Brokers and Finders. No broker or finder has acted for
Villain or any of Sellers in connection with this Agreement or the transactions
contemplated by this Agreement and no broker or finder is entitled to any
brokerage or finder's fee or to any commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of
Villain or any of Sellers.
4.16 Customer List. Schedule 4.16 hereto sets forth a true,
correct and complete list of all customers of Villain to which Villain has sold
or provided products or services during the two years immediately preceding the
date hereof. This list provides an accurate statement of the gross revenues
received from each such customer by Villain during the fiscal year ended March
31, 1996.
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4.17 Adverse Facts. Sellers are not aware (after having made all
reasonable inquiries) of any material fact or matter not disclosed in this
Agreement or in the Schedules hereto which might reasonably affect the
willingness of a purchaser to acquire the Assets on the terms (including price)
contained herein or that might be expected to adversely affect the assets or
the business of Villain after Closing.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Sellers as follows:
5.1 Incorporation. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2 Authorization. Purchaser has full legal right and corporate
power and authority to enter into and deliver this Agreement and to consummate
the transactions set forth herein and to perform all the terms and conditions
hereof to be performed by it. This Agreement has been duly executed and
delivered by Purchaser and is a legal, valid and binding obligation of
Purchaser enforceable in accordance with its terms, except as limited by
applicable bankruptcy, moratorium, insolvency or other laws affecting generally
the rights of creditors or by principles of equity.
5.3 Brokers and Finders. No broker or finder has acted for
Purchaser in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Purchaser.
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNITIES, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLERS. All statements of fact contained in
this Agreement or in any written statement (including financial statements),
certificate, schedule or other document delivered by or on behalf of Sellers
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed representations and warranties of Sellers hereunder.
All indemnities, guarantees, covenants, agreements, representations and
warranties made by Sellers hereunder or pursuant hereto or in connection with
the transactions contemplated hereby shall survive the Closing, regardless of
any investigation at any time made by or on behalf of Purchaser.
7. COVENANTS OF SELLERS PRIOR TO CLOSING DATE. Sellers hereby
covenant and agree that between the date of this Agreement and the Closing
Date:
7.1 Access to Information. Villain and each of Sellers shall, and
each of Sellers shall cause Villain to, afford to the officers and authorized
representatives of Purchaser access to the plants, properties, books and
records of Villain and furnish Purchaser with such financial and operating data
and other information regarding the business, assets and properties of Villain
as Purchaser may from time to time reasonably request, including, but not
limited to, true and correct unaudited monthly financial statements for all
months ending after the Balance Sheet Date and prior to the Closing Date.
7.2 General Affirmative Covenants. At all times prior to the
Closing Date, Villain shall, and each of Sellers shall cause Villain to:
(a) conduct its business only in the ordinary course;
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(b) maintain the Assets in good working order and condition,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to
or affecting its business, assets, properties and rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage acceptable to and approved in
writing by Purchaser; provided, however; that any incremental increase
in insurance coverage shall be paid by Purchaser;
(e) duly and timely file all reports or returns required to
be filed with any Governmental Authority, and promptly pay all Taxes
levied or assessed upon it or its properties or upon any part thereof
subject to the right to contest such taxes and assessments;
(f) duly observe and conform to all laws and requirements of
any Governmental Authority relating to its assets or properties or to
the operation and conduct of its business and all covenants, terms and
conditions upon or under which any of its properties are held;
(g) duly and timely take all actions necessary to carry out
the transactions contemplated hereby.
7.3 General Negative Covenants. At all times prior to the Closing
Date, Villain shall not take, and each of Sellers shall prohibit and prevent
Villain from taking, any of the following actions without the prior written
consent of Purchaser (except with respect to subparagraph (e) below):
(a) making or approving any changes in Villain's Articles of
Incorporation or other charter documents or bylaws;
(b) issuing any shares of stock or securities or any rights
with respect thereto;
(c) declaring or paying any dividend or making any
distribution in respect of Villain's stock, whether now or hereafter
outstanding, or purchasing, redeeming or otherwise acquiring or
retiring, directly or indirectly, for value any shares of stock or
securities of Villain;
(d) without the prior written or oral consent of Purchaser,
entering into or assuming any contract, agreement, obligation, lease,
license or commitment related to assets of Villain, not in the
ordinary course of business, that can be expected to generate gross
revenues or expenses in excess of US $50,000;
(e) except under existing credit facilities and in the
ordinary course of business, entering into or assuming any mortgage,
pledge, conditional sale or other title retention agreement, lien,
encumbrance or charge of any kind upon any of the properties or assets
of Villain, whether now owned or hereafter acquired, or creating or
assuming any obligation for borrowed money, or making any loans or
advances to or assuming, guaranteeing, endorsing or otherwise becoming
liable with respect to the obligations, stock or dividends of any
person, firm, association or corporation, or purchasing or otherwise
acquiring any stocks, bonds or other securities of any person, firm,
association or corporation, or selling,
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leasing, abandoning or otherwise disposing of any of the assets of
Villain, including, but not limited to, real property, machinery,
equipment or other operating properties;
(f) engaging in any activities or transactions that might
result in a Material Adverse Effect; or
(g) merging or consolidating with any other corporation or
acquiring all or substantially all of the business or assets of any
other person, firm, association or corporation.
7.4 No Transfer of the Assets. Villain shall not sell, transfer,
assign, pledge or otherwise dispose of or encumber any right, title or interest
in or to any of the Assets or enter into any agreement, trust or commitment
relating to any of the Assets.
7.5 Approvals and Consents. Sellers shall, and shall cause
Villain to, obtain, in writing and without penalty to Purchaser, all necessary
approvals and consents required in order to authorize, approve and consummate
this Agreement.
8. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are, at the option of Purchaser, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Purchaser in its sole discretion):
8.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Sellers contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date. Each and all of the agreements and
covenants of Villain and Sellers to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed. Sellers shall have
delivered to Purchaser a certificate dated the Closing Date and executed by
Sellers to all such effects.
8.2 No Governmental Actions. No action or proceeding before a
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Purchaser reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
8.3 No Material Adverse Effect. No Material Adverse Effect shall
have occurred and no material loss or damage to any of the properties or assets
of Villain, whether or not covered by insurance, shall have occurred since the
Balance Sheet Date, and Sellers shall have delivered to Purchaser a certificate
dated the Closing Date and executed by Sellers to all such effects.
8.4 Board of Directors Approval. The board of directors of
Purchaser, in its sole discretion, shall have approved this Agreement and the
consummation by Purchaser of the transactions contemplated hereby.
8.5 Execution of Stock Purchase Agreement. Purchaser and Panther
Oil Tools Ltd., a Jersey corporation ("Panther"), shall have consummated the
transactions contemplated by the Stock Purchase Agreement dated May 23, 1996,
between Purchaser, Seller and Panther.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The
obligations of Sellers hereunder are, at their option, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Sellers, in their sole discretion):
9.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date. Each of the agreements and covenants of
Purchaser to be performed on or before the Closing Date shall have been
performed. Purchaser shall have delivered to Sellers a certificate dated the
Closing Date and executed by Purchaser to all such effects.
10. INDEMNITY BY SELLERS.
10.1 Indemnity. Sellers covenant and agree, jointly and severally,
that they will indemnify, hold harmless and defend Purchaser and Villain and
their respective officers, directors, employees, agents, consultants,
representatives and Affiliates (collectively, the "Indemnified Parties"), at
all times from and after the date of this Agreement, from and against any and
all penalties, demands, damages, punitive damages, losses, liabilities, suits,
costs, costs of any settlement or judgment, claims of any and every kind
whatsoever (including, without limitation, interest and penalties thereon), and
expenses (including, without limitation, reasonable attorneys' fees) of or to
any of the Indemnified Parties ("Damages"), which may now or in the future be
paid, incurred or suffered by or asserted against the Indemnified Parties by
any Person resulting or arising from or incurred in connection with any one or
more of the following:
(a) any material misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of Villain or
Sellers under this Agreement or from any material misrepresentation in
or omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Purchaser pursuant to the terms of
this Agreement, which individually or in the aggregate are material.
Solely for purposes of determining whether any party is entitled to
indemnification under this Section 10.1 or whether any representation
or warranty or any covenant or agreement herein has been breached, if
any representation or warranty or any covenant or agreement herein
contains any materiality qualifier with respect thereto, then any
materiality qualifier in such provision with respect thereto shall be
deemed not to apply and shall be read and interpreted as if the
qualification stated herein with respect to materiality was not
contained therein; and
(b) all material actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including costs of court
and reasonable attorneys' fees) incident to any of the foregoing;
provided that no such obligation of indemnity shall accrue and Sellers shall
only be obligated hereunder, to the extent Damages exceed $100,000, and then
only for the amounts in excess of $100,000 and; provided further, in no event
shall the amounts due hereunder exceed $1,000,000.00.
10.2 Notice of Claim. Purchaser agrees that upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including receipt by it or any Indemnified Party of notice of any
demand, assertion, claim, action or proceeding, judicial or
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otherwise, by any Person with respect to any matter as to which any of the
Indemnified Parties are entitled to indemnity under the provisions of this
Agreement (such actions being collectively referred to herein as the "Claim"),
Purchaser will give prompt notice thereof in writing to Sellers together with a
statement of such information respecting any of the foregoing as it shall then
have; provided that any delay in giving or failure to give such notice shall
not limit Purchaser's or Villain's rights to indemnity hereunder except to the
extent that Sellers are shown to have been damaged by such delay or failure.
10.3 Right of Sellers to Participate in Defense. With respect to
any Claim as to which Purchaser seeks indemnity hereunder, Sellers shall assume
the defense of any such proceeding, and shall have the sole discretion to
settle or defend any proceeding; provided that Purchaser shall have the right
to approve any such settlement, which approval shall not be unreasonably
withheld and Sellers shall pay the fees of one firm of defense counsel unless
such counsel determines a conflict exists in which case Purchaser shall have
the right to engage separate counsel.
10.4 Payment. Sellers shall promptly pay to Purchaser or such
other Indemnified Parties as may be entitled to indemnity hereunder in cash the
amount of any Damages to which Purchaser or such Indemnified Parties may become
entitled by reason of the provisions of this Agreement.
11. NON-COMPETITION AGREEMENT. For a period of two years from the
date hereof, neither Sellers nor any Affiliate of Sellers shall, within the
areas in which Ponder and Villain have each conducted business in the two years
preceding the Closing Date, (i) compete directly or indirectly with the
business engaged in by Villain as of the Closing Date, (ii) solicit directly or
indirectly any of the accounts of Villain or (iii) become the employee or
consultant of or otherwise render services to, or own any interest in, any
enterprise that directly or indirectly competes with the business engaged in by
Villain as of the Closing Date. For purposes of this Section 11, the term
"accounts" shall mean any Person for which Villain has performed or does
perform services or to which Villain has sold or does sell merchandise during
the period beginning two years immediately prior to the date of this Agreement
and ending one year after the date of this Agreement.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Sellers recognize
and acknowledge that they have and will have access to certain confidential
information of Villain, such as lists of customers and costs and financial
information, that is valuable, special and unique property of Villain. Sellers
agree that they will not disclose, and Sellers will use their best efforts to
prevent disclosure by any other Person of, any such confidential information to
any Person or for any purpose or reason whatsoever, except to authorized
representatives of Purchaser.
13. EXPENSES. Whether or not the transactions contemplated hereby
are consummated, each of the parties will pay all costs and expenses of its
performance of and compliance with this Agreement.
14. NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally, given by
prepaid telex or telegram or by facsimile or other similar
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instantaneous electronic transmission device or mailed first class, postage
prepaid, certified United States mail, return receipt requested, as follows:
(a) If to Purchaser, at:
Ponder Industries, Inc.
P. O. Drawer 2229
Alice, Texas 78333
Attention: Larry Armstrong
Facsimile No.: 512-664-8451
With a copy to:
Phillip M. Renfro
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Facsimile No. 210-224-8336
(b) If to Seller, at:
Villain Ltd.
c/o Sydney Vane House
P. O. Box 201
Rue du Commerce
St. Peter Port
Guernsey
Channel Islands
Attention: John Le Seelleur
Facsimile No. 44 1481 725 054
With a copy to:
Charles D. Powell
Brown, Parker & Leahy, L.L.P.
Citicorp Center
1200 Smith, Suite 3600
Houston, Texas 77002-4595
Facsimile No. (713) 654-1871
provided that any party may change its address for notice by giving to the
other party written notice of such change. Any notice given under this Section
14 shall be effective (i) if delivered personally, when delivered, (ii) if sent
by telex or telegram or by facsimile or other similar instantaneous electronic
transmission device, 24 hours after sending and (iii) if mailed, 48 hours after
mailing.
15. REMEDIES FOR BREACH.
15.1 Arbitration. The parties agree that any dispute or
controversy arising out of or in connection with this Agreement or any alleged
breach hereof shall be settled by arbitration in
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Houston, Texas pursuant to the rules of the American Arbitration Association.
If Purchaser on the one hand and Sellers, on the other hand cannot jointly
select a single arbitrator to determine the matter, one arbitrator shall be
chosen by Purchaser on the one hand and Sellers, on the other hand (or, if
either fails to make a choice, by the American Arbitration Association on
behalf of such party) and the two arbitrators so chosen will select a third.
The decisions of the single arbitrator jointly selected by the parties, or, if
three arbitrators are selected, the decision of any two of them, will be final
and binding upon the parties and the judgment of a court of competent
jurisdiction may be entered thereon. Fees of the arbitrators and costs of
arbitration shall be borne by the parties in such manner as shall be determined
by the arbitrator or arbitrators.
16. GENERAL PROVISIONS.
16.1 Governing Law; Interpretation; Section Headings. This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Texas. The section headings contained herein are for
purposes of convenience only, and shall not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
16.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intentions of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or severance,
except that if any severance materially alters the intentions of the parties
hereto as expressed herein (a modification being permitted only if there is no
material alteration), then the parties hereto shall use commercially reasonable
effort to agree to appropriate equitable amendments to this Agreement in light
of such severance, and if no such agreement can be reached within a reasonable
time, any party hereto may initiate arbitration under the then current rules of
the American Arbitration Association to determine and effect such appropriate
equitable amendments.
16.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the
transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
any party hereto which is not embodied in this Agreement, and no party hereto
shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth.
16.4 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns.
16.5 Assignment. Except as specifically permitted herein, this
Agreement and the rights and obligations of the parties hereto shall not be
assigned or delegated by either party hereto without the prior written consent
of the other party hereto.
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16.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance.
16.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
16.8 Telecopy Execution and Delivery. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes.
17. TERMINATION. This Agreement may be terminated without further
obligation of the parties, as follows:
17.1 Mutual Consent. This Agreement may be terminated at any time
prior to Closing by mutual written consent of the parties hereto.
17.2 Failure of Conditions. By either party hereto, if the
conditions, as set forth in this Agreement, to such party's obligations under
this Agreement are not fulfilled on or prior to the Closing Date; provided that
any such termination shall not limit the remedies otherwise available to such
party as a result of misrepresentations of or breaches by the other party.
17.3 Failure to Close. This Agreement will automatically terminate
at the end of the day on May 31, 1996, if the Closing shall not have occurred
on or before such date, unless the parties shall have otherwise agreed in
writing prior to such date. No party will be liable in damages to any other
party as a result of termination pursuant to this Section 17.3 unless the
failure of the Closing was due to the failure of such party to comply with the
terms of this Agreement or the failure of a party to close the transaction if
all conditions had otherwise been satisfied.
[signatures on next page]
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<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PURCHASER:
PONDER ENERGY SERVICES, INC.
By: /s/ Ponder Energy Services, Inc.
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Name:
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Title:
----------------------------------------
VILLAIN:
VILLAIN LTD.
By: /s/ Villain Ltd.
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Name:
-----------------------------------------
Title:
----------------------------------------
SELLERS:
/s/ John Le Seelleur
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Name: John Le Seelleur
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/s/ Mel Maitland
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Name: Mel Maitland
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/s/ Wayne Tynen
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Name: Wayne Tynen
-----------------------------------------
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