UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

FORM 10-Q
 
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018
 
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM             TO             .
 
COMMISSION FILE NUMBER 1-13455
 

TETRA Technologies, Inc.
(Exact name of registrant as specified in its charter)

 
Delaware
74-2148293
(State of incorporation)
(I.R.S. Employer Identification No.)
 
 
24955 Interstate 45 North
 
The Woodlands, Texas
77380
(Address of principal executive offices)
(zip code)
 
(281) 367-1983
(Registrant’s telephone number, including area code)

 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ]  No [   ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ]  No [   ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer [ ] 
Accelerated filer [ X ] 
Non-accelerated filer [   ] (Do not check if a smaller reporting company)
Smaller reporting company [   ]
Emerging growth company [ ]
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ]  No [ X ]
 
As of May 9, 2018 , there were 125,569,741 shares outstanding of the Company’s Common Stock, $0.01 par value per share.




PART I
FINANCIAL INFORMATION
 
Item 1. Financial Statements.
 
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)

 
Three Months Ended 
 March 31,
 
2018
 
2017
Revenues:
 

 
 

Product sales
$
75,953

 
$
67,978

Services
123,428

 
91,431

Total revenues
199,381

 
159,409

Cost of revenues:
 

 
 

Cost of product sales
60,214

 
49,582

Cost of services
84,743

 
63,649

Depreciation, amortization, and accretion
26,441

 
26,524

Total cost of revenues
171,398

 
139,755

Gross profit
27,983

 
19,654

General and administrative expense
30,803

 
26,751

Interest expense, net
14,973

 
13,767

Warrants fair value adjustment
(1,994
)
 
(5,976
)
CCLP Series A Preferred Units fair value adjustment
1,358

 
1,631

Litigation arbitration award income

 
(12,816
)
Other expense, net
2,776

 
461

Loss before taxes and discontinued operations
(19,933
)
 
(4,164
)
Provision for income taxes
1,124

 
81

Loss before discontinued operations
(21,057
)
 
(4,245
)
Discontinued operations:
 
 
 
Loss from discontinued operations (including 2018 loss on disposal of $31.5 million), net of taxes
(41,706
)
 
(7,007
)
Net loss
(62,763
)
 
(11,252
)
Loss attributable to noncontrolling interest
9,115

 
8,789

Loss attributable to TETRA stockholders
$
(53,648
)
 
$
(2,463
)
Basic net income (loss) per common share:
 

 
 
Income (loss) before discontinued operations attributable to TETRA stockholders
$
(0.10
)
 
$
0.04

Loss from discontinued operations attributable to TETRA stockholders
$
(0.36
)
 
$
(0.06
)
Net loss attributable to TETRA stockholders
$
(0.46
)
 
$
(0.02
)
Average shares outstanding
117,598

 
114,197

Diluted net income (loss) per common share:
 

 
 

Income (loss) before discontinued operations attributable to TETRA stockholders
$
(0.10
)
 
$
0.04

Loss from discontinued operations attributable to TETRA stockholders
$
(0.36
)
 
$
(0.06
)
Net loss attributable to TETRA stockholders
$
(0.46
)
 
$
(0.02
)
Average diluted shares outstanding
117,598

 
114,304



See Notes to Consolidated Financial Statements

1



TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
 
 
Three Months Ended 
 March 31,
 
2018
 
2017
Net loss
$
(62,763
)
 
$
(11,252
)
Foreign currency translation adjustment
1,283

 
2,193

Comprehensive loss
(61,480
)
 
(9,059
)
Comprehensive loss attributable to noncontrolling interest
9,500

 
8,648

Comprehensive loss attributable to TETRA stockholders
$
(51,980
)
 
$
(411
)
 

See Notes to Consolidated Financial Statements

2



TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
 
 
March 31,
2018
 
December 31,
2017
 
(Unaudited)
 
 

ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
104,113

 
$
26,128

Restricted cash
8,978

 
261

Trade accounts receivable, net of allowances of $1,073 in 2018 and $1,286 in 2017
175,262

 
144,051

Inventories
127,925

 
115,438

Assets of discontinued operations
7,907

 
121,134

Prepaid expenses and other current assets
22,618

 
17,597

Total current assets
446,803

 
424,609

Property, plant, and equipment:
 

 
 

Land and building
78,940

 
78,559

Machinery and equipment
1,195,458

 
1,167,680

Automobiles and trucks
36,392

 
34,744

Chemical plants
189,173

 
186,790

Construction in progress
37,930

 
31,566

Total property, plant, and equipment
1,537,893

 
1,499,339

Less accumulated depreciation
(713,125
)
 
(689,907
)
Net property, plant, and equipment
824,768

 
809,432

Other assets:
 

 
 

Goodwill
21,856

 
6,636

Patents, trademarks and other intangible assets, net of accumulated amortization of $72,946 in 2018 and $71,114 in 2017
88,134

 
47,405

Deferred tax assets, net
10

 
10

Notes receivable
7,462

 
44

Other assets
19,229

 
20,478

Total other assets
136,691

 
74,573

Total assets
$
1,408,262

 
$
1,308,614

 

See Notes to Consolidated Financial Statements

3



TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Amounts)
 
 
March 31,
2018
 
December 31,
2017
 
(Unaudited)
 
 

LIABILITIES AND EQUITY
 

 
 

Current liabilities:
 

 
 

Trade accounts payable
$
60,135

 
$
70,847

Unearned income
38,168

 
18,701

Accrued liabilities
45,171

 
58,478

Liabilities of discontinued operations
14,287

 
71,874

Total current liabilities
157,761

 
219,900

Long-term debt, net
823,565

 
629,855

Deferred income taxes
4,040

 
4,404

Asset retirement obligations, net of current portion
11,929

 
11,738

CCLP Series A Preferred Units
54,214

 
61,436

Warrants liability
11,207

 
13,202

Other liabilities
20,085

 
15,518

Total long-term liabilities
925,040

 
736,153

Commitments and contingencies
 

 
 

Equity:
 

 
 

TETRA stockholders' equity:
 

 
 

Common stock, par value $0.01 per share; 250,000,000 shares authorized at March 31, 2018 and December 31, 2017; 128,212,198 shares issued at March 31, 2018 and 118,515,797 shares issued at December 31, 2017
1,282

 
1,185

Additional paid-in capital
455,046

 
425,648

Treasury stock, at cost; 2,683,245 shares held at March 31, 2018, and 2,638,093 shares held at December 31, 2017
(18,821
)
 
(18,651
)
Accumulated other comprehensive income (loss)
(42,099
)
 
(43,767
)
Retained earnings (deficit)
(209,983
)
 
(156,335
)
Total TETRA stockholders' equity
185,425

 
208,080

Noncontrolling interests
140,036

 
144,481

Total equity
325,461

 
352,561

Total liabilities and equity
$
1,408,262

 
$
1,308,614

 

See Notes to Consolidated Financial Statements

4



TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)  
 
Three Months Ended March 31,
 
2018
 
2017
Operating activities:
 

 
 

Net loss
$
(62,763
)
 
$
(11,252
)
Reconciliation of net loss to cash provided by operating activities:
 
 
 
Depreciation, amortization, and accretion
28,509

 
29,478

Provision (benefit) for deferred income taxes
(61
)
 
(6
)
Equity-based compensation expense
876

 
2,469

Provision for doubtful accounts
453

 
772

Non-cash loss on disposition of business
32,369

 

Amortization of deferred financing costs
1,224

 
1,091

CCLP Series A Preferred offering costs

 
37

CCLP Series A Preferred accrued paid in kind distributions
1,523

 
1,955

CCLP Series A Preferred fair value adjustment
1,358

 
1,631

Warrants fair value adjustment
(1,995
)
 
(5,976
)
Expense for unamortized finance costs and other non-cash charges and credits
3,668

 
(532
)
Gain on sale of assets
90

 
(83
)
Changes in operating assets and liabilities:
 

 
 

Accounts receivable
6,584

 
(10,909
)
Inventories
(13,467
)
 
(10,627
)
Prepaid expenses and other current assets
(4,311
)
 
(527
)
Trade accounts payable and accrued expenses
(24,586
)
 
(16,919
)
Decommissioning liabilities

 
(474
)
Other
(732
)
 
(666
)
Net cash used in operating activities
(31,261
)
 
(20,538
)
Investing activities:
 

 
 

Purchases of property, plant, and equipment, net
(28,892
)
 
(5,060
)
Acquisition of businesses, net of cash acquired
(42,002
)
 

Proceeds from disposal of business
3,121

 

Proceeds on sale of property, plant, and equipment
76

 
248

Other investing activities
146

 
196

Net cash used in investing activities
(67,551
)
 
(4,616
)
Financing activities:
 

 
 

Proceeds from long-term debt
474,550

 
74,550

Principal payments on long-term debt
(278,150
)
 
(59,150
)
CCLP distributions
(4,358
)
 
(7,248
)
Tax remittances on equity based compensation
(293
)
 

Debt issuance costs and other financing activities
(6,139
)
 
(119
)
Net cash provided by financing activities
185,610

 
8,033

Effect of exchange rate changes on cash
(96
)
 
112

Increase (decrease) in cash and cash equivalents
86,702

 
(17,009
)
Cash and cash equivalents and restricted cash at beginning of period
26,389

 
36,531

Cash and cash equivalents and restricted cash at end of period
$
113,091

 
$
19,522

 
 
 
 
 
 
 
 
Supplemental cash flow information:
 

 
 
Interest paid
$
17,710

 
$
14,395

Income taxes paid
1,331

 
1,929

See Notes to Consolidated Financial Statements

5



TETRA Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
 
NOTE A – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing and offshore rig cooling services, and compression services and equipment. We were incorporated in Delaware in 1981. Following the acquisition and disposition transactions that closed during the three month period ended March 31, 2018 , we reorganized our reporting segments and are now composed of three divisions – Completion Fluids & Products, Water & Flowback Services, and Compression . Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc. and its consolidated subsidiaries on a consolidated basis.
 
Our consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods. Operating results for the period ended March 31, 2018 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2018 .

We consolidate the financial statements of CSI Compressco LP and its subsidiaries ("CCLP") as part of our Compression Division, as we determined that CCLP is a variable interest entity and we are the primary beneficiary. We control the financial interests of CCLP and have the ability to direct the activities of CCLP that most significantly impact its economic performance through our ownership of its general partner. The share of CCLP net assets and earnings that is not owned by us is presented as noncontrolling interest in our consolidated financial statements. Our cash flows from our investment in CCLP are limited to the quarterly distributions we receive on our CCLP common units and general partner interest (including incentive distribution rights) and the amounts collected for services we perform on behalf of CCLP, as TETRA's capital structure and CCLP's capital structure are separate, and do not include cross default provisions, cross collateralization provisions, or cross guarantees.
 
The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission ("SEC") and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in connection with the financial statements for the year ended December 31, 2017 , and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 5, 2018 .

We have reviewed our financial forecasts as of May 10, 2018 for the subsequent twelve month period, which consider the impact of the current distribution levels from CCLP. Based on our financial forecasts, which reflect certain operating and other business assumptions that we believe to be reasonable as of May 10, 2018 , we believe that we will have adequate liquidity, earnings, and operating cash flows to fund our operations and debt obligations and maintain compliance with our debt covenants through May 10, 2019.

In March 2018, CCLP closed an offering of CCLP senior secured notes in the aggregate amount of $350.0 million , and a portion of the proceeds were used to repay and terminate CCLP's bank revolving credit facility (as amended, the "CCLP Credit Agreement"). (See Note D - Long-Term Debt and Other Borrowings.) Based on its financial forecasts that reflect the current level of distributions and certain operating and other business assumptions that CCLP believes to be reasonable as of May 10, 2018 , CCLP believes that it will have adequate liquidity, earnings, and operating cash flows to fund its operations and debt obligations and maintain compliance with its debt covenants through May 10, 2019.

Use of Estimates
 
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material.

6




Reclassifications

Certain previously reported financial information has been reclassified to conform to the current period’s presentation. For a discussion of the reclassification of the financial presentation of our Offshore Division as discontinued operations, see Note C - Discontinued Operations.

Cash Equivalents
 
We consider all highly liquid cash investments with a maturity of three months or less when purchased to be cash equivalents.
 
Restricted Cash
 
Restricted cash is classified as a current asset when it is expected to be repaid or settled in the next twelve month period. Restricted cash as of March 31, 2018 consists of cash used to secure outstanding letters of credit of our Compression Division.
 
Inventories
 
Inventories are stated at the lower of cost or net realizable value. Except for work in progress inventory discussed below, cost is determined using the weighted average method. Components of inventories as of March 31, 2018 and December 31, 2017 are as follows: 
 
March 31, 2018
 
December 31, 2017
 
(In Thousands)
Finished goods
$
67,283

 
$
66,377

Raw materials
3,692

 
4,027

Parts and supplies
36,584

 
33,632

Work in progress
20,366

 
11,402

Total inventories
$
127,925

 
$
115,438


Finished goods inventories include newly manufactured clear brine fluids as well as used brines that are repurchased from certain customers for recycling. Recycled brines are recorded at cost, using the weighted average method. Work in progress inventory consists primarily of new compressor packages located in the CCLP fabrication facility in Midland, Texas. The cost of work in progress is determined using the specific identification method. We write down the value of inventory by an amount equal to the difference between its cost and its estimated net realizable value.

Net Income (Loss) per Share
 
The following is a reconciliation of the weighted average number of common shares outstanding with the number of shares used in the computations of net income (loss) per common and common equivalent share:
 
Three Months Ended 
 March 31,
 
2018
 
2017
 
(In Thousands)
Number of weighted average common shares outstanding
117,598

 
114,197

Assumed exercise of equity awards and warrants

 
107

Average diluted shares outstanding
117,598

 
114,304

 
For the three month period ended March 31, 2018 , the average diluted shares outstanding excludes the impact of all outstanding equity awards and warrants, as the inclusion of these shares would have been anti-dilutive due to the net losses recorded during the periods. In addition, for the three month periods ended March 31, 2018 and March 31, 2017 , the calculation of diluted earnings per common share excludes the impact of the CCLP

7



Preferred Units, as the inclusion of the impact from conversion of the CCLP Preferred Units into CCLP common units would have been anti-dilutive.

Foreign Currency Translation
 
We have designated the euro, the British pound, the Norwegian krone, the Canadian dollar, the Brazilian real, the Argentine peso, and the Mexican peso, respectively, as the functional currency for our operations in Finland and Sweden, the United Kingdom, Norway, Canada, Brazil, Argentina, and certain of our operations in Mexico. The U.S. dollar is the designated functional currency for all of our other foreign operations. The cumulative translation effects of translating the applicable accounts from the functional currencies into the U.S. dollar at current exchange rates are included as a separate component of equity. Foreign currency exchange gains and (losses) are included in other (income) expense, net and totaled $0.9 million and $(0.6) million during the three month periods ended March 31, 2018 and March 31, 2017 , respectively.

Income Taxes

Our consolidated provision for income taxes during the first three months of 2017 and 2018 is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three month period ended March 31, 2018 of negative 5.6% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. At March 31, 2018 and December 31, 2017, we had not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we made reasonable estimates of the effects and recorded provisional amounts. We will continue to make and refine our calculations as additional analysis is completed. We recognized an income tax expense of $54.1 million in the fourth quarter of 2017 associated with the impact of the Act in our 2017 filing. This income tax expense was fully offset by a decrease in the valuation allowance previously recorded on our net deferred tax assets. As such, the Act resulted in no net tax expense in the fourth quarter of 2017. We have considered in our estimated annual effective tax rate for 2018, the impact of the statutory changes enacted by the Act, including reasonable estimates of those provisions effective for the 2018 tax year. Our provisional estimate on Global Intangible Low Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), Base Erosion and Anti-Abuse Tax (“BEAT”), and IRC Section 163(j) interest limitation do not impact our effective tax rate for the three months ended March 31, 2018. The accounting for the tax effects of the Act will be completed in 2018 as provided by the U.S. Securities and Exchange Commission’s SAB No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act.

Asset Retirement Obligations

We operate facilities in various U.S. and foreign locations that are used in the manufacture, storage, and sale of our products, inventories, and equipment. These facilities are a combination of owned and leased assets. The values of our asset retirement obligations for these properties were $11.9 million and $11.7 million as of March 31, 2018 and December 31, 2017 , respectively. We are required to take certain actions in connection with the retirement of these assets. Asset retirement obligations are recorded in accordance with FASB ASC 410, "Asset Retirement and Environmental Obligations," whereby the estimated fair value of a liability for asset retirement obligations is recognized in the period in which it is incurred and in which a reasonable estimate can be made. Such estimates are based on relevant assumptions that we believe are reasonable. We have reviewed our obligations in this regard in detail and estimated the cost of these actions. The associated asset retirement costs are capitalized as part of the carrying amount of these long-lived assets and are depreciated on a straight-line basis over the life of the assets.

The changes in the values of our asset retirement obligations during the three month period ended March 31, 2018 , are as follows:

8



 
Three Months Ended March 31, 2018
 
(In Thousands)
Beginning balance for the period, as reported
$
11,738

Activity in the period:
 
Accretion of liability
159

Revisions in estimated cash flows
32

Ending balance
$
11,929


We review the adequacy of our asset retirement obligation liabilities whenever indicators suggest that the estimated cash flows underlying the liabilities have changed.
 
Fair Value Measurements
 
Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.
 
Under U.S. generally accepted accounting principles ("GAAP"), the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.
 
We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized on a recurring basis in the determination of the carrying value of the liability for the warrants to purchase 11.2 million shares of our common stock (the "Warrants") and CCLP Preferred Units (as herein defined). We also utilize fair value measurements on a recurring basis in the accounting for our foreign currency derivative contracts. For these fair value measurements, we utilize the quoted value as determined by our counterparty financial institution (a level 2 fair value measurement). Fair value measurements are also utilized on a nonrecurring basis, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill (a level 3 fair value measurement), the initial recording of our asset retirement obligations, and for the impairment of long-lived assets, including goodwill (a level 3 fair value measurement). The fair value of certain of our financial instruments, which include cash, restricted cash, accounts receivable, accounts payable, short-term borrowings, and long-term debt pursuant to our bank credit agreement, approximate their carrying amounts. The aggregate fair values of our long-term 11% Senior Note at March 31, 2018 and December 31, 2017 , were approximately $128.5 million and $130.8 million , respectively, based on current interest rates on those dates, which were different from the stated interest rate on the 11% Senior Note. Those fair values compare to face amounts of the 11% Senior Note of $125.0 million both at March 31, 2018 and December 31, 2017 . The fair values of the publicly traded CCLP 7.25% Senior Notes (as herein defined) at March 31, 2018 and December 31, 2017 , were approximately $277.4 million and $279.7 million , respectively. Those fair values compare to a face amount of $ 295.9 million both at March 31, 2018 and December 31, 2017 . The fair value of the publicly traded CCLP 7.50% Senior Secured Notes at March 31, 2018 was approximately $353.5 million . This fair value compares to aggregate principal amount of such notes at March 31, 2018 of $350.0 million . We calculated the fair values of our 11% Senior Note as of March 31, 2018 and December 31, 2017 internally, using current market conditions and average cost of debt (a level 2 fair value measurement). We based the fair values of the CCLP 7.25% Senior Notes and the CCLP 7.50% Senior Secured Notes as of March 31, 2018 on recent trades for these notes (a level 1 fair value measurement). See Note D - Long-Term Debt and Other Borrowings, for further discussion.


9



The CCLP Preferred Units are valued using a lattice modeling technique that, among a number of lattice structures, includes significant unobservable items (a Level 3 fair value measurement). These unobservable items include (i) the volatility of the trading price of CCLP's common units compared to a volatility analysis of equity prices of CCLP's comparable peer companies, (ii) a yield analysis that utilizes market information related to the debt yields of comparable peer companies, and (iii) a future conversion price analysis. The fair valuation of the CCLP Preferred Units liability is increased by, among other factors, projected increases in CCLP's common unit price and by increases in the volatility and decreases in the debt yields of CCLP's comparable peer companies. Increases (or decreases) in the fair value of CCLP Preferred Units will increase (decrease) the associated liability and result in future adjustments to earnings for the associated valuation losses (gains). During the three months ended March 31, 2018 , the fair value of the CCLP Preferred Units increased by $1.4 million , which was charged to earnings in the consolidated statement of operations.

The Warrants are valued either by using their traded market prices (a level 1 fair value measurement) or, for periods when market prices are not available, by using the Black Scholes option valuation model that includes estimates of the volatility of the Warrants implied by their trading prices (a level 3 fair value measurement). As of March 31, 2018 and December 31, 2017 , the fair valuation methodology utilized for the Warrants was a level 3 fair value measurement, as there were no available traded market prices to value the Warrants. The fair valuation of the Warrants liability is increased by, among other factors, increases in our common stock price, and by increases in the volatility of our common stock price. Increases (or decreases) in the fair value of the Warrants will increase (decrease) the associated liability and result in future adjustments to earnings for the associated valuation losses (gains). During the three months ended March 31, 2018 , the fair value of the Warrants liability decreased by $2.0 million , which was credited to earnings in the consolidated statement of operations.

During the third quarter of 2017 and the first quarter of 2018, we issued stand-alone, cash-settled stock appreciation rights awards to an executive officer. These awards are valued by using the Black Scholes option valuation model and such fair value is recognized based on the portion of the requisite service period satisfied as of each valuation date. The fair valuation of the stock appreciation rights liability is increased by, among other factors, increases in our common stock price, and by increases in the volatility of our common stock price. This stock appreciation rights awards are reflected as an accrued liability in our consolidated balance sheet. Increases (or decreases) in the fair value of the stock appreciation rights awards will increase (decrease) the associated liability and result in future adjustments to earnings for the associated valuation losses (gains).

A summary of these fair value measurements as of March 31, 2018 and December 31, 2017 , is as follows:
 
 
 
Fair Value Measurements Using
 
Total as of
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Description
March 31, 2018
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
(In Thousands)
CCLP Series A Preferred Units
$
(54,214
)
 
$

 
$

 
$
(54,214
)
Warrants liability
(11,207
)
 

 

 
(11,207
)
Cash-settled stock appreciation rights
(142
)
 

 

 
(142
)
Asset for foreign currency derivative contracts
104

 

 
104

 

Liability for foreign currency derivative contracts
(264
)
 

 
(264
)
 

Net liability
$
(65,723
)
 
 
 
 
 
 


10



 
 
 
Fair Value Measurements Using
 
Total as of
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Description
December 31, 2017
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
(In Thousands)
CCLP Series A Preferred Units
$
(61,436
)
 
$

 
$

 
$
(61,436
)
Warrants liability
(13,202
)
 

 

 
(13,202
)
Cash-settled stock appreciation rights
(97
)
 

 

 
(97
)
Asset for foreign currency derivative contracts
241

 

 
241

 

Liability for foreign currency derivative contracts
(378
)
 

 
(378
)
 

Net liability
$
(74,872
)
 
 
 
 
 
 

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers." This ASU supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605, "Revenue Recognition", and most industry-specific guidance. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those years, under either full or modified retrospective adoption.

In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)" to clarify the guidance on principal versus agent considerations. This ASU does not change the effective date or adoption method under ASU 2014-09 which is noted above.

In April 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" to clarify the guidance on identifying performance obligations and the licensing implementation guidance. This ASU does not change the effective date or adoption method under ASU 2014-09, which is noted above.

Additionally, in May 2016, the FASB issued ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients." This ASU addresses and amends several aspects of ASU 2014-09, but does not change the core principle of the guidance. This ASU does not change the effective date or adoption method under ASU 2014-09 which is noted above.

On January 1, 2018, we adopted ASU 2014-09 and all related amendments ("ASU 2014-09"). We utilized the modified retrospective method of adoption. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also provides a five-step model for determining revenue recognition for arrangements that are within the scope of the standard: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of ASU 2014-09, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for revenues, see Note J - Revenue from Contracts with Customers.

11



The impact from the adoption of ASU 2014-09 to our January 1, 2018 consolidated balance sheet, our March 31, 2018 consolidated balance sheet, and our consolidated results of operations for the three months ended March 31, 2018 was immaterial. The adoption of ASU 2014-09 had no impact to cash provided by operating, financing, or investing activities in our consolidated statement of cash flows. We do not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis.
In February 2016, the FASB issued ASU 2016-02, "Leases" (Topic 842) to increase comparability and transparency among different organizations. Organizations are required to recognize lease assets and lease liabilities on the balance sheet and disclose key information about the leasing arrangements and cash flows. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods, under a modified retrospective adoption with early adoption permitted. We are currently assessing the potential effects of these changes to our consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses. ASU 2016-13, which has an effective date of the first quarter of fiscal 2022, also applies to employee benefit plan accounting. We are currently assessing the potential effects of these changes to our consolidated financial statements and employee benefit plan accounting.
In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" to reduce diversity in practice in classification of certain transactions in the statement of cash flows. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted, under a retrospective transition adoption. We adopted this ASU during the three month period ended March 31, 2018, with no material impact to our consolidated financial statements.
In November 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory" which requires companies to account for the income tax effects of intercompany transfers of assets other than inventory when the transfer occurs. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted, under a modified retrospective transition adoption. We adopted this ASU during the three month period ended March 31, 2018. The adoption of this standard did not have a material impact to our consolidated financial statements due to a previously recorded valuation allowance on our net deferred tax assets.
Additionally, in November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted, under a retrospective transition adoption. We adopted this ASU during the three month period ended March 31, 2018, resulting in restricted cash being classified with cash and cash equivalents in our consolidated statement of cash flows.
In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. The ASU is effective for annual periods beginning after December 15, 2020, and interim periods within those annual periods, with early adoption permitted, under a prospective adoption. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting" to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. We adopted this ASU during the three month period ended March 31, 2018, with no material impact to our consolidated financial statements.
In July 2017, the FASB issued ASU 2017-11, "Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception" to consider “down round” features when determining whether certain equity-linked financial

12



instruments or embedded features are indexed to an entity’s own stock. Entities that present EPS under ASC 260 will recognize the effect of a down round feature in a freestanding equity-classified financial instrument only when it is triggered. The effect of triggering such a feature will be recognized as a dividend and a reduction to income available to common shareholders in basic EPS. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. We are currently assessing the potential effects of these changes to our consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" to change how companies account for and disclose hedges. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. We are currently assessing the potential effects of these changes to our consolidated financial statements.

NOTE B – ACQUISITIONS AND DISPOSITIONS

Acquisition of SwiftWater Energy Services

On February 28, 2018 , pursuant to a purchase agreement dated February 13, 2018 (the "SwiftWater Purchase Agreement"), we purchased all of the equity interests in SwiftWater Energy Services, LLC ("SwiftWater"), which is engaged in the business of providing water management and water solutions to oil and gas operators in the Permian Basin market of Texas. Strategically, the acquisition of SwiftWater enhances our position as one of the leading integrated water management companies, providing water transfer, storage, and treatment services, along with proprietary automation technology and numerous other water-related services.

Under the terms of the SwiftWater Purchase Agreement, consideration of $42.0 million of cash, subject to a working capital adjustment, and 7,772,021 shares of our common stock (valued at $28.2 million ) were paid at closing. The sellers will also have the right to receive contingent consideration payments, in an aggregate amount of up to $15.0 million , calculated on EBITDA and revenue (each as defined in the SwiftWater Purchase Agreement) of the water management business of SwiftWater and all of our pre-existing operations in the Permian Basin in respect of the period from January 1, 2018 through December 31, 2019. The contingent consideration may be paid in cash or shares of our common stock, at our election.

As of March 31, 2018, our preliminary allocation of the SwiftWater purchase price is as follows (in thousands):

Current assets
$
16,880

Property and equipment
10,999

Intangible assets
42,032

Goodwill
15,220

Total assets acquired
85,131

 
 
Current liabilities
7,189

Total liabilities assumed
7,189

Net assets acquired
$
77,942


The above allocation of the purchase price to the SwiftWater net tangible assets and liabilities considers approximately $6.7 million of estimated fair value for the liabilities associated with the contingent purchase price consideration. The fair value of the obligation to pay the contingent purchase price consideration was calculated based on the anticipated EBITDA and revenue for our water management business comprised of SwiftWater and all of our pre-existing operations in the Permian Basin and could increase (to $15.0 million ) or decrease (to $0 ) depending on the actual earnings from these operations going forward. Increases or decreases in the value of the anticipated contingent purchase price consideration liability due to changes in the amounts paid or expected to be paid will be charged or credited to earnings in the period in which such changes occur. The allocation of the purchase price to the SwiftWater net tangible assets and liabilities and identifiable intangible assets, as well as the contingent consideration liabilities, as of February 28, 2018, is preliminary and subject to revisions to the fair value

13



calculations for certain of the tangible and identified intangible assets as well as the fair value calculation of the contingent purchase price consideration liability. The final purchase price allocation could differ materially from the preliminary allocation noted in the summary above. The preliminary allocation of purchase price includes approximately $15.2 million of deductible goodwill allocated to our Water & Flowback Services segment, and is supported by the strategic benefits discussed above and expected to be generated from the acquisition. The acquired property and equipment is stated at fair value, and depreciation on the acquired property and equipment is computed using the straight-line method over the estimated useful lives of each asset. Machinery and equipment is depreciated using useful lives of 3 to 15 years; and automobiles and trucks are depreciated using useful lives of 3 to 4 years. The acquired intangible assets represent approximately $3.3 million for the trademark/tradename, approximately $37.2 million for customer relationships, and approximately $1.5 million of other intangible assets that are stated at estimated fair value and are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 16 years. These identified intangible assets are recorded net of approximately $0.2 million of accumulated amortization as of March 31, 2018 .

For the three month period ended March 31, 2018, our revenues, depreciation and amortization, and pretax earnings included $8.1 million , $0.5 million , and $1.8 million , respectively, associated with the SwiftWater acquisition after the closing on February 28, 2018. In addition, SwiftWater acquisition-related costs of approximately $0.4 million were incurred during the three month period ended March 31, 2018 , consisting of external legal fees, transaction consulting fees, and due diligence costs. These costs have been recognized in general and administrative expenses in the consolidated statement of operations.

The pro forma information presented below has been prepared to give effect to the SwiftWater acquisition as if the transaction had occurred at the beginning of the periods presented. The pro forma information includes the impact from the allocation of the acquisition purchase price on depreciation and amortization. The pro forma information also excludes the SwiftWater acquisition-related costs charged to earnings during the 2018 period. The pro forma information is presented for illustrative purposes only and is based on estimates and assumptions we deemed appropriate. The following pro forma information is not necessarily indicative of the historical results that would have been achieved if the acquisition transaction had occurred in the past, and our operating results may have been different from those reflected in the pro forma information below. Therefore, the pro forma information should not be relied upon as an indication of the operating results that we would have achieved if the transaction had occurred at the beginning of the periods presented or the future results that we will achieve after the transaction.

 
Three Months Ended March 31,
 
2018
 
2017
 
(In Thousands)
Revenues
$
213,531

 
$
170,933

Depreciation, amortization, and accretion
$
26,951

 
$
27,051

Gross profit
$
32,432

 
$
23,659

 
 
 
 
Net income (loss) from continuing operations
$
(21,437
)
 
$
(5,411
)
Net income (loss) attributable to TETRA stockholders
$
(12,322
)
 
$
3,378

 
 
 
 

Sale of Offshore Division

On March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division. Pursuant to an Asset Purchase and Sale Agreement (the "Maritech Asset Purchase Agreement") with Orinoco Natural Resources, LLC ("Orinoco"), Orinoco purchased certain remaining offshore oil, gas and mineral leases and related assets of Maritech (the "Maritech Properties"). Immediately thereafter, we closed the transactions contemplated by a Membership Interest Purchase and Sale Agreement (the "Maritech Equity Purchase Agreement") with Orinoco, whereby Orinoco purchased all of the equity interests of Maritech (the "Maritech Equity Interests"). Immediately thereafter, we closed the transactions contemplated by an Equity Interest Purchase Agreement (the "Offshore Services Purchase Agreement") with Epic Offshore Specialty, LLC, an affiliate of Orinoco ("Epic Offshore"), whereby Epic Offshore (the "Offshore Services Sale") purchased all of the equity interests in the wholly owned subsidiaries that comprised our Offshore Services segment operations (the "Offshore Services Equity Interests").

14



 
Under the terms of the Maritech Asset Purchase Agreement, the Maritech Equity Purchase Agreement, and the Offshore Services Purchase Agreement, the consideration delivered by Orinoco and Epic Offshore for the Maritech Properties, the Maritech Equity Interests and the Offshore Services Equity Interests consisted of (i) the assumption by Orinoco of substantially all of the liabilities and obligations relating to the ownership, operation and condition of the Maritech Properties and the provision of certain indemnities by Orinoco to us under the Maritech Asset Purchase Agreement, (ii) the assumption by Orinoco of substantially all of the liabilities of Maritech and the provision of certain indemnities by Orinoco under the Maritech Equity Purchase Agreement, (iii) the assumption by Epic Offshore of substantially all of the liabilities of the Offshore Services Equity Interests relating to the periods following the closing of the Offshore Services Sale and the provision of certain indemnities by Epic Offshore under the Offshore Services Purchase Agreement, (iv) cash in the amount $3.1 million , (v) a promissory note in the original principal amount of $7.5 million payable by Epic Offshore to us in full, together with interest at a rate of 1.52% per annum, on December 31, 2019, (vi) performance by Orinoco under a Bonding Agreement executed in connection with the Maritech Asset Purchase Agreement and the Maritech Equity Purchase Agreement whereby Orinoco provided at closing non-revocable performance bonds in an amount equal to $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech, to be replaced within 90 days of the closing with non-revocable performance bonds, meeting certain requirements, in the sum of $47.0 million , and (vii) the delivery of a personal guaranty agreement from Thomas M. Clarke and Ana M. Clarke guaranteeing the payment obligations of Orinoco under the Bonding Agreement (collectively, the "Transaction Consideration").

As a result of these transactions, we have effectively exited the businesses of our Offshore Services and Maritech segments, and these operations are reflected as discontinued operations in our consolidated financial statements. See Note C - "Discontinued Operations" for further discussion. Our consolidated pre-tax results of operations for the three month period ending March 31, 2018 included a loss on the disposal of our Offshore Division of $31.5 million , net of tax, including transaction costs of $1.4 million , during the three month period ended March 31, 2018.

NOTE C – DISCONTINUED OPERATIONS

As discussed in Note B - "Acquisitions and Dispositions," on March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division. As a result, we have accounted for our Offshore Division, consisting of our Offshore Services and Maritech segments, as discontinued operations and have revised prior period financial statements to exclude these businesses from continuing operations. A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations
(in thousands)
 
Three Months Ended March 31, 2018
 
Three Months Ended March 31, 2017
 
Offshore Services
 
Maritech
 
Total
 
Offshore Services
 
Maritech
 
Total
Major classes of line items constituting pretax loss from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
4,477

 
$
186

 
$
4,663

 
$
8,361

 
$
231

 
$
8,592

Cost of revenues
11,123

 
238

 
11,361

 
10,740

 
287

 
11,027

Depreciation, amortization, and accretion

1,856

 
213

 
2,069

 
2,584

 
370

 
2,954

General and administrative expense
1,253

 
186

 
1,439

 
1,468

 
237

 
1,705

Other (income) expense, net
39

 

 
39

 
(96
)
 

 
(96
)
Pretax loss from discontinued operations
(9,794
)
 
(451
)
 
(10,245
)
 
(6,335
)
 
(663
)
 
(6,998
)
Pretax loss on disposal of discontinued operations

 

 
(33,788
)
 

 

 

Total pretax loss from discontinued operations

 

 
(44,033
)
 

 

 
(6,998
)
Income tax benefit

 

 
(2,327
)
 

 

 
9

Total loss from discontinued operations

 

 
$
(41,706
)
 

 

 
$
(7,007
)


Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Statement of Financial Position
(in thousands)
 
March 31, 2018
 
December 31, 2017
 
Offshore Services
 
Maritech
 
Total
 
Offshore Services
 
Maritech
 
Total
Carrying amounts of major classes of assets included as part of discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Trade receivables
$
6,474

 
$
1,433

 
$
7,907

 
$
27,385

 
$
1,542

 
$
28,927

Inventories

 

 

 
4,616

 

 
4,616

Property, plant, and equipment

 

 

 
85,873

 

 
85,873

Other assets

 

 

 
1,674

 
44

 
1,718

Total major classes of assets of the discontinued operations
$
6,474

 
$
1,433

 
$
7,907

 
$
119,548

 
$
1,586

 
$
121,134

 
 
 
 
 
 
 
 
 
 
 
 
Carrying amounts of major classes of liabilities included as part of discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Trade payables
6,509

 
228

 
6,737

 
13,942

 
87

 
14,029

Accrued liabilities
5,328

 
2,222

 
7,550

 
8,905

 
2,278

 
11,183

Decommissioning and other asset retirement obligations

 

 

 

 
46,662

 
46,662

Total major classes of liabilities of the discontinued operations
$
11,837

 
$
2,450

 
$
14,287

 
$
22,847

 
$
49,027

 
$
71,874



15




NOTE D – LONG-TERM DEBT AND OTHER BORROWINGS
 
We believe TETRA's capital structure and CCLP's capital structure should be considered separately, as there are no cross default provisions, cross collateralization provisions, or cross guarantees between CCLP's debt and TETRA's debt.

Consolidated long-term debt as of March 31, 2018 and December 31, 2017 , consists of the following:
 
 
 
March 31, 2018
 
December 31, 2017
 
 
 
(In Thousands)
TETRA
 
Scheduled Maturity
 
 
 
Bank revolving line of credit facility (presented net of the unamortized deferred financing costs of $1.3 million as of March 31, 2018)
 
September 30, 2019
$
73,143

 
$

11.0% Senior Note, Series 2015 (presented net of the unamortized discount of $3.7 million as of March 31, 2018 and $3.9 million as of December 31, 2017 and net of unamortized deferred financing costs of $3.3 million as of March 31, 2018 and $3.4 million as of December 31, 2017)
 
November 5, 2022
118,008

 
117,679

TETRA total debt
 
 
191,151

 
117,679

Less current portion
 
 

 

TETRA total long-term debt
 
 
$
191,151

 
$
117,679

 
 
 
 
 
 
CCLP
 
 
 
 
 
CCLP Bank Credit Facility (presented net of the unamortized deferred financing costs of $4.0 million as of December 31, 2017), terminated March 22, 2018
 
August 4, 2019

 
223,985

CCLP 7.25% Senior Notes (presented net of the unamortized discount of $2.7 million as of March 31, 2018 and $2.8 million as of December 31, 2017 and net of unamortized deferred financing costs of $4.7 million as of March 31, 2018 and $5.0 million as of December 31, 2017)
 
August 15, 2022
288,588

 
288,191

CCLP 7.50% Senior Secured Notes (presented net of unamortized deferred financing costs of $6.2 million as of March 31, 2018)
 
March 22, 2025
343,826

 

CCLP total debt
 
 
632,414

 
512,176

Less current portion
 
 
$

 
$

Consolidated total long-term debt
 
 
$
823,565

 
$
629,855


As of March 31, 2018 , TETRA (excluding CCLP) had a $74.4 million outstanding balance and $6.1 million in letters of credit against its Credit Agreement, leaving a net availability of $119.5 million . Availability under the TETRA Credit Agreement is subject to compliance with the covenants and other provisions in the credit agreement that may limit borrowings thereunder. The CCLP Credit Agreement was terminated in March 2018.

As described below, we and CCLP are in compliance with all covenants of our respective debt and senior note agreements as of March 31, 2018 .
    
Our Long-Term Debt

Our Credit Agreement .


16



At March 31, 2018 , our consolidated leverage ratio was 2.62 to 1 (compared to a 4.75 to 1 maximum allowed under the Credit Agreement) and our fixed charge coverage ratio was 2.54 to 1 (compared to a 1.25 to 1 minimum required under the Credit Agreement).

CCLP Long-Term Debt     

CCLP Senior Secured Notes . On March 8, 2018 , CCLP, and its wholly owned subsidiary, CSI Compressco Finance Inc. (together with CCLP, the "CCLP Issuers") entered into the Purchase Agreement (the “Purchase Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the initial purchasers listed in Schedule A thereto (collectively, the “Initial Purchasers”), pursuant to which the CCLP Issuers agreed to issue and sell to the Initial Purchasers $350 million aggregate principal amount of the CCLP Issuers’ 7.50% Senior Secured First Lien Notes due 2025 (the "CCLP Senior Secured Notes") (the "CCLP Offering") pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act").

The CCLP Issuers closed the Offering on March 22, 2018. The CCLP Senior Secured Notes were issued at par for net proceeds of approximately $344.1 million , after deducting certain financing costs. CCLP used the net proceeds to repay in full and terminate its existing bank Credit Agreement and for general partnership purposes, including the expansion of its compression fleet. The CCLP Senior Secured Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees" and, together with the CCLP Senior Secured Notes, the "CCLP Senior Secured Note Securities") on a senior secured basis initially by each of CCLP's domestic restricted subsidiaries (other than CSI Compressco Finance Inc., certain immaterial subsidiaries and certain other excluded domestic subsidiaries) and are secured by a first-priority security interest in substantially all of the CCLP Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the CCLP Senior Secured Notes, subject to certain permitted encumbrances and exceptions. On the closing date, CCLP entered into an indenture (the "Indenture") by and among the Obligors and U.S. Bank National Association, as trustee with respect to the Securities. The CCLP Senior Secured Notes accrue interest at a rate of 7.50% per annum. Interest on the CCLP Senior Secured Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2018. The CCLP Senior Secured Notes are scheduled to mature on April 1, 2025. During the three months ended March 31, 2018, CCLP incurred total financing costs of $6.2 million related to the CCLP Senior Secured Notes . These costs are deferred, netting against the carrying value of the amount outstanding.

On and after April 1, 2021, CCLP may redeem all or a part of the CCLP Senior Secured Notes , from time to time, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon to, but not including, the applicable redemption date, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12-month period beginning on April 1 of the years indicated below:

 
 
 
Date
 
Price
2021
 
105.625
%
2022
 
103.750
%
2023
 
101.875
%
2024
 
100.000
%

In addition, any time or from time to time before April 1, 2021, CCLP may, at its option, redeem all or a portion of the CCLP Senior Secured Notes at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined in the Indenture) with respect to the CCLP Senior Secured Notes plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

Prior to April 1, 2021, CCLP may on one or more occasions redeem up to 35% of the principal amount of the CCLP Senior Secured Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price equal to 107.500% of the principal amount of the CCLP Senior Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, subject to the right of holders of record on the relevant record date to receive interest due on the

17



relevant interest payment date, provided that (a) at least 65% of the aggregate principal amount of the CCLP Senior Secured Notes originally issued on the issue date (excluding notes held by CCLP and its subsidiaries) remains outstanding after each such redemption; and (b) the redemption occurs within 180 days after the date of the closing of the equity offering.
    
If CCLP experiences certain kinds of changes of control, each holder of the CCLP Senior Secured Notes will be entitled to require CCLP to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of that holder’s CCLP Senior Secured Notes pursuant to an offer on the terms set forth in the Indenture. CCLP will offer to make a cash payment equal to 101% of the aggregate principal amount of the CCLP Senior Secured Notes repurchased plus accrued and unpaid interest, if any, on the CCLP Senior Secured Notes repurchased to the date of repurchase, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

The Indenture contains customary covenants restricting CCLP's ability and the ability of CCLP restricted subsidiaries to: (i) pay distributions on, purchase or redeem CCLP common units or purchase or redeem CCLP subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to CCLP. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting CCLP, subject to the satisfaction of certain conditions, to transfer assets to certain of CCLP's unrestricted subsidiaries. Moreover, if the CCLP Senior Secured Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the Indenture, many of the restrictive covenants in the Indenture will be terminated. The Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding CCLP Senior Secured Notes may declare all of the CCLP Senior Secured Notes to be due and payable immediately .

On March 22, 2018, CCLP, the grantors named therein, the Trustee and U.S. Bank National Association, as the collateral trustee (the “Collateral Trustee”), entered into a collateral trust agreement (the “Collateral Trust Agreement”) pursuant to which the Collateral Trustee will receive, hold, administer, maintain, enforce and distribute the proceeds of all of its liens upon the collateral for the benefit of the current and future holders of the CCLP Senior Secured Notes and any future priority lien obligations, if any.

CCLP Bank Credit Facilities.

On March 22, 2018, in connection with the closing of the CCLP Offering, CCLP repaid all outstanding borrowings and obligations under its existing CCLP Credit Agreement with a portion of the net proceeds from the CCLP Offering, and terminated the CCLP Credit Agreement. As a result of the termination of the CCLP Credit Agreement, associated unamortized deferred financing costs of $3.5 million were charged to other (income) expense, net, during the three month period ended March 31, 2018.

NOTE E – CCLP SERIES A CONVERTIBLE PREFERRED UNITS

During 2016, CCLP entered into Series A Preferred Unit Purchase Agreements (the “CCLP Unit Purchase Agreements”) with certain purchasers to issue and sell in private placements (the "Initial Private Placement" and "Subsequent Private Placement," respectively) an aggregate of 6,999,126 of CSI Compressco LP Series A Convertible Preferred Units representing limited partner interests in CCLP (the “CCLP Preferred Units”) for a cash purchase price of $11.43 per CCLP Preferred Unit (the “Issue Price”), resulting in total 2016 net proceeds to CCLP, after deducting certain offering expenses, of $77.3 million . We purchased 874,891 of the CCLP Preferred Units in the Initial Private Placement at the aggregate Issue Price of $10.0 million .

We and the other holders of CCLP Preferred Units (each, a “CCLP Preferred Unitholder”) receive quarterly distributions, which are paid in kind in additional CCLP Preferred Units, equal to an annual rate of 11.00% of the Issue Price ( $1.2573 per unit annualized), subject to certain adjustments. The rights of the CCLP Preferred Units include certain anti-dilution adjustments, including adjustments for economic dilution resulting from the issuance of CCLP common units in the future below a set price.


18



A ratable portion of the CCLP Preferred Units has been, and will continue to be, converted into CCLP common units on the eighth day of each month over a period of thirty months that began in March 2017 (each, a “Conversion Date”), subject to certain provisions of the Second Amended and Restated CCLP Partnership Agreement that may delay or accelerate all or a portion of such monthly conversions. On each Conversion Date, a portion of the CCLP Preferred Units will convert into CCLP common units representing limited partner interests in CCLP in an amount equal to, with respect to each CCLP Preferred Unitholder, the number of CCLP Preferred Units held by such CCLP Preferred Unitholder divided by the number of Conversion Dates remaining, subject to adjustment described in the Second Amended and Restated CCLP Partnership Agreement, with the conversion price (the "Conversion Price") determined by the trading prices of the common units over the prior month, among other factors, and as otherwise impacted by the existence of certain conditions related to the CCLP common units. Based on the number of CCLP Preferred Units outstanding as of March 31, 2018 , the maximum aggregate number of CCLP common units that could be required to be issued pursuant to the conversion provisions of the CCLP Preferred Units is approximately 30.0 million CCLP common units; however, CCLP may, at its option, pay cash, or a combination of cash and common units, to the CCLP Preferred Unitholders instead of issuing common units on any Conversion Date, subject to certain restrictions as described in the Second Amended and Restated CCLP Partnership Agreement. The total number of CCLP Preferred Units outstanding as of March 31, 2018 was 5,241,563 , of which we held 658,281 .

Because the CCLP Preferred Units may be settled using a variable number of CCLP common units, the fair value of the CCLP Preferred Units, net of the units we purchased, is classified as long-term liabilities on our consolidated balance sheet in accordance with ASC 480 "Distinguishing Liabilities and Equity." The fair value of the CCLP Preferred Units as of March 31, 2018 was $54.2 million . Changes in the fair value during each quarterly period, including the $1.4 million and $1.6 million net increase s in fair value during the three month period ended March 31, 2018 and 2017, respectively, are charged or credited to earnings in the accompanying consolidated statements of operations. Based on the conversion provisions of the CCLP Preferred Units, and using the Conversion Price calculated as of March 31, 2018 , the theoretical number of CCLP common units that would be issued if all of the outstanding CCLP Preferred Units were converted on March 31, 2018 on the same basis as the monthly conversions would be approximately 8.6 million CCLP common units, with an aggregate market value of $62.6 million . A $1 decrease in the Conversion Price would result in the issuance of 1.4 million additional CCLP common units pursuant to these conversion provisions.

NOTE F – MARKET RISKS AND DERIVATIVE CONTRACTS
 
We are exposed to financial and market risks that affect our businesses. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. We have currency exchange rate risk exposure related to transactions denominated in foreign currencies as well as to investments in certain of our international operations. As a result of our variable rate bank credit facility, we face market risk exposure related to changes in applicable interest rates. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures.

Derivative Contracts

Foreign Currency Derivative Contracts . We and CCLP each enter into 30-day foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of March 31, 2018 , we and CCLP had the following foreign currency derivative contracts outstanding relating to portions of our foreign operations:
Derivative Contracts
 
US Dollar Notional Amount
 
Traded Exchange Rate
 
Settlement Date

 
(In Thousands)
 

 

Forward sale Euro
 
$
1,117

 
1.24
 
4/18/2018
Forward purchase pounds sterling
 
5,624

 
1.41
 
4/18/2018
Forward sale Canadian dollar
 
5,925

 
1.30
 
4/18/2018
Forward purchase Mexican peso
 
1,653

 
18.76
 
4/18/2018
Forward sale Norwegian krone
 
3,782

 
7.75
 
4/18/2018
Forward sale Mexican peso
 
6,760

 
18.79
 
4/18/2018

19




Under this program, we and CCLP may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative instruments are based on quoted market values as reported to us by our counterparty (a level 2 fair value measurement). The fair values of our and CCLP's foreign currency derivative instruments as of March 31, 2018 and December 31, 2017 , are as follows:

Foreign currency derivative instruments
Balance Sheet Location
 
 Fair Value at March 31, 201 8
 
 Fair Value at December 31, 2017

 

 
(In Thousands)
Forward purchase contracts
 
Current assets
 
$
48

 
$
111

Forward sale contracts
 
Current assets
 
56

 
130

Forward sale contracts
 
Current liabilities
 
(259
)
 
(255
)
Forward purchase contracts
 
Current liabilities
 
(6
)
 
(113
)
Net asset (liability)
 
 
 
$
(161
)
 
$
(127
)

None of the foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three month periods ended March 31, 2018 and March 31, 2017 , we recognized $28,000 and $0.7 million of net gains (losses), respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.

NOTE G – EQUITY
 
Changes in equity for the three month periods ended March 31, 2018 and 2017 are as follows:

 
Three Months Ended March 31,
 
2018
 
2017
 
TETRA
 
Non-
controlling
Interest
 
Total
 
TETRA
 
Non-
controlling
Interest
 
Total
 
(In Thousands)
Beginning balance for the period
$
208,080

 
$
144,481

 
$
352,561

 
$
233,523

 
$
166,943

 
$
400,466

Net income (loss)
(53,648
)
 
(9,115
)
 
(62,763
)
 
(2,463
)
 
(8,789
)
 
(11,252
)
Foreign currency translation adjustment
1,668

 
(385
)
 
1,283

 
2,052

 
141

 
2,193

Comprehensive Income (loss)
(51,980
)
 
(9,500
)
 
(61,480
)
 
(411
)
 
(8,648
)
 
(9,059
)
Issuance of common stock, net
28,115

 

 
28,115

 
(11
)
 

 
(11
)
Conversions of CCLP Series A Preferred

 
10,103

 
10,103

 

 
2,388

 
2,388

Distributions to public unitholders

 
(4,358
)
 
(4,358
)
 

 
(7,248
)
 
(7,248
)
Equity-based compensation
1,434

 
(655
)
 
779

 
1,513

 
956

 
2,469

Treasury stock and other
(224
)
 
(35
)
 
(259
)
 
(36
)
 
(42
)
 
(78
)
Ending balance as of March 31
$
185,425

 
$
140,036

 
$
325,461

 
$
234,578

 
$
154,349

 
$
388,927


Activity within the foreign currency translation adjustment account during the periods includes no reclassifications to net income (loss).


20



NOTE H – COMMITMENTS AND CONTINGENCIES
 
Litigation
 
We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

On March 18, 2011, we filed a lawsuit in the Circuit Court of Union County, Arkansas, asserting claims of professional negligence, breach of contract and other claims against the engineering firm we hired for engineering design, equipment, procurement, advisory, testing and startup services for our El Dorado, Arkansas chemical production facility. The engineering firm disputed our claims and promptly filed a motion to compel the matter to arbitration. After a lengthy procedural dispute in Arkansas state court, arbitration proceedings were initiated on November 15, 2013. Ultimately, on December 16, 2016, the arbitration panel ruled in our favor, declared us as the prevailing party, and awarded us a total net amount of $12.8 million . We received full payment of the $12.8 million final award on January 5, 2017, and this amount was credited to earnings in the accompanying consolidated statement of operations for the three months ended March 31, 2017 .

  Other Contingencies

During 2011, in connection with the sale of a significant majority of Maritech's oil and gas producing properties, the buyers of the properties assumed the associated decommissioning liabilities pursuant to the purchase and sale agreements. In March 2018, we closed the Maritech Asset Purchase Agreement with Orinoco that provided for the purchase by Orinoco of the Maritech Properties. Also in March 2018, we finalized the Maritech Equity Purchase Agreement with Orinoco, that provided for the purchase by Orinoco of the Maritech Equity Interests. As a result of these transactions, we have effectively exited the businesses of our Offshore Services and Maritech segments and Orinoco has assumed all of Maritech's remaining abandonment and decommissioning obligations.

NOTE I – INDUSTRY SEGMENTS
 
Following the transactions closed during the three month period ended March 31, 2018 , we reorganized our reporting segments and now manage our operations through three Divisions: Completion Fluids & Products, Water & Flowback Services, and Compression . Our Completion Fluids & Products Division was previously reported as our Fluids Division, and included our water management services operations. Following the acquisition of SwiftWater in February 2018, our expanded water management operations are now included with our production testing operations as part of our Water & Flowback Services Division. The operations of our previous Offshore Division, consisting of our previous Offshore Services and Maritech, are now reported as discontinued operations following their disposal in March 2018.
 
Our Completion Fluids & Products Division manufactures and markets clear brine fluids, additives, and associated products and services to the oil and gas industry for use in well drilling, completion, and workover operations in the United States and in certain countries in Latin America, Europe, Asia, the Middle East, and Africa. The division also markets liquid and dry calcium chloride products manufactured at its production facilities or purchased from third-party suppliers to a variety of markets outside the energy industry.
 
Our Water & Flowback Services Division provides domestic onshore oil and gas operators with comprehensive water management services. The division also provides frac flowback, production well testing, offshore rig cooling, and other associated services in many of the major oil and gas producing regions in the United States, Mexico, and Canada, as well as in basins in certain regions in South America, Africa, Europe, the Middle East, and Australia.
 
The Compression Division is a provider of compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage. The Compression Division 's equipment sales business includes the fabrication and sale of standard compressor packages, custom-designed compressor packages, and oilfield pump systems designed and fabricated at the division's facilities. The Compression Division 's aftermarket services business provides compressor package reconfiguration and maintenance services as well as

21



providing compressor package parts and components manufactured by third-party suppliers. The Compression Division provides its services and equipment to a broad base of natural gas and oil exploration and production, midstream, transmission, and storage companies operating throughout many of the onshore producing regions of the United States as well as in a number of foreign countries, including Mexico, Canada, and Argentina.
 
We generally evaluate the performance of and allocate resources to our segments based on profit or loss from their operations before income taxes and nonrecurring charges, return on investment, and other criteria. Transfers between segments and geographic areas are priced at the estimated fair value of the products or services as negotiated between the operating units. “Corporate overhead” includes corporate general and administrative expenses, corporate depreciation and amortization, interest income and expense, and other income and expense.

22



 Summarized financial information concerning the business segments is as follows:

 
Three Months Ended 
 March 31,
 
2018
 
2017
 
(In Thousands)
Revenues from external customers
 

 
 

Product sales
 

 
 

Completion Fluids & Products Division
$
51,057

 
$
52,211

Water & Flowback Services Division
1,250

 
6,113

Compression Division
23,646

 
9,654

Consolidated
$
75,953

 
$
67,978

 
 
 
 
Services
 

 
 

Completion Fluids & Products Division
$
2,049

 
$
4,016

Water & Flowback Services Division
59,603

 
31,510

Compression Division
61,776

 
55,905

Consolidated
$
123,428

 
$
91,431

 
 
 
 
Interdivision revenues
 

 
 

Completion Fluids & Products Division
$
(2
)
 
$
1

Water & Flowback Services Division
222

 
556

Compression Division

 

Interdivision eliminations
(220
)
 
(557
)
Consolidated
$

 
$

 
 
 
 
Total revenues
 

 
 

Completion Fluids & Products Division
$
53,104

 
$
56,228

Water & Flowback Services Division
61,075

 
38,179

Compression Division
85,422

 
65,559

Interdivision eliminations
(220
)
 
(557
)
Consolidated
$
199,381

 
$
159,409

 
 
 
 
Income (loss) before taxes
 

 
 

Completion Fluids & Products Division
$
2,449

 
$
19,473

Water & Flowback Services Division
6,548

 
(1,265
)
Compression Division
(14,018
)
 
(14,333
)
Interdivision eliminations

 
(167
)
Corporate Overhead (1)
(14,912
)
 
(7,872
)
Consolidated
$
(19,933
)
 
$
(4,164
)



23



 
March 31, 2018
 
December 31, 2017
 
(In Thousands)
Total assets
 

 
 

Completion Fluids & Products Division
$
303,157

 
$
293,507

Water & Flowback Services Division
224,570

 
139,771

Compression Division
895,979

 
784,745

Corporate Overhead and eliminations
(23,351
)
 
(30,501
)
Assets of discontinued operations
7,907

 
121,092

Consolidated
$
1,408,262

 
$
1,308,614



(1)
Amounts reflected include the following general corporate expenses:
 
Three Months Ended 
 March 31,
 
2018
 
2017
 
(In Thousands)
General and administrative expense
$
12,598

 
$
9,555

Depreciation and amortization
151

 
91

Interest expense
4,007

 
3,774

Warrants fair value adjustment
(1,994
)
 
(5,976
)
Other general corporate (income) expense, net
150

 
428

Total
$
14,912

 
$
7,872



24



NOTE J – REVENUE FROM CONTRACTS WITH CUSTOMERS

Performance Obligations. Revenue is recognized when performance obligations under the terms of a contract with our customer are satisfied. Generally this occurs with the transfer of control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. For a general discussion of the nature of the goods and services that we provide, see Note I - Industry Segments.

Product Sales. Product sales revenues are recognized at a point in time when we transfer control of our product offerings to our customers, generally when we ship products from our facility to our customer. The product sales for our Completion Fluid & Products Division consist primarily of clear brine fluids, additives, and associated manufactured products. Product sales for our Water & Flowback Services Division are typically attributed to specific performance obligations within certain production testing service arrangements. Parts and equipment sales comprise the product sales for the Compression Division.

Services . Service revenues represent revenue recognized over time, as our customer arrangements typically provide agreed upon day-rates (monthly service rates for compression services) and we recognize service revenue based upon the number of days services have been performed. Service revenue recognized over time is associated with a majority of our Water & Flowback Services Division arrangements, compression service and aftermarket service contracts within our Compression Division, and a small portion of Completion Fluids & Products Division revenue that is associated with completion fluid service arrangements. With the exception of the initial terms of the compression services contracts for medium- and high-horsepower compressor packages of our Compression Division, our customer contracts are generally for terms of one year or less. The majority of the service arrangements in the Water & Flowback Services Division are for a period of 90 days or less. Within our Compression Division service revenue, most aftermarket service revenues are recognized at a point in time when we transfer control of our products and complete the delivery of services to our customers.

We receive cash equal to the invoice price for most product sales and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. Since the period between when we deliver products or services and when the customer pays for products or services are not expected to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts.

Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer. For any arrangements with multiple performance obligations, we use management's estimated selling price to determine the stand-alone selling price for separate performance obligations. For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period. As of March 31, 2018, we had $6.6 million of remaining performance obligations related to our compression service contracts. As a practical expedient, this amount does not reflect revenue for compression service contracts whose original expected duration is less than 12 months an d does not consider the effects of the time value of money . The remaining performance obligations are expected to be recognized through 2022 as follows (in thousands):

 
2018
 
2019
 
2020
 
2021
 
2022
 
Total
 
(In Thousands)
Compression service contracts remaining performance obligations
$
1,732

 
$
1,929

 
$
1,740

 
$
702

 
$
546

 
$
6,649


Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost for freight and shipping costs as part of cost of product sales when control over our products (i.e. delivery) has transferred to the customer.

Use of Estimates. C ontracts where the amount of revenue that will ultimately be realized is subject to uncertainties not fully known as of the time revenue is recognized are known as variable consideration arrangements. In recognizing revenue for these arrangements, the amount of variable consideration recognized is limited so that it is probable that significant amounts of revenues will not be reversed in future periods when the

25



uncertainty is resolved. For products returned by the customer, we estimate the expected returns based on an analysis of historical experience. For volume discounts earned by the customer, we estimate the discount (if any) based on our estimate of the total expected volume of products sold or services to be provided to the customer during the discount period. In certain contracts for the sale of clear brine fluids, we may agree to issue credits for the repurchase of reclaimable used fluids from certain customers at an agreed price that is based on the condition of the fluids. For sales of clear brine fluids, we adjust the revenue recognized in the period of shipment by the estimated amount of the credit expected to be issued to the customer, and this estimate is based on historical experience. As of March 31, 2018 and December 31, 2017, the amount of remaining credits expected to be issued for the repurchase of reclaimable used fluids was $0.6 million and $2.8 million , respectively, that were recorded in inventory (right of return asset) and accounts payable. For the three month period ended March 31, 2018 , there were no material differences between amounts recognized compared to estimates made in a prior period from these variable consideration arrangements.

Contract Assets and Liabilities. Contract assets arise when we transfer products or perform services in fulfillment of a contract obligation but must perform other performance obligations before being entitled to payment. Generally, once we have transferred products or performed services for the customer pursuant to a contract, we recognize revenue and trade accounts receivable, as we are entitled to payment that is unconditional. Any contract assets, along with billed and unbilled accounts receivable, are included in Trade Accounts Receivable in our consolidated balance sheets. Contract liabilities arise when we receive consideration, or consideration is unconditionally due, from a customer prior to transferring products or services to the customer under the terms of a sales contract. We classify contract liabilities as Deferred Revenue in our consolidated balance sheets. Such deferred revenue typically results from advance payments received on sales of compressor equipment prior to when it is completed and transferred to the customer in accordance with the customer contract.

As of March 31, 2018 and December 31, 2017, contract assets were immaterial. The following table reflects the changes in our contract liabilities during the three month period ended March 31, 2018 :
 
March 31, 2018
 
December 31, 2017
 
Increase (Decrease)
 
(In Thousands)
 
 
Contract liabilities
 
 
 
 
 
Deferred revenue
$
35,929

 
$
17,050

 
$
18,879


Bad debt expense on accounts receivables and contract assets was $0.2 million and $0.6 million du ring the three month periods ended March 31, 2018 and 2017, respectively. During the three months ended March 31, 2018 , contract liabilities increased due to deferred revenue for consideration received on new compressor equipment being fabricated. During the three months ended March 31, 2018 , $17.8 million of deferred revenue as of December 31, 2017 was recognized as product sales revenue, primarily associated w ith deliveries of compression equipment.

Contract Costs. When costs are incurred to obtain contracts, such as professional fees and sales bonuses, such costs are deferred and amortized over the expected period of benefit. Costs of mobilizing service equipment necessary to perform under service contracts, if significant, are deferred and amortized over the estimated service period, which is generally a few weeks. As of March 31, 2018 , such contract costs were immaterial. Where applicable, we establish provisions for estimated obligations pursuant to product warranties by accruing for estimated future product warranty cost in the period of the product sale. Such estimates are based on historical warranty loss experience. Major components of fabricated compressor packages have manufacturer warranties that we pass through to the customer.

Disaggregation of Revenue. We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our three reportable segments in Note I . In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.


26



 
March 31, 2018
 
March 31, 2017
 
(In Thousands)
Completion Fluids & Products
 
 
 
U.S.
27,909

 
40,802

International
25,195

 
15,426

 
53,104

 
56,228

Water & Flowback Services
 
 
 
U.S.
47,038

 
24,140

International
14,037

 
14,039

 
61,075

 
38,179

Compression
 
 
 
U.S.
76,980

 
57,968

International
8,442

 
7,591

 
85,422

 
65,559

Interdivision eliminations
 
 
 
U.S.
2

 
(1
)
International
(222
)
 
(556
)
 
(220
)
 
(557
)
Total Revenue
 
 
 
U.S.
151,929

 
122,909

International
47,452

 
36,500

 
199,381

 
159,409


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included in this Quarterly Report. In addition, the following discussion and analysis also should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 5, 2018 . This discussion includes forward-looking statements that involve certain risks and uncertainties.

Business Overview  

Significant strategic transactions that closed during the first quarter of 2018 have positioned us to further capitalize on the current increased level of oil and gas industry activity. Following the February 28, 2018 acquisition of SwiftWater Energy Services, LLC ("SwiftWater"), we have enhanced and expanded our position as one of the leading integrated water management companies, providing water transfer, storage, and treatment services, along with proprietary automation technology and numerous other water-related services. The acquisition of SwiftWater, which serves the key Permian Basin market in Texas, has begun to contribute significantly to the revenues and operating cash flows of our Water & Flowback Services Division. The total purchase price for SwiftWater consisted of $42.0 million of cash and 7.7 million shares of newly issued common stock, as well as contingent consideration of up to $15.0 million depending on operating results. On March 22, 2018, our CSI Compressco LP subsidiary ("CCLP") issued $350 million aggregate principal amount of CCLP 7.50% Senior Secured First Lien Notes due 2025 (the "CCLP Senior Secured Notes"), which generated $344.1 million of net proceeds, a portion of which was used to repay the borrowings outstanding under CCLP's bank revolving credit facility (the "CCLP Credit Agreement"), which was then terminated. Following the repayment of this credit agreement, the remaining proceeds from the issuance of the CCLP Senior Secured Notes are available to fund additional Compression Division capital expenditures to further grow its compression equipment fleet. Also, on March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division. As a result of this disposition, we have effectively exited the businesses of our Offshore Services and Maritech segments, and the buyer has assumed all liabilities and obligations associated with Maritech, including but not limited to all currently identified and any future identified decommissioning obligations.

Following the above transactions, we reorganized our reporting segments and now manage our operations through three Divisions: Completion Fluids & Products, Water & Flowback Services, and Compression . Our

27



Completion Fluids & Products Division was previously reported as our Fluids Division, and included our water management services operations. Following the acquisition of SwiftWater, our expanded water management operations are now included with our production testing operations as part of our Water & Flowback Services Division. The operations of our previous Offshore Services and Maritech segments are now reported as discontinued operations following their disposal in March 2018, and prior period financial information retroactively excludes their operating results from our continuing operations.

Consolidated revenues during the three months ended March 31, 2018 increased approximately 25% compared to the corresponding prior year period, primarily due to increased revenues of our Water & Flowback Services Division and our Compression Division. With the increase in crude oil prices in early 2018, operating plans and capital expenditure levels of many of our oil and natural gas customers have increased, benefiting certain of our operating segments with improved revenues and cash flows. In addition to reflecting one month of impact from the February 28, 2018 SwiftWater acquisition, our Water & Flowback Services Division benefited from increased activity levels in several of its markets, as a result of increased domestic rig count levels and improved customer contract pricing. Compression Division revenues also improved, with increased revenues for compression equipment product sales and increased compression services revenues from the increased utilization of its compression fleet. The increases in Water & Flowback Services and Compression revenues were partially offset by decreased Completion Fluids & Products revenues, as offshore activity levels remain challenged. The increased revenues resulted in improved consolidated gross profit compared to the corresponding prior year period, despite the increased costs from the acquired SwiftWater operations and overall increased activity.

In addition to the acquisition of SwiftWater, we also are continuing to grow our operations through increased capital expenditure activity. Our Compression Division increased its growth capital expenditure levels during the first quarter of 2018 compared to the corresponding prior year period, as it increased its compression equipment fleet to meet the increasing customer demand for compression services. In addition, we have also increased capital expenditure levels, particularly in our Water & Flowback Services Division, as we selectively grow our capacity in certain markets. Cash provided by operating activities is expected to increase going forward, reflecting the increased revenues and earnings of our businesses. While significant borrowing capacity remains under our bank credit facility, we and CCLP also continue to consider additional sources of capital, including issuances of additional long-term debt and equity, and, as it relates to CCLP, the establishment of a revolving credit facility.
    
Approximately $632.4 million of our consolidated debt balance is owed by CCLP, serviced by CCLP's existing cash balances and cash provided by CCLP's operations (less its capital expenditures), and $343.8 million of which is secured by certain assets of CCLP. The following table provides condensed consolidating balance sheet information reflecting our net assets and CCLP's net assets that service and secure our and CCLP's respective capital structures.
 
March 31, 2018
Condensed Consolidating Balance Sheet
TETRA
 
CCLP
 
Eliminations
 
Consolidated
 
(In Thousands)
Cash, excluding restricted cash
$
14,013

 
$
90,100

 
$

 
$
104,113

Affiliate receivables
11,630

 

 
(11,630
)
 

Other current assets
222,104

 
120,586

 

 
342,690

Property, plant and equipment, net
215,062

 
609,706

 

 
824,768

Other assets, including investment in CCLP
53,121

 
33,549

 
50,021

 
136,691

Total assets
$
515,930

 
$
853,941

 
$
38,391

 
$
1,408,262

 
 
 
 
 
 
 
 
Affiliate payables
$

 
$
11,630

 
$
(11,630
)
 
$

Other current liabilities
93,550

 
64,211

 

 
157,761

Long-term debt, net
191,151

 
632,414

 

 
823,565

CCLP Series A Preferred Units


 
62,000

 
(7,786
)
 
54,214

Warrants liability
11,207

 

 

 
11,207

Other non-current liabilities
34,597

 
1,457

 

 
36,054

Total equity
185,425

 
82,229

 
57,807

 
325,461

Total liabilities and equity
$
515,930

 
$
853,941

 
$
38,391

 
$
1,408,262



28



Cash used by operating activities for the three months ended March 31, 2018 was $31.3 million compared to $20.5 million for the three months ended March 31, 2017 , an increase of $10.7 million , or 52.2% , despite improved operating profitability, primarily due to cash utilized due to timing of payments of accounts payable. Consolidated capital expenditures were $28.9 million during the three months ended March 31, 2018 , and included $17.0 million of capital expenditures by our Compression Division, primarily for growth capital expenditures. Corresponding prior year period consolidated capital expenditures, net of sales proceeds, were $5.1 million , including $7.2 million by our Compression Division. Although our capital expenditure levels are expected to increase going forward, we continue to defer or reduce capital expenditure projects where possible in order to conserve cash. Key objectives associated with our capital structure (excluding the capital structure of CCLP) include the ongoing management of amounts outstanding and available under our bank revolving credit facility and repayment of our 11% Senior Note. CCLP also continues to carefully monitor its 2018 capital expenditure program in order to conserve its cash. During the first three months of 2018 , we received $3.0 million from CCLP as our share of CCLP common unit distributions. 

Critical Accounting Policies
 
In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. We base these estimates on historical experience, available information, and various other assumptions that we believe are reasonable. We periodically evaluate these estimates and judgments, including those related to potential impairments of long-lived assets (including goodwill), the collectability of accounts receivable, the current cost of future asset retirement obligations, and the allocation of acquisition purchase price. The fair values of portions of our total assets and liabilities are measured using significant unobservable inputs. The combination of these factors forms the basis for judgments made about the carrying values of assets and liabilities that are not readily apparent from other sources. These judgments and estimates may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material.

Acquisition Purchase Price Allocations
 
We account for acquisitions of businesses using the purchase method, which requires the allocation of the purchase price based on the fair values of the assets and liabilities acquired. We estimate the fair values of the assets and liabilities acquired using accepted valuation methods, and, in many cases, such estimates are based on our judgments as to the future operating cash flows expected to be generated from the acquired assets throughout their estimated useful lives. Following the February 28, 2018 acquisition of SwiftWater, we have accounted for the various assets (including intangible assets) and liabilities acquired based on our estimate of their fair values. Goodwill represents the excess of acquisition purchase price over the estimated fair values of the net assets acquired. Our estimates and judgments of the fair value of acquired businesses are imprecise, and the use of inaccurate fair value estimates could result in the improper allocation of the acquisition purchase price to acquired assets and liabilities, which could result in asset impairments, the recording of previously unrecorded liabilities, and other financial statement adjustments. The difficulty in estimating the fair values of acquired assets and liabilities is increased during periods of economic uncertainty.


29



Results of Operations

Three months ended March 31, 2018 compared with three months ended March 31, 2017 .

Consolidated Comparisons
 
Three Months Ended 
 March 31,
 
Period to Period Change
 
2018
 
2017
 
2018 vs 2017
 
% Change
 
(In Thousands, Except Percentages)
Revenues
$
199,381

 
$
159,409

 
$
39,972

 
25.1
%
Gross profit
27,983

 
19,654

 
8,329

 
42.4
%
Gross profit as a percentage of revenue
14.0
 %
 
12.3
 %
 
 

 
 

General and administrative expense
30,803

 
26,751

 
4,052

 
15.1
%
General and administrative expense as a percentage of revenue
15.4
 %
 
16.8
 %
 
 

 
 

Interest expense, net
14,973

 
13,767

 
1,206

 
8.8
%
Warrants fair value adjustment
(1,994
)
 
(5,976
)
 
3,982

 
 
CCLP Series A Preferred Units fair value adjustment
1,358

 
1,631

 
(273
)
 
 
Litigation arbitration award income

 
(12,816
)
 
12,816

 
 
Other (income) expense, net
2,776

 
461

 
2,315

 
 
Loss before taxes and discontinued operations
(19,933
)
 
(4,164
)
 
(15,769
)
 
 
Loss before taxes and discontinued operations as a percentage of revenue
(10.0
)%
 
(2.6
)%
 
 

 
 

Provision for income taxes
1,124

 
81

 
1,043

 
 
Loss before discontinued operations
(21,057
)
 
(4,245
)
 
(16,812
)
 
 
Discontinued operations:
 
 
 
 
 
 
 
Loss from discontinued operations (including 2018 loss on disposal of $31.5 million), net of taxes
(41,706
)
 
(7,007
)
 
(34,699
)
 
 
Net loss
(62,763
)
 
(11,252
)
 
(51,511
)
 
 
Loss attributable to noncontrolling interest
9,115

 
8,789

 
326

 
 

Loss attributable to TETRA stockholders
$
(53,648
)
 
$
(2,463
)
 
$
(51,185
)
 
 
 
Consolidated revenues during the current year quarter increased compared to the prior year quarter primarily due to a $22.9 million increase in Water & Flowback Services Division revenues. The increase in Water & Flowback Services Division revenues was primarily driven by increased activity in certain domestic and international markets and the February 28, 2018 acquisition of SwiftWater. Our Compression Division reported increased revenues of $19.9 million , primarily due to increased compressor equipment sales activity. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit increased compared to the prior year quarter primarily due to the increased revenues of our Water & Flowback Services Division and Compression Division . Despite the improvement in the activity levels of certain of our businesses, the impact of pricing pressures continues to impact profitability. Operating expenses reflect the increase in consolidated revenues, although we remain aggressive in managing operating costs and minimizing increased headcount, despite the increased operations.
 
Consolidated general and administrative expenses increased during the first quarter of 2018 compared to the prior year quarter, primarily due to increased professional services fees of $2.1 million (including $0.9 million of corporate transaction costs), increased salary and employee expenses of $1.0 million , as well as increased insurance and other general expenses of $0.9 million .
 
Consolidated interest expense, net, increased during the first quarter of 2018 compared to the prior year quarter, primarily due to Compression Division interest expense. Compression Division interest expense increased due to the higher interest rate on the CCLP Senior Secured Notes, a portion of the proceeds of which were used to repay the balance outstanding under the CCLP Credit Agreement, and is expected to remain increased compared to prior year periods. Interest expense during the 2018 and 2017 periods includes $1.2 million and $1.1 million , respectively, of finance cost amortization.

30




The Warrants are accounted for as a derivative liability in accordance with Accounting Standards Codification ("ASC") 815 and therefore they are classified as a long-term liability on our consolidated balance sheet at their fair value. Increases (or decreases) in the fair value of the Warrants are generally associated with increases (or decreases) in the trading price of our common stock, resulting in adjustments to earnings for the associated valuation losses (gains), and resulting in future volatility of our earnings during the period the Warrants are outstanding.

The CCLP Preferred Units may be settled using a variable number of CCLP common units, and therefore the fair value of the CCLP Preferred Units is classified as a long-term liability on our consolidated balance sheet in accordance with ASC 480. Because the CCLP Preferred Units are convertible into CCLP common units at the option of the holder, the fair value of the CCLP Preferred Units will generally increase or decrease with the trading price of the CCLP common units, and this increase (decrease) in CCLP Preferred Unit fair value will be charged (credited) to earnings, as appropriate, resulting in future volatility of our earnings during the period the CCLP Preferred Units are outstanding.

In January 2017, our Completion Fluids & Products Division collected $12.8 million from a legal arbitration award, resulting in a credit to earnings. See Commitments and Contingencies - Litigation section below for additional discussion.

Consolidated other (income) expense, net, was $2.8 million of other expense during the current year quarter compared to $0.5 million of other expense during the prior year quarter, primarily due to $3.5 million of unamortized deferred financing costs charged to earnings as a result of the termination of the CCLP Credit Agreement.
 
Our consolidated provision for income taxes during the first quarter of 2018 is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three month period ended March 31, 2018 of negative 5.6% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. At March 31, 2018 and December 31, 2017, we had not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we made reasonable estimates of the effects and recorded provisional amounts. We will continue to make and refine our calculations as additional analysis is completed. We recognized an income tax expense of $54.1 million in the fourth quarter of 2017 associated with the impact of the Act in our 2017 filing. This income tax expense was fully offset by a decrease in the valuation allowance previously recorded on our net deferred tax assets. As such, the Act resulted in no net tax expense in the fourth quarter of 2017. We have considered in our estimated annual effective tax rate for 2018, the impact of the statutory changes enacted by the Act, including reasonable estimates of those provisions effective for the 2018 tax year. Our provisional estimate on Global Intangible Low Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), Base Erosion and Anti-Abuse Tax (“BEAT”), and IRC Section 163(j) interest limitation do not impact our effective tax rate for the three months ended March 31, 2018. The accounting for the tax effects of the Act will be completed in 2018 as provided by the U.S. Securities and Exchange Commission’s SAB No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act.


31



Divisional Comparisons
 
Completion Fluids & Products Division
 
Three Months Ended 
 March 31,
 
Period to Period Change
 
2018
 
2017
 
2018 vs 2017
 
% Change
 
(In Thousands, Except Percentages)
Revenues
$
53,104

 
$
56,228

 
$
(3,124
)
 
(5.6
)%
Gross profit
6,686

 
11,330

 
(4,644
)
 
(41.0
)%
Gross profit as a percentage of revenue
12.6
%
 
20.2
%
 
 

 
 

General and administrative expense
4,640

 
4,684

 
(44
)
 
(0.9
)%
General and administrative expense as a percentage of revenue
8.7
%
 
8.3
%
 
 

 
 

Interest (income) expense, net
(233
)
 
13

 
(246
)
 
 

Litigation arbitration award income

 
(12,816
)
 
12,816

 
 
Other (income) expense, net
(170
)
 
(24
)
 
(146
)
 
 

Income before taxes
$
2,449

 
$
19,473

 
$
(17,024
)
 
(87.4
)%
Income before taxes as a percentage of revenue
4.6
%
 
34.6
%
 
 

 
 

 
The decrease in Completion Fluids & Products Division revenues during the current year quarter compared to the prior year quarter was primarily due to $2.0 million of decreased completion services revenues and $1.2 million of decreased product sales revenue. These decreases reflect decreased clear brine fluids ("CBF") and associated product sales revenues in the U.S. Gulf of Mexico, including decreased revenues as a result of a TETRA CS Neptune (R) completion fluid project that was completed during 2017. These decreases were partially offset by increased international CBF and manufactured products sales.

Completion Fluids & Products Division gross profit during the current year quarter decreased compared to the prior year quarter primarily due to the decreased revenues and profitability associated with the mix of CBF products and services, including the prior year impact of the TETRA CS Neptune completion fluid project discussed above. Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, including the timing of TETRA CS Neptune completion fluid projects.
 
The Completion Fluids & Products Division reported a significant decrease in pretax earnings during the current year quarter compared to the prior year quarter primarily due to the collection of an arbitration award of $12.8 million during January 2017 that was credited to earnings, and from the decreased gross profit discussed above. Completion Fluids & Products Division administrative cost levels remained consistent compared to the prior year quarter, as $0.3 million of decreased salary and employee related expenses were offset by $0.2 million of increased legal and professional fees and $0.1 million of increased general expenses. The Completion Fluids & Products Division continues to review opportunities to further reduce its administrative costs.

Water & Flowback Services Division
 
Three Months Ended 
 March 31,
 
Period to Period Change
 
2018
 
2017
 
2018 vs 2017
 
% Change
 
(In Thousands, Except Percentages)
Revenues
$
61,075

 
$
38,179

 
$
22,896

 
60.0
%
Gross profit
11,404

 
2,248

 
9,156

 
 
Gross profit as a percentage of revenue
18.7
%
 
5.9
 %
 
 

 
 

General and administrative expense
5,278

 
3,742

 
1,536

 
41.0
%
General and administrative expense as a percentage of revenue
8.6
%
 
9.8
 %
 
 

 
 

Interest (income) expense, net
(15
)
 
(122
)
 
107

 
 

Other (income) expense, net
(407
)
 
(107
)
 
(300
)
 
 

Income (loss) before taxes
$
6,548

 
$
(1,265
)
 
$
7,813

 
 
Income (loss) before taxes as a percentage of revenue
10.7
%
 
(3.3
)%
 
 

 
 


32



 
Water & Flowback Services Division revenues increased during the current year quarter compared to the prior year quarter, primarily due to increased water management services. Water management and flowback services activity increased $27.8 million resulting from the impact of increased demand, reflecting the growth in domestic onshore rig count. Approximately $8.1 million of the water management increase was generated from the operations of SwiftWater, which was acquired on February 28, 2018. Increased service revenues were partially offset by $4.9 million of decreased product sales revenue, due to an international equipment sale during the prior year period.

The Water & Flowback Services Division reflected increased gross profit during the current year quarter compared to the prior year quarter, due to the increase in revenues and improving customer pricing levels. However, customer pricing continues to be challenging due to excess availability of equipment in certain markets. The Water & Flowback Services Division continues to monitor its cost structure, minimizing increased costs despite increasing activity levels, and looking to capture synergies following the SwiftWater acquisition.
 
The Water & Flowback Services Division reported pretax income during the current year quarter compared to a pretax loss during the prior year quarter, primarily due to the improvement in gross profit described above. General and administrative expenses levels increased compared to the prior year quarter, primarily due to the acquisition of SwiftWater, due to increased salary and employee related expenses of $1.3 million and increased insurance and other general expenses of $0.2 million . Other income increased primarily due to increased foreign currency gains.

Compression Division
 
Three Months Ended 
 March 31,
 
Period to Period Change
 
2018
 
2017
 
2018 vs 2017
 
% Change
 
(In Thousands, Except Percentages)
Revenues
$
85,422

 
$
65,559

 
$
19,863

 
30.3
 %
Gross profit
10,040

 
6,163

 
3,877

 
62.9
 %
Gross profit as a percentage of revenue
11.8
 %
 
9.4
 %
 
 

 
 

General and administrative expense
8,286

 
8,770

 
(484
)
 
(5.5
)%
General and administrative expense as a percentage of revenue
9.7
 %
 
13.4
 %
 
 

 
 

Interest expense, net
11,214

 
10,102

 
1,112

 
 

CCLP Series A Preferred fair value adjustment
1,358

 
1,631

 
(273
)
 
 
Other (income) expense, net
3,200

 
(7
)
 
3,207

 
 

Loss before taxes
$
(14,018
)
 
$
(14,333
)
 
$
(315
)
 
(2.2
)%
Loss before taxes as a percentage of revenue
(16.4
)%
 
(21.9
)%
 
 

 
 

    
Compression Division revenues increased during the current year quarter compared to the prior year quarter, primarily due to a $14.0 million increase in product sales revenues, due to a higher number of new compressor equipment sales compared to the prior year quarter. Demand for new compressor equipment continues to improve, and the current equipment sales backlog has increased significantly compared to the prior year quarter. In addition, current year revenues reflect a $5.9 million increase in service revenues from compression and aftermarket services operations. This increase in service revenues was primarily due to increasing demand for compression services, as reflected by increased compressor fleet utilization rates. Overall utilization of the Compression Division's compressor fleet has improved sequentially for six consecutive quarterly periods, led by increased utilization of the high- and medium-horsepower fleet.

Compression Division gross profit increased during the current year quarter compared to the prior year quarter due to increased revenues discussed above. The increased compressor fleet utilization rates have led to increases in customer contract pricing.
 
The Compression Division recorded a slightly decreased pretax loss during the current year quarter compared to the prior year quarter despite increased gross profit discussed above. Other (income) expense, net, reflected an expense primarily due to $3.5 million of unamortized deferred financing costs charged to earnings as a result of the termination of the CCLP Credit Agreement. In addition, interest expense increased compared to the

33



prior year period, due to the higher interest rate from the CCLP Senior Secured Notes, which were issued in March 2018, compared to the previous CCLP Credit Agreement. Increased interest expense is expected to continue compared to the prior year periods. General and administrative expense levels decreased compared to the prior year quarter, as decreased salary and employee-related expenses, including equity compensation, of $0.6 million and decreased bad debt expense of $0.4 million were partially offset by $0.2 million of increased other general expenses and increased professional fees of $0.2 million .

Corporate Overhead
 
Three Months Ended 
 March 31,
 
Period to Period Change
 
2018
 
2017
 
2018 vs 2017
 
% Change
 
(In Thousands, Except Percentages)
Gross profit (loss) (depreciation expense)
$
(151
)
 
$
(91
)
 
$
(60
)
 
(65.9
)%
General and administrative expense
12,598

 
9,555

 
3,043

 
31.8
 %
Interest (income) expense, net
4,007

 
3,774

 
233

 
 

Warrants fair value adjustment income
(1,994
)
 
(5,976
)
 
3,982

 
 
Other (income) expense, net
150

 
428

 
(278
)
 
 

Loss before taxes
$
(14,912
)
 
$
(7,872
)
 
$
(7,040
)
 
(89.4
)%

Corporate Overhead pretax loss increased during the current year quarter compared to the prior year quarter, primarily due to increased general and administrative expense. Corporate general and administrative expense increased due to $1.7 million of increased professional service fees (including $0.9 million of transaction costs), $0.5 million of increased salary, incentives and employee related expenses, $0.4 million of increased other general expenses, and $0.4 million of increased consulting marketing fees. In addition, the fair value of the outstanding Warrants liability resulted in a $2.0 million credit to earnings during 2018 compared to a $6.0 million credit to earnings in 2017.

Liquidity and Capital Resources
    
We reported a decrease in consolidated cash flows from operating activities during the first three months of 2018 compared to the corresponding prior year period. This decrease occurred despite the improved profitability of our operations, due to increased working capital needs largely due to the timing of payments of accounts payable. CCLP used $0.4 million of our consolidated operating cash flows during the three months ended March 31, 2018 , and we received $3.0 million of cash distributions from CCLP during the three months ended March 31, 2018 compared to $5.6 million during the corresponding prior year period. We believe that the cost reduction and capital structure steps we have taken during the past two years continue to support our ability to meet our financial obligations and fund future growth as needed, despite current uncertain operating and financial markets.

We and CCLP are in compliance with all covenants of our respective debt agreements as of March 31, 2018 . With regard to CCLP, considering financial forecasts as of May 10, 2018 for the subsequent twelve month period, which consider the current level of cash distributions to be paid on CCLP common units, CCLP believes that it will have adequate liquidity, earnings, and operating cash flows to fund its operations and debt obligations and maintain compliance with its debt covenants through May 10, 2019. We have reviewed our financial forecasts as of May 10, 2018 for the subsequent twelve month period, which consider the current level of cash distributions expected to be received on the CCLP common units we own. Based on this review as of May 10, 2018 , we anticipate that we will have sufficient liquidity, earnings, and operating cash flows to fund our operations and debt obligations and maintain compliance with the covenants under our debt agreements through May 10, 2019.

Our consolidated sources and uses of cash during the three months ended March 31, 2018 and 2017 are as follows:


34



 
Three months ended March 31,
 
2018
 
2017
 
(In Thousands)
Operating activities
$
(31,261
)
 
$
(20,538
)
Investing activities
(67,551
)
 
(4,616
)
Financing activities
185,610

 
8,033


Because of the level of consolidated debt, we believe it is important to consider our capital structure and CCLP's capital structure separately, as there are no cross default provisions, cross collateralization provisions, or cross guarantees between CCLP's debt and TETRA's debt. (See Financing Activities section below for a discussion of the terms of our and CCLP's respective debt arrangements.) Our consolidated debt outstanding has a carrying value of approximately $823.6 million as of March 31, 2018 . However, approximately $632.4 million of this consolidated debt balance is owed by CCLP and is serviced from the existing cash balances and cash flows of CCLP and $343.8 million of which is secured by certain of CCLP's assets. Through our common unit ownership interest in CCLP, which was approximately 38% as of March 31, 2018 , and ownership of an approximately 2% general partner interest that includes incentive distribution rights, we receive our share of the distributable cash flows of CCLP through its quarterly cash distributions. Approximately $90.1 million of the $104.1 million of the cash balance reflected on our consolidated balance sheet is owned by CCLP and is not accessible by us. As of March 31, 2018 , and subject to compliance with the covenants and other provisions of the agreements that may limit borrowings under our Credit Agreement, we had availability of $119.5 million under our Credit Agreement. Following the issuance of the CCLP Senior Secured Notes, CCLP used a portion of the proceeds to repay the borrowings outstanding under CCLP's bank revolving credit facility, which was then terminated.

Operating Activities
 
Consolidated cash flows used by operating activities totaled $31.3 million during the first three months of 2018 compared to $20.5 million during the corresponding prior year period, an increase of $10.7 million or 52% . Operating cash flows decrease d despite improved operating profitability due to the decrease to cash provided by working capital changes, particularly related to the timing of payments of accounts payable. We have taken steps to aggressively manage working capital, including increased collection efforts and a focus on minimizing inventory levels. We continue to monitor customer credit risk in the current environment and have historically focused on serving larger capitalized oil and gas operators and national oil companies.

Demand for the vast majority of our products and services is driven by oil and gas industry activity, which is affected by oil and natural gas commodity pricing. With the increase in crude oil prices in early 2018, operating plans and capital expenditure levels of many of our oil and natural gas customers has increased, benefiting certain of our operating segments with improved revenues and cash flows. The acquisition of SwiftWater during the three months ended March 31, 2018 is expected to provide additional revenues and operating cash flows going forward. Domestic onshore rig counts have improved compared to early 2017, and this increase in activity has resulted in improved cash provided by operating activities of our Water & Flowback Services Division. However, offshore and international rig count levels remain relatively unchanged. The increased crude oil pricing and resulting increased capital expenditure activity of our Compression Division customers has resulted in increased demand for compression services and equipment, which has also resulted in increased cash provided by operating activities of our Compression Division. However, oil and natural gas prices are expected to continue to be volatile in the future, and if oil and gas industry activity levels decrease in the future, we expect that our levels of operating cash flows will be negatively affected.

During early 2018, and despite increasing activity levels, we have taken steps to minimize growth to our operating and administrative headcount and continue to maintain a low cost structure for our businesses. Continuing specific cost reduction steps taken during prior periods, we also continue to review for other further opportunities to reduce costs.

As part of the sale of our Offshore Division in March 2018, Orinoco assumed all liabilities and obligations currently associated with our former Maritech subsidiary, including but not limited to all currently identified and any future identified Maritech decommissioning obligations.


35



Investing Activities
 
During the first three months of 2018 , the total amount of our net cash utilized on investing activities was $67.6 million . The acquisition of SwiftWater included cash purchase consideration of $42.0 million , which is subject to further working capital adjustment. Total cash capital expenditures during the first three months of 2018 were $28.9 million , net of disposals. Our Completion Fluids & Products Division spent $1.1 million on capital expenditures during the first three months of 2018 , the majority of which related to plant and facility additions. Our Water & Flowback Services Division spent $8.8 million on capital expenditures, primarily to add to its water management equipment fleet. Our Compression Division spent $17.1 million , primarily for growth capital expenditure projects to increase its compression fleet.

Generally, a majority of our planned capital expenditures has been related to identified opportunities to grow and expand certain of our existing businesses. However, certain of these planned expenditures have been, and may continue to be, postponed or canceled as we are reviewing all capital expenditure plans carefully in an effort to conserve cash. We currently have no long-term capital expenditure commitments. The deferral of capital projects could affect our ability to compete in the future. Excluding our Compression Division, we expect to spend approximately $40 to $50 million during 2018 on capital expenditures, primarily to expand our water management services equipment fleet. Our Compression Division expects to spend approximately $90 to $110 million on capital expenditures during 2018 to expand its compressor fleet in response to increased demand for compression services. The level of future growth capital expenditures depends on forecasted demand for our products and services. If the forecasted demand for our products and services during 2018 increases or decreases, the amount of planned expenditures on growth and expansion will be adjusted accordingly.
 
Financing Activities 
 
During the first three months of 2018 , the total amount of consolidated cash provided by financing activities was $185.6 million , primarily consisting of the proceeds from the issuance of the CCLP Senior Secured Notes, which were used to repay the CCLP Credit Agreement and provide additional funding for future capital expenditures, and borrowings under our Credit Agreement that were primarily used to fund the purchase of SwiftWater. To fund future capital and working capital requirements, we may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, leases, equity issuances, and other sources of capital. We and CCLP are in compliance with all covenants of our respective debt agreements as of March 31, 2018 .

See CCLP Financing Activities below for discussion of the CCLP Preferred Units and CCLP's long-term debt.

Our Long-Term Debt

Our Bank Credit Facility . As of May 10, 2018 , TETRA (excluding CCLP) had an outstanding balance on its revolving credit facility (as amended, the "Credit Agreement"), of $90.2 million , and had $6.1 million in letters of credit against the revolving credit facility, leaving a net availability, subject to compliance with our covenants and other provisions of the Credit Agreement that limit borrowings under the Credit Facility, of $103.7 million . The Credit Agreement, as amended, matures on September 30, 2019 and limits aggregate lender commitments to $200 million. Borrowings generally bear interest at the British Bankers Association LIBOR rate plus 2.50% to 4.25%, depending on one of our financial ratios. We pay a commitment fee ranging from 0.35% to 1.00% on unused portions of the facility. All obligations under the Credit Agreement and the guarantees of such obligations are secured by first-lien security interests in substantially all of our assets and the assets of our subsidiaries other than CCLP and its subsidiaries (limited, in the case of foreign subsidiaries, to 66% of the voting stock or equity interests of first-tier foreign subsidiaries). Such security interests are for the benefit of the lenders under the Credit Agreement as well as the holder of our 11% Senior Note on a pari passu basis. In addition, the Credit Agreement includes limitations on aggregate asset sales, individual acquisitions, and aggregate annual acquisitions, dispositions, and capital expenditures.
    
Our Credit Agreement contains customary covenants and other restrictions, including certain financial ratio covenants based on our levels of debt and interest cost compared to a defined measure of our operating cash flows over a twelve month period. The Credit Agreement requires us to maintain (i) a fixed charge coverage ratio that may not be less than 1.25 to 1 as of the end of any fiscal quarter; and (ii) a consolidated leverage ratio that may not exceed (a) 5.00 to 1 at the end of fiscal quarters ending during the period from and including March 31, 2017

36



through and including December 31, 2017, (b) 4.75 to 1 at the end of fiscal quarters ending March 31, 2018 and June 30, 2018, (c) 4.50 to 1 at the end of fiscal quarters ending September 30, 2018 and December 31, 2018, and (d) 4.00 to 1 at the end of each of the fiscal quarters thereafter. At March 31, 2018 , our consolidated leverage ratio was 2.62 to 1 (compared to a 4.75 to 1 maximum allowed under the Credit Agreement). At March 31, 2018 , our fixed charge coverage ratio was 2.54 to 1 (compared to a 1.25 to 1 minimum required under the Credit Agreement). Deterioration of these financial ratios could result in a default by us under the Credit Agreement that, if not remedied, could result in termination of the Credit Agreement and acceleration of any outstanding balances. Any such default could also result in a cross-default under our 11% Senior Note. We have reviewed our financial forecasts as of May 10, 2018 for the subsequent twelve month period, which consider the current level of distributions expected to be received on the CCLP common units we own. Based on this review, and the current market conditions as of May 10, 2018 , we anticipate that we will have sufficient liquidity, earnings, and operating cash flows to maintain compliance with the covenants under our debt agreements through May 10, 2019.

CCLP is an unrestricted subsidiary and is not a borrower or a guarantor under our Credit Agreement. Our Credit Agreement includes cross-default provisions relating to any other indebtedness (excluding indebtedness of CCLP) greater than a defined amount. Our Credit Agreement also contains a covenant that restricts us from paying dividends in the event of a default or if such payment would result in an event of default.

Our Senior Note . Our senior note consists of the 11% Senior Note that was initially issued and sold in November 2015 and later amended (the "Amended and Restated 11% Senior Note Agreement"). As of May 10, 2018 , the aggregate principal amount outstanding of the 11% Senior Note is $125.0 million .

The 11% Senior Note bears interest at the fixed rate of 11.0% and matures on November 5, 2022. Interest on the 11% Senior Note is due quarterly on March 15, June 15, September 15, and December 15 of each year. We may prepay the 11% Senior Note, in whole or in part at a prepayment price equal to (i) prior to November 20, 2018, 100% of the principal amount so prepaid, plus accrued and unpaid interest and a “make-whole” prepayment amount, (ii) during the period commencing on November 20, 2018, and ending on November 19, 2019, 104% of the principal amount so prepaid, plus accrued and unpaid interest, (iii) during the period commencing on November 20, 2019 and ending on November 19, 2020, 102% of the principal amount so prepaid, plus accrued and unpaid interest, (iv) during the period commencing on November 20, 2020, and ending on November 19, 2021, 101% of the principal amount so prepaid, plus accrued and unpaid interest, and (v) on or after November 20, 2021, 100% of the principal amount so prepaid, plus accrued and unpaid interest.

The 11% Senior Note is guaranteed by substantially all of our wholly owned U.S. subsidiaries. The Amended and Restated 11% Senior Note Agreement contains customary covenants that limit our ability and the ability of certain of our restricted subsidiaries to, among other things: incur or guarantee additional indebtedness; incur or create liens; merge or consolidate or sell substantially all of our assets; engage in a different business; enter into transactions with affiliates; and make certain payments. In addition, the Amended and Restated 11% Senior Note Agreement requires us to maintain certain financial ratios, including a maximum leverage ratio (ratio of debt and letters of credit outstanding to a defined measure of earnings). The maximum leverage ratio is further defined in the Amended and Restated 11% Senior Note Agreement. Consolidated net earnings under the Amended and Restated 11% Senior Note Agreement is the aggregate of our net income (or loss) of our consolidated restricted subsidiaries, including cash dividends and distributions (not the return of capital) received from persons other than consolidated restricted subsidiaries (such as CCLP) and after allowances for taxes for such period determined on a consolidated basis in accordance with U.S. generally accepted accounting principles ("GAAP"), excluding certain items more specifically described therein. CCLP is an unrestricted subsidiary and is not a borrower or a guarantor under the Amended and Restated 11% Senior Note Agreement.

37




The Amended and Restated 11% Senior Note Agreement includes customary default provisions, as well as cross-default provisions relating to other indebtedness (excluding indebtedness of CCLP) greater than a defined amount. In addition, the Amended and Restated 11% Senior Note Agreement requires a minimum fixed charge coverage ratio at the end of any fiscal quarter of 1.25 to 1 and allows a maximum ratio of consolidated funded indebtedness at the end of any fiscal quarter of a defined measure of earnings ("EBITDA") of (a) 5.00 to 1 as of the end of any fiscal quarter ending during the period commencing March 31, 2017 and ending December 31, 2017, (b) 4.75 to 1 as of the end of any fiscal quarter ending March 31, 2018 and June 30, 2018 and (c) 4.50 to 1 as of the end of any fiscal quarter ending September 30, 2018 and December 31, 2018, and (d) 4.00 to 1 at the end of fiscal quarters ending thereafter. Pursuant to the Amended and Restated 11% Senior Note Agreement, the 11% Senior Note is secured by first-lien security interests in substantially all of our assets and the assets of our subsidiaries on a pari passu basis with the lenders under the Credit Agreement. See the above discussion of our Credit Agreement for a description of these security interests. The 11% Senior Note is pari passu in right of payment with all borrowings under the Credit Agreement and ranks at least pari passu in right of payment with all other outstanding indebtedness. We are in compliance with all covenants of the Amended and Restated 11% Senior Note Purchase Agreement as of March 31, 2018 . At March 31, 2018 , our ratio of consolidated funded indebtedness to EBITDA was 2.62 to 1 (compared to 4.75 to 1 maximum allowed under the Amended and Restated 11% Senior Note Agreement) and our fixed charge coverage ratio was 2.54 to 1 (compared to a 1.25 to 1 minimum required under the Amended and Restated 11% Senior Note Purchase Agreement). CCLP is an unrestricted subsidiary and is not a borrower or a guarantor under our Amended and Restated 11% Senior Note Purchase Agreement.

CCLP Financing Activities

In March 2018, CCLP issued an aggregate $350.0 million of its CCLP Senior Secured Notes, and the net proceeds of $344.1 million were partially used to repay the remaining outstanding balance of $258.0 million under the CCLP Credit Agreement, which was then terminated. See below for a further discussion of the CCLP Senior Secured Notes. The remaining proceeds are available to fund future CCLP capital expenditures, including the increasing capital expenditures mentioned above that are needed in order to grow and maintain the capacity of CCLP's compressor and equipment fleet, as well as for general partnership needs.

CCLP Preferred Units . On August 8, 2016 and September 20, 2016 , CCLP entered into Series A Preferred Unit Purchase Agreements (the “Unit Purchase Agreements”) with certain purchasers with regard to its issuance and sale in private placements (the "Initial Private Placement" and "Subsequent Private Placement," respectively) of an aggregate of 6,999,126 of CSI Compressco LP Series A Convertible Preferred Units representing limited partner interests in CCLP (the “CCLP Preferred Units”) for a cash purchase price of $11.43 per CCLP Preferred Unit (the “Issue Price”), resulting in total 2016 net proceeds, after deducting certain offering expenses, of approximately $77.3 million . We purchased 874,891 of the CCLP Preferred Units at the aggregate Issue Price of $10.0 million .

In connection with the closing of the Initial Private Placement, CSI Compressco GP Inc (our wholly owned subsidiary) executed the Second Amended and Restated CCLP Partnership Agreement to, among other things, authorize and establish the rights and preferences of the CCLP Preferred Units. The CCLP Preferred Units are a new class of equity security that will rank senior to all classes or series of equity securities of CCLP with respect to distribution rights and rights upon liquidation. We and the other holders of CCLP Preferred Units (each, a “CCLP Preferred Unitholder”) will receive quarterly distributions, which will be paid in kind in additional CCLP Preferred Units, equal to an annual rate of 11.00% of the Issue Price ( $1.2573 per unit annualized), subject to certain adjustments. The rights of the CCLP Preferred Units include certain anti-dilution adjustments, including adjustments for economic dilution resulting from the issuance of common units in the future below a set price.

A ratable portion of the CCLP Preferred Units has been, and will continue to be, converted into CCLP common units on the eighth day of each month over a period that began in March 2017 (each, a “Conversion Date”), subject to certain provisions of the Second Amended and Restated CCLP Partnership Agreement that may delay or accelerate all or a portion of such monthly conversions. On each Conversion Date, a portion of the CCLP Preferred Units will convert into CCLP common units representing limited partner interests in CCLP in an amount equal to, with respect to each CCLP Preferred Unitholder, the number of CCLP Preferred Units held by such CCLP Preferred Unitholder divided by the number of Conversion Dates remaining, subject to adjustment described in the Second Amended and Restated CCLP Partnership Agreement, with the conversion price (the "Conversion Price") determined by the trading prices of the common units over the prior month, among other factors, and as otherwise impacted by the existence of certain conditions related to the CCLP common units. The maximum aggregate number of CCLP common units that could be required to be issued pursuant to the conversion provisions of the

38



CCLP Preferred Units is potentially unlimited; however, CCLP may, at its option, pay cash, or a combination of cash and CCLP common units, to the CCLP Preferred Unitholders instead of issuing CCLP common units on any Conversion Date, subject to certain restrictions as described in the Second Amended and Restated CCLP Partnership Agreement and the CCLP Credit Agreement. Including the impact of paid in kind distributions of CCLP Preferred Units and conversions of CCLP Preferred Units into CCLP common units, the total number of CCLP Preferred Units outstanding as of March 31, 2018 was 5,241,563 , of which we held 658,281 .

Because the CCLP Preferred Units may be settled using a variable number of CCLP common units, the fair value of the CCLP Preferred Units is classified as a long-term liability on our consolidated balance sheet in accordance with ASC 480 "Distinguishing Liabilities and Equity." The fair value of the CCLP Preferred Units as of March 31, 2018 was $54.2 million . Changes in the fair value during each quarterly period, if any, are charged or credited to earnings in the accompanying consolidated statements of operations. Charges or credits to earnings for changes in the fair value of the CCLP Preferred Units, along with the interest expense for the accrual and payment of paid-in-kind distributions associated with the CCLP Preferred Units, are non-cash charges and credits associated with the CCLP Preferred Units.

In addition, the CCLP Unit Purchase Agreements include certain provisions regarding change of control, transfer of CCLP Preferred Units, indemnities, and other matters described in detail in the CCLP Unit Purchase Agreements. The CCLP Unit Purchase Agreements contain customary representations, warranties and covenants of CCLP and the purchasers.

CCLP Senior Secured Notes . On March 8, 2018, CCLP entered into the Purchase Agreement (the “Purchase Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the initial purchasers listed in Schedule A thereto (collectively, the “Initial Purchasers”), pursuant to which the CCLP Issuers agreed to issue and sell to the Initial Purchasers $350 million aggregate principal amount of the CCLP Issuers’ 7.50% Senior Secured First Lien Notes due 2025 (the "CCLP Senior Secured Notes") (the "CCLP Offering") pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act").

The CCLP Issuers closed the Offering on March 22, 2018. The CCLP Senior Secured Notes were issued at par for net proceeds of approximately $344.1 million , after deducting certain financing costs. CCLP used the net proceeds to repay in full and terminate CCLP's existing bank Credit Agreement and for general partnership purposes, including the expansion of its compression fleet. The CCLP Senior Secured Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees" and, together with the CCLP Senior Secured Notes, the "CCLP Senior Secured Note Securities") on a senior secured basis initially by each of CCLP's domestic restricted subsidiaries (other than CSI Compressco Finance Inc., certain immaterial subsidiaries and certain other excluded domestic subsidiaries) and are secured by a first-priority security interest in substantially all of the CCLP Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the CCLP Senior Secured Notes, subject to certain permitted encumbrances and exceptions. On the closing date, we entered into an indenture (the "Indenture") by and among the Obligors and U.S. Bank National Association, as trustee with respect to the Securities. The CCLP Senior Secured Notes accrue interest at a rate of 7.50% per annum. Interest on the CCLP Senior Secured Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2018. The CCLP Senior Secured Notes are scheduled to mature on April 1, 2025. During the three months ended March 31, 2018, CCLP incurred total financing costs of $6.2 million related to the CCLP Senior Secured Notes. These costs are deferred, netting against the carrying value of the amount outstanding.

On and after April 1, 2021, CCLP may redeem all or a part of the CCLP Senior Secured Notes , from time to time, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon to, but not including, the applicable redemption date, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12-month period beginning on April 1 of the years indicated below:


39



 
 
 
Date
 
Price
2021
 
105.625%
2022
 
103.750%
2023
 
101.875%
2024
 
100.000%

In addition, any time or from time to time before April 1, 2021, CCLP may, at our option, redeem all or a portion of the CCLP Senior Secured Notes at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined in the Indenture) with respect to the CCLP Senior Secured Notes plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

Prior to April 1, 2021, CCLP may on one or more occasions redeem up to 35% of the principal amount of the CCLP Senior Secured Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price equal to 107.500% of the principal amount of the CCLP Senior Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date, provided that (a) at least 65% of the aggregate principal amount of the CCLP Senior Secured Notes originally issued on the issue date (excluding notes held by CCLP and its subsidiaries) remains outstanding after each such redemption; and (b) the redemption occurs within 180 days after the date of the closing of the equity offering.
    
If CCLP experiences certain kinds of changes of control, each holder of the CCLP Senior Secured Notes will be entitled to require us to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of that holder’s CCLP Senior Secured Notes pursuant to an offer on the terms set forth in the Indenture. CCLP will offer to make a cash payment equal to 101% of the aggregate principal amount of the CCLP Senior Secured Notes repurchased plus accrued and unpaid interest, if any, on the CCLP Senior Secured Notes repurchased to the date of repurchase, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

The Indenture contains customary covenants restricting CCLP ability and the ability of CCLP restricted subsidiaries to: (i) pay distributions on, purchase or redeem CCLP common units or purchase or redeem CCLP subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of our assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from our restricted subsidiaries to CCLP. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting CCLP, subject to the satisfaction of certain conditions, to transfer assets to certain of CCLP unrestricted subsidiaries. Moreover, if the CCLP Senior Secured Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the Indenture, many of the restrictive covenants in the Indenture will be terminated. The Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding CCLP Senior Secured Notes may declare all of the CCLP Senior Secured Notes to be due and payable immediately .

On March 22, 2018, CCLP, the grantors named therein, the Trustee and U.S. Bank National Association, as the collateral trustee (the “Collateral Trustee”), entered into a collateral trust agreement (the “Collateral Trust Agreement”) pursuant to which the Collateral Trustee will receive, hold, administer, maintain, enforce and distribute the proceeds of all of its liens upon the collateral for the benefit of the current and future holders of the CCLP Senior Secured Notes and any future priority lien obligations, if any.

CCLP Senior Notes . The obligations under the CCLP 7.25% Senior Notes (the "CCLP Senior Notes") are jointly and severally and fully and unconditionally, guaranteed on a senior unsecured basis by each of CCLP’s domestic restricted subsidiaries (other than CSI Compressco Finance) that guarantee CCLP’s other indebtedness (the "Guarantors" and together with the Issuers, the "Obligors"). The CCLP Senior Notes and the subsidiary

40



guarantees thereof (together, the "CCLP Senior Note Securities") were issued pursuant to an indenture described below. As of May 9, 2018 , $295.9 million in aggregate principal amount of the CCLP Senior Notes are outstanding.

The Obligors issued the CCLP Senior Note Securities pursuant to the Indenture dated as of August 4, 2014 (the "CCLP Senior Note Indenture") by and among the Obligors and U.S. Bank National Association, as trustee (the "Trustee"). The CCLP Senior Notes accrue interest at a rate of 7.25% per annum. Interest on the CCLP Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year. The CCLP Senior Notes are scheduled to mature on August 15, 2022.

The CCLP Senior Note Indenture contains customary covenants restricting CCLP’s ability and the ability of its restricted subsidiaries to: (i) pay dividends and make certain distributions, investments and other restricted payments; (ii) incur additional indebtedness or issue certain preferred shares; (iii) create certain liens; (iv) sell assets; (v) merge, consolidate, sell or otherwise dispose of all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) designate its subsidiaries as unrestricted subsidiaries under the CCLP Senior Note Indenture. The CCLP Senior Note Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the CCLP Senior Note Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the CCLP Senior Notes then outstanding may declare all amounts owing under the CCLP Senior Notes to be due and payable. CCLP is in compliance with all covenants of the CCLP Senior Note Purchase Agreement as of March 31, 2018 .

Other Sources and Uses

In addition to the aforementioned revolving credit facility, we and CCLP fund our respective short-term liquidity requirements from cash generated by our respective operations, leases, and from short-term vendor financing. Should additional capital be required, we believe that we have the ability to raise such capital through the issuance of additional debt or equity. However, instability or volatility in the capital markets at the times we need to access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time.
 
TETRA's Credit Agreement, as amended, matures in September 2019, TETRA's 11% Senior Note matures in November 2022, the CCLP Senior Notes mature in August 2022 and the CCLP Senior Secured Notes mature in March 2025. The replacement of these capital sources at similar or more favorable terms is not certain. If it is necessary to issue additional equity to fund our capital needs, additional dilution to our common stockholders will occur.

Although near-term growth plans pursuant to our long-term growth strategy have resumed, they are being reviewed carefully and are subject to our continuing efforts to conserve cash. CCLP has also increased its growth capital expenditure activity in response to increased demand for compression services. CCLP's long-term growth objectives are funded from its available cash available, other borrowings, and cash generated from the issuance of common or preferred units.

On March 23, 2016, we filed a universal shelf Registration Statement on Form S-3 with the Securities and Exchange Commission ("SEC"). On April 13, 2016, the Registration Statement on Form S-3 was declared effective by the SEC. Pursuant to this registration statement, we have the ability to sell debt or equity securities in one or more public offerings up to an aggregate public offering price of $164.4 million. This shelf registration statement currently provides us additional flexibility with regard to potential financings that we may undertake when market conditions permit or our financial condition may require.

As part of our long-term strategic growth plans, we evaluate opportunities to acquire businesses and assets that may require the payment of cash. Such acquisitions may be funded with existing cash balances, funds under credit facilities, or cash generated from the issuance of equity or debt securities.
 
The CCLP Second Amended and Restated Partnership Agreement requires that within 45 days after the end of each quarter, it distribute all of its available cash, as defined in the Second Amended and Restated Partnership Agreement, to its common unitholders of record on the applicable record date. During the three months ended March 31, 2018 , CCLP distributed $7.3 million , including $4.4 million to its public unitholders. The amount of quarterly distributions is determined based on a variety of factors, including estimates of CCLP's cash needs to fund its future operating, investing, and debt services requirements. There can be no assurance that quarterly distributions from CCLP will increase from this amount per unit, or that there will not be future decreases in the amount of distributions going forward.

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Off Balance Sheet Arrangements
 
As of March 31, 2018 , we had no “off balance sheet arrangements” that may have a current or future material effect on our consolidated financial condition or results of operations.
 
Commitments and Contingencies
 
Litigation
 
We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

On March 18, 2011, we filed a lawsuit in the Circuit Court of Union County, Arkansas, asserting claims of professional negligence, breach of contract and other claims against the engineering firm we hired for engineering design, equipment, procurement, advisory, testing and startup services for our El Dorado, Arkansas chemical production facility. The engineering firm disputed our claims and promptly filed a motion to compel the matter to arbitration. After a lengthy procedural dispute in Arkansas state court, arbitration proceedings were initiated on November 15, 2013. Ultimately, on December 16, 2016, the arbitration panel ruled in our favor, declared us as the prevailing party, and awarded us a total net amount of $12.8 million. We received full payment of the $12.8 million final award on January 5, 2017.
 
Other Contingencies
 
During 2011, in connection with the sale of a significant majority of Maritech's oil and gas producing properties, the buyers of the properties assumed the associated decommissioning liabilities pursuant to the purchase and sale agreements. In March 2018, we closed the Maritech Asset Purchase Agreement with Orinoco that provided for the purchase by Orinoco of the Maritech Properties. Also in March 2018, we finalized the Maritech Equity Purchase Agreement with Orinoco, that provided for the purchase by Orinoco of the Maritech Equity Interests. As a result of these transactions, we have effectively exited the businesses of our Offshore Services and Maritech segments and Orinoco assumed all of Maritech's remaining abandonment and decommissioning obligations.

Contractual Obligations
 
 
Payments Due
 
 
Total
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
 
(In Thousands)
Long-term debt - TETRA
 
$
191,151

 
$

 
$
73,143

 
$

 
$

 
$
118,008

 
$

Long-term debt - CCLP
 
632,414

 

 

 

 

 
288,588

 
343,826

Interest on debt - TETRA
 
67,556

 
12,656

 
15,991

 
13,340

 
13,340

 
12,229

 

Interest on debt - CCLP
 
277,662

 
35,635

 
47,513

 
47,513

 
47,513

 
40,425

 
59,063

Purchase obligations
 
113,428

 
9,478

 
9,450

 
9,450

 
9,450

 
9,450

 
66,150

Decommissioning and other asset retirement obligations
 
11,929

 

 

 

 

 

 
11,929

Operating and capital leases
 
86,238

 
12,000

 
12,022

 
10,548

 
8,517

 
6,358

 
36,793

Total contractual cash obligations (1)
 
$
1,380,378

 
$
69,769

 
$
158,119

 
$
80,851

 
$
78,820

 
$
475,058

 
$
517,761


(1)  
Amounts exclude other long-term liabilities reflected in our Consolidated Balance Sheet that do not have known payment streams. These excluded amounts include approximately $1.2 million of liabilities under FASB Codification Topic 740, “Accounting for Uncertainty in Income Taxes,” as we are unable to reasonably estimate the ultimate amount or timing of tax settlements. These excluded amounts also include approximately $ 54.2 million of liabilities related to the CCLP Series A Convertible Preferred Units. The preferred units are expected to be serviced and satisfied with non-cash paid-in-kind distributions and conversions to CCLP common units. See " Note E – CCLP Series A Convertible Preferred Units," in the Notes to Consolidated Financial Statements for further discussion.

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For additional information about our contractual obligations as of December 31, 2017 , see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2017 .

Cautionary Statement for Purposes of Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this Quarterly Report are identifiable by the use of the following words and other similar words: “anticipates", "assumes", “believes,” "budgets", “could,” “estimates,” "expects", "forecasts", "goal", "intends", "may", "might", "plans", "predicts", "projects", "schedules", "seeks", "should", "targets", "will", and "would".

Such forward-looking statements reflect our current views with respect to future events and financial performance and are based on assumptions that we believe to be reasonable, but such forward-looking statements are subject to numerous risks, and uncertainties, including, but not limited to:
economic and operating conditions that are outside of our control, including the supply, demand, and prices of crude oil and natural gas;
the levels of competition we encounter;
the activity levels of our customers;
our operational performance;
the availability of raw materials and labor at reasonable prices;
risks related to acquisitions and our growth strategy;
our ability to comply with the financial covenants in our debt agreements and the consequences of any failure to comply with such financial covenants;
the availability of adequate sources of capital to us;
the effect and results of litigation, regulatory matters, settlements, audits, assessments, and contingencies;
risks related to our foreign operations;
information technology risks including the risk from cyberattack, and
other risks and uncertainties under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 , those set forth in Item 1A "Risk Factors" in Part II of this Quarterly Report on Form 10-Q, and as included in our other filings with the U.S. Securities and Exchange Commission (“SEC”), which are available free of charge on the SEC website at www.sec.gov.

The risks and uncertainties referred to above are generally beyond our ability to control and we cannot predict all the risks and uncertainties that could cause our actual results to differ from those indicated by the forward-looking statements. If any of these risks or uncertainties materialize, or if any of the underlying assumptions prove incorrect, actual results may vary from those indicated by the forward-looking statements, and such variances may be material.

All subsequent written and oral forward-looking statements made by or attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements we may make, except as may be required by law.
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices. For a discussion of our indirect exposure to fluctuating commodity prices, please read “Risk Factors — Certain Business Risks” in our Annual Report on Form 10-K filed with the SEC on March 5, 2018 . We depend on U.S. and international demand for and production of oil and natural gas, and a reduction in this demand or production could adversely affect the demand or the prices we charge for our services, which could cause our revenues and operating cash flows to

43



decrease in the future. We do not currently hedge, and do not intend to hedge, our indirect exposure to fluctuating commodity prices.

Interest Rate Risk

As of March 31, 2018 , due to borrowings made during the three month period then ended, we had a balance outstanding under our Credit Agreement, and such borrowings bear interest at variable rates of interest (currently 4.30%).

 
 
Expected Maturity Date
 
 
 
Fair Market
Value
($ amounts in thousands)
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
 
March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt:
 
$

 
$
74,400

 
$

 
$

 
$—
 
$

 
$
74,400

 
$
74,400

U.S. dollar fixed rate - TETRA
 
$

 
$

 
$

 
$

 
$125,000
 
$

 
$
125,000

 
$
128,500

U.S. dollar fixed rate - CCLP
 
$

 
$

 
$

 
$

 
$295,930
 
$
350,000

 
$
645,930

 
$
630,900

Weighted average interest rate (fixed)
 

 

 

 

 
8.36
%
 
7.50
%
 

 
 


Exchange Rate Risk

As of March 31, 2018 , there have been no material changes pertaining to our exchange rate exposures as disclosed in our Form 10-K for the year ended December 31, 2017 .

Item 4. Controls and Procedures.
 
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2018 , the end of the period covered by this quarterly report.

As discussed above in this Quarterly Report on Form 10-Q, on February 28, 2018 , we completed the acquisition of SwiftWater. We are currently integrating SwiftWater into our internal control over financial reporting processes. In executing this integration, we are analyzing, evaluating, and, where necessary, making changes in controls and procedures related to the SwiftWater business, which we expect to be completed in fiscal year 2019. We expect to exclude SwiftWater from our assessment of internal control over financial reporting as of December 31, 2018 . Total assets of SwiftWater represented approximately 6% of our consolidated total assets as of March 31, 2018 , and SwiftWater's revenues following the February 28, 2018 acquisition date represented approximately 4% of our consolidated revenues for the three month period ended March 31, 2018 .

Other than the changes described above, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2018 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II
OTHER INFORMATION
 
Item 1. Legal Proceedings.
 
We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.
 

44



Environmental Proceedings
 
One of our subsidiaries, TETRA Micronutrients, Inc. ("TMI"), previously owned and operated a production facility located in Fairbury, Nebraska. TMI is subject to an Administrative Order on Consent issued to American Microtrace, Inc. (n/k/a/ TETRA Micronutrients, Inc.) in the proceeding styled In the Matter of American Microtrace Corporation , EPA I.D. No. NED00610550, Respondent, Docket No. VII-98-H-0016, dated September 25, 1998 (the "Consent Order"), with regard to the Fairbury facility. TMI is liable for ongoing environmental monitoring at the Fairbury facility under the Consent Order; however, the current owner of the Fairbury facility is responsible for costs associated with the closure of that facility. While the outcome cannot be predicted with certainty, management does not consider it reasonably possible that a loss in excess of any amounts accrued has been incurred or is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.
 
Item 1A. Risk Factors.

There have been no material changes in the information pertaining to our Risk Factors as disclosed in our Form 10-K for the year ended December 31, 2017 .

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
(a) None.
 
(b) None.
 
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Period
 
Total Number
of Shares Purchased
 
Average
Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs (1)
January 1 – January 31, 2017
 

(2)
$


 
$
14,327,000

February 1 – February 28, 2017
 
45,152

(2)
3.89


 
14,327,000

March 1 – March 31, 2017
 

(2)


 
14,327,000

Total
 
45,152

 
 


 
$
14,327,000

(1)
In January 2004, our Board of Directors authorized the repurchase of up to $20 million of our common stock. Purchases will be made from time to time in open market transactions at prevailing market prices. The repurchase program may continue until the authorized limit is reached, at which time the Board of Directors may review the option of increasing the authorized limit.
(2)
Shares we received in connection with the exercise of certain employee stock options or the vesting of certain shares of employee restricted stock. These shares were not acquired pursuant to the stock repurchase program.

Item 3. Defaults Upon Senior Securities.
 
None.

Item 4. Mine Safety Disclosures.
 
None.
 
Item 5. Other Information.
 
None.

 

45



Item 6. Exhibits.
 
Exhibits:
2.1**
2.2**
2.3**

2.4**
10.1
10.2
10.3*
31.1*
31.2*
32.1***
32.2***
101.INS+
XBRL Instance Document.
101.SCH+
XBRL Taxonomy Extension Schema Document.
101.CAL+
XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB+
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE+
XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF+
XBRL Taxonomy Extension Definition Linkbase Document.
*
Filed with this report.
**
Filed with this report. The schedules and exhibits to this agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish supplementary any omitted schedules and exhibits to the Securities Exchange Commission upon request.
***
Furnished with this report.
+
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the three month periods ended March 31, 2018 and 2017 ; (ii) Consolidated Statements of Comprehensive Income for the three month periods ended March 31, 2018 and 2017 ; (iii) Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 ; (iv) Consolidated Statements of Cash Flows for the three month periods ended March 31, 2018 and 2017 ; and (v) Notes to Consolidated Financial Statements for the three months ended March 31, 2018 .
 
A statement of computation of per share earnings is included in Note A of the Notes to Consolidated Financial Statements included in this report and is incorporated by reference into Part II of this report.

46



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 

 
TETRA Technologies, Inc.
 
 
 
 
 
Date:
May 10, 2018
By:
/s/Stuart M. Brightman
 
 
 
Stuart M. Brightman
 
 
 
Chief Executive Officer
 
 
 
 
Date:
May 10, 2018
By:
/s/Elijio V. Serrano
 
 
 
Elijio V. Serrano
 
 
 
Senior Vice President
 
 
 
Chief Financial Officer
 
 
 
 
Date:
May 10, 2018
By:
/s/Ben C. Chambers
 
 
 
Ben C. Chambers
 
 
 
Vice President – Accounting
 
 
 
Principal Accounting Officer

47

Execution Copy

















ASSET PURCHASE AND SALE AGREEMENT BY AND BETWEEN

MARITECH RESOURCES, LLC

as Seller,

TETRA TECHNOLOGIES, INC.,

as Seller Parent and
ORINOCO NATURAL RESOURCES, LLC

as Buyer



DATED February 28, 2018





TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS AND REFERENCES    1
Section 1.1    Defined Terms    1
ARTICLE II PROPERTY TO BE SOLD AND PURCHASED    5
Section 2.1    Properties    5
Section 2.2    Excluded Properties    7
ARTICLE III CONSIDERATION    8
Section 3.1    Consideration    8
Section 3.2    Allocation    8
ARTICLE IV REPRESENTATIONS OF SELLER    9
Section 4.1    Representations of Seller    9
Section 4.2    Disclaimers    10
ARTICLE V REPRESENTATIONS OF BUYER    11
Section 5.1    Representations of Buyer    11
ARTICLE VI CERTAIN COVENANTS    13
Section 6.1    Preferential Rights and Consents    13
Section 6.2    Insurance    13
Section 6.3    Interim Operations    13
Section 6.4    Bonding Agreement    14
Section 6.5    Encumbrances    14
ARTICLE VII CONDITIONS TO CLOSING; TERMINATION    14
Section 7.1    Conditions Precedent to the Obligations of Buyer    14
Section 7.2    Conditions Precedent to the Obligations of Seller    14
Section 7.3    Frustration of Closing Conditions    15
Section 7.4    Termination of Agreement    15
Section 7.5    Procedure Upon Termination    15
Section 7.6    Effect of Termination    15
ARTICLE VIII CLOSING    16
Section 8.1    Closing    16
Section 8.2    Seller’s Closing Obligations    16
Section 8.3    Buyer’s Closing Obligations    16
ARTICLE IX POST CLOSING ACTIONS    17
Section 9.1    Operational Transition    17
Section 9.2    Notifications by Buyer    17




ARTICLE X ASSUMPTION AND INDEMNIFICATION    17
Section 10.1    Assumption and Indemnification By Buyer    17
Section 10.2    Indemnification By Seller Parent    18
Section 10.3    Indemnification Procedures    18
Section 10.4    Limitations    20
Section 10.5    Survival of Provisions    21
Section 10.6    Mitigation    21
Section 10.7    No Duplication    21
Section 10.8    No Commissions Owed    22
Section 10.9    Knowledge of Breach    22
ARTICLE XI NOTICES    22
Section 11.1    Notices    22
ARTICLE XII TAX MATTERS    23
Section 12.1    Asset Taxes    23
Section 12.2    Transfer Fees and Taxes    23
Section 12.3    Tax Returns    23
ARTICLE XIII MISCELLANEOUS MATTERS    24
Section 13.1    Further Assurances    24
Section 13.2    Gas Imbalances, Make-Up Obligations    24
Section 13.3    Waiver of Consumer Rights    24
Section 13.4    Parties Bear Own Expenses/No Special Damages    24
Section 13.5    Entire Agreement    25
Section 13.6    Amendments, Waivers    25
Section 13.7    Choice of Law    25
Section 13.8    Jurisdiction; Waiver of Jury Trial    25
Section 13.9    Time of Essence    26
Section 13.10    No Assignment    26
Section 13.11    Successors and Assigns    26
Section 13.12    No Press Releases    26
Section 13.13    Counterpart Execution, Fax Execution    26
Section 13.14    Contribution    26
Section 13.15    References, Titles and Construction    26
Section 13.16    Severability    27
Section 13.17    Agreement for Parties’ Benefit Only    27
Section 13.18    Confidentiality    27





LIST OF EXHIBITS AND SCHEDULES


Exhibits    A    Leases
B    Form of Exhibit “A” for Form BOEM-0150 and Form BOEM-0151 C    Form of Bonding Agreement
D    Form of FIRPTA

Schedule    4.1(e) Litigation
6.1    Consents to Assign





ASSET PURCHASE AND SALE AGREEMENT

THIS ASSET PURCHASE AND SALE AGREEMENT (as the same may be
amended, restated, supplemented or otherwise modified from time to time in accordance herewith, this “ Agreement ”) is entered into this 28 th day of February, 2018 (the “ Execution Date ”), between Maritech Resources, LLC a Delaware limited liability company (“ Seller ”), TETRA Technologies, Inc., a Delaware corporation, solely for purposes of Article X herein (“ Seller Parent ”) and Orinoco Natural Resources, LLC, a Virginia limited liability company (“ Buyer ” or “ Orinoco ”). Buyer and Seller may be referred to collectively as the “ Parties ” or individually as a “ Party .”

RECITALS:

A. Immediately subsequent to the execution and delivery of this Agreement and the assignments contemplated thereby, the Seller, TETRA Applied Technologies, LLC, a Delaware limited liability company (“ TETRA Applied ”), Seller Parent, solely for purposes of Article VII thereof, and Orinoco will enter into that certain Membership Interest Purchase and Sale Agreement (the “ MIPSA ”), providing for the sale of the membership interests of Seller to Orinoco.

B. Immediately subsequent to the execution and delivery of the MIPSA and the assignment contemplated thereby, Seller Parent, TETRA Production Testing Holding LLC, a Delaware limited liability company (“ TETRA Holding ” and together with Seller Parent, the “ EIPA Sellers ”), and Epic Offshore Specialty, LLC, a Delaware limited liability company (“ EOS ”) will enter into that certain Equity Interest Purchase Agreement (the “ EIPA ”), providing for the sale by the EIPA Sellers of the equity interests of TSB Offshore, Inc. (“ TSB ”) and TETRA Applied to EOS.

C. Seller is the owner of the Properties (as such term is defined below), and Seller desires to sell the Properties to Buyer, and Buyer desires to purchase the Properties from Seller, on the terms and conditions set forth herein.
W I T N E S S E T H:





ARTICLE I
DEFINITIONS AND REFERENCES

Section 1.1 Defined Terms . When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Section 1.1 or in the section, subsections or other subdivisions referred to below:

Affiliate ” means, when used with respect to a specified Person, another Person that, either directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this Agreement, “control” (and correlative terms, including “controlling” and “controlled”) means the power, whether by contract, equity ownership or otherwise, to direct the policies and management of a Person and any Person that directly or indirectly owns more than 50% of any class of voting equity interests of the Person specified shall be deemed to be an Affiliate of such Person.
Applicable Environmental Laws ” mean all applicable Laws by which the Properties are bound and which are pertaining or relating to (a) the prevention, abatement, control or elimination of pollution or pollution control, (b) the protection of public health, wildlife, natural resources or the environment, and (c) the management, presence, transport, storage, disposal or release of waste materials and/or hazardous substances, including: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”);
(ii) the Emergency Planning and Community Right-to-Know Act of 1986, as amended; (iii) the Federal Insecticide, Fungicide & Rodenticide Act, as amended; (iv) the Federal Water Pollution Control Act, as amended; (v) the Oil Pollution Act of 1990, as amended; (vi) the Resource Conservation and Recovery Act, as amended; (vii) the Superfund Amendments and Reauthorization Act of 1986, as amended; (viii) the Hazardous Materials Transportation Act, as amended; (ix) the Safe Drinking Water Act, as amended; (x) the Toxic Substances Control Act, as amended; (xi) the Clean Air Act, as amended; (xii) the Endangered Species Act; and, with respect to each of the foregoing clauses (i) through (xii), all similar state Laws, and the rules and regulations promulgated thereunder, all as amended and supplemented.

Asset Taxes ” means Property Taxes and all excise, severance, production, sales, use, or similar Taxes (excluding, for the avoidance of doubt, any Income Taxes and Transfer Taxes) based upon or measured by the ownership or operation of the Properties or the production of hydrocarbons therefrom or the receipt of proceeds therefrom.

BOEM ” means the United States Department of the Interior, Bureau of Ocean Energy Management, or any successor agency.

BSEE ” means the United States Department of the Interior, Bureau of Safety and Environmental Enforcement, or any successor agency.

Business Day ” means any day other than a Saturday, a Sunday or other day on which commercial banks in Houston, Texas are authorized or required by Law to close.

Buyer Indemnified Claim ” and “Buyer Indemnified Claims” shall have the meanings assigned to such terms in Section 10.2.

Buyer Indemnified Parties ” shall have the meanings assigned to such terms in Section 10.2 .

Cap ” shall have the meanings assigned to such terms in Section 10.4(a) .




Claim Notice ” shall have the meanings assigned to such terms in Section 10.3(a) . Closing ” and “ Closing Date ” shall have the meanings assigned to such terms in Section 8.1 .

Code ” shall mean the Internal Revenue Code of 1986, as amended.

Condition of the Properties ” shall have the meaning assigned to such term in Section 10.1(c) .

Contracts ” shall have the meaning assigned to such term in Section 2.1(e) .

Conveyance ” and “ Conveyances s hall have the meanings assigned to such terms in
Section 8.2(a) .

Deductible ” shall have the meanings assigned to such terms in Section 10.4(a). “ EIPA ” shall have the meaning assigned to such term in the recitals.
EIPA Sellers ” shall have the meaning assigned to such term in the recitals. “ Election Period ” shall have the meanings assigned to such terms in Section 10.3(b). “ EOS ” shall have the meaning assigned to such term in the recitals.
Equipment ” shall have the meaning assigned to such term in Section 2.1(d). “ Excluded Properties ” shall have the meaning assigned to such term in Section 2.2.
Governmental Entity ” means any tribal, local, municipal, national, federal, foreign, domestic or other governmental or regulatory authority, department, agency, commission, body, court or other body or entity of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, self-regulatory or Taxing Authority or power of any nature, including any arbitrator or arbitral tribunal.

Income Taxes ” means any income, franchise and similar Taxes.
Indemnified Party ” shall have the meanings assigned to such terms in Section 10.3(a) . Indemnifying Party ” shall have the meanings assigned to such terms in Section
10.3(a) .
Indemnity Claim ” shall have the meanings assigned to such terms in Section 10.3(f). “ Indemnity Notice ” shall have the meanings assigned to such terms in Section 10.3(f). “ Law ” or “ Laws ” means any law (including common and civil law), statute, ordinance,
rule, regulation, judgment, writ, treaty, code, order, injunction, ruling, order, decree, arbitration award, agency requirement, license or permit of any Governmental Entity.

Leases ” shall have the meaning assigned to such term in Section 2.1(a) .





Liabilities ” means any liability (whether known or unknown, whether fixed or otherwise, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including all costs and expenses relating thereto.
Losses ” means all losses, costs, charges, expenses (including interest and penalties due and payable with respect thereto and reasonable attorneys’ and other professional fees and expenses in connection with any action whether involving a third-party claim or any claim solely between the Parties hereto), obligations, Liabilities, settlement payments, awards, judgments, fines, penalties, damages, demands, claims, assessments or deficiencies.

Orinoco ” shall have the meaning assigned to such term in the Preamble.

Permits ” means any and all permits, licenses and governmental authorizations that are used for the ownership, operation, maintenance, repair or replacement of the Properties.

Person ” means any individual, firm, corporation, company, partnership (general and limited), limited liability company, joint venture, association, trust, estate, unincorporated organization, Governmental Entity or any other entity.

Proceeding ” means any proceeding, action, claim, suit, audit, investigation or inquiry by or before any arbitrator or Governmental Entity.

Properties ” shall have the meaning assigned to such term in Section 2.1.

Property Taxes ” means all real property Taxes, personal property Taxes and similar ad valorem Taxes.
Purchase Price ” shall have the meaning assigned to such term in Section 3.1 . Records ” shall have the meaning assigned to such term in Section 2.1(g).

Routine Governmental Approvals ” shall have the meaning assigned to such term in
Section 4.1(c).

Seller Parent ” shall have the meaning assigned to such term in the Recitals.

Seller’s Indemnified Claim ” and “ Seller’s Indemnified Claims ” shall have the meanings assigned to such terms in Section 10.1.

Seller’s Reps and Warranties ” shall have the meaning assigned to such term in
Section 4.2.

Tax ” or “ Taxes ” means taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees imposed by any Taxing Authority, including taxes, levies or other like assessments on income, profits or gains, franchise, privilege, gross receipts, ad valorem, escheat, value added, customs, excise, import or export, real or property, asset, sales, use, license, payroll, transaction, capital, net worth, withholding, estimated, social security, utility, workers’ compensation, severance, production, unemployment compensation, occupation, premium, windfall profits, environmental stamp, documentary, filing, recordation, transfer and gains taxes, levies or otherwise or other governmental taxes imposed or payable to or in any jurisdiction or




country in the world, or any state or county, government or subdivision or agency thereof (any such authority a “ Taxing Authority ”), together with any interest, penalties or additions with respect thereto and any interest in respect of such additions or penalties and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, whether disputed or not.

Tax Allocation ” shall have the meaning assigned to such term in Section 3.2 .

Tax Consideration ” means the amount properly treated as consideration for U.S. federal income tax purposes in connection with the transactions contemplated by this Agreement, the MIPSA, and the EIPA.

Tax Return ” means any return, declaration, report, claim for refund, property rendition or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof.

Taxing Authority ” shall have the meaning assigned to such term in the definition of
Tax or Taxes .

TETRA Applied ” shall have the meaning assigned to such term in the recitals. “ TETRA Holding ” shall have the meaning assigned to such term in the recitals.
Third Party ” means any Person other than Buyer, Seller, or any of their respective Affiliates.
Third Party Claim ” shall have the meanings assigned to such terms in Section 10.3. “ Transfer Taxes ” means any sales, use, value-added, business, goods and services,
transfer (including any stamp duty or other similar Tax chargeable in respect of any instrument transferring property), documentary, conveyancing or similar Tax or expense or any recording fee (including any BOEM transfer fee), in each case that is imposed as a result of any transaction contemplated herein, together with any penalty, interest and addition to any such item with respect to such item.

TSB ” shall have the meaning assigned to such term in the recitals. “ Units ” shall have the meaning assigned to such term in Section 2.1(b). “ Wells ” shall have the meaning assigned to such term in Section 2.1(a).


ARTICLE II
PROPERTY TO BE SOLD AND PURCHASED

Section 2.1 Properties . Seller shall sell and Buyer shall purchase, on the terms and conditions of this Agreement, the following described properties, rights and interests (the “ Properties ”):





(a)      All rights, titles and interests of Seller in and to the oil, gas and mineral leases described in Exhibit A attached hereto (the “ Leases ”) and, with respect to the Leases, all oil and/or gas wells and wellbores located thereon or on leases with which the Leases have been pooled, communitized or unitized, whether producing, shut-in, or abandoned and whether for production, injection or disposal (the “ Wells ”), along with all other right, title and interest of Seller in and to the Leases and the Wells;

(b)      Except to the extent as may be limited by the Leases, all of Seller's rights, privileges, benefits and powers conferred upon Seller, as the holder of any Lease, with respect to the use and occupation of the surface of, as well as the subsurface depths under, the lands covered by such Lease that may be necessary or useful to the possession and enjoyment of such Lease; except to the extent as may be limited by the Leases, all of Seller's rights in any pools or units which include all or any part of any Lease or any Well (the “ Units ”), including Seller's right, title and interest in production from any Unit, regardless of whether such Unit production is derived from wells located on or off a Lease and Seller's right, title and interest in any wells within any such Unit;

(c)      To the extent assignable, all of Seller's right, title and interest in and to Permits, servitudes, easements, and rights-of-way (the “ Easements ”);

(d)      All of Seller's right, title and interest in and to all platforms, caissons, subsea tie-backs and facilities, equipment, machinery, fixtures and other real, personal and mixed property situated on, or being fabricated or constructed specifically for or for the benefit of, the Leases and/or used in the operation of the Properties, including well equipment, casing, rods, tanks, boilers, buildings, tubing, pumps, motors, fixtures, machinery, inventory, separators, dehydrators, compressors, treaters, power lines, field processing facilities, flowlines, gathering lines, transmission lines and all other pipelines (the “ Equipment ”);

(e)      To the extent assignable, all of Seller's right, title and interest in and to all lease agreements, royalty agreements, assignments, gas purchase and sale contracts, oil purchase and sale agreements, transportation and marketing agreements, farmin and farmout agreements, operating agreements, unit agreements, production handling agreements, processing agreements, facilities or equipment leases and other contracts, agreements and rights, all to the extent used, or held for use, with respect to the ownership or operation of the Properties, or with respect to the production or treatment of Hydrocarbons from, or attributable to, the Properties (collectively, the “ Contracts ”);

(f)      All of Seller's right, title and interest in and to the hydrocarbons produced from the Properties, including "line fill" and inventory below the pipeline connection in tanks, attributable to the Wells, the Leases and Units (the “ Hydrocarbons ”);

(g)      Originals, or, if originals are unavailable, copies of, all of the files, records, information and data relating directly to the Properties and in Seller's possession, including title records, abstracts, title opinions, title certificates, production records, severance tax records, and all other information relating directly to the ownership or operation of the Properties, but exclusive of (i) any such records, data or information where transfer of same is prohibited by Third Party agreements or applicable Law, as to which Seller is unable to secure a waiver, and




(ii) the work product of Seller's legal counsel, excluding title opinions and title certificates (collectively, the “ Records ”).

Notwithstanding anything to the contrary in this Section 2.1 or elsewhere in this Agreement, the Properties do not include, and there is hereby expressly excepted and excluded therefrom and reserved to Seller the Excluded Properties, as defined in Section 2.2 below.

Section 2.2 Excluded Properties . The Properties do not include, and there is hereby expressly excepted and excluded therefrom and reserved to Seller the following:

(a)      all claims, including claims for insurance proceeds, and causes of action of Seller (i) with respect to any of the Excluded Properties (ii) arising from acts, omissions or events related to, or damage to or destruction of, the Properties attributable to the period of time prior to the Closing Date, or (iii) arising under or with respect to any of the Contracts (including claims for adjustments or refunds) attributable to the period of time prior to the Closing Date;

(b)      all rights and interests of Seller attributable to the period of time prior to the Closing Date (i) under any policy or agreement of insurance or indemnity or (ii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events related to, or damage to or destruction of, the Properties;

(c)      all claims of Seller for refunds of, credits attributable to, loss carry forwards with respect to, or similar Tax assets relating to (i) Asset Taxes attributable to the Properties for any period (or portion thereof) prior to the Closing Date, (ii) Income Taxes, or (iii) any Taxes attributable to the Excluded Properties;

(d)      all amounts resulting from any hedging transactions and any gains or Losses attributable to any hedging activities;

(e)      any of Seller's proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property but Seller’s geological, geophysical, engineering or other data related to the Properties or the interpretation or analysis thereof shall not be Excluded Properties except to the extent transfer of such data is prohibited, restricted by third-party agreements or applicable Law;

(f)      all documents and instruments of Seller relating to the Properties that may be protected by an attorney-client privilege, except title opinions and title certificates;

(g)      all data in respect of the Properties that cannot be disclosed or assigned to Buyer without breaching confidentiality arrangements under agreements with Persons unaffiliated with Seller;

(h)      all audit rights arising under any of the Contracts or otherwise with respect to any period prior to the Closing Date or to any of the Excluded Properties; and

(i)      all agreements and correspondence between Seller and any Third Party relating to the transactions contemplated by this Agreement.





These excluded properties, rights and interests specified in the foregoing subsections (a) through (i), inclusive, of this Section 2.2 are collectively referred to as the “ Excluded Properties .” It is understood that certain of the Excluded Properties may not be embraced by the term Properties. The fact that certain properties, rights and interests have been expressly excluded is not intended to suggest that had they not been excluded they would have constituted Properties and shall not be used to interpret the meaning of any word or phrase used in describing the Properties.






ARTICLE III CONSIDERATION

Section 3.1 Consideration . The consideration to be paid (the “ Purchase Price ”) for the Properties under this Agreement, the Interests under the MIPSA and the Equity Interests under the EIPA shall be:

(i)      the assumption by Buyer of the Assumed Obligations and the indemnity provided by Buyer pursuant to Article X hereof, and the full performance of each;

(ii)      the assumption by Orinoco of the Assumed Obligations (as such term is defined in the MIPSA) and the indemnity provided by Orinoco pursuant to the MIPSA, and the full performance of each;

(iii)      the assumption by EOS of the Assumed Obligations (as such term is defined in the EIPA) and the indemnity provided by Buyer Parent pursuant to the EIPA, and the full performance of each;

(iv)      Orinoco’s delivery of, and performance under, the bonding agreement to be delivered under Section 6.4, which shall be in the form attached hereto as Exhibit C (the “ Bonding Agreement ”); and

(v)      the Cash Purchase Price and the execution by EOS of the Note (as such term is defined in the EIPA) payable to the EIPA Sellers, and the full performance by EOS thereof as set forth in the EIPA.

Section 3.2 Allocation . Within ninety (90) days after the Closing, Buyer and Seller shall use commercially reasonable efforts to agree to the amount of the Tax Consideration and an allocation of the Tax Consideration among the seven asset classes specified in Section 1.338-6(b) of the U.S. Treasury Regulations (i.e. “Class V assets,” “Class VI assets,” “Class VII assets,” etc.) in a manner consistent with Section 1060 of the Code. If the Parties reach an agreement with respect to such allocation (as agreed, the “ Tax Allocation ”), (i) the Parties shall update the Tax Allocation in a manner consistent with the original Tax Allocation and Section 1060 of the Code following any adjustment to the Tax Consideration pursuant to this Agreement, (ii) the Parties shall, and shall cause their Affiliates to, report consistently with the Tax Allocation on all Tax Returns, (iii) each Party shall promptly inform the other Party in writing of any challenge by any Taxing Authority to the Tax Allocation and consult and keep one another informed with respect to the status of such challenge, and (iv) no Party shall take any position in any Tax Return that is inconsistent with the Tax Allocation unless otherwise required by applicable Law; provided, however, that no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any tax audit, claim or similar proceedings in connection with such Tax Allocation.






ARTICLE IV REPRESENTATIONS OF SELLER

Section 4.1 Representations of Seller . Seller represents to Buyer that as of the date hereof and as of the Closing Date:

(a) Organization and Qualification . Seller is a limited liability company duly organized and legally existing and in good standing under the Laws of the State of Delaware and is qualified to do business and in good standing under the Laws of each jurisdiction to which the Properties are subject where the Laws of such jurisdiction require Seller to so qualify with respect to the Properties.

(b) Due Authorization . Seller has full limited liability company power and authority to execute and deliver this Agreement and each other agreement, instrument or document executed or to be executed by Seller in connection with the transactions contemplated hereby, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Seller of this Agreement and each other agreement, instrument or document executed or to be executed by the Seller in connection with the transactions contemplated hereby, and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized by all necessary limited liability company action of Seller.

(c) Non-Contravention and Approvals . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will conflict with or result in a violation under any provision of Seller’s governing documents or result in any default under any of the Contracts or any agreement or instrument to which Seller is a party or by which the Properties are bound, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to Seller or to the Properties, except for (i) requirements (if any) that there be obtained consents to assignment or waivers of preferential rights to purchase from Third Parties (provided that all such consents and waivers shall have been obtained in writing by Seller to the satisfaction of Buyer prior to Closing), (ii) approvals required to be obtained from Governmental Entities which are customarily obtained post-closing (“ Routine Governmental Approvals ”), and (iii) the requirements of any maintenance of uniform interest provisions contained in any operating or other agreements.

(d) Valid, Binding and Enforceable . This Agreement constitutes, and all instruments and documents to be delivered hereunder will, when executed and delivered, constitute the legal, valid and binding obligation of Seller, enforceable in accordance with their respective terms, except as limited by bankruptcy or other Laws applicable generally to creditor’s rights and as limited by general equitable principles.

(e) Litigation . Except as set forth on Schedule 4.1(e) , there are no Proceedings pending, or to the Seller’s Knowledge, threatened, in which the Seller is or may be a party that could be reasonably expected to adversely affect the Properties after the Closing Date (including any actions challenging or pertaining to the Seller’s title to any of the Properties or claiming a violation of Applicable Environmental Laws), or to enjoin or prohibit the execution and delivery




of this Agreement by the Seller or the consummation of the transactions contemplated hereby by the Seller.

(f) Brokerage Fees and Commissions . Neither Seller nor any Affiliate of Seller has incurred any obligation or entered into any agreement for any investment banking, brokerage or finder’s fee or commission in respect of the transactions contemplated by this Agreement for which Buyer shall incur any liability.

(g) No Violation of Laws . To Seller’s Knowledge, there has been no violation of any applicable Laws with respect to the ownership or operation of the Properties. There are no outstanding suspensions of operations or suspension of production pertaining to the Properties that are awaiting approval by a Governmental Entity. There are no unresolved INCs issued by any Governmental Entity with respect to any Properties or any other disputes involving regulatory issues with a Governmental Entity.

Section 4.2 Disclaimers . THE EXPRESS REPRESENTATIONS OF SELLER CONTAINED IN SECTION 4.1 ABOVE AND THE SPECIAL WARRANTY OF TITLE IN THE CONVEYANCES TO BE DELIVERED AT CLOSING ( COLLECTIVELY, THE “ SELLER’S REPS AND WARRANTIES ) ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE. SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING AND EXCEPT FOR SELLER’S REPS AND WARRANTIES, THE PROPERTIES SHALL BE CONVEYED PURSUANT HERETO WITHOUT (a) ANY WARRANTY OR REPRESENTATION, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO (i) TITLE TO THE PROPERTIES EXCEPT THAT SELLER DOES HEREBY WARRANT AND REPRESENT (AND SHALL WARRANT AND REPRESENT IN THE CONVEYANCES), THAT THE CONVEYANCES SHALL CONTAIN A SPECIAL WARRANTY OF TITLE TO THE PROPERTIES BY, THROUGH AND UNDER THE SELLER, OR THE CONDITION, QUANTITY, QUALITY OF THE PROPERTIES, (ii) THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT, (iii) PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR POTENTIAL OF THE PROPERTIES TO PRODUCE HYDROCARBONS, (iv) THE ENVIRONMENTAL CONDITION OF THE PROPERTIES, BOTH SURFACE AND SUBSURFACE, (v) THE STATUS OF THE PROPERTIES WITH RESPECT TO COMPLIANCE WITH LAWS, INCLUDING APPLICABLE ENVIRONMENTAL LAWS, OR (vi) ANY OTHER MATTERS CONTAINED IN ANY MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER OR BY SELLER’S AGENTS OR REPRESENTATIVES, OR (b) ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER. BUYER SHALL HAVE INSPECTED, OR WAIVED (AND UPON CLOSING SHALL BE DEEMED TO HAVE WAIVED) ITS RIGHT TO INSPECT, THE PROPERTIES FOR ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,




BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE OR RELEASE OF HAZARDOUS MATERIAL, INCLUDING HAZARDOUS SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE FIBERS, OR NATURALLY OCCURRING RADIOACTIVE MATERIALS (NORM). EXCEPT FOR THE SELLER’S REPS AND WARRANTIES, SELLER FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT BUYER SHALL BE DEEMED TO BE OBTAINING THE PROPERTIES, INCLUDING, WITHOUT LIMITATION, THE EQUIPMENT COMPRISING PART OF THE PROPERTIES, IN THEIR PRESENT STATUS, AND CONDITION, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION
4.2    ARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW.


ARTICLE V REPRESENTATIONS OF BUYER

Section 5.1 Representations of Buyer . Buyer represents to Seller that as of the date hereof and as of the Closing Date:

(a)      Organization and Qualification . Buyer is duly organized and legally existing and in good standing under the Laws of the state in which it was formed and is qualified to do business and in good standing under the Laws of each jurisdiction to which the Properties are subject where the Laws of such jurisdiction require Buyer to so qualify with respect to the Properties. Buyer is also qualified to own and operate oil and gas properties with all applicable Governmental Entities having jurisdiction over the Properties, to the extent such qualification is necessary or appropriate or will be necessary or appropriate upon consummation of the transactions contemplated hereby (including, without limitation, Buyer has met all bonding requirements of such agencies in order for Buyer to become a Designated Operator, as such term is defined in 30 CFR 556.105).

(b)      Due Authorization . Buyer has full power and authority to enter into and perform its obligations under this Agreement and has taken all proper action to authorize entering into this Agreement and performance of its obligations hereunder.

(c)      Non-Contravention and Approvals . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will conflict with or result in a violation under any provision of Buyer’s governing documents or result in any default under any agreement or instrument to which Buyer




is a party, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to Buyer.

(d)      Valid, Binding and Enforceable . This Agreement constitutes, and all instruments and documents to be delivered hereunder will, when executed and delivered, constitute, the legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except as limited by bankruptcy or other Laws applicable generally to creditor’s rights and as limited by general equitable principles.

(e)      No Litigation . There are no pending suits, actions, or other Proceedings in which Buyer is a party (or, to Buyer’s knowledge, which have been threatened to be instituted against Buyer) which affect the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

(f)      No Distribution . Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended, and is acquiring the Properties for its own account and not with the intent to make a distribution in violation of the Securities Act of 1933 as amended (and the rules and regulations pertaining thereto) or in violation of any applicable state blue sky Laws or other applicable securities Laws, rules or regulations.

(g)      Knowledge and Experience . Buyer has, and had prior to negotiations regarding the Properties, such knowledge and experience in the ownership and operation of oil and gas properties and financial and business matters as to be able to evaluate the merits and risks of an investment in the Properties. Buyer is able to bear the economic risks of an investment in the Properties and understands risks of, and other considerations relating to, a purchase of the Properties.

(h)      Opportunity to Verify Information . As of the Closing Buyer has, and Buyer’s agents and representatives have, been afforded the opportunity to ask questions of the Seller (or a Person or Persons acting on its behalf) concerning the Properties, and Buyer and/or such agents and representatives has been furnished with all materials relating to the Properties requested by them. In making the decision to enter into this Agreement and consummate the transactions contemplated hereby, Buyer has relied solely on (a) its own independent due diligence investigation of the Properties, and (b) its own expertise and judgment and the advice and counsel of its own legal, land, tax, economic, environmental, engineering, geological and geophysical and other advisors and consultants. At Closing, Buyer shall be deemed to have knowledge of all facts contained in all materials, documents and other information which Buyer has been furnished or to which Buyer has been given access.

(i)      Merits and Risks of an Investment in the Properties . Buyer understands and acknowledges that: (i) an investment in the Properties involves certain risks; (ii) neither the United States Securities and Exchange Commission nor any federal, state or foreign agency has passed upon the Properties or made any finding or determination as to the fairness of an investment in the Properties or the accuracy or adequacy of the disclosures made to Buyer; and
(iii) except as set forth in Article VII of this Agreement, Buyer is not entitled to cancel, terminate or revoke this Agreement.




(j)      Financing . Buyer has, or will have as the same become due hereunder, all funds necessary to (i) pay any fees and expenses payable by Buyer in connection with the transaction contemplated hereby, and (ii) satisfy any of its other payment obligations hereunder.

(k)      Bankruptcy . There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by, or, to the knowledge of Buyer, threatened against Buyer.

(l)      Brokerage Fees and Commissions . Neither Buyer nor any Affiliate of Buyer has incurred any obligation or entered into any agreement for any investment banking, brokerage or finder’s fee or commission in respect of the transactions contemplated by this Agreement for which Sellers shall incur any liability.

(m)      Knowledge of Breach . Buyer has no knowledge of any breach by Seller of its representations and warranties contained in this Agreement.



ARTICLE VI CERTAIN COVENANTS

Section 6.1 Preferential Rights and Consents . There are no preferential rights to purchase affecting the Properties. Schedule 6.1 sets forth all required Third Party consents to assign the Properties, except for those consents and approvals of assignments that are customarily obtained after the Closing. As of the Closing Date, Seller will have requested waivers of all known consents to assign applicable to the transactions contemplated herein and will provide to Buyer copies of all requests of such waivers and will keep Buyer informed as to the status of each such request. Seller shall have no further obligation with respect to such consents (including, without limitation, Seller shall have no obligation to assure that such consents are obtained) except that Seller agrees to use commercially reasonable efforts to cooperate with Buyer in obtaining such consents. Buyer shall indemnify and hold Seller (and its partners and its and their affiliates and the respective members, officers, managers, directors, employees, attorneys, contractors and agents of such parties) harmless from and against all Losses whatsoever that arise out of the failure to obtain consents or waivers of any applicable preferential rights with respect to any transfer by Seller to Buyer of any part of the Properties and with respect to any subsequent transfers, WHETHER OR NOT SUCH CLAIMS, ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE) OF ANY INDEMNIFIED PARTY .

Section 6.2 Insurance . Effective as of Closing, Buyer shall have obtained or caused to have been obtained insurance policies in the types and with minimum policy limits of those currently held by Seller or its Affiliate with respect to ownership and operation of the Properties.

Section 6.3 Interim Operations . As to Properties operated by Seller, prior to the Closing, except (i) as required by applicable Law, (ii) as otherwise expressly contemplated or required by this Agreement, or (iii) with the prior written consent of Buyer, Seller will continue operation




of the Properties in the ordinary course of its business in all material respects, and Seller will not sell or otherwise dispose of any portion of the Properties without the prior written consent of Buyer, except for sales or other dispositions of (a) oil, gas and other minerals in the ordinary course of business after production, or (b) equipment and other personal property or fixtures in the ordinary course of business where the same has become obsolete, is otherwise no longer necessary for the operation of the Properties, or is replaced by an item or items of at least equal suitability.

Section 6.4 Bonding Agreement . Contemporaneously with the execution and delivery of this Agreement, Seller shall deliver to Buyer a counterpart of the Bonding Agreement in the form attached hereto as Exhibit C duly executed by Seller Parent, and Buyer shall execute and deliver to Seller a counterpart of the Bonding Agreement duly executed by Buyer.

Section 6.5 Encumbrances . At Closing, Seller shall deliver the Properties to Buyer free and clear of all TETRA Liens (as that term is defined in the EIPA) or any other mortgage, lien or encumbrance established by Seller or one of its Affiliates.





ARTICLE VII
CONDITIONS TO CLOSING; TERMINATION

Section 7.1 Conditions Precedent to the Obligations of Buyer . The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Buyer in whole or in part to the extent permitted by applicable Law):

(a) the representations and warranties of the Seller set forth in Section 4.1(a) (Organization and Qualification) and Section 4.1(b) (Due Authorization) shall be true and correct in all respects, (ii) the representations and warranties of Seller set forth in this Agreement (other than Section 4.1(a) and Section 4.1(b)) that are qualified by materiality (whether by reference to the terms “material” or any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of the Seller that are not so qualified by materiality (other than Section 4.1(a) and Section 4.1(b)) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period); and

(b) Seller shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Seller prior to the Closing Date.

Section 7.2 Conditions Precedent to the Obligations of Seller . The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Seller in whole or in part to the extent permitted by applicable Law):

(a) (i) the representations and warranties of Buyer set forth in Section 5.1(a) (Organization and Qualification) and Section 5.1(b) (Due Authorization) shall be true and correct in all respects, (ii) the representations and warranties of Buyer set forth in this Agreement (other than Section 5.1(a) and Section 5.1(b)) that are qualified by materiality (whether by reference to the terms “material” or any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of Buyer that are not so qualified by materiality (other than Secti on 5.1(a) and Section 5.1(b)) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period); and

(b) Buyer shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Buyer prior to the Closing Date.

Section 7.3 Frustration of Closing Conditions . Neither Seller nor Buyer may rely on the failure of any condition set forth in Section 7.1 or Section 7.2, as the case may be, if such failure was caused by such Party’s failure to comply with any provision of this Agreement.





Section 7.4 Termination of Agreement . This Agreement may be terminated prior to the Closing as follows:

(a)      At the election of Seller or Buyer on or after March 30, 2018 (the “ Termination Date ”), if the Closing shall not have occurred by the close of business on such date; provided, however , that the terminating Party is not in material default of any of its obligations hereunder;
(b)      by mutual written consent of Seller and Buyer; or

(c)      by Seller or Buyer if there shall be in effect a final nonappealable order of a Governmental Entity of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.

Section 7.5 Procedure Upon Termination . In the event of termination and abandonment of the transactions contemplated hereby by Buyer or Sellers, or both, pursuant to Section 7.4, written notice thereof shall forthwith be given to the other Party, and this Agreement shall terminate, and the purchase of the Properties hereunder shall be abandoned, without further action by any Party. In such event, within one (1) Business Day after such termination, Buyer shall execute and deliver, and Seller shall deliver a counterpart duly executed by Seller Parent, of an instrument terminating the Bonding Agreement.

Section 7.6     Effect of Termination .

(a) In the event that this Agreement is terminated in accordance with Section 7.4, then each of the Parties shall be relieved of their respective duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Buyer or Sellers; provided, that (i) no such termination shall relieve any Party from liability for any breach of this Agreement and (ii) the obligations of the Parties set forth in
Article XII hereof shall survive any such termination and shall be enforceable hereunder.

(b) Nothing in this Section 7.6 shall relieve Buyer or Seller of any liability for a breach of this Agreement prior to the date of termination and the non breaching Party’s right to pursue all legal and equitable remedies will survive such termination. The damages recoverable by the non breaching Party shall include all attorneys’ fees reasonably incurred by such Party in connection with the transactions contemplated hereby.


ARTICLE VIII CLOSING

Section 8.1 Closing. Subject to the satisfaction of the conditions set forth in Section
7.1      or Section 7.2 and (or waiver thereof by the Party entitled to waive that conditions), the closing (herein called the “ Closing ”) of the transaction contemplated hereby shall take place at the offices of the Seller at 24955 I-45 North, The Woodlands, Texas 77380 within two (2)   Business Days after satisfaction or waiver of all of the closing conditions set forth in Article VII hereof (other than those required to be satisfied at the Closing, but subject to the satisfaction thereof) or on such




other date or at such other location as is mutually agreeable to Buyer and Seller (such date being the “ Closing Date ”). The Parties intend that the Closing with respect to this Agreement shall be deemed effective as of 12:01 a.m. Houston time and immediately prior to the consummation of the transactions contemplated under the MIPSA.

Section 8.2 Seller’s Closing Obligations . At the Closing,

(a)      Delivery of Conveyance . Seller shall execute, acknowledge and deliver to Buyer a conveyance of the Properties (the “ Conveyances ” and each a “ Conveyance ”), in the forms attached hereto as Exhibit B .

(b)      Letters in Lieu . Seller shall, if requested by Buyer, execute and deliver to Buyer letters in lieu of transfer orders (or similar documentation), in form acceptable to both Parties.

(c)      Turn Over Possession . Seller shall turn over possession of the Properties to the extent Seller can do so.

(d)      FIRPTA . Seller (or the Person characterized as the transferor for purposes of Section 1445 of the Code, if Seller is classified as a disregarded entity) shall execute and deliver to Buyer a certification of non-foreign status pursuant to the Foreign Investment in Real Property Tax Act of 1980, in the form attached hereto as Exhibit D ( “FIRPTA” ).

(e)      Officer’s Certificate . Seller shall deliver to Buyer a certificate dated as of the Closing Date, certifying the statements set forth in Section 7.1(a) and Section 7.1(b) are true and correct.

Section 8.3 Buyer’s Closing Obligations . At the Closing,

(a) Succession by Buyer . Buyer shall furnish to Seller such evidence (including, without limitation, evidence of satisfaction of all applicable bonding and surety requirements) as Seller may require that Buyer is qualified with the applicable authorities to succeed Seller as the owner and, where applicable, operator of the Properties.

(b) Bonds . Buyer shall deliver to Seller the bonds as required under the Bonding Agreement.

(c) Officer’s Certificate . Buyer shall deliver to Seller a certificate dated as of the Closing Date, certifying the statements set forth in Section 7.2(a) and Section 7.2(b) are true and correct.



ARTICLE IX
POST CLOSING ACTIONS





Section 9.1 Operational Transition . THERE IS NO ASSURANCE GIVEN BY SELLER THAT BUYER SHALL SUCCEED SELLER AS OPERATOR OF ANY PROPERTY WHERE OTHER PARTIES OWN INTERESTS IN THE WELLS AND
BUYER ACCEPTS THE RISK THEREOF. Notwithstanding the foregoing, Seller and its Affiliates will use commercially reasonable efforts to cooperate with Buyer and its Affiliates in any reasonable attempt Buyer or its Affiliates may make to obtain consents to operate from the other parties owning interests in the Wells or Properties.
Section 9.2 Notifications by Buyer . Without limiting Buyer’s other obligations hereunder with respect to applicable transfer restrictions, immediately after the Closing, Buyer shall notify all applicable operators, non-operators, oil and gas purchasers, and Governmental Entities that it has purchased the Properties.






ARTICLE X ASSUMPTION AND INDEMNIFICATION

Section 10.1 Assumption and Indemnification By Buyer . From and after the Closing, Buyer shall assume, timely pay and perform, all duties, obligations and liabilities (including with respect to Taxes as set forth in Article XII) relating to the ownership and/or operation of the Properties regardless of whether the same accrued or otherwise arose before, on or after the Closing, other than the Excluded Properties, (including, without limitation, those arising under the Contracts as described in Section 2. 1 ), and indemnify and hold Seller, Seller Parent (and their respective partners, members, and all their affiliates, and all their respective members, directors, managers, officers, employees, attorneys, contractors and agents) harmless from and against any and all Losses (individually a “ Seller’s Indemnified Claim ” and collectively “ Seller’s Indemnified Claims ”) arising out of:

(a) any breach or inaccuracy of any warranty or representation, or any breach or inaccuracy of any covenant or agreement of Buyer contained in this Agreement;

(b) the ownership and/or operation of the Properties regardless of whether the same accrued or otherwise arose before, on or after the Closing (including, without limitation, those arising under the Contracts; or

(c) the condition of the Properties (“ Condition of the Properties ”) on the date of Closing (including, without limitation, within such matters all obligations to properly plug and abandon, or replug and re-abandon, Wells, to remove platforms and pipelines, to restore the surface of the Properties and to comply with, or to bring the Properties into compliance with, Applicable Environmental Laws, rules, regulations and orders, including conducting any remediation activities which may be required on or otherwise in connection with activities on the Properties), regardless of whether such condition or the events giving rise to such condition arose or occurred before or after the Closing (collectively, items (b) and (c) of this Section
10.1     are referred to herein as the “ Assumed Obligations ”). For the avoidance of doubt, the Assumed Obligations shall not include any matter for which the Buyer would be entitled to indemnification under Section 10.2 .

Section 10.2 Indemnification By Seller Parent . From and after the Closing, Seller Parent shall indemnify, defend and hold Buyer (and its partners, members, and all their affiliates, and all their respective directors, officers, employees, attorneys, contractors and agents) (collectively, “ Buyer Indemnified Parties ”) harmless from and against any and all Losses (individually a “ Buyer’s Indemnified Claim ” and collectively “ Buyer’s Indemnified Claims ”) arising out of:

(a)      The breach of any of the representations and warranties of the Seller set forth in
Section 4.1;

(b)      The Proceedings set forth on Schedule 4.1(e) ; and





(c)      Liabilities for Taxes of Seller arising from or otherwise related to the ownership, management or operation of the Properties prior to the Closing Date.

THE FOREGOING ASSUMPTIONS AND INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH DUTIES, OBLIGATIONS OR LIABILITIES, OR SUCH CLAIMS, ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF (i) NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE) OF ANY INDEMNIFIED PARTY, OR (ii) STRICT LIABILITY.

Section 10.3 Indemnification Procedures . The obligations of Seller Parent to indemnify the Buyer Indemnified Parties under Section 10.2 with respect to Losses incurred by the Buyer Indemnified Parties, and the obligations of Buyer to indemnify the Seller Indemnified Parties under Section 10.1 with respect to Losses incurred by the Seller Indemnified Parties, in either case arising out of or resulting from the assertion of liability or any Legal Proceeding by third parties who are not Affiliated with a Party to this Agreement (each, as the case may be, a “ Third-Party Claim ”), will be subject to the terms and conditions of the following clauses (a) through (e):
(a)      A party claiming indemnification under this Agreement (an “ Indemnified Party ”) shall promptly after receiving written notice of any Third-Party Claim, but in no event later than thirty (30) days thereafter, transmit to the party or parties from whom indemnification is sought under this Agreement (the “ Indemnifying Party ”) a written notice of the Third-Party Claim (a “ Claim Notice ”) describing in reasonable detail the nature of the Third-Party Claim, attaching a copy of all papers served to such Indemnified Party with respect to such Third-Party Claim (if any), setting forth a reasonable estimate of the amount of Losses attributable to the Third-Party Claim to the extent feasible (which estimate shall not be conclusive of the final amount of Losses arising from or relating to such Third-Party Claim), and describing in reasonable detail the basis of the Indemnified Party’s request for indemnification under this Agreement. Any failure or delay to provide such Claim Notice within such specified time period shall not release or relieve the Indemnifying Party from its liability under this Article X or affect the right of an Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) the Indemnifying Party is prejudiced by such failure or delay.

(b)      Within twenty (20) days after receipt of any Claim Notice (the “ Election Period ”), the Indemnifying Party shall notify the Indemnified Party (i) whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article X with respect to such Third-Party Claim and (ii) whether the Indemnifying Party desires, at its sole cost and expense and in accordance with Section 10.3(c), to defend the Indemnified Party against such Third-Party Claim. If the Indemnifying Party does not notify the Indemnified Party within such Election Period that the Indemnifying Party disputes its potential liability with respect to such Third-Party Claim, any liability with respect to such Third-Party Claim shall be deemed a disputed liability of the Indemnifying Party hereunder.

(c)      Subject to Section 10.3(d), if the Indemnifying Party notifies the Indemnified Party within the Election Period that the Indemnifying Party elects to assume the defense of such Third-




Party Claim, then the Indemnifying Party shall have the right to defend, at its sole cost and expense, such Third-Party Claim by all appropriate proceedings with counsel of its choosing (but reasonably satisfactory to the Indemnified Party); provided, that the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense. The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnifying Party shall obtain the prior written consent of the Indemnified Party before entering into any compromise or settlement of such Third-Party Claim, which consent shall not be unreasonably withheld; provided further, that no such consent shall be required for any such compromise or settlement that: (A) is exclusively monetary and will be paid in full by the Indemnifying Party (rather than the Indemnified Party); (B) does not contain an admission of liability on the part of any Indemnified Party; and (C) unconditionally and fully releases the Indemnified Party with respect to such Third Party Claim. If reasonably requested by the Indemnifying Party, the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in contesting any Third-Party Claim that the Indemnifying Party elects to contest in good faith pursuant to this Section 10.3(c) , including by providing the Indemnifying Party with reasonable access during normal business hours of the Indemnified Party to books, records and personnel of the Indemnified Party (but only to the extent relevant to such Third-Party Claim), and in making any related counterclaim against the Person asserting the Third-Party Claim or any cross-complaint against any Person. Except as otherwise provided herein, the Indemnified Party may participate in, but not control, any defense or settlement of any Third- Party Claim controlled by the Indemnifying Party pursuant to this Section 10.3(c) , and to retain counsel of the Indemnified Party’s own choice in connection with such participation, and the Indemnified Party shall bear its own costs and expenses with respect to such participation.

(d)      If within the Election Period the Indemnifying Party has delivered a written notice to the Indemnified Party to the effect that the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article X with respect to such Third-Party Claim, or by the Indemnifying Party’s failure to respond, the Indemnifying Party is deemed to dispute its potential liability, and if such dispute is finally and conclusively resolved by a court of competent jurisdiction in favor of the Indemnified Party, the Indemnifying Party shall be required to bear the costs and expenses of the Indemnified Party’s defense of such Third-Party Claim pursuant to this Section 10.3(d) .

(e)      The non-controlling party in the defense of a Third-Party Claim shall have the right to consult with the party controlling such defense, and the controlling party shall facilitate such consultation, with respect to the conduct, status, developments and results of the defense of such Third-Party Claim and the controlling party’s strategy for addressing the matters that are the basis of such Third-Party Claim.

(f)      In the event any Indemnified Party should have a claim for indemnification hereunder against any Indemnifying Party that does not involve a Third-Party Claim (an “ Indemnity Claim ”), the Indemnified Party shall promptly transmit to the Indemnifying Party a written notice of such Indemnity Claim (an “ Indemnity Notice ”) describing in reasonable detail the nature of the Indemnity Claim, and setting forth a reasonable estimate of the amount of Losses attributable to such Indemnity Claim to the extent feasible (which estimate shall not be conclusive of the final amount of Losses arising from or relating to such Indemnity Claim)




and the basis of the Indemnified Party’s request for indemnification under this Agreement. Any failure or delay to provide such Indemnity Notice shall not release or relieve the Indemnifying Party from its liability under this Article X or affect the right of an Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) the Indemnifying Party is actually prejudiced by such failure or delay.

(g)      Within twenty (20) days after receipt of any Indemnity Notice, the Indemnifying Party shall notify the Indemnified Party whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article X with respect to such Indemnity Claim. If the Indemnifying Party does not notify the Indemnified Party within twenty (20) days from its receipt of the Indemnity Notice that the Indemnifying Party disputes such Indemnity Claim, any liability with respect to such Indemnity Claim shall be deemed a disputed liability of the Indemnifying Party hereunder.

Section 10.4     Limitations .

(a) No indemnity shall be payable to the Buyer Indemnified Parties under Section
10.2      with respect to any claim, unless and until the aggregate of all Losses related thereto due from Seller Parent exceeds $500,000 (the “ Deductible ”), in which event all Losses so due in excess of the Deductible shall be paid in the aggregate by Seller Parent; provided, that the aggregate amount payable by Seller Parent for all Losses arising under Section 10.2 with respect to any claim shall not exceed $2,000,000 (the “ Cap ”).

(b) Notwithstanding anything to the contrary contained in this Agreement, neither the Deductible nor the Cap shall apply to Losses of the Buyer Indemnified Parties arising out of the matters described in Section 10.2(b) or Section 10.2(c) .

Section 10.5 Survival of Provisions . The representations, warranties, covenants and agreements of Buyer contained in this Agreement or in any instrument delivered at Closing shall survive the Closing and the delivery of the Conveyances indefinitely. The representations, warranties, covenants and agreements of Seller contained in this Agreement or in any instrument delivered at the Closing shall survive the Closing for a period of twelve
(12) months. Notwithstanding the preceding sentence, the covenants and agreements of Seller contained in this Agreement that by their terms are to be performed in whole or in part after Closing, including, without limitation, the covenants and agreements contained in Article VI and this Article X, shall survive the Closing until they have been performed in accordance with their terms.

Section 10.6 Mitigation . Each Indemnified Party shall, and is obligated to, take all reasonable steps to mitigate all indemnifiable Losses upon and after becoming aware of any event which could reasonably be expected to give rise to any Losses hereunder. Each Indemnified Party shall, and it is obligated to, take all reasonable steps to mitigate all indemnifiable Losses upon and after becoming aware of any event which could reasonably be expected to give rise to any Losses hereunder.

Section 10.7 No Duplication . Any Losses giving rise to liability for indemnification hereunder shall be determined without duplication of recovery by reason of the same set of facts




giving rise to such Losses constituting a breach of more than one representation, warranty, covenant or agreement. For purposes of this Agreement, Losses shall be calculated after giving effect to any amounts actually recovered from third parties, including amounts actually recovered under insurance policies with respect to such Losses, net of any costs to recover such amounts, including any deductibles, co-payments or other reasonable and documented costs and expenses (including attorneys’ fees and other costs of collection) resulting from the related claims under applicable insurance policies. Any Indemnified Party having a claim under these indemnification provisions shall make a good-faith effort to recover all losses, costs, damages and expenses from insurers of such Indemnified Party under applicable insurance policies so as to reduce the amount of any Losses hereunder; provided, that actual recovery of any insurance shall not be a condition to the Indemnifying Party’s obligation to make indemnification payments to the Indemnified Party in accordance with the terms of this Agreement. If the Indemnifying Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for a Loss, after an indemnification payment by the Indemnifying Party has been made for such Loss, then the Indemnified Party shall promptly reimburse the Indemnifying Party for such indemnification payment up to the amount so received or realized by the Indemnified Party, net of any costs to recover such amounts, including any deductibles, co-payments or other reasonable and documented costs and expenses (including attorneys’ fees and other costs of collection) resulting from the related claims under applicable insurance policies.

Section 10.8 No Commissions Owed . Seller Parent agrees to indemnify and hold Buyer (and its partners and its and their affiliates, and the respective officers, directors, employees, attorneys, contractors and agents of such parties) harmless from and against any and all Losses arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by, or on behalf of, Seller with any broker or finder in connection with this Agreement or the transaction contemplated hereby. Buyer agrees to indemnify and hold Seller (and its partners and its and their affiliates and the respective members, officers, managers, directors, employees, attorneys, contractors and agents of such parties) harmless from and against any and all Losses arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by, or on behalf of, Buyer with any broker or finder in connection with this Agreement or the transaction contemplated hereby.

Section 10.9 Knowledge of Breach . If prior to the Closing, the Buyer has knowledge of any inaccuracy or breach of any of the representations and warranties of Seller set forth herein and nonetheless proceeds with and consummates the Closing, then the Buyer shall be deemed to have waived and forever renounced any right to assert a claim for indemnification related to such inaccuracy or breach under this Agreement.






ARTICLE XI NOTICES

Section 11.1 Notices . All notices and other communications required under this Agreement shall (unless otherwise specifically provided herein) be in writing and be delivered personally, by recognized commercial courier or delivery service which provides a receipt or by registered or certified mail (postage prepaid), at the following addresses:

If to Buyer:
Orinoco Natural Resources, LLC 192 Summerfield Court, Suite 203
Roanoke, VA 24019
Attention: Thomas M. Clarke
Telephone: (540) 595-3908

If to Seller:
TETRA Technologies, Inc. 24955 I-45 North
The Woodlands, Texas 77478
Attention: Bass C. Wallace
Telephone: (281) 364-2241

or such other post office address within the continental limits of the United States as a Party may designate for itself by giving notice to the other Party, in the manner provided in this Section, at least ten (10) days prior to the effective date of such change of address. All notices given by personal delivery or mail shall be effective on the date of actual receipt at the appropriate address as provided above.

ARTICLE XII TAX MATTERS

Section 12.1 Asset Taxes . Seller shall file with the appropriate Governmental Entities all applicable Tax Returns for Asset Taxes related to the Properties which are required to be filed by Seller on or before the Closing Date and shall pay any Asset Taxes reflected thereon as due and owing. Buyer shall file all other Tax Returns for Asset Taxes related to the Properties and shall timely pay any Asset Taxes reflected thereon as due and owing and indemnify and hold Seller harmless with respect to same. Each Party shall be responsible for its own Income Taxes.

Section 12.2 Transfer Fees and Taxes . All required documentary, filing and recording fees and expenses in connection with the filing and recording of the Conveyances or other instruments required to convey title to the Properties to Buyer shall be borne by Buyer. Any and all Transfer Taxes shall be borne by Buyer, provided that Seller shall pay or cause to be paid to the applicable Governmental Entities any Transfer Taxes that it is required by Law to collect and remit. Buyer shall indemnify and hold Seller harmless from and against such Transfer Taxes within thirty (30) days of Seller's written demand therefor. If Seller (not Buyer) is required by applicable Law to appeal or protest the assessment of Transfer Taxes, the appeal or protest of such proposed assessment shall be treated as an item for which Seller is entitled to indemnification and if Buyer provides a written request and instructs Seller to do so, Seller shall prosecute the protest or appeal; in such event Buyer shall pay all out-of-pocket expenses of Seller (including




attorneys’ fees) incurred by Seller in connection with such appeal or protest. Seller and Buyer shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.

Section 12.3 Tax Returns .

(a)      Without limiting anything in Section 3.2 to the contrary, the Parties shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns and any Proceeding with respect to Taxes relating to the Properties. Such cooperation shall include the retention and (upon another Party’s request) the provision of records and information that are relevant to any such Tax Return Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided under this Agreement. The Parties agree to retain all books and records with respect to Tax matters pertinent to the Properties relating to any Tax period beginning before the Closing Date until the expiration of the statute of limitations of the respective Tax periods and to abide by all record retention agreements entered into with any Governmental Entity.

(b)      Seller shall have the right to, and Buyer shall take all actions necessary or advisable to allow and permit Seller to, control the conduct, defense, and settlement of any Tax Proceeding related to Taxes that are allocated to the Seller under this Agreement. If Seller elects not to control the conduct or defense of such Tax Proceeding, Buyer shall control the conduct and defense of such Proceeding, provided that Buyer shall not settle or compromise any such Proceeding without Seller’s prior written consent.





ARTICLE XIII MISCELLANEOUS MATTERS

Section 13.1 Further Assurances . After the Closing, Buyer and Seller, at the request of the other and without additional consideration, shall execute and deliver, and shall otherwise cause to be executed and delivered, from time to time, such further instruments of conveyance and transfer, notices, and other documents, and shall take such other action as may be reasonably necessary to accomplish the orderly transfer of the ownership and operatorship of the Properties to Buyer in the manner contemplated by this Agreement and to otherwise satisfy the intent of this Agreement. It shall be Buyer’s obligation to timely file the assignments of interest and other required documents with BOEM and BSEE.

Section 13.2 Gas Imbalances, Make-Up Obligations . Without limitation on any other provision of this Agreement, it is expressly understood and agreed that, upon the occurrence of Closing, Buyer shall succeed to and assume the position of Seller with respect to all gas imbalances and make-up obligations related to the Properties (regardless of whether such imbalances or make-up obligations arise at the wellhead, pipeline, gathering system or other level, and regardless of whether the same arise under contract or otherwise). As a result of such succession, Buyer shall (i) be entitled to receive any and all benefits which Seller would have been entitled to receive by virtue of such position (including, without limitation, rights to produce and receive volumes of production in excess of volumes which it would otherwise be entitled to produce and receive by virtue of ownership of the Properties and rights to receive cash balancing payments), and (ii) be obligated to suffer any detriments which Seller would have been obligated to suffer by virtue of such position (including, without limitation, the obligation to deliver to others production volumes which would have otherwise been attributable to its ownership of the Properties, to deliver production to purchasers hereof without receiving full payment therefor, or to make cash balancing payments or to repay take or pay payments) and (iii) shall be responsible for any and all royalty obligations with respect to such imbalances (including, without limitation, any of the same arising out of royalties having been paid on an “entitlement” basis rather than a “receipts” basis).

Section 13.3 Waiver of Consumer Rights . Buyer hereby waives its rights under the Texas Deceptive Trade Practices - Consumer Protection Act, Section 17.41 et seq., Business and Commerce Code, a Law that gives consumers special rights and protections, and any similar Law in any other state to the extent such Act or similar Law would otherwise apply. After consultation with an attorney of Buyer’s own selection, Buyer voluntarily consents to this waiver. To evidence Buyer’s ability to grant such waiver, Buyer represents to Seller that it (a) is in the business of seeking or acquiring, by purchase or lease, goods or services for commercial or business use, (b) has knowledge and experience in financial and business matters that enable it to evaluate the merits and risks of the transactions contemplated hereby,
(c)      is not in a significantly disparate bargaining position, and (d) has consulted with, and is represented by, an attorney of Buyer’s own selection in connection with this transaction, and such attorney was not directly or indirectly identified, suggested, or selected by Seller or an agent of Seller.

Section 13.4 Parties Bear Own Expenses/No Special Damages . Each Party shall bear and pay all expenses (including, without limitation, legal fees) incurred by it in connection




with the negotiation and execution of this Agreement and with the transaction contemplated by this Agreement. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY IN NO EVENT SHALL EITHER PARTY BE ENTITLED TO RECEIVE FROM THE OTHER ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, PROVIDED THAT ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES RECOVERED BY A THIRD PARTY (EXCEPT AN AFFILIATE OF THE INDEMNIFIED PARTY) SHALL BE RECOVERABLE BY A PARTY TO THE EXTENT THAT SUCH PARTY IS ENTITLED TO INDEMNIFICATION FOR THE MATTER IN WHICH SUCH DAMAGES ARE RECOVERED.

Section 13.5 Entire Agreement . This Agreement, the EIPA, and the MIPSA, as well as all documents and instruments required to be delivered hereunder and thereunder, contain the entire understanding of the Parties with respect to the subject matter hereof and thereof and collectively supersede all prior written and oral agreements, understandings, negotiations, and discussions among the parties with respect to such subject matter.

Section 13.6 Amendments, Waivers . This Agreement may be amended, modified, supplemented, restated or discharged (and provisions hereof may be waived) only by an instrument in writing signed by the Parties.

Section 13.7 Choice of Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION.

Section 13.8 Jurisdiction; Waiver of Jury Trial .

(a)      EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY TEXAS STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION. THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT FINAL AND UNAPPEALABLE JUDGMENT AGAINST ANY OF THEM IN ANY ACTION CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT, A CERTIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH JUDGMENT.
(b)      EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY




IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR INSTRUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN THIS Section 13.8 .

Section 13.9 Time of Essence . Time is of the essence in this Agreement.

Section 13.10 No Assignment . Neither the Seller nor the Buyer shall have the right to assign this Agreement without the prior written consent of the other Party. Notwithstanding anything in the preceding sentence to the contrary, Buyer shall have the right to assign this Agreement to its designated Affiliate upon identification to Seller of such designee.

Section 13.11 Successors and Assigns . Subject to the limitation on assignment contained in Section 13.10 above, the Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 13.12 No Press Releases . Except as may be required under applicable Law, neither Party shall make any public announcement with respect to the transaction contemplated hereby without the prior written consent of the other Party.

Section 13.13 Counterpart Execution, Fax Execution . This instrument may be executed in a number of identical counterparts, each of which for all purposes is to be deemed an original, and all of which constitute collectively, one instrument. It is not necessary that each Party hereto execute the same counterpart so long as identical counterparts are executed by each such Party hereto. An executed counterpart of this instrument may be validly delivered by electronic transmission.

Section 13.14 Contribution . Except as may be otherwise provided herein, Buyer is deemed to have waived, to the fullest extent permitted under applicable Law, any right to contribution against Seller (including, without limitation, any contribution claim arising under any Applicable Environmental Law) and any and all other rights, claims and causes of action it may have against Seller arising under or based on any Law.

Section 13.15 References, Titles and Construction .

(a) All references in this Agreement to articles, sections, subsections and other subdivisions refer to corresponding articles, sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise.

(b) Titles appearing at the beginning of any of such subdivisions are for convenience only and shall not constitute part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions.
(c) The words “this Agreement”, “this instrument”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited.





(d) Words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender.

(e) Examples shall not be construed to limit, expressly or by implication, the matter they illustrate.

Section 13.16 Severability . The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of any other provision.

Section 13.17 Agreement for Parties’ Benefit Only . This Agreement is not intended to confer upon any Person not a Party hereto any rights or remedies hereunder except as expressly provided in Article X, and no Person other than the Parties hereto is entitled to rely on any representation, covenant, or agreement contained herein.

Section 13.18 Confidentiality . Prior to Closing, Buyer and Seller shall hold in strict confidence all aspects of the transactions contemplated by this Agreement and Buyer shall hold all proprietary information and data concerning the Properties and obtained in connection with the transactions contemplated by this Agreement (other than information and data that becomes generally available to the public other than through disclosure by a Party or its partners, officers, managers, investors, employees or representatives), and without the prior written consent of all other parties neither Buyer nor Seller shall disclose any such information to anyone other than to its partners, officers, managers, employees and representatives; provided, however, the foregoing shall not restrict disclosures by Buyer or Seller in order to comply with applicable securities or other applicable Laws or to comply with existing loan or other agreements binding upon such Party.


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






Executed as of the Execution Date by:


    
SELLER:
MARITECH RESOURCES, LCC
 
 
By:
/s/ Stuart M. Brightman
Name:
Stuart M. Brightman
Title:
President
 
 
 
 
SELLER PARENT:
TETRA TECHNOLOGIES, INC., solely for
purposes of Article X herein
 
 
By:
/s/ Stuart M. Brightman
Name:
Stuart M. Brightman
Title:
Chief Executive Officer
 
 
 
 
 
 
BUYER:
ORINOCO NATURAL RESOURCES, LLC
 
 
By:
/s/ Thomas M. Clarke
Name:
Thomas M. Clarke
Title:
Authorized Signatory



        






    

EQUITY INTEREST PURCHASE AGREEMENT

by and among

TETRA TECHNOLOGIES, INC.,

TETRA PRODUCTION TESTING HOLDING LLC

and

EPIC OFFSHORE SPECIALTY, LLC
_______________________________________


Dated February 28, 2018


________________________________________







        



TABLE OF CONTENTS
 
 
 
 
 
PAGE
Article I DEFINITIONS; INTERPRETATION
1
Section 1.1
Defined Terms
1
Section 1.2
Interpretations
12
Article II PURCHASE AND SALE OF EQUITY INTERESTS
14
Section 2.1
Transfer of Equity Interests
14
Section 2.2
Consideration
14
Section 2.3
Time and Place of Closing; Deliveries
14
Section 2.4
Allocation of Purchase Price
17
Section 2.5
TETRA Contracts.
18
Article III REPRESENTATIONS AND WARRANTIES OF THE SELLERS
19
Section 3.1
Organization; Authority; Qualification
19
Section 3.2
Consents and Approvals; No Violations
19
Section 3.3
Financial Information
20
Section 3.4
Material Contracts.
20
Section 3.5
Legal Proceedings; Orders
21
Section 3.6
Environmental Matters
21
Section 3.7
Capitalization; Title to Equity Interests.
22
Section 3.8
Real Property
23
Section 3.9
Intellectual Property
23
Section 3.10
Employee Matters
24
Section 3.11
Benefit Plans
25
Section 3.12
Taxes
26
Section 3.13
Export Controls
26
Section 3.14
Illegal Payments
26
Section 3.15
Related Party Transactions
27
Section 3.16
Brokers; Finders and Fees
27
Section 3.17
U.S. Citizenship
27
Section 3.18
Maritime Matters
27
Section 3.19
No Other Representations or Warranties
28
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER
29
Section 4.1
Organization; Authority
29
Section 4.2
Consents and Approvals; No Violations
29
Section 4.3
Sufficiency of Funds and Solvency
29
Section 4.4
Investor Representations
29
Section 4.5
Limitation of Representations and Warranties
30
Section 4.6
Legal Proceedings
30
Section 4.7
Independent Investigation
30



        



Section 4.8
U.S. Citizenship
31
Section 4.9
Brokers; Finders and Fees
31
Article V COVENANTS OF THE PARTIES
31
Section 5.1
Access.
31
Section 5.2
Conduct of Business Pending the Closing
31
Section 5.3
Further Assurances
31
Section 5.4
Public Announcement
32
Section 5.5
Intercompany Accounts
32
Section 5.6
Transitional Use of Signage and Other Materials Incorporating TETRA Marks.
32
Section 5.7
Litigation Support
32
Section 5.8
Labor Matters
33
Section 5.9
Financial Assurances
33
Section 5.10
Confidentiality
33
Section 5.11
Entity Names
33
Section 5.12
Employee Non-Solicitation
33
Article VI EMPLOYEE MATTERS
34
Section 6.1
Employee Matters
34
Section 6.2
Welfare Benefits Plans.
34
Section 6.3
Miscellaneous Employee Issues
35
Article VII Tax Matters
35
Section 7.1
Adjustment to Purchase Price
35
Section 7.2
Transfer Taxes
35
Section 7.3
Tax Treatment of Purchase and Sale of
35
Section 7.4
336(e) Election.
35
Section 7.5
Tax Covenants
36
Article VIII CONDITIONS TO CLOSING; TERMINATION
37
Section 8.1
Conditions Precedent to Obligations of Buyer.
37
Section 8.2
Conditions Precedent to Obligations of Sellers.
38
Section 8.3
Frustration of Closing Conditions.
38
Section 8.4
Termination of Agreement.
38
Section 8.5
Procedure Upon Termination.
39
Section 8.6
Effect of Termination.
39
Article IX SURVIVAL AND INDEMNIFICATION
39
Section 9.1
Assumption and Indemnification by Buyer.
39
Section 9.2
Survival Periods
39
Section 9.3
Indemnification by the Sellers
40
Section 9.4
Indemnification by Buyer
40
Section 9.5
Indemnification Procedures
40
Section 9.6
Limitations.
42



        



Section 9.7
Mitigation
43
Section 9.8
No Duplication
43
Section 9.9
Limitation on Damages
43
Section 9.10
Exclusive Remedies
43
Article X MISCELLANEOUS PROVISIONS
44
Section 10.1
Counterparts
44
Section 10.2
Governing Law; Jurisdiction and Forum; Waiver of Jury Trial
44
Section 10.3
Entire Agreement
44
Section 10.4
Expenses
44
Section 10.5
Notices
45
Section 10.6
Successors and Assigns
45
Section 10.7
Third-Party Beneficiaries
45
Section 10.8
Amendments and Waivers
46
Section 10.9
Severability
46
Section 10.10
Specific Performance
46
Section 10.11
Waiver of Conflicts Regarding Representation
46
Section 10.12
Attorney-Client Privilege
46

SCHEDULES
Schedule 1.1(a)    Inventory
Schedule 2.5(a)    TETRA Contract Projects
Schedule 3.1    Foreign Jurisdiction Qualifications
Schedule 3.2    Sellers Consents and Approvals
Schedule 3.3(b)    TETRA Liens
Schedule 3.4(a)    Material Contracts
Schedule 3.4(b)    Contract Exceptions
Schedule 3.5    Legal Proceedings
Schedule 3.6(a)    Environmental Matters
Schedule 3.6(b)    Environmental Permits
Schedule 3.7(a)    Capitalization of the Companies
Schedule 3.7(b)    Rights in Respect of Equity Interests
Schedule 3.8(a)    Owned Real Property
Schedule 3.8(b)    Leased Real Property
Schedule 3.9(a)    Intellectual Property and Licenses
Schedule 3.9(b)    Intellectual Property Status
Schedule 3.10(a)    Employees
Schedule 3.10(b)    Consultants
Schedule 3.10(c)    Collective Bargaining Agreements
Schedule 3.10(d)    Employee Claims





Schedule 3.10(e)    Employment Arrangements
Schedule 3.11(a)    Benefit Plans
Schedule 3.11(b)(iii)    Welfare Benefits
Schedule 3.11(b)(iv)    Compensation or Benefits
Schedule 3.12    Taxes
Schedule 3.15    Related Party Transactions
Schedule 3.18    Vessels and Barges
Schedule 4.2    Buyer Consents and Approvals
Schedule 5.9    Financial Assurances


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EXHIBITS
Exhibit A – Form of Assignment of TSB Shares
Exhibit B – Form of Assignment of TAT Interests
Exhibit C – Form of Transition Services Agreement
Exhibit D – Form of Co-Employer Agreement
Exhibit E – Form of Release of Mortgage



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EQUITY INTEREST PURCHASE AGREEMENT
THIS EQUITY INTEREST PURCHASE AGREEMENT , dated as of February 28, 2018 (this “ Agreement ”), is entered into by and among TETRA Technologies, Inc., a Delaware corporation (“ TETRA ”), TETRA Production Testing Holding LLC, a Delaware limited liability company (“ TETRA Holding ”, and together with TETRA, the “ Sellers ”), and Epic Offshore Specialty, LLC, a Delaware limited liability company (“ Buyer ”). The Sellers and Buyer are hereinafter collectively referred to as the “ Parties ” and each individually as a “ Party .”
RECITALS
WHEREAS, Orinoco Natural Resources, LLC, a Virginia limited liability company (“ Orinoco ”), and Maritech Resources, LLC, a Delaware limited liability company (“ Maritech ”) and formerly a wholly owned subsidiary of TETRA Applied (as herein defined), entered into an Asset Purchase and Sale Agreement (the “ Maritech APA ”), providing for the sale by Maritech to Orinoco of certain Properties (as such term is defined in the Maritech APA);
WHEREAS , TETRA Applied and Orinoco entered into that certain Membership Interest Purchase and Sale Agreement (the “ MIPSA ”), providing for the sale by TETRA Applied of the membership interests of Maritech to Orinoco following the consummation of the transactions contemplated by the Maritech APA;
WHEREAS , TETRA owns all of the issued and outstanding shares (the “ TSB Shares ”) of TSB Offshore, Inc., a Delaware corporation (“ TSB ”);
WHEREAS , TETRA Holding owns 100% of the issued and outstanding equity interests (the “ TAT Interests ,” and together with the TSB Shares, the “ Equity Interests ”) in TETRA Applied Technologies, LLC, a Delaware limited liability company (“ TETRA Applied ”), which owns 100% of the issued and outstanding equity interests in Epic Diving & Marine Services, LLC, a Delaware limited liability company (“ Epic ”); and
WHEREAS , for federal income tax purposes, TSB is treated as a C Corporation and TETRA Applied and Epic are each treated as disregarded entities;
WHEREAS , upon the terms and subject to the conditions set forth herein, the Sellers desire to sell, transfer and assign to Buyer, and Buyer desires to purchase and assume from the Sellers, the Equity Interests.
NOW, THEREFORE , in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
Article I

DEFINITIONS; INTERPRETATION
Section 1.1      Defined Terms . For purposes of this Agreement, capitalized terms have the following meanings:
336(e) Election ” has the meaning set forth in Section 7.4(a) .

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Affiliate ” means, when used with respect to a specified Person, another Person that, either directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this Agreement, “control” (and correlative terms, including “controlling” and “controlled”) means the power, whether by contract, equity ownership or otherwise, to direct the policies and management of a Person, and any Person that directly or indirectly owns more than 50% of any class of voting equity interests of the Person specified shall be deemed to be an Affiliate of such Person.
Agreement ” has the meaning set forth in the Preamble.
Assignment of TAT Interests ” has the meaning set forth in Section 2.3(b)(ii) .
Assignment of TSB Shares ” has the meaning set forth in Section 2.3(b)(i) .
Assumed Obligations ” has the meaning set forth in Section 9.1 .
Benefit Plans ” means any written “employee benefit plan,” as defined in Section 3(5) of ERISA and each profit-sharing, bonus, stock option, stock purchase, pension, retirement, severance, deferred compensation, excess benefit, supplemental unemployment, post-retirement medical or life insurance, welfare, incentive, sick leave, long-term disability, medical, hospitalization, life insurance, other insurance or employee benefit plan maintained or contributed to by TETRA or its Subsidiaries under which any Employees are entitled to benefits accrued with respect to service to the Business as an employee of any Seller or Company or their respective Affiliates.
Books and Records ” means all books and records of the Companies, including machinery and equipment maintenance files, customer lists, customer purchasing records, price lists, supplier and vendor lists, quality control records and procedures, operational records and data (including correspondence with Governmental Entities in the possession of the Sellers or an Affiliate thereof), and sales materials (whether stored in print, magnetic tapes, computer disks, or any other digital or electronic media).
Business ” means the business of providing: (i) downhole and subsea, well plugging and abandonment, workover and wireline services; (ii) decommissioning, construction, and inspection, repair and maintenance services utilizing heavy lift barges, cutting technologies and/or conventional and saturation diving services with regard to offshore oil and gas production platforms and pipelines; and (iii) conventional and saturation diving services; in each case, as conducted by the Companies.
Business Day ” means any day other than a Saturday, a Sunday or other day on which commercial banks in Houston, Texas are authorized or required by Law to close.
Buyer ” has the meaning set forth in the Preamble.
Buyer Disclosure Schedule ” means the disclosure schedule delivered by Buyer to the Sellers on the date of this Agreement and attached hereto. References to numbered “Schedules” in Article IV of this Agreement refer to the corresponding numbered sections of the Buyer Disclosure Schedule.
Buyer Indemnified Parties ” has the meaning set forth in Section 9.3 .
Cap ” has the meaning set forth in Section 9.6(a) .

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Capital Lease ” means any lease of (or other arrangement conveying the right to use) any property by a Company as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease.
Cash Purchase Price ” has the meaning set forth in Section 2.2(a) .
Claim Notice ” has the meaning set forth in Section 9.5(a) .
Closing ” and “ Closing Date ” have the respective meanings set forth in Section 2.3(a) .
Closing Fuel Volume ” means the amount of Fuel mutually agreed upon by the Parties.
COBRA ” has the meaning set forth in Section 3.11(b)(iii) .
Code ” means the Internal Revenue Code of 1986, as amended.
Co-Employer Agreement ” has the meaning set forth in Section 2.3(b)(viii) .
Common Interest Parties ” has the meaning set forth in Section 10.12 .
Companies ” means, collectively, TSB, TETRA Applied and Epic, with each being referred to as a “ Company ”.
Companies Taxes ” means (i) any Liability for Taxes of the Companies for any Pre‑Closing Tax Period and (ii) any Liability for Taxes for which the Companies or the Buyer or any of its Affiliates is held liable under Treasury Regulations Section 1.1502-6 (or any analogous provision of state, local or foreign Law) by reason of the Companies being included in a consolidated, affiliated, combined or unitary group on or before the Closing Date or for which the Companies are or have been liable as a transferee or successor, by contract or otherwise.
Confidentiality Agreement ” means the confidentiality agreement, dated November 6, 2017, between TETRA and Orinoco.
Consent ” or “ Consents ” has the meaning set forth in Section 3.2 .
Contract ” of a Person means any agreement, arrangement, commitment, contract, purchase order, note, indenture, guarantee or other form of Indebtedness, lease, sublease, license, sublicense or other undertaking, whether written or oral, of such Person, to which such Person is a party, or by which such Person or any of its assets or properties is bound or subject.
Deductible ” has the meaning set forth in Section 9.6(a) .
Disclosure Schedules ” means the Sellers Disclosure Schedule and the Buyer Disclosure Schedule.
Effective Time ” has the meaning set forth in Section 2.3(a) .
Election Period ” has the meaning set forth in Section 9.5(b) .
Employees ” has the meaning set for in Section 3.10(a) .
Environmental Law ” means any Law relating to the prevention, abatement or elimination of pollution, or the protection of the environment, public health, or of natural resources, including: (i) the

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Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“ CERCLA ”); (ii) the Emergency Planning and Community Right-to-Know Act of 1986, as amended; (iii) the Federal Insecticide, Fungicide & Rodenticide Act, as amended; (iv) the Federal Water Pollution Control Act, as amended; (v) the Oil Pollution Act of 1990, as amended; (vi) the Resource Conservation and Recovery Act, as amended; (vii) the Superfund Amendments and Reauthorization Act of 1986, as amended; (viii) the Hazardous Materials Transportation Act, as amended; (ix) the Safe Drinking Water Act, as amended; (x) the Toxic Substances Control Act, as amended; (xi) the Clean Air Act, as amended; (xii) the Endangered Species Act; and, with respect to each of the foregoing clauses (i) through (xii), all similar state Laws, and the rules and regulations promulgated thereunder, including Louisiana and Texas statutes, rules and regulations, all as amended and supplemented as of the Closing Date.
Epic ” has the meaning set forth in the Recitals.
Equity Interests ” has the meaning set forth in the Recitals.
ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate ” means any Person that is, or at any relevant time was required to be, treated as a single employer with any one or more of the Sellers under Section 414 of the Code.
Exchange Act ” means the Securities Exchange Act of 1934, as amended.
Export Control Laws ” has the meaning set forth in Section 3.13 .
Financial Assurance ” means any financial instrument, including any surety bond, letter of credit, guaranty or other financial instrument or account, required by any Governmental Entity or any other Person, Law or Permit in an amount and form maintained by any of the Sellers related to or in connection with the conduct of the Business.
Former Employee ” means an individual who, as of immediately prior to the Closing, is not a current employee of a Company, a Seller or any of their respective Affiliates but who, during any period prior to the Closing, was employed by a Company, a Seller or its Affiliates and Subsidiaries.
Fuel ” means all diesel fuel within the Vessels at the Closing.
Fuels Cash Purchase Price ” has the meaning set forth in Section 2.2(a) .
GAAP ” means United States generally accepted accounting principles in effect from time to time.
Governing Documents ” means with respect to any particular entity: (a) if a corporation, its articles or certificate of incorporation and its bylaws; (b) if a limited partnership, its limited partnership agreement and its articles or certificate of limited partnership; (c) if a limited liability company, its articles of organization or certificate of formation and its limited liability company agreement or operating agreement; (d) all related equityholders’ agreements, voting agreements, voting trust agreements, joint venture agreements or registration rights agreements; and (e) any amendment or supplement to any of the foregoing.
Governmental Entity ” means any tribal, local, municipal, national, federal, foreign, domestic or other governmental or regulatory authority, department, agency, commission, body, court or other body or entity of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision exercising or entitled to exercise any administrative, executive, judicial, legislative, police,

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regulatory, self-regulatory or taxing authority or power of any nature, including any arbitrator or arbitral tribunal.
Guaranty ” has the meaning set forth in Section 2.3(c)(iii) .
Hazardous Substance ” means any toxic, hazardous, extremely hazardous, infectious, explosive, corrosive, flammable, carcinogenic, mutagenic, sanitary substance, chemical, waste, solid, material, pollutant or contaminant that is defined or listed as hazardous or toxic under any applicable Environmental Law. Without limiting the generality of the immediately preceding sentence, it shall also include any radioactive material, including any naturally-occurring radioactive material, and any source, special or by-product material as defined in 42 U.S.C. 2011, et seq., any amendments or authorizations thereof, Bevill Amendment materials under 42 U.S.C. 6921(b)(3)(A)(ii), radon gas, any asbestos-containing materials in any form or condition, mold, urea formaldehyde form insulation, any polychlorinated biphenyls in any form or condition, radioactive waste, or natural gas, natural gas liquids, liquefied natural gas, condensate, or derivatives or byproducts thereof or oil or petroleum products or by products and constituents thereof.
HB ” has the meaning set forth in Section 10.11 .
Indebtedness ” means, with respect to the Sellers, as it relates to the Business, or the Companies, any Liability under or for any of the following, without duplication: (a) any indebtedness for borrowed money; (b) any obligation evidenced by any note, bond, debenture, mortgage or similar debt instrument (including a letter of credit); (c) any indebtedness for the deferred purchase price of any asset of a Company, or any properties or services with respect to which any of the Sellers are liable, contingently or otherwise, as obligor or otherwise; (d) any commitment by which any of the Sellers assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit); (e) any indebtedness guaranteed in any manner by any of the Sellers or the Companies; (f) any obligations under Capital Leases of the Companies; (g) any indebtedness secured by a Lien on any of the assets of the Companies; (h) obligations under any performance bond, surety bond, letter of credit or similar financial assurances (whether or not drawn); (i) any Liabilities of the types described in clauses (a) through (h) above of any Person other than the Sellers, the payment of which is guaranteed in any manner by any of the Sellers or the Companies or secured by a Lien on any of the assets of the Companies; and (j) accrued interest in respect of any of the Liabilities described in clauses (a) through (i) above, and all premiums, penalties, charges, fees, expenses and other amounts which would become due in connection with the payment and satisfaction in full of such obligations arising from or in connection with the consummation of the transactions contemplated by this Agreement or any other Transaction Document. Indebtedness shall not, however, include (y) any amounts payable under the charter agreements for any Vessels and (z) intercompany Liabilities between any of the Companies, on the one hand, and any of the Sellers or their Affiliates, on the other that are paid or cancelled as of the Closing.
Indemnified Party ” has the meaning set forth in Section 9.5(a) .
Indemnifying Party ” has the meaning set forth in Section 9.5(a) .
Indemnity Claim ” has the meaning set forth in Section 9.5(f) .
Indemnity Notice ” has the meaning set forth in Section 9.5(f) .
Intellectual Property ” means all intellectual property, including (i) trademarks and service marks, logos, trade names, corporate names and other indications of origin, together with all translations, adaptations, derivations, and combinations thereof, applications or registrations in any jurisdiction pertaining to the

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foregoing and all goodwill associated therewith, (ii) inventions (whether or not patentable), discoveries, improvements, ideas, know-how, formulae, methodologies, research and development, business methods, processes, technology, software (including any required passwords), interpretive code or source code, object or executable code, libraries, development documentation, compilers (other than commercially available compilers), programming tools, drawings, specifications and data) and applications, patents or grants in any jurisdiction pertaining to the foregoing, including re-issues, continuations, divisions, continuations-in-part, reexaminations, renewals and extensions, (iii) trade secrets, including confidential information and the right in any jurisdiction to limit the use or disclosure thereof, (iv) copyrights in writings, designs, software, mask works or other works, applications or registrations in any jurisdiction for the foregoing and all moral rights related thereto, (v) database rights, (vi) Internet websites, web pages, domain names and applications and registrations pertaining thereto and all intellectual property used in connection with or contained in websites, (vii) all rights under agreements relating to the foregoing, (viii) all books and records pertaining to the foregoing, (ix) all other similar types of proprietary intellectual property rights arising under the Laws of any country or jurisdiction, and (x) all claims or causes of action arising out of or related to past, present or future infringement or misappropriation of the foregoing.
Inventory ” means all spare parts and supply inventory of the Companies as of the Closing Date, set forth on Schedule 1.1(a) , which Schedule includes the amount paid by the Companies to acquire such Inventory.
Inventory Cash Purchase Price ” has the meaning set forth in Section 2.2(a) .
IP Assets ” means, collectively, (i) all Intellectual Property owned by the Companies and (ii) all of the Companies’ rights to any Intellectual Property under any license agreements that are listed on Schedule 3.9(a) .
IRS ” means the United States Internal Revenue Service.
Law ” or “ Laws ” means any law (including common and civil law), statute, ordinance, rule, regulation, judgment, writ, treaty, code, order, injunction, ruling, order, decree, arbitration award, agency requirement, license or permit of any Governmental Entity.
Lease ” or “ Leases ” has the meaning set forth in Section 3.8(b) .
Leased Real Property ” has the meaning set forth in Section 3.8(b) .
Legal Proceeding ” has the meaning set forth in Section 3.5 .
Liabilities ” means any liability (whether known or unknown, whether fixed or otherwise, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including all costs and expenses relating thereto.
Liens ” means all liens, pledges, charges, claims, mortgages, deeds of trust, security interests, restrictions on transfer, easements, encroachments, preemptive rights, rights of first refusal, rights of first offer, purchase options, or other encumbrances of any kind, whether voluntarily incurred or arising by operation of law (including, in the case of a Vessel owned by any of the Companies, a charter or lease of such Vessel by any Company).
Losses ” means all losses, costs, charges, expenses (including interest and penalties due and payable with respect thereto and reasonable attorneys’ and other professional fees and expenses in connection with

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any action whether involving a third-party claim or any claim solely between the parties hereto), obligations, Liabilities, settlement payments, awards, judgments, fines, penalties, damages, demands, claims, assessments or deficiencies.
Marine Environmental Incident ” means (a) any material Release of Hazardous Substances from any of the Vessels during the period that such Vessels are owned, leased or chartered by any of the Companies; (b) any incident in which there is a material Release of any Hazardous Substances from a vessel other than a Vessel and which involves a collision between a Vessel while owned, leased or operated by any of the Companies and such other vessel or some other incident of navigation or operation, including an allision; in either case, where such Vessel or any of the Companies is actually or allegedly at fault or otherwise liable (in whole or in part); or (c) any incident in which there is a material Release of Hazardous Substances from a vessel (other than a Vessel) and where any employee working on a Vessel owned, leased or operated by any of the Companies is actually or potentially liable to be arrested as a result thereof and, in each case under (a), (b) and (c), where any of the Companies or the charter of the Vessel is actually or allegedly at fault or otherwise liable.
Maritech ” has the meaning set forth in the Recitals.
Maritech APA ” has the meaning set forth in the Recitals.
Material Adverse Effect ” means any result, occurrence, change, condition, development, fact, event or effect that has had a material and adverse effect on (a) the business, the operations, the Liabilities, properties, assets, financial condition or assets of the Companies, taken as a whole, or (b) the ability of the Sellers to perform their respective obligations under or consummate the transactions contemplated by this Agreement; provided , however , that “Material Adverse Effect” shall not include: (i) changes, developments or occurrences (A) generally affecting the principal industries and geographic areas in which the Business operates, other than such changes that have a disproportionate impact on the Business, (B) generally affecting the economy or the financial markets in the United States or globally (including interest rates), (C) generally affecting regulatory or political conditions in the United States, or (D) the commencement, continuation or escalation of war, material armed hostilities or other material international or national calamity or acts of terrorism, (ii) changes, developments or occurrences resulting from actions or omissions of any of the Sellers taken in order to comply with the express terms of this Agreement or with the specific prior written consent of Buyer; (iii) resulting from the announcement or pendency of the transactions contemplated by this Agreement; (iv) any adoption, implementation, promulgation, repeal, modification, reinterpretation or proposal of any Law by any Governmental Entity; (v) any changes in GAAP after the date hereof; or (vi) the failure of the Companies to attain or meet any financial projections provided to Buyer in connection with the transactions contemplated hereby.
Material Contracts ” has the meaning set forth in Section 3.4(a) .
MIPSA ” has the meaning set forth in the Recitals.
Note ” has the meaning set forth in Section 2.2(b) .
Order ” has the meaning set forth in Section 3.5 .
Orinoco ” has the meaning set forth in the Recitals.
Owned Real Property ” has the meaning set forth in Section 3.8(a) .

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Party ” or “ Parties ” has the meaning set forth in the Preamble.
Permit ” means any permit, license, certificate, tariff, concession, variance, exemption, approval, consent, franchise, registration, filing, order, qualification or authorization which may be granted or issued by or of any Governmental Entity in connection with the Business or required under any applicable Law.
Permitted Liens ” means (a) Liens, if any, created or permitted expressly and in writing to be imposed by Buyer; (b) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens imposed by applicable Law arising or incurred in the ordinary course of business for obligations that are not due and payable; (c) Liens for Taxes and other governmental charges that are not due and payable; (d) in the case of Leases, any interest of, or Liens created by, the owner of fee title to the land covered thereby; (e) any zoning, building code or similar Laws imposed by any Governmental Entity; (f) title defects or imperfections of title, easements, rights-of-way, covenants, restrictions and other similar non-monetary encumbrances with respect to the Owned Real Property and Leased Real Property which, in the aggregate, do not materially detract from the value of the property subject thereto or materially interfere with the continued use and operation of such real property as presently used or operated; (g) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation; and (h) Permitted Maritime Liens.
Permitted Maritime Liens ” means (i) Liens for crew wages (including wages of the masters of the Vessels) incurred in the ordinary course of business and that are not yet due and payable or that are being contested in good faith by appropriate proceedings; (ii) Liens for necessaries provided to the Vessels incurred in the ordinary course of business that are not yet due and payable; (iii) Liens arising by operation of Law in the ordinary course of business in connection with operating, maintaining or repairing the Vessels that are not yet due and payable or that are being contested in good faith by appropriate proceedings; and (iv) Liens for damages arising from maritime torts that are unclaimed or that are covered by insurance, or in respect of which a bond or other security has been posted on behalf of the ship owner with the appropriate court or other tribunal to prevent the arrest or to secure the release of the applicable Vessel from arrest, unless any such Lien is being contested in good faith by appropriate proceedings.
Person ” means any individual, firm, corporation, company, partnership (general and limited), limited liability company, joint venture, association, trust, estate, unincorporated organization, Governmental Entity or any other entity.
Pre-Closing Tax Period ” means any Tax period ending on or before the Closing Date and that portion of any Straddle Period ending on the Closing Date.
Property Taxes ” means ad valorem, property, excise, severance, production, sales, use, or similar Taxes.
Purchase Price ” has the meaning set forth in Section 2.2 .
Related Party ” means (a) each individual who is, or who has at any time within the preceding year been, an officer of the Sellers; and (b) any entity (other than the Sellers) in which any one of the individuals referred to in clause (a) holds (or in which more than one of such individuals collectively hold), beneficially or otherwise, a controlling interest or a material voting, proprietary or equity interest.
Release ” means any spilling, leaking, leaching, migrating, pumping, pouring, emitting, emptying, discharging, injecting, escaping, abandoning, dumping or disposing into the environment (indoor or outdoor,

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including the ambient air, soil, subsurface strata, surface water, groundwater and wetlands) of Hazardous Substances in violation of or giving rise to liability under any Environmental Law.
“Rental Agreement ” has the meaning set forth in Section 2.3(b)(xi) .
SEC ” has the meaning set forth in Section 3.3(a) .
Section 336(e) Election Statement ” has the meaning set forth in Section 7.4(b) .
Section 336(e) Purchase Price Allocation ” has the meaning set forth in Section 7.4(c) .
Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Sellers ” has the meaning set forth in the Preamble.
Sellers Disclosure Schedule ” means the disclosure schedule delivered by the Sellers to Buyer on the date of this Agreement and attached hereto, as it may be supplemented or modified pursuant to this Agreement. References to numbered “Schedules” in Article III of this Agreement refer to corresponding numbered sections of the Sellers Disclosure Schedule.
Sellers Indemnified Parties ” has the meaning set forth in Section 9.4 .
Sellers Retained Assets ” means (i) all cash, cash equivalents, short-term investments, bank deposits, investment accounts, corporate credit cards and similar items of the Sellers or the Companies, and (ii) accounts receivable of the Companies or the Business for periods prior to the Effective Time.
Sellers Retained Liabilities ” mean any and all Liabilities of Sellers and/or the Companies arising from or otherwise related to the ownership, management or operation of the Business or the Companies prior to the Effective Time, or any services performed by the Companies prior to the Effective Time, including Liabilities for Taxes, Liabilities with respect to Employees and Former Employees, Liabilities under any Benefit Plans maintained by the Companies, Liabilities under Seller Retained Plans, Liabilities for Legal Proceedings related to the Business, and Liabilities for trade payables related to the Business; provided, however, that Sellers Retained Liabilities shall not include in any manner, whether directly or indirectly, the prior ownership, management or operation of Maritech, any of its properties, or any Liabilities or Losses of any kind arising from or related to (i) Maritech, its properties or assets, (ii) TETRA Applied’s prior ownership of Maritech, or (iii) any guaranties, bonds or other financial assurances previously provided by TETRA and its Affiliates with respect to Maritech, its properties and operations.
Sellers Retained Plan ” means a Benefit Plan of which, as of the Closing Date, any of the Sellers or an ERISA Affiliate thereof shall be the sponsoring, adopting or participating employer(s).
Straddle Period ” means any Tax period beginning before or on and ending after the Closing Date.
Subcontract ” has the meaning set forth in Section 2.3(b)(ix) .
Sublease ” has the meaning set forth in Section 2.3(b)(x) .
Subsidiary ” of a Person means any corporation or other entity (including a limited liability company, partnership or other business association) in which such Person, directly or indirectly, owns

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outstanding capital stock or other voting securities having the power, under ordinary circumstances, to elect a majority of the directors or similar members of the governing body of such corporation or other entity, or otherwise to direct the management and policies of such corporation or other entity.
Surviving Covenants ” has the meaning set forth in Section 9.2 .
TAT Interests ” has the meaning set forth in the Recitals.
Tax ” or “ Taxes ” means taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees imposed by any Taxing Authority, including taxes, levies or other like assessments on income, profits or gains, franchise, privilege, gross receipts, ad valorem, escheat, value added, customs, excise, import or export, real or property, asset, sales, use, license, payroll, transaction, capital, net worth, withholding, estimated, social security, utility, workers’ compensation, severance, production, unemployment compensation, occupation, premium, windfall profits, environmental stamp, documentary, filing, recordation, transfer and gains taxes, levies or otherwise or other governmental taxes imposed or payable to or in any jurisdiction or country in the world, or any state or county, government or subdivision or agency thereof (any such authority a “ Taxing Authority ”), together with any interest, penalties or additions with respect thereto and any interest in respect of such additions or penalties and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.
Tax Allocation ” has the meaning set forth in Section 2.4 .
Tax Consideration ” means the amount properly treated as consideration for U.S. federal income tax purposes in connection with the transactions contemplated by this Agreement, the Maritech APA and the MIPSA.
Tax Matter ” has the meaning specified in Section 7.5(c) .
Tax Return ” means any return, declaration, report, claim for refund, property rendition or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof.
Taxing Authority ” has the meaning set forth in the definition of Tax or Taxes.
Temporary Period ” has the meaning set forth in Section 2.5(c) .
TETRA” has the meaning set forth in the Preamble.
TETRA Applied ” has the meaning set forth in the Recitals.
TETRA Contract ” has the meaning set forth in Section 2.5(a) .
TETRA Contract Project ” or “ TETRA Contract Projects ” has the meaning set forth in Section 2.5(a) .
TETRA Entities ” means, collectively, Sellers and any Subsidiary of a Seller, other than the Companies and Maritech, and “ TETRA Entity ” means each of them.
TETRA Holding ” has the meaning set forth in the Preamble.

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TETRA Liens ” has the meaning set forth in Section 3.3(b) .
TETRA Marks ” means any right, title or interest in (i) the names “TETRA,” “TETRA Technologies,” “TETRA Applied,” “TETRA Offshore Services,” and all translations, transliterations, adoptions, combinations and derivations thereof, (ii) any trade names or trademarks and any application or registration thereof, or (iii) any service marks or identifying logos and any application or registration thereof.
Third-Party Claim ” has the meaning set forth in Section 9.5 .
Transaction Documents ” means this Agreement, the Assignment of TSB Shares, the Assignment of TAT Interests, the Transition Services Agreement, the Co-Employer Agreement, the Note, and any other Contract, document or instrument entered into or executed by any Party that is contemplated by this Agreement; provided, however, that Maritech APA, MIPSA and all Contracts, documents or instruments entered into or created by any of the parties thereto contemplated by either the Maritech APA or MIPSA shall not be considered a Transaction Document for purposes of this Agreement.
Transfer Tax ” means any sales, use, value-added, business, goods and services, transfer (including any stamp duty or other similar Tax chargeable in respect of any instrument transferring property), documentary, conveyancing or similar Tax or expense or any recording fee, in each case that is imposed as a result of any transaction contemplated herein, together with any penalty, interest and addition to any such item with respect to such item.
Transition Services Agreement ” has the meaning set forth in Section 2.3(b)(vii) .
Treasury Regulations ” means the regulations promulgated by the United States Treasury Department under the Code.
TSB ” has the meaning set forth in the Recitals.
TSB Shares ” has the meaning set forth in the Recitals.
U.S. Citizen ” means a Person that is a citizen of the United States within the meaning of 46 U.S.C. § 50501(a), (b) and (d), and the regulations promulgated thereunder and related thereto (as each may be amended from time to time), eligible and qualified to own and operate U.S. flag vessels in the U.S. Coastwise Trade or any authorized trade requiring a U.S. flag vessel.
U.S. Coastwise Trade ” means the carriage or transport of merchandise and/or passengers in the coastwise trade of the United States of America within the meaning of Chapter 551 of Title 46 of the United States Code.
Vessels ” means the vessels (including barges) owned, leased, chartered, held or used by any of the Companies, as set forth in Schedule 3.18 .
WARN Act ” means the Workers Adjustment Retraining and Notification Act of 1988, as amended.
Welfare Plan ” means any employee welfare benefit plan within the meaning of Section 3(l) of ERISA, any short-term disability program classified as a “payroll practice,” any group health plan within the meaning of Code Section 105, any cafeteria plan within the meaning of Code Section 125, any dependent care assistance program within the meaning of Code Section 129, any adoption assistance plan within the

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meaning of Code Section 137, any tuition assistance plan within the meaning of Code Section 127, and any qualified transportation plan within the meaning of Code Section 132, other than any severance plan.
Section 1.2      Interpretations . Unless expressly provided for elsewhere in this Agreement, this Agreement shall be interpreted in accordance with the following provisions:
(a)      Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural form and vice versa.
(b)      If a word or phrase is defined, its other grammatical forms have a corresponding meaning.
(c)      The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
(d)      All references in this Agreement to articles, sections, or subdivisions thereof shall refer to the corresponding article, section or subdivision thereof of this Agreement unless specific reference is made to such articles, sections, or subdivisions of another document or instrument.
(e)      For purposes of this Agreement, a reference to any agreement or document (including a reference to this Agreement) is to the agreement or document as amended, varied, supplemented, novated, or replaced, except to the extent prohibited by this Agreement or such other agreement or document.
(f)      A reference to a Party to this Agreement or a party to any other agreement or document includes such party’s permitted successors and assigns.
(g)      A reference to legislation or to a provision of legislation includes a modification or reenactment of it, a legislative provision substituted for it, and a regulation or statutory instrument issued under it.
(h)      A reference to a writing includes a facsimile or e-mail transmission of it.
(i)      The words “hereof,” “herein” and “hereunder,” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule, and exhibit references are to this Agreement unless otherwise specified.
(j)      The word “including,” “include,” “includes” and all variations thereof shall mean “including, without limitation.”
(k)      The Exhibits attached to this Agreement are incorporated herein by reference and made a part of this Agreement.
(l)      The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
(m)      “Shall” and “will” have equal force and effect.

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(n)      The word “or” will have the inclusive meaning represented by the phase “and/or.”
(o)      Unless otherwise specified, all references to a specific time of day in this Agreement shall be based upon Central Standard Time or Central Daylight Saving Time, as applicable on the date in question in Houston, Texas.
(p)      References to “$” or to “dollars” shall mean the lawful currency of the United States of America.
(q)      In the event an action is required under this Agreement on a day that is not a Business Day, such action shall be required to be performed on the next succeeding day that is a Business Day.
(r)      All references to “day” or “days” shall mean calendar days unless specified as a “Business Day.”
(s)      Time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the time period commences and including the day on which the time period ends and by extending the period to the next Business Day following if the last day of the time period is not a Business Day.
(t)      The phrase “to the knowledge of the Sellers” or any similar phrase shall mean such facts and other information which as of the date of this Agreement are actually known to Peter Pintar, Robert A. Gilbert, Stuart Brightman, Joe Meyer, and Elijio V. Serrano.
(u)      All materials or information posted in the electronic data room maintained for the use and benefit of Buyer on or before February 27, 2018, access to which has been afforded to representatives of Buyer, shall have been deemed to have been “made available” to Buyer, as such phrase is used herein.
(v)      All Section headings in the Sellers Disclosure Schedule correspond to the Sections of this Agreement, but information provided in any Section of the Sellers Disclosure Schedule shall constitute disclosure for purposes of each Section of this Agreement where such information is relevant.
ARTICLE II     

PURCHASE AND SALE OF EQUITY INTERESTS
Section 2.1      Transfer of Equity Interests . Subject to the terms and conditions set forth herein, at the Closing, the Sellers shall sell, assign, transfer, convey and deliver the Equity Interests to Buyer, and Buyer shall purchase, acquire and accept the Equity Interests from Sellers. Notwithstanding the foregoing, Sellers shall retain ownership of the Sellers Retained Assets.
Section 2.2      Consideration . The consideration to be paid (the “ Purchase Price ”) by Buyer to the Sellers for (i) the Equity Interests under this Agreement, (ii) the Interests (as such term is defined in the MIPSA) under the MIPSA, and (iii) the Purchased Assets (as such term is defined under the Maritech APA) under the Maritech APA consists of:
(a)      an amount in cash equal to (i) the value of the Fuel, with the value of the Fuel to be determined by multiplying the Closing Fuel Volume by the average cost per gallon to Sellers of the Fuel for

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the one hundred eighty (180) day period immediately preceding the Closing Date (the “ Fuels Cash Purchase Price ”) plus (ii) the value of all usable (i.e. non-obsolete) Inventory, with the value of such Inventory being an amount equal to sixty percent (60%) of the amount paid by Sellers to acquire such Inventory (the “ Inventory Cash Purchase Price ” and together with the Fuels Cash Purchase Price, the “ Cash Purchase Price ”), payable in U.S. dollars by Buyer to Sellers at the Closing;
(b)      a promissory note (the “ Note ”) in the original principal amount of $7,500,000, executed by Buyer and payable to the Sellers, such Note to bear interest at the rate of 1.52% per annum, to be payable in full on December 31, 2019, and to be in a form reasonably acceptable to Sellers;
(c)      (i) the assumption and performance by Buyer of the Assumed Obligations and the indemnity provided by Buyer pursuant to Section 9.4 of this Agreement, (ii) the assumption and performance by Orinoco of the Assumed Obligations (as defined in the Maritech APA) and the indemnity provided by Orinoco pursuant to Article X of the Maritech APA, and (iii) the assumption and performance by Orinoco of the Assumed Obligations (as defined in the MIPSA) and the indemnity provided by Orinoco pursuant to Article VII of the MIPSA; and
(d)      Buyer’s performance under the bonding agreement to be delivered pursuant to Section 5.3(c) of the MIPSA and Section 3.1 of the Maritech APA.
Section 2.3      Time and Place of Closing; Deliveries .
(a)      Subject to the satisfaction of the conditions set forth in Section 8.1 and Section 8.2 (or waiver thereof by the Party entitled to waive that conditions), the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of the Sellers at 24955 I-45 North, The Woodlands, Texas 77380, within two (2) Business Days after satisfaction or waiver of all of the closing conditions set forth in Article VIII hereof (other than those required to be satisfied at the Closing, but subject to the satisfaction thereof) or on such other date or at such other location as is mutually agreeable to Buyer and Sellers (such date being the “ Closing Date ”). The Parties intend that the Closing with respect to this Agreement shall be deemed effective as of 12:03 a.m., Houston, Texas time and immediately following the consummation of the transactions contemplated under the Maritech APA and the MIPSA (the “ Effective Time ”).
(b)      Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers shall deliver, or cause to be delivered, to Buyer, subject to the provisions of Section 2.5 :
(i)      an assignment, stock power or similar instrument affecting the transfer of the TSB Shares to Buyer, free and clear of Liens other than restrictions on transfer that may be imposed by federal or state securities Laws or the Governing Documents of TSB, substantially in the form set forth as Exhibit A hereto (the “ Assignment of TSB Shares ”), duly executed by TETRA, accompanied by any original certificate(s) representing the TSB Shares;
(ii)      an assignment or similar instrument affecting the transfer of the TAT Interests to Buyer free and clear of Liens other than restrictions on transfer that may be imposed by federal or state securities Laws or the Governing Documents of TETRA Applied, substantially in the form set forth as Exhibit B hereto (the “ Assignment of TAT Interests ”), duly executed by TETRA Holding, accompanied by any original certificate(s) representing the TAT Interests;
(iii)      certificates of good standing and legal existence, as applicable, of each of the Companies and Sellers issued by the Secretary of State or similar Governmental Entity of the jurisdiction

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of formation or incorporation of the Companies, as of a date within five (5) Business Days of the Closing Date;
(iv)      resignation letters from each individual who serves as a director, manager or officer of a Company, in each case effective as of the Closing, pursuant to which each such individual resigns from his or her position as a director, manager or officer, as applicable, of such Company;
(v)      releases of Liens and other documentation reasonably satisfactory to Buyer confirming that (A) all TETRA Liens have been irrevocably released, and (B) the Companies have been released from any liability with respect to the TETRA Liens;
(vi)      (i) a certificate from each Seller in the form specified in Treasury Regulation Section 1.1445-2(b)(2)(iv) that such entity is not a “foreign person” within the meaning of Section 1445 of the Code and (ii) a properly completed and executed Form W-9 in respect of each Seller;
(vii)      an executed counterpart to the Transition Services Agreement, substantially in the form set forth as Exhibit C hereto (the “ Transition Services Agreement ”);
(viii)      an executed counterpart to the Co-Employer Agreement, substantially in the form set forth as Exhibit D hereto (the “ Co-Employer Agreement ”);
(ix)      an executed counterpart of a master services agreement or other form of subcontract as contemplated by Section 2.5 with respect to any TETRA Contracts (the “ Subcontract ”), in a form mutually acceptable to the Parties;
(x)      an executed counterpart of a sublease agreement (the “ Sublease ”), in a form mutually acceptable to the Parties;
(xi)      an executed counterpart of an equipment rental agreement (the “ Rental Agreement ”), in a form mutually acceptable to the Parties;
(xii)      the original minute books of the Companies and any Books and Records that may be in the possession or under the control of Sellers or any of their Affiliates, other than any books and records that Sellers or any of their Affiliates are required by Law to retain the originals of, in which case copies thereof have been delivered to Buyer (it being understood that Sellers are not required to deliver the minute books and any Books and Records which are already within the possession or control of the Companies); provided , that Sellers and their Affiliates shall have reasonable access to, or the right to retain a copy of, all Books and Records delivered to Buyer to the extent reasonably necessary for, and for use solely in connection with, Tax, audit, regulatory or litigation purposes;
(xiii)      certificates dated as of the Closing Date and duly executed by the Secretary of each of the Sellers, certifying (A) that a true, complete and correct copy of such Seller’s Governing Documents, as amended and in effect on the Closing Date, is attached thereto, (B) that a true, complete and correct copy of the resolutions of the board of directors or managers of such Seller authorizing the execution, delivery and performance by such Seller of this Agreement and the Transaction Documents to which such Seller is a party, and the consummation of the transactions contemplated hereby and thereby, is attached thereto, and that such resolutions have not been amended, modified or rescinded and remain in full force and effect on the Closing Date, and (C) the names and signatures of the officer(s) of such Seller authorized to execute this Agreement and each Transaction Document to which such Seller is a party;

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(xiv)      an executed Release of Mortgage, substantially in the form of Exhibit E attached hereto, suitable for filing with the National Vessel Documentation Center of the U.S. Coast Guard for each U.S.-flag Vessel owned by the Companies;
(xv)      a Certificate of Ownership of Vessel (U.S. Coast Guard Form CG-1330) or Abstract of Title (U.S. Coast Guard Form CG-1332) for each U.S.-flag Vessel owned by the Sellers issued by the National Vessel Documentation Center of the U.S. Coast Guard, and a Certificate of Ownership and Encumbrance issued by the Vanuatu Maritime Services Limited in each case dated not earlier than five (5) Business Days prior to the Closing Date, stating that such Vessel is free from all recorded Liens other than the mortgages which are the subject of the Releases of Mortgage to be delivered to Buyer pursuant to Section 2.3(c)(xiv) ;
(xvi)      each Seller shall have delivered to Buyer a certificate dated the Closing Date, certifying the statements set forth in Section 8.1(a) and Section 8.1(b) are true and correct;
(xvii)      such other documents and instruments required to be delivered by the Sellers at Closing pursuant to this Agreement, and all such other agreements, certificates, documents and other instruments as Buyer reasonably requests in writing and as are reasonably necessary to consummate the transactions contemplated by this Agreement and/or any of the Transaction Documents, in each case, in form and substance reasonably satisfactory to Buyer and its counsel.
(c)      Upon the terms and subject to the conditions of this Agreement, at the Closing, the Buyer shall deliver, or cause to be delivered, to the Sellers:
(i)      the Cash Purchase Price, calculated pursuant to Section 2.2(a) ;
(ii)      the Note, duly executed by Buyer;
(iii)      a personal guaranty (the “ Guaranty ”), duly executed by Thomas M. Clarke and Ana M. Clarke, guaranteeing the payment of the Note and in a form reasonably acceptable to Sellers;
(iv)      the Assignment of TSB Shares, duly executed by Buyer;
(v)      the Assignment of TAT Interests, duly executed by Buyer;
(vi)      the Transition Services Agreement, duly executed by Buyer;
(vii)      the Co-Employer Agreement, duly executed by Buyer;
(viii)      the Subcontract, duly executed by Buyer;
(ix)      the Sublease, duly executed by Buyer;
(x)      the Rental Agreement, duly executed by Buyer;
(xi)      a certificate of good standing and legal existence of Buyer issued by the Secretary of State of the State of Delaware, as of a date within five (5) Business Days of the Closing Date;
(xii)      a certificate, dated as of the Closing Date and duly executed by an officer of Buyer, certifying (A) that a true, complete and correct copy of Buyer’s Governing Documents, as amended

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and in effect on the Closing, is attached thereto, (B) that a true, complete and correct copy of the resolutions of the members of Buyer, authorizing the execution, delivery and performance by Buyer of this Agreement and the Transaction Documents to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, is attached thereto, and that such resolutions have not been amended, modified or rescinded and remain in full force and effect on the Closing Date, and (C) the names and signatures of the officer(s) of Buyer authorized to execute this Agreement and each Transaction Document to which Buyer is a party;
(xiii)      Buyer shall have delivered to Sellers a certificate dated the Closing Date, certifying the statements set forth in Section 8.2(a) and Section 8.2(b) are true and correct; and
(xiv)      such other documents and instruments required to be delivered by Buyer at Closing pursuant to this Agreement, and all such other agreements, certificates, documents and other instruments as the Sellers reasonably requests in writing and as are reasonably necessary to consummate the transactions contemplated by this Agreement and/or any of the Transaction Documents, in each case, in form and substance reasonably satisfactory to the Sellers and their counsel.
Section 2.4      Allocation of Purchase Price . Within ninety (90) days after the Closing, Buyer and Sellers shall use commercially reasonable efforts to agree to the amount of the Tax Consideration and an allocation of the Tax Consideration, by entity, among the seven asset classes specified in Section 1.338-6(b) of the Treasury Regulations (i.e., “Class V assets,” “Class VI assets,” Class VII assets,” etc.) in a manner consistent with Section 1060 of the Code. If the Parties reach an agreement with respect to such allocation (as agreed, the “ Tax Allocation ”), (i) the Parties shall update the Tax Allocation in a manner consistent with the original Tax Allocation and Section 1060 of the Code following any adjustment to the Tax Consideration pursuant to this Agreement, (ii) the Parties shall, and shall cause their Affiliates to, report consistently with the Tax Allocation on all Tax Returns, (iii) each Party shall promptly inform the other Parties in writing of any challenge by any Taxing Authority to the Tax Allocation and consult and keep one another informed with respect to the status of such challenge and (iv) no Party shall take any position in any Tax Return that is inconsistent with the Tax Allocation unless otherwise required by applicable Law; provided, however , that no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any tax audit, claim or similar proceedings in connection with such Tax Allocation.
Section 2.5      TETRA Contracts.
(a)      Buyer acknowledges that TETRA has provided, and continues to provide as of the Closing Date, services in connection with the Business pursuant to certain Contracts held by TETRA (each a “ TETRA Contract ”) and that such TETRA Contracts will not be assigned or conveyed to Buyer. Each such ongoing project or any project expected to be commenced in the Business within ninety (90) days following the Closing Date pursuant to a TETRA Contract is listed on Schedule 2.5(a) (each project is referred to individually as a “ TETRA Contract Project ” and collectively as “ TETRA Contract Projects ”).
(b)      To the extent permitted by applicable Law, during the Temporary Period the Sellers shall (or shall cause their Affiliates to) use commercially reasonable efforts to provide Buyer, under the terms reasonably acceptable to the Sellers, the benefits under any such TETRA Contract as they relate to the TETRA Contract Projects in accordance with the terms thereof (after recoupment of any actual and documented direct expenses and contractual obligations incurred by TETRA under the terms of such TETRA Contract, as provided for below), including by entering into the Subcontract and such other subcontracts, subleases,

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use and service agreements or other contractual arrangements which will provide such benefits to Buyer. During the Temporary Period, TETRA shall promptly pay over to Buyer, in respect of each TETRA Contract as it relates to a TETRA Contract Project, all money or other consideration received by TETRA net of any actual and documented direct expenses or contractual obligations incurred by TETRA under the terms of such TETRA Contract. During the Temporary Period, TETRA authorizes Buyer, to the extent permitted by applicable Law and the terms of the TETRA Contract, to perform all the obligations and receive all the benefits of TETRA under the TETRA Contract as they relate to a TETRA Contract Project. Buyer shall comply with the terms of the applicable TETRA Contract with respect to each TETRA Contract Project and any expansion thereof or new job as permitted herein including all insurance requirements as set forth in the TETRA Contract. Buyer shall provide proof of such insurance policies as necessary to support the obligations under the TETRA Contracts and Buyer shall cause TETRA to be named as an additional insured under and any such insurance policies and obtain a waiver of subrogation in favor of TETRA. Buyer shall, as agent or subcontractor for TETRA, pay, perform and discharge fully the Liabilities and obligations of TETRA under the TETRA Contract as they relate to a TETRA Contract Project during the Temporary Period. With respect to any Third-Party Claim or any Losses accruing during the Temporary Period under a TETRA Contract and related to a TETRA Contract Project, Buyer shall indemnify, defend and hold harmless the Sellers Indemnified Parties from and against any and all Losses that a Sellers Indemnified Party may suffer resulting from, arising out of, relating to, or caused by Buyer’s performance, breach or default under, or operation of any TETRA Contract as they relate to a TETRA Contract Project, regardless of the negligence, strict liability or other legal fault of any Sellers Indemnified Party, and such indemnification obligation shall not be subject to any limitations as set forth in Article IX .
(c)      The “Temporary Period” for any particular TETRA Contract shall mean the period beginning on the Closing Date and ending on the earlier of (A) the earlier of the date on which all TETRA Contract Projects under such TETRA Contract are completed and the date on which such TETRA Contract expires, and (B) except as provided below, the date that is ninety (90) days following the Closing Date. The obligations under this Section 2.5(c) with respect to any TETRA Contract shall only apply to any TETRA Contract Project associated with such TETRA Contract. In the event Buyer desires to undertake any new project, or expand the scope of any existing TETRA Contract Project, with a customer that is a party to a TETRA Contract, Buyer must enter into a new Contract with such customer; provided, however , that Buyer shall be permitted to undertake any such new project or expand the scope of any TETRA Contract Project with any such customer during the sixty (60) days immediately following the Closing Date without entering into a new Contract, which new project or expanded scope shall be completed within one hundred twenty (120) days following the Closing Date.
ARTICLE III     

REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as set forth in the Sellers Disclosure Schedule, each of the Sellers, jointly and severally, represents and warrants to Buyer as follows:
Section 3.1      Organization; Authority; Qualification .
(a)      Sellers . Each of the Sellers is duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all necessary corporate or limited liability company power, as applicable, and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. Each Seller’s execution, delivery and performance of this Agreement, the Transaction Documents to which it is a party and the consummation of the transactions

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contemplated hereby have been duly authorized by all requisite corporate or limited liability company action, as applicable, on the part of such Seller. Each of this Agreement and each Transaction Document to which a Seller is a party has been duly and validly executed and delivered by such Seller, and, assuming the due authorization, execution and delivery of this Agreement and each Transaction Document (as applicable) by Buyer, constitutes a valid, legal and binding agreement of each of the Sellers, as applicable, enforceable against each Seller, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the rights of creditors generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(b)      Companies . Each of the Companies is duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all necessary corporate or limited liability company power, as applicable, and authority to own, lease and operate its properties and to carry on its business as now conducted. Each of the Companies is qualified to do business and is in good standing as a foreign company in the jurisdictions listed on Schedule 3.1 . Correct and complete copies of the Governing Documents, minute book and record books, as applicable, of each Company have been made available to Buyer.
(c)      Subsidiaries . With the exception of Epic, which is a wholly owned subsidiary of TETRA Applied, none of the Companies has any Subsidiaries or any direct or indirect equity interest in any Person.
Section 3.2      Consents and Approvals; No Violations . No material filing with or notice to, and no material permit, authorization, registration, consent, license, certificate, order or approval of (collectively, “ Consents ” and individually, a “ Consent ”) any Governmental Entity or any other Person is required on the part of any of the Sellers for or in connection with the execution, delivery and performance by the Sellers of this Agreement or the consummation by the Sellers of the transactions contemplated hereby, except as set forth on Schedule 3.2 . Neither the execution, delivery and performance of this Agreement by the Sellers and the other Transaction Documents to which such Seller is or will be a party, nor the consummation by the Sellers of the transactions contemplated by this Agreement and the other Transaction Documents will (a) contravene, conflict with, or result in a violation or breach of any provision of the respective Governing Documents of any Seller or (b) violate any Law applicable to the Sellers; except as it relates to clause (b) where such contravention, conflict, violation or breach would not have a Material Adverse Effect.
Section 3.3      Financial Information .
(a)      TETRA’s Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 as filed with the Securities and Exchange Commission (“ SEC ”) are available on the EDGAR website maintained by the SEC. Such filings include segment financial information pertaining to the Business as conducted by TETRA Applied and Epic. The segment financial information contained in such reports present fairly, in all material respects, the financial results of operations of the Business as conducted by TETRA Applied and Epic for the periods covered thereby.
(b)      The Companies do not have any Indebtedness except for the Indebtedness of TETRA secured by the Liens described on Schedule 3.3(b) (the “ TETRA Liens ”), each of such Liens to be released at Closing.

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Section 3.4      Material Contracts.
(a)      Schedule 3.4(a) contains a list of the following Contracts to which any of the Companies are bound (together with all Contracts pertaining to Intellectual Property listed on Schedule 3.9(a) , collectively, the “ Material Contracts ”):
(i)      all master service agreements, lease agreements or other forms of agreements pursuant to which the Companies currently provide, or have provided within the last twelve (12) months, products and services to their customers;
(ii)      to the extent not identified under clause (i) above, all Contracts (A) that require, from and after the date of this Agreement, payments by or to any Company of at least $200,000 in the aggregate or (B) that have a base term or require the performance of services (excluding potential renewals) by any of the Companies, for a period extending at least twelve (12) months following the Closing Date (other than contracts cancellable by the Companies without penalty on not more than thirty (30) days’ notice);
(iii)      all Contracts since January 1, 2015 that relate to the sale or disposition of any material assets of the Companies other than in the ordinary course of business;
(iv)      all Contracts relating to Indebtedness (other than trade payables incurred in the ordinary course of business);
(v)      all Contracts under which any Company (A) is a lessee or sublessee of, or holds, uses or operates, any personal property owned by any other Person requiring payments in excess of $100,000 annually, or (B) is a lessor or sublessor of, or permits any other Person to hold, use or operate, any property, whether real or personal or mixed, owned or controlled by the Companies;
(vi)      all vessel charters or leases or other similar Contracts pursuant to which the Companies charter or lease, on a bareboat, demise, time, voyage or other basis, any of the Vessels, and all material operating agreements, ship or technical management agreements, or crew management agreements relating to the Vessels to which any Company is a party;
(vii)      any Contract concerning a joint venture, partnership, teaming agreement, or similar contract or agreement (however named) involving a sharing of profits, losses, costs or Liabilities or for which the Companies use or have a right to use such Contract even though such Company is not a party thereto;
(viii)      all Contracts between or among any Company, on the one hand, and any Seller or any other Affiliate of a Seller, on the other hand;
(ix)      all collective bargaining agreements or Contracts with any labor organization, trade union, work council, or other representative body or association; and
(x)      any Contract (A) for the payment of compensation to any Employee or consultant of any of the Companies that provides for annual payments in excess of $100,000, other than any such Contract that is terminable by the Companies without penalty or severance, or (B) relating to change of control, severance, transaction bonus or other bonus payments arising from the transactions contemplated by this Agreement.

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(b)      Except as set forth on Schedule 3.4(b) , (i) none of the Companies, nor to Sellers’ knowledge any other party to a Material Contract, is in default or breach in any material respect under the terms of any such Material Contract (a default or breach shall not include the failure of any other party to timely pay any amounts due under such Material Contract) and none of the Companies or Sellers has received any written notice of breach, default termination or threatened termination of any Material Contract, (ii) none of the Companies or Sellers has made any written notice or claim of a material breach default, termination or threatened termination of any Material Contract and (iii) all Material Contracts are enforceable against the respective Company and, to the knowledge of the Sellers, the other party thereto in accordance with the terms, except as limited by applicable bankruptcy, insolvency, reorganization or other similar Laws of general application affecting the enforcement of creditors’ rights generally.
Section 3.5      Legal Proceedings; Orders . Except as set forth on Schedule 3.5 , there is no action, litigation, mediation, petition, complaint, suit, arbitration, proceeding (including any worker’s compensation claim or proceeding), hearing or investigation by or before any Governmental Entity or any arbitration or alternative dispute resolution panel (each, a “ Legal Proceeding ”), or any judgment, order, writ, decree, injunction, settlement, stipulation, ruling, award or other determination, whether preliminary or final, by or of any Governmental Entity or any other arbitration or dispute resolution body whose finding, ruling or holding is legally binding or enforceable as a matter of right (each, an “ Order ”), pending against any of the Companies.
Section 3.6      Environmental Matters .
(a)      Except as set forth on Schedule 3.6(a) , (i) to the knowledge of the Sellers, the Companies are in compliance, in all material respects, with all applicable Environmental Laws; and (ii) since December 31, 2016, none of the Companies or the Sellers has received any written communication, citation, notice of non-compliance or areas of concern from any Governmental Entity or any other Person that alleges that any of the Companies is not in compliance with any Environmental Law or Permit applicable to the ownership of the assets of such Company or operation of its Business (including the operation of the Vessels).
(b)      Except as set forth on Schedule 3.6(b) , each of the Companies holds and maintains, in full force and effect, and in all material respects is in compliance with, all material Permits that are necessary or required under applicable Environmental Laws for the conduct of the Business as currently conducted (including the operation of the Vessels). Each such environmental Permit held by the Companies is listed on Schedule 3.6(b) , and, to the knowledge of the Sellers, there are no pending judicial or regulatory proceedings by any Governmental Entity that could reasonably be expected to result in the termination, revocation or adverse modification of any such Permit, except as would not be reasonably expected to have a Material Adverse Effect.
(c)      The Sellers have previously made available to Buyer all material environmental, geological, engineering, workover, operational and maintenance reports, audits and studies and material state and federal environmental compliance correspondence among and between state and federal Governmental Entities relating to the Business (including the operation of the Vessels), the handling of Hazardous Substances, or compliance with Environmental Laws, which are in the possession or control of the Sellers.
(d)      None of the Companies has entered into or agreed to any court decree, order or settlement, nor are any of the Companies subject to any judgment, Order, directive, decree, settlement or fine or other sanction relating to compliance with any Environmental Law.

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(e)      None of the Owned Real Property or Leased Real Property, to the knowledge of the Sellers, is listed on the CERCLA National Priorities List or any equivalent list of sites of environmental concern maintained by any Governmental Entity.
(f)      There are no Legal Proceedings pending, notices thereof that have been received by any Company, or, to the knowledge of the Sellers, any such Legal Proceedings that have been threatened in writing against any of the Companies under any Environmental Law.
(g)      None of the Companies has had a material Release or discharge of any Hazardous Substances on, under, in or from the Vessels, the Owned Real Property or Leased Real Property that is currently subject to any investigation, remediation or monitoring, pursuant to applicable Environmental Laws, and, since January 1, 2013, there have been no Marine Environmental Incidents.
(h)      The representations and warranties included in this Section 3.6 shall constitute the sole and exclusive representations and warranties of the Sellers relating to environmental matters, including any matters arising under Environmental Laws.
Section 3.7      Capitalization; Title to Equity Interests.
(a)      With respect to each Company, Schedule 3.7(a) sets forth (i) the total number of authorized Equity Interests, (ii) the number and class of Equity Interests issued and outstanding, and (iii) the record owner of all the issued and outstanding Equity Interests of such Company. Such Seller owns of record and beneficially all of the Equity Interests set forth opposite such Seller’s name on Schedule 3.7(a) and such Seller has good and marketable title to such Equity Interests, in each case free and clear of any and all Liens, other than (i) the TETRA Liens, which will be released at Closing, and (ii) restrictions on transfer that may be imposed by federal or state securities Laws or the Governing Documents of such Company. The Equity Interests constitute all of the outstanding equity interests in the Companies. The Equity Interests: (i) are duly authorized, validly issued, fully paid (to the extent required under the Governing Documents of the Companies) and nonassessable; (ii) are free and clear of all Liens, other than restrictions on transfer that may be imposed by federal or state securities Laws or the Governing Documents of such Company and the TETRA Liens, which TETRA Liens will be released at Closing; and (iii) other than this Agreement, are not subject to any agreements or understandings among any Persons with respect to the voting or transfer thereof.
(b)      Except as set forth on Schedule 3.7(b) , there are no outstanding options, warrants, rights to subscribe to, purchase rights, preemptive rights, calls or similar rights relating to, or contracts, commitments, understandings or arrangements by which the applicable Seller or the Companies are or may become bound to issue, additional securities or other equity interests of any Company, or rights or other securities convertible into or exchangeable or exercisable for securities or other equity interests in such Company.
Section 3.8      Real Property .
(a)      Owned Real Property. Schedule 3.8(a) sets forth the only real property owned by the Companies (the “ Owned Real Property ”). TETRA Applied has good and indefeasible fee simple title to the Owned Real Property, free and clear of all Liens except Permitted Liens and the TETRA Liens, which TETRA Liens will be released at Closing. The Sellers have made available to Buyer a correct and complete copy of all deeds (as recorded) by which TETRA Applied acquired such parcel of Owned Real Property, and copies of existing title insurance policies and surveys in possession of the Sellers with respect to the Owned Real Property.

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(b)      Leased Real Property . Schedule 3.8(b) sets forth all real property leased by the Companies (the “ Leased Real Property ”) and the leases (“ Leases ”) with respect thereto. The Sellers have made available to Buyer a correct and complete copy of each Lease listed in Schedule 3.8(b) (including all amendments, modifications or subleases in connection therewith). Except as set forth on Schedule 3.8(b) , none of the Leases require the consent of the landlord thereunder to the transactions contemplated by this Agreement or any of the documents executed in connection herewith. With respect to each Lease listed in Schedule 3.8(b) :
(i)      each is in full force and effect and is a valid and binding agreement of the respective Company, as the case may be, and to the knowledge of the Sellers, of each other party thereto;
(ii)      none of the Companies or the Sellers has sent or received written notice of any material breach or default thereunder which remains uncured or unwaived;
(iii)      the tenant under each such Lease holds legal and valid leasehold title thereunder free and clear of all Liens except for Permitted Liens; and
(iv)      except for the TETRA Liens, which are released on Closing, and Permitted Liens, the tenant thereunder has not assigned, sublet, mortgaged, encumbered or granted any other Person possessory or occupancy rights under the respective Lease or its interest thereunder.
Section 3.9      Intellectual Property .
(a)      Schedule 3.9(a) sets forth a list of the material Intellectual Property owned, licensed or used by the Companies. Except as set forth on Schedule 3.9(a) , the Intellectual Property listed on Schedule 3.9(a) constitutes all material licenses and other legally enforceable rights, title and interest held by the Companies to use all patents, copyrights, trademarks, service marks, trade names, brand marks, brand names, logos, intellectual property, domain names, software object and source code as are necessary for the operation of the Business as currently conducted.
(b)      Except as set forth on Schedule 3.9(b) : (i) to the knowledge of the Sellers, all of the IP Assets are valid and subsisting and one or more of the Companies owns and possesses good and valid legal and beneficial title and interest to, or has a valid and enforceable right to use pursuant to a written license agreement, each of the IP Assets together with the goodwill associated therewith, free and clear of all Liens other than Permitted Liens and the TETRA Liens, which TETRA Liens will be released at Closing; (ii) there is no pending or, to the knowledge of the Sellers, threatened action, claim or other Legal Proceeding by a third Person contesting the legality, validity, enforceability, registrability, use or ownership of any IP Asset; (iii) to the knowledge of the Sellers, the Business as currently conducted and the use of the IP Assets are not infringing upon, misappropriating or conflicting with, including in the preparation, distribution, marketing or licensing thereof, and have not infringed upon, misappropriated or conflicted with, the Intellectual Property of any other Person and, to the knowledge of the Sellers, the IP Assets are not being and have not been infringed, misappropriated or conflicted by any third Person.
(c)      Each license, sublicense and other contract covering or relating to any IP Assets that is listed on Schedule 3.9(a) is in full force and effect and is a valid and binding agreement of the respective Companies, as the case may be.

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Section 3.10      Employee Matters .
(a)      Schedule 3.10(a) lists all individuals who are currently employed by the Companies as of the date of this Agreement (including individuals on short-term disability, long-term disability, approved leave of absence, or layoff status) (the “ Employees ”). Such list includes each Employee’s name, title or position, location, employer, hire date, credited service, current rate of hourly wage or salary, compensation paid or payable during 2018, as well as any bonus, commission, or incentive payments paid during 2017 or payable for 2017, any accrued and unused paid time off days, whether the Employee is classified as exempt or non-exempt, any outstanding loans or advances made to them, and each employee compensation or benefit plan in which they participate. In addition, Schedule 3.10(a) also discloses whether each Employee is a full time employee or a part time employee and whether such Employee is currently active at work and, in the case of any such Employee who is not active, the scheduled return to work date for such Employee.
(b)      Schedule 3.10(b) lists all individuals who are currently working as consultants or independent contractors for or on behalf of any of the Sellers, as it relates to the Business, or any of the Companies as of the date of this Agreement, which list includes each individual’s name, current fee rate and amounts paid or payable during 2017 and 2018, and also contains a complete and accurate list of all bonus payments made by any of the Companies to such independent contractors and consultants during 2017 and 2018.
(c)      Except as set forth on Schedule 3.10(c) , neither the Sellers, as it relates to the Business, nor the Companies is a party to or bound by any collective bargaining agreement applicable to any Employees, nor, to the knowledge of the Sellers, is any Employee of the Companies represented by a union, labor organization or other representative body or association or subject to a collective bargaining agreement.
(d)      There is no labor strike or labor dispute, slow down, lockout, picketing, work stoppage, or unresolved material labor union grievance actually pending or, to the knowledge of the Sellers, threatened against or affecting the Companies. There are no unfair labor practice charges or complaints before any Governmental Entity or court pending or, to the knowledge of the Sellers, threatened against any of the Companies or any of the Sellers, as it relates to the Business. Except as set forth on Schedule 3.10(d) , (i) to the knowledge of the Sellers, there has been no charge of discrimination, harassment, retaliation, and/or other wrongdoing filed against or threatened against the Sellers, as it relates to the Business, or the Companies with the Equal Employment Opportunity Commission or similar Governmental Body, nor has any current or Former Employee made a written complaint of discrimination, harassment, retaliation, and/or other wrongdoing during the twelve (12) months preceding the date of this Agreement; (ii) no Legal Proceedings are pending or, to the knowledge of the Sellers, threatened with respect to employment or labor Laws or any employment or other individual Contract, either by private individuals or by Governmental Authorities; (iii) there are no outstanding Orders or settlements to which any of the Sellers, as it relates to the Business, or the Companies is a party or which otherwise bind any of the Sellers, as it relates to the Business, or the Companies with respect to their Employees or Former Employees; (iv) there is no claim with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or, to the knowledge of the Sellers, threatened before any Governmental Entity with respect to any Persons currently employed by any of the Sellers, as it relates to the Business, or the Companies.
(e)      Except as set forth on Schedule 3.10(e) , (i) each Employee is an at-will employee, and (ii) none of the Companies is a party to any employment Contract (other than an at-will employment arrangement) or any consulting or similar Contract for the provision of services to the Companies or any

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severance, deferred compensation, change of control, retention or other similar agreement, plan or arrangement with any Employee.
(f)      The representations and warranties of the Sellers included in this Section 3.10 shall constitute the sole and exclusive representations and warranties of the Sellers relating to employee matters, including any matters arising under any applicable Laws.
Section 3.11      Benefit Plans .
(a)      Schedule 3.11(a) lists all Benefit Plans in effect and maintained, sponsored, contributed to, or required to be contributed to by the Sellers and/or the Companies, under which Employees have accrued material benefits for service as Employees in connection with the Business, true and correct copies of which have been made available to Buyer.
(b)      Except as would not result in a material Liability to Buyer:
(i)      each Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable IRS determination letter issued with respect to such plan or a favorable advisory or opinion letter issued by the IRS to the sponsor of the volume submitter or prototype plan adopted with respect to such Benefit Plan to that effect, and no amendment has been made nor has any event occurred with respect to any such Benefit Plan which would reasonably be expected to cause the loss or denial of such qualification under Section 401(a) of the Code;
(ii)      no Seller, no Subsidiary of a Seller, and no ERISA Affiliate of any Seller or any Company or of any Subsidiary of any Seller or any Company sponsors, maintains, contributes to, has in the past sponsored, maintained or contributed to, or otherwise has any obligation with respect to (A) any plan or arrangement subject to Title IV or Section 302 of ERISA, or Section 412 of the Code, (B) a “multiemployer plan” within the meaning of Section 3(37) of ERISA, or (c) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA);
(iii)      except as set forth on Schedule 3.11(b)(iii) , no Benefit Plan provides health, medical or other welfare benefits after retirement or other termination of employment, other than for continuation coverage required under Section 4980B(f) of the Code and Sections 601 through 608, inclusive, of ERISA or similar state Law (“ COBRA ”);
(iv)      except as set forth on Schedule 3.11(b)(iv) , neither the signing of this Agreement, nor the consummation of the transaction contemplated hereby will accelerate the time of payment or vesting, or trigger any payment or funding, of any compensation or benefits or trigger any other material obligation under any Benefit Plan; and
(v)      each Benefit Plan is operated and administered in all material respects in accordance with its terms and applicable Law, including ERISA and the Code.
(c)      The representations and warranties of the Sellers included in this Section 3.11 shall constitute the sole and exclusive representations and warranties of the Sellers relating to employee benefit matters, including any matters arising under ERISA or other applicable Laws.

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Section 3.12      Taxes .
(a)      Except as set forth on Schedule 3.12 , all material Tax Returns with respect to the Business required to be filed by the Sellers and/or the Companies (taking into account any valid extension) have been filed, and all Taxes due with respect to such Tax Returns have been paid or accrued. There is not currently in force any agreement for any extension of time for the assessment or prepayment of any Tax of or with respect to the Companies other than extensions obtained in the ordinary course of business.
(b)      No Seller is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.
(c)      The representations and warranties of the Sellers included in this Section 3.12 shall constitute the sole and exclusive representations and warranties of the Sellers relating to Tax matters, including any matters arising under any applicable Tax Laws.
Section 3.13      Export Controls . None of the Companies has directly or indirectly taken any action which has caused or would cause the Companies to be in violation of or subject to penalties or sanctions under any applicable Law controlling international transactions and trade in goods, services, technical data, technology or software or imposing trade embargoes or sanctions, including the Arms Export Control Act (50 U.S.C. ch 39), the International Traffic in Arms Regulations, 22 C.F.R. Parts 120 - 130, the Export Administration Act (50 U.S.C. App. §§ 2401- 2420); the Export Administration Regulations (15 C.F.R. Parts 730 – 774); the International Emergency Economic Powers Act (50 U.S.C. §§ 1701 – 1706), the Trading with the Enemy Act; the Foreign Trade Regulations (15. C.F.R. Part 30), United States Customs Laws and regulations, and any similar Law of any other jurisdiction (the “ Export Control Laws ”). None of the Sellers, as it relates to the Business, nor the Companies has filed or been requested to file with any Governmental Entity a directed or voluntary disclosure, a response to an administrative or other subpoena, or other information regarding any violation or alleged violation of, or compliance with the Export Control Laws, and no such disclosures or responses or other filings by the Sellers or Companies are currently pending or in progress.
Section 3.14      Illegal Payments . None of the Companies or any of their respective directors, officers, employees, representatives or agents, has directly or indirectly:
(a)      given or agreed to give any gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other Person to assist in connection with any actual or proposed transaction or made or agreed to make any contribution, or reimbursed any political gift or contribution made by any other Person, to any candidate for federal, state, local or foreign public office, (A) which violates any Laws, including but not limited to, the Foreign Corrupt Practices Act of 1977, as amended, or the Anti-Kickback Act or might subject Buyer to any damages or penalties in any civil, criminal or governmental litigation or Legal Proceeding, or (B) the non-continuation of which has had or may reasonably be likely to have a Material Adverse Effect; or
(b)      established or maintained any fund or asset for any purpose or by which the Companies receive any benefit that has not been recorded in the books and records of the Companies.
Section 3.15      Related Party Transactions . Except as set forth on Schedule 3.15 , no Seller, nor any Related Parties of any of them, nor the knowledge of the Sellers any employee of any Company, has,

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or within the past 12 months has had, any interest in any property (whether real, personal or mixed and whether tangible or intangible) used in or pertaining to the Business. Except as set forth on Schedule 3.15 , no Seller nor any of its Related Parties owns, or within the past 12 months has owned, of record or beneficially, an equity interest or any other financial or profit interest in any Person, excluding any Affiliates of TETRA, including for this purpose, Maritech, that has (a) had business dealings or a financial interest in any transaction with any Company or (b) engaged in competition with any Company.
Section 3.16      Brokers; Finders and Fees . Except for Simmons & Company International, whose fees will be paid by the Sellers, no broker, finder or investment banker is entitled to any brokerage or finder’s fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf the Sellers.
Section 3.17      U.S. Citizenship . Each of the Companies (and any entity in the chain of ownership of the Companies) that own and/or operate any of the Vessels in the U.S. Coastwise Trade is, and has been during any period that it has owned and/or operated such Vessels in the U.S. Coastwise Trade, a U.S. Citizen.
Section 3.18      Maritime Matters .
(a)      Schedule 3.18 sets forth (except as may be noted on such Schedule) a true, correct and complete list of all of the Vessels, including for each Vessel: (i) its name; (ii) its flag state and official number and its International Maritime Organization (IMO) number; (iii) its owner of record; (iv) whether it is owned, leased or chartered, and (v) if it is the subject of a lease or charter, the type of lease or charter and the name of the counterparty. None of the Companies owns, operates, leases or charters any vessels other than the Vessels set forth in Schedule 3.18 . With respect to each Vessel that Schedule 3.18 indicates is owned by any of the Companies, the applicable Company has good and valid title to such Vessel, free and clear of all Liens, other than Permitted Liens and the TETRA Liens, which TETRA Liens will be released at Closing.
(b)      Except as set forth in Schedule 3.18 none of the Companies lease or charter any Vessels on a bareboat or demise basis from or to third parties. Schedule 3.18 lists all of the Vessels that the Companies time charter from or to third parties, which time charters are valid and in full force and effect in all material respects.
(c)      Each of the Vessels that are listed in Schedule 3.18 as being documented under the U.S. flag and owned by any of the Companies (i) was built in the United States, (ii) is eligible for use in the U.S. Coastwise Trade, (iii) is documented as a U.S.-flag vessel and its Certificate of Documentation has a coastwise endorsement and is valid and unexpired, and (iv) since such Vessel has been owned by any Company, as applicable, has never (x) been owned or operated by or sold to any Person, or bareboat or demise or sub-bareboat or demise chartered or other leased on a bareboat or demise basis to any Person, that did not qualify as a U.S. Citizen, (y) been registered under the laws of a foreign country, or (z) been rebuilt foreign, as defined in 46 C.F.R. § 67.177.
(d)      None of the Vessels is financed by U.S. Government financing guaranties issued pursuant to Chapter 537 of Title 46 of the United States Code (or its predecessor). None of the Companies maintains, has maintained or has applied for a Construction Reserve Fund or a Capital Construction Fund pursuant to Chapter 533 or Chapter 535 of Title 46 of the United States Code (or their predecessors), respectively.

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(e)      Each of the applicable Companies maintains valid and unexpired Certificates of Financial Responsibility (Oil Pollution) issued by the U.S. Coast Guard pursuant to the Federal Water Pollution Control Act for its Vessels to the extent that such certificate may be required by applicable Law and such other similar certificates that are valid and unexpired as may be required in the course of the operation of any of the Vessels pursuant to other applicable Law.
(f)      (i) Each of the Vessels owned by any of the Companies is afloat and is otherwise being conveyed on and “as is, where is” basis; and (ii) each Vessel holds all valid and unexpired certificates, licenses and permits from the United States Coast Guard and the American Bureau of Shipping, if applicable, required for the operation of the Vessel in its current trades.
(g)      Each of the Vessels that is documented under the U.S. flag has a valid and unexpired Certificate of Inspection issued by the U.S. Coast Guard, and, each Vessel that is classed is in class, free of all outstanding conditions and recommendations affecting its class of which the Companies have been informed, except for any such conditions or recommendations that, with approval of the American Bureau of Shipping, will be remedied at such Vessel’s next scheduled survey, dry dock, or inspection.
Section 3.19      No Other Representations or Warranties . EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (AS MODIFIED BY THE SELLERS DISCLOSURE SCHEDULE), NEITHER SELLERS NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO ANY SELLER, THE BUSINESS, THE EQUITY INTERESTS, ANY COMPANY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EACH SELLER HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY ANY SELLER, ANY AFFILIATE OF A SELLER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III HEREOF (AS MODIFIED BY THE SELLERS DISCLOSURE SCHEDULE), EACH SELLER (I) EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO THE EQUITY INTERESTS, THE BUSINESS, THE COMPANIES OR THE ASSETS OF THE COMPANIES (INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS) AND (II) HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO BUYER OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE MADE AVAILABLE TO BUYER BY ANY REPRESENTATIVE OF ANY SELLER, ANY COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES). EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (AS MODIFIED BY THE SELLERS DISCLOSURE SCHEDULE), THE ASSETS OF THE COMPANIES ARE BEING ACQUIRED ON AN “AS IS” AND “WHERE IS” BASIS.
ARTICLE IV     

REPRESENTATIONS AND WARRANTIES OF BUYER

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Except as set forth in the Buyer Disclosure Schedule, Buyer represents and warrants to the Sellers as follows:
Section 4.1      Organization; Authority . Buyer is (i) duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all limited liability company power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. Buyer’s execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of Buyer. This Agreement and each of the Transaction Documents (other than this Agreement) has been duly and validly executed and delivered by Buyer and, assuming the due authorization, execution and delivery of this Agreement by the Sellers, constitutes a valid, legal and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the rights of creditors generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 4.2      Consents and Approvals; No Violations . No Consent of any Governmental Entity is required on the part of Buyer for or in connection with the execution, delivery and performance by Buyer of this Agreement or the consummation by Buyer of the transactions contemplated hereby, except as set forth on Schedule 4.2 . Neither the execution, delivery and performance of this Agreement by Buyer and the other Transaction Documents to which Buyer is or will be a party nor the consummation by Buyer of the transactions contemplated by this Agreement and the other Transaction Documents will (a) contravene, conflict with, or result in a violation or breach of any provision of the respective Governing Documents of Buyer, or (b) violate any Law applicable to Buyer.
Section 4.3      Sufficiency of Funds and Solvency . Immediately after giving effect to the transactions contemplated hereby, the Buyer will be able to pay its debts as they become due and will own property which has a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent liabilities). Immediately after giving effect to the transactions contemplated hereby, the Buyer will have adequate capital to carry on the Business. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated hereby with the intent to hinder, delay, or defraud either present or future creditors of any of the Buyer.
Section 4.4      Investor Representations . With respect to the Equity Interests to be purchased by Buyer hereunder:
(a)      Buyer is acquiring such Equity Interests for its own account as principal, for investment purposes only, and not with a view to, or for, resale or distribution thereof, in whole or in part in a manner that would require registration under or violate the registration requirements of any state or federal securities Law. Buyer has no contract, undertaking, agreement or arrangement with any Person to sell, transfer or pledge to such Person or to anyone else the Equity Interests, or any part thereof, and Buyer has no present plans to enter into any such contract, undertaking, agreement or arrangement.
(b)      Buyer is an “accredited investor” as that term is defined under Rule 501 of Regulation D of the Securities Act.

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(c)      Buyer has been given the opportunity to ask questions of, and receive answers from, Sellers and their officers concerning the terms and conditions of the sale of the Equity Interests and other matters pertaining to its investment. Buyer acknowledges that Buyer has been furnished all information that Buyer has requested to the extent that Buyer considers necessary and advisable, and such information is sufficient upon which to base an investment decision. The foregoing shall not in any manner diminish or adversely affect any representation or warranty of the Sellers contained in this Agreement and the Buyer’s rights to indemnification hereunder shall not be affected by any such investigation by the Buyer.
(d)      Buyer understands that, until the sale, transfer or assignment of the Equity Interests has been registered under the Securities Act, the Equity Interests cannot be sold, transferred or assigned except as may be otherwise permitted under the Securities Act and the rules and regulations promulgated thereunder in effect at the time of sale, transfer or assignment, and then only in compliance with all applicable state securities Laws.
(e)      Buyer understands and is fully aware that no federal or state agency has made any finding or determination as to the fairness of an investment in, or made a recommendation or endorsement of, the Equity Interests.
(f)      Buyer acknowledges and understands that Sellers are relying upon, among other things, the representations and warranties of Buyer in this Agreement in concluding that the sale of the Equity Interests hereunder will be exempt from the registration requirements of the Securities Act and the rules and regulations promulgated thereunder.
Section 4.5      Limitation of Representations and Warranties . BUYER HEREBY ACKNOWLEDGES (i) PRIOR RECEIPT OF THE DESCRIPTIVE MEMORANDUM DATED NOVEMBER 2017, (ii) THAT THE DESCRIPTIVE MEMORANDUM CONTAINS PROJECTIONS AND FORWARD LOOKING INFORMATION THAT INHERENTLY ARE UNCERTAIN, THAT ACTUAL RESULTS AND OCCURRENCES MAY BE MATERIALLY DIFFERENT THAN AS SET FORTH IN THE DESCRIPTIVE MEMORANDUM AND THAT EVENTS AND CIRCUMSTANCES BEYOND THE CONTROL OF THE SELLERS WILL AFFECT ACTUAL RESULTS AND OCCURRENCES, AND (iii) EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III OF THIS AGREEMENT, THAT THE SELLERS MAKE NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE CONTENTS OF THE DESCRIPTIVE MEMORANDUM.
Section 4.6      Legal Proceedings . There is no Legal Proceeding pending or, to the knowledge of Buyer, threatened against Buyer or any Affiliate of Buyer that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
Section 4.7      Independent Investigation . Buyer has conducted its own independent investigation, review and analysis of the results of operations, prospects, condition (financial or otherwise) or assets of the Companies, and acknowledges that it and its agents and representatives have been provided access to the personnel, properties, assets, premises, books and records, and other documents and data of the Sellers and the Companies for such purpose. Buyer acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has relied solely upon its own investigation and the express representations and warranties set forth in Article

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III , (b) none of the Sellers nor any other Person has made any representation or warranty as to the Sellers, the Business, the Companies or this Agreement, except as expressly set forth in Article III , and (c) in no event shall Sellers have any Liability to the Buyer with respect to a breach of representation, warranty or covenant under this Agreement to the extent Buyer knew of such breach as of the Closing Date.
Section 4.8      U.S. Citizenship . Buyer is a U.S. Citizen.
Section 4.9      Brokers; Finders and Fees . No broker, finder or investment banker is entitled to any brokerage or finder’s fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf Buyer.
ARTICLE V     

COVENANTS OF THE PARTIES
Section 5.1      Access .
(a)      At and after the Closing Date, Buyer shall and shall cause its Affiliates and each of their respective representatives to (i) afford the Sellers and their representatives access, at reasonable times during normal business hours after first obtaining the consent of Buyer, to the books, records, work papers, account records, properties and personnel of the Companies or otherwise relating to the Business; and (ii) furnish the Sellers and their representatives with such additional financial, operating and other data and information for such purposes as the Sellers may reasonably request including, without limitation, preparation of Tax Returns and other documents and reports required by it to be filed with Governmental Entities or in connection with any action against, or investigation by, any Governmental Entity of, or in connection with any examination of, the Sellers or the Companies with respect to any period prior to the Closing Date including any Tax or other regulatory review or audit. All requests for information made pursuant to this Section 5.1(a) shall be directed to an individual designated by Buyer.
(b)      Unless otherwise consented to in writing by TETRA, Buyer shall not, and shall cause its Affiliates not to, for a period of seven (7) years following the Closing Date, destroy, alter or otherwise dispose of any of the Books and Records without first offering in writing to surrender to the Sellers such Books and Records or any portion thereof which Buyer or its Affiliates may intend to destroy or dispose of.
Section 5.2      Conduct of Business Pending the Closing . Prior to the Closing, except (i) as required by applicable Law or GAAP, (ii) as otherwise expressly contemplated or required by this Agreement or (iii) with the prior written consent of Buyer, the Sellers shall cause the Companies to conduct the Business in the ordinary course of business in all material respects; provided that the Sellers may cause the transfer of the Sellers Retained Assets as contemplated by this Agreement.
Section 5.3      Further Assurances . From time to time, as and when requested by any Party, each of the Parties shall use commercially reasonable efforts to take or cause to be taken all action, to do or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper, or advisable under applicable Laws or otherwise to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby, including the execution and delivery of such instruments, and the taking of such other actions as the other Parties may reasonably require in order to carry out the

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intent of this Agreement. The Sellers shall forward promptly to Buyer, and shall hold in trust for Buyer pending delivery to Buyer, any (a) mail or other correspondence received by the Sellers after the Closing Date that was misdirected or relates exclusively to the Companies, and (b) subject to the provisions of the Transition Services Agreement, monies, checks or instruments received by the Sellers after the Closing Date with respect to accounts receivable of the Companies relating to the period on and following the Closing Date.
Section 5.4      Public Announcement . Neither the Sellers nor Buyer shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other Party or Parties (which approval will not be unreasonably withheld, conditioned or delayed) unless disclosure is otherwise required by applicable Laws or listing requirements (including securities Laws); provided that, to the extent required by applicable Laws, the Party intending to make such release shall use its commercially reasonable efforts consistent with such applicable Laws to consult with the other Parties with respect to the timing and content thereof. Buyer acknowledges that TETRA will disclose this Agreement and the transactions contemplated herein as required by the Exchange Act.
Section 5.5      Intercompany Accounts . On or prior to the Closing Date, all intercompany accounts between or among the Companies and any Seller or any Affiliate of a Seller (including amounts for services provided but not yet billed) shall be settled or otherwise eliminated.
Section 5.6      Transitional Use of Signage and Other Materials Incorporating TETRA Marks . Buyer acknowledges that TETRA or an Affiliate is the sole and exclusive owner of the TETRA Marks, all rights to which and the goodwill pertaining thereto are being retained by TETRA or its Affiliate, as applicable, and that Buyer will have no claim or rights in or to the TETRA Marks, other than the right to use the TETRA Marks during a transition period of twelve (12) months following the Closing Date. Except as set forth in the immediately preceding sentence, neither Buyer nor the Companies will use or permit the use of any TETRA Marks, and within twelve months following the Closing Date, Buyer will remove the TETRA Marks from all vehicles, vessels, barges, equipment, real property, signage, supplies, materials, stationery, brochures, advertising and packaging materials, manuals, electronic means of communication and similar items relating to or used in the Business or owned by the Companies. Buyer agrees to use or cause the use of TETRA Marks in accordance with all material respects with the quality standards established by TETRA or its Affiliate, as applicable, owning the TETRA Marks; it being understood that the goods and services provided in association with the TETRA Marks immediately before the Closing Date are of a quality that is reasonably acceptable to TETRA or its Affiliate and justifies the rights granted in this Section 5.6 . Buyer agrees that it will not contest ownership, validity or enforceability of the TETRA Marks and will not take any actions during the transition period to jeopardize the value of the TETRA Marks. Except as set forth in this Section 5.6 from and after the Closing Date none of Buyer, the Companies, nor any of their respective Affiliates will utilize the TETRA Marks in the operation of the Business.
Section 5.7      Litigation Support . After the Closing, in the event and for so long as any Party actively is prosecuting, contesting or defending any action by a third party in connection any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or

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transaction involving the Business or the Companies, and any of the foregoing require the other Party’s cooperation due to such Party’s ownership of the Business or the Companies at a relevant time, the requested Party shall, and shall cause its Subsidiaries and controlled Affiliates to, cooperate reasonably with the requesting Party and its counsel, at the requesting Party’s expense for any out-of-pocket expenses, in the prosecution, contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be reasonably necessary in connection with the prosecution, contest or defense, subject to appropriate confidentiality measures.
Section 5.8      Labor Matters .
(a)      Buyer shall be solely responsible for complying with the WARN Act and any and all obligations under other applicable Laws requiring notice of plant closings, relocations, mass layoffs, reductions in force or similar actions (and for any failures to so comply), in any case, applicable to any “employment losses” (as that term is defined in the WARN Act), as a result of any action by Buyer and its Affiliates (including the Companies) on or after to the Closing Date. Buyer shall indemnify and hold harmless the Sellers and their Affiliates against any and all Losses arising in connection with any failure to comply with these requirements and such indemnity shall not be subject to the limitations as set forth in Article IX .
(b)      The Parties shall cooperate in connection with any required notification to, or any required consultation with, the employees, employee representatives, work councils, unions, labor boards and relevant Governmental Entities concerning the transactions contemplated by this Agreement with respect to any Employees.
Section 5.9      Financial Assurances . Within 30 days after Closing Date, Buyer shall, at its sole cost and expense, use commercially reasonable efforts to substitute a Financial Assurance obtained by Buyer for all Sellers Financial Assurances identified on Schedule 5.9 . Such substitution shall include the assumption by Buyer of, and the full and complete release of each of the Sellers and their Affiliates under, all Sellers Financial Assurances and any underlying credit support obligations and shall be in form and substance reasonably satisfactory to the Sellers. Sellers shall reasonably cooperate with Buyer in obtaining such substitute Financial Assurances. With respect to any existing Financial Assurance maintained after the Closing, Buyer shall indemnify and hold harmless the Sellers and their Affiliates against, and reimburse the Sellers and their Affiliates for, any and all Losses, Liabilities, expenses, costs or other damages incurred in connection with such existing Financial Assurances, including: (i) costs to maintain such existing Financial Assurances, whether or not any such existing Financial Assurance is accessed, drawn upon or required to be performed; (ii) amounts payable in connection with any existing Financial Assurance to any beneficiary or counterparty to such existing Financial Assurance; and (iii) amounts otherwise incurred as a result of any existing Financial Assurances being accessed, drawn upon or required to be performed.
Section 5.10      Confidentiality . Buyer acknowledges and agrees that the Confidentiality Agreement remains in full force and effect and, in addition, covenants and agrees to keep confidential, in accordance with the provisions of the Confidentiality Agreement, information provided to Buyer pursuant to this Agreement or in connection with the transactions contemplated hereby.

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Section 5.11      Entity Names . Within ninety (90) days following the Closing, Buyer shall amend the constitutional documents of TETRA Applied to change the legal name of such entity to a name that does not include “TETRA,” “TETRA Applied” or any other TETRA Mark.
Section 5.12      Employee Non-Solicitation . For a period of two (2) years following the Closing Date, Buyer shall not, and shall not permit its Affiliates to, directly or indirectly, solicit, recruit, induce or encourage any employee of a TETRA Entity to leave his or her employment with such TETRA Entity, or hire, employ, or otherwise engage any such employee who was an employee of a TETRA Entity during the six (6) months prior to such hiring, employment or other engagement by Buyer or its Affiliates; provided, however , that none of Buyer or its Affiliates shall be prohibited from making general solicitations not specifically targeted at any of the employees of the TETRA Entities or from employing persons who respond to such general solicitations.
ARTICLE VI     

EMPLOYEE MATTERS
Section 6.1      Employee Matters . Buyer shall provide or cause to be provided, for a period of ninety (90) days following the Closing Date, to each of the Companies Employees who remain continuously employed from the Closing with any Company, Buyer or other Subsidiary of Buyer, compensation (including the bonus opportunities but excluding equity-based compensation) and benefits comparable, in the aggregate for each Companies Employee, to that provided immediately prior to the Closing. Sellers shall pay, or cause to be paid, to the Companies Employees the 2017 cash bonuses in accordance with the terms and provisions of TETRA’s cash incentive compensation plan and procedures.
Section 6.2      Welfare Benefits Plans .
(a)      Upon termination of the welfare benefit services provided under the Transition Services Agreement, Buyer shall permit each Employee to enroll in Welfare Plans maintained by Buyer or its Affiliates that provide benefits substantially consistent with those provided by Sellers and the Companies prior to the Closing Date.
(b)      With respect to the coverage of the Employees and their eligible beneficiaries and covered dependents under the Welfare Plans provided by Buyer or its Affiliates, (i) each such Employee’s credited service with the Sellers, the Companies and their Affiliates shall be credited against any waiting period applicable to eligibility for enrollment of new employees under the Welfare Plans; and (ii) limitations on benefits due to pre-existing conditions shall be waived (or, if such a waiver is not otherwise required by applicable Laws, Buyer shall use commercially reasonable efforts to have them waived), to the extent waived under the corresponding Benefit Plan of the Sellers and their Affiliates, for any Employee enrolled in any Welfare Plan maintained by the Sellers and their Affiliates as of the Effective Time, and for their eligible beneficiaries and covered dependents.
(c)      Subject to the provisions of the Transition Services Agreement and Co-Employer Agreement, Buyer shall be responsible for providing the notices and making available COBRA continuation coverage for all Employees and their respective covered dependents whose qualifying events (as defined in Code Section 4980B) occur after the Closing Date. The Sellers shall continue to be responsible for providing

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the notices and making available COBRA continuation coverage, for all of the Former Employees and their respective covered dependents whose qualifying events (as defined in Code Section 4980B) occur on or prior to the Closing Date.
(d)      Notwithstanding anything in this Agreement to the contrary, if any Employee has become disabled (within the meaning of the applicable Welfare Plan maintained by the Sellers or their Affiliates that provides short-term or long-term disability benefits) prior to the Closing Date, the Sellers and/or their Affiliates will retain liability for the provision of disability benefits payable to such Employee under the Sellers’ Welfare Plans, if any, with respect to such disability. From and after the Closing Date, any right to reemployment for any Employee who is on short-term or long-term disability as of immediately prior to the Closing Date shall be the obligation of Buyer and its Affiliates (including the Companies) and not of the Sellers and their Affiliates, so long as such reemployment occurs within the longer of (i) 180 days of the Closing Date and (ii) any statutorily prescribed period during which such Employee is entitled to reemployment.
(e)      Buyer shall assume and honor all unused paid time off held by the Employees as of the Closing Date.
Section 6.3      Miscellaneous Employee Issues . No provision of this Agreement shall create any third party beneficiary or other rights in any employee (including any beneficiary or dependent thereof) or any other persons in respect of continued employment with any of the Sellers, Buyer or any of their respective Affiliates, and no provision of this Agreement shall create any such rights in any such persons with respect to any benefits that may be provided, directly or indirectly, under any Benefit Plan, policy or arrangement which may be established or maintained by the Sellers or Buyer or preclude any of the Sellers or Buyer from terminating or amending any such plan, policy or arrangement in accordance with its terms.
ARTICLE VII     

TAX MATTERS
Section 7.1      Adjustment to Purchase Price . Any payment by Buyer, on the one hand, or the Sellers, on the other hand, pursuant to Article IX will be treated as an adjustment to the Purchase Price for all Tax purposes.
Section 7.2      Transfer Taxes . Any Transfer Taxes arising from the sale of the Equity Interests shall be borne by the Buyer. Buyer agrees to file or cause to be filed in a timely manner all necessary documents (including, but not limited to, all Tax Returns) with respect to all such amounts. The Parties agree that the transaction qualifies as an occasional sale (or similar exemption) under applicable state Law and agree to file all Tax Returns consistent with such position. The Parties also agree to timely provide any certifications necessary in connection with such position. The Parties further agree to cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.
Section 7.3      Tax Treatment of Purchase and Sale of TAT Interests. For federal income Tax purposes, and other applicable Tax purposes, Buyer and Seller agree to treat the purchase and sale of the TAT Interests as the purchase and sale of the assets of TETRA Applied.

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Section 7.4      336(e) Election.
(a)      The Parties understand and agree that the acquisition of the TSB Shares will be treated as an asset sale for federal income Tax purposes pursuant to Code Section 336(e). Accordingly, the Company shall make a timely election under Code Section 336(e) (and any corresponding election under state, local and foreign tax law) with respect to the purchase and sale of the TSB Shares (collectively, the “ 336(e) Election ”). TETRA will include any income, gain, loss, deduction, or other tax item resulting from the 336(e) Election on its on its consolidated federal income Tax Return to the extent required by applicable Law.
(b)      The Parties agree that this Agreement may constitute the agreement described in Treasury Regulation 1.336-2(h)(3)(i). TETRA will timely furnish to the Buyer a copy of the election statement described in Treasury Regulation 1.336-2(h)(3)(iii) (the “ Section 336(e) Election Statement ”), and TETRA Applied will file such Section 336(e) Election Statement with its Tax Return for the taxable year that includes the Closing. Buyer shall deliver to TETRA all information reasonably requested by TETRA in connection with the preparation of the Section 336(e) Election Statement.
(c)      In accordance with the 336(e) Election, Buyer and TETRA shall agree on the allocation of the Tax Consideration attributable to TETRA Applied among the assets of TETRA Applied which shall be made, adjusted, and amended, in accordance with Code Section 336(e), the Treasury Regulations promulgated thereunder, and Section 2.4 (the “ Section 336(e) Purchase Price Allocation ”).
(d)      Each of the Parties agrees to (i) prepare and timely file all applicable income Tax Returns in a manner consistent with the Section 336(e) Purchase Price Allocation as finalized, (ii) file Form 8883 or any successor form(s) in accordance therewith, and (iii) otherwise act in accordance with the Section 336(e) Purchase Price Allocation, unless otherwise required by applicable Law, (iv) promptly inform the other Parties in writing of any challenge by any Taxing Authority related to the 336(e) Election and to consult and keep one another informed with respect to the status of any such challenge, provided, however, that no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any tax audit, claim or similar proceedings in connection with such 336(e) Purchase Price Allocation.
Section 7.5      Tax Covenants
(a)      For purposes of determining whether and to what extent a Liability for Taxes for a Straddle Period constitutes Companies Taxes, the portion of any Tax that is allocable will be determined as though the taxable year of each Company terminated at the close of business on the Closing Date; provided, however, that with respect to Property Taxes relating to the assets of the Companies, the Buyer shall be responsible for all 2018 Property Taxes.
(b)      %3. TETRA shall timely file all Tax Returns of the Companies due on or before the Closing Date or that otherwise relate solely to Tax periods ending on or before the Closing Date and that are due after the Closing Date and Sellers shall timely pay any Taxes shown as due and owing on such Tax Returns. TETRA shall deliver to Buyer for Buyer’s review and comment a copy of each such Tax Return prior to the due date thereof (taking into account any extensions). TETRA will reasonably consider all comments received from Buyer with respect to such Tax Returns.
(i)      Buyer shall prepare in a manner consistent with past practice all Tax Returns of the Companies for a Straddle Period that are required to be filed after the Closing Date. Buyer shall deliver to TETRA for TETRA’s review and comment a copy of each such Tax Return at least thirty (30) days

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prior to the due date thereof (taking into account any extensions), Buyer will (A) incorporate all reasonable comments from TETRA with respect to the portion of the Straddle Period that is on or before the Closing Date, and (B) incorporate all reasonable comments from TETRA with respect to the portion of the Straddle Period that is on or after the Closing Date, unless Buyer disputes any such comments. Buyer and TETRA will promptly attempt to resolve any disputes with respect to any comments from TETRA; provided , that if they are unable to do so within five (5) days prior to the due date of such Tax Returns, the filings will be made as proposed by TETRA with respect to a pre-Closing period comment and as proposed by Buyer with respect to a post-Closing period comment, and such disputed items will be further resolved through amendments to the Tax Returns. Buyer shall timely file all such Tax Returns and shall timely pay Taxes shown as due and owing thereon.
(ii)      Buyer shall promptly, and in no event later than fifteen (15) days, reimburse Sellers for any Taxes (other than Companies Taxes) paid by Sellers pursuant to this Section 7.5(b) . Sellers shall promptly, and in no event later than fifteen (15) days, reimburse Buyer for any Companies Taxes paid by Buyer pursuant to this Section 7.5(b) .
(c)      Buyer, on the one hand, and Sellers, on the other hand, shall promptly notify each other upon receipt by such Party of written notice of any inquiries, claims, assessments, audits or similar events with respect to Taxes relating to a Pre-Closing Tax Period (any such inquiry, claim, assessment, audit or similar event, a “ Tax Matter ”). Any failure to so notify the other Party of any Tax Matter shall not relieve such other Party of any liability with respect to such Tax Matters except to the extent such Party was actually and materially prejudiced as a result thereof. TETRA shall have sole control of the conduct of all Tax Matters relating exclusively to a Tax period ending on or before the Closing Date; provided, however , that TETRA shall keep Buyer reasonably informed of the progress of any such Tax Matter.
(d)      In the case of a Tax Matter relating exclusively to a Straddle Period, Sellers and Buyer shall jointly control all proceedings taken in connection with any such Tax Matter including any settlement or compromise thereof; provided, however , that neither Sellers on one hand nor Buyer on the other hand shall effect any such settlement or compromise without obtaining the other's prior written consent thereto, which shall not be unreasonably conditioned, withheld or delayed. Buyer shall have sole control of the conduct of all Tax Matters that do not relate to a Pre-Closing Tax Period or Straddle Period, including any settlement or compromise thereof.
(e)      Sellers shall be entitled to the amount of any refund or credit of Taxes of the Companies with respect to a Pre-Closing Tax Period (to the extent such Taxes were paid by the Companies prior to the Closing), which refund or credit is actually recognized by Buyer or its Affiliates (including the Companies) within one year after the Closing Date, except to the extent such refund or credit arises as the result of a carryback of a loss or other tax benefit from a Tax period (or portion thereof) beginning after the Closing Date. Buyer shall pay, or cause to be paid, to Sellers any amount to which Seller is entitled pursuant to the prior sentence, less reasonable out-of-pocket costs incurred in obtaining such refund or credit, within five (5) Business Days of the receipt or recognition of the applicable refund or credit by Buyer or its Affiliates. To the extent requested by Sellers, Buyer will reasonably cooperate with Sellers in obtaining such refund or credit, including through the filing of amended Tax Returns for periods ending before or on the Closing Date or refund claims.
(f)      The Parties agree to furnish to each other, upon request, as promptly as practicable, such information and assistance relating to the Companies as is reasonably necessary for the filing of all Tax Returns, and making of any election related to Taxes, the preparation for any audit by any Tax Authority and the prosecution or defense of any action, suit or proceeding related to Taxes involving the Company, and

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each shall execute and deliver such documents as are reasonably necessary to carry out the intent of this Section 7.5 . The Party requesting such information and assistance shall reimburse the other Party for all reasonable expenses incurred in connection with providing such information and assistance.
ARTICLE VIII     

CONDITIONS TO CLOSING; TERMINATION
Section 8.1      Conditions Precedent to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Buyer in whole or in part to the extent permitted by applicable Law):
(a) (i) the representations and warranties of the Sellers set forth in Section 3.1 (Organization; Authority; Qualification) and Section 3.7 (Capitalization; Title to Equity Interests) shall be true and correct in all respects, (ii) the representations and warranties of Sellers set forth in this Agreement (other than Section 3.1 and Section 3.7 ) that are qualified by materiality (whether by reference to the terms “material” or “Material Adverse Effect,” any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of Sellers that are not so qualified by materiality (other than Section 3.1 and Section 3.7 ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(b) Sellers shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Sellers prior to the Closing Date;
(c) Sellers shall have obtained a consent to the transactions contemplated by this Agreement and a release of the TETRA Liens under TETRA’s Credit Agreement dated of June 27, 2006, as amended, and related security documents from the lenders party thereto;
(d) Sellers shall have obtained a consent to the transactions contemplated by this Agreement and a release of the TETRA Liens under TETRA’s Amended and Restated Note Purchase Agreement dated as of July 1, 2016, as amended, with GSO TETRA Holdings, LP, and related security documents; and
(e) the transactions contemplated by the Maritech APA and the MIPSA shall have been consummated.
Section 8.2      Conditions Precedent to Obligations of Sellers. The obligation of each Seller to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Sellers in whole or in part to the extent permitted by applicable Law):

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(a) (i) the representations and warranties of Buyer set forth in Section 4.1 (Organization; Authority) shall be true and correct in all respects, (ii) the representations and warranties of Buyer set forth in this Agreement (other than Section 4.1 ) that are qualified by materiality (whether by reference to the terms “material” or “Material Adverse Effect,” any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of Buyer that are not so qualified by materiality (other than Section 4.1 ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(b) Buyer shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Buyer prior to the Closing Date; and
(c) the transactions contemplated by the Maritech APA and the MIPSA shall have been consummated.
Section 8.3      Frustration of Closing Conditions. Neither Sellers nor Buyer may rely on the failure of any condition set forth in Section 8.1 or Section 8.2 , as the case may be, if such failure was caused by such Party’s failure to comply with any provision of this Agreement.
Section 8.4      Termination of Agreement. This Agreement may be terminated prior to the Closing as follows:
(a) At the election of Sellers or Buyer on or after March 30, 2018 (the “ Termination Date ”), if the Closing shall not have occurred by the close of business on such date; provided, however , that the terminating Party is not in material default of any of its obligations hereunder;
(b) by mutual written consent of Sellers and Buyer; or
(c) by Sellers or Buyer if there shall be in effect a final nonappealable Order of a Governmental Entity of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.
Section 8.5      Procedure Upon Termination. In the event of termination and abandonment of the transactions contemplated hereby by Buyer or Sellers, or both, pursuant to Section 8.4 , written notice thereof shall forthwith be given to the other Party, and this Agreement shall terminate, and the purchase of the Equity Interests hereunder shall be abandoned, without further action by any Party.
Section 8.6      Effect of Termination.
(a) In the event that this Agreement is terminated in accordance with Section 8.4 , then each of the Parties shall be relieved of their respective duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Buyer or Sellers; provided , that (i) no such termination shall relieve any Party from liability for any breach of this Agreement and (ii)

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the obligations of the Parties set forth in Article X hereof shall survive any such termination and shall be enforceable hereunder.
(b) Nothing in this Section 8.6 shall relieve Buyer or Sellers of any liability for a breach of this Agreement prior to the date of termination and the non‑breaching Party’s right to pursue all legal and equitable remedies will survive such termination. The damages recoverable by the non‑breaching Party shall include all attorneys’ fees reasonably incurred by such Party in connection with the transactions contemplated hereby. Nothing in this Section 8.6 shall be deemed to limit the rights of the Parties contained in Section 10.10 .
ARTICLE IX     

SURVIVAL AND INDEMNIFICATION
Section 9.1      Assumption and Indemnification by Buyer. From and after the Closing, Buyer shall assume and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid or discharged) all duties, obligations and liabilities (including with respect to Taxes as set forth in Article IX ) of the Companies or arising under the Companies’ Governing Documents or relating to the subject matter thereof, or otherwise under any theory of Law, arising on or after the Closing Date (the “ Assumed Obligations ”).
Section 9.2      Survival Periods . All representations and warranties other than Section 3.7 contained in this Agreement or in any Schedule to this Agreement, or in any certificate, document or other instrument delivered in connection with this Agreement, and the right to commence any claim with respect thereto, shall terminate and cease to be of further force and effect as of the date which is eighteen (18) months following the Closing Date. The representations and warranties set forth in Section 3.7 shall survive indefinitely. Those covenants that contemplate or may involve actions to be taken or obligations in effect after the Closing shall survive in accordance with their terms (the “ Surviving Covenants ”). Notwithstanding the foregoing, any covenant, agreement, representation, warranty or other matter in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to this Section 9.2 , if notice of the inaccuracy or breach thereof or other matter giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.
Section 9.3      Indemnification by the Sellers . Subject to the terms and conditions of this Article IX , including the limitations set forth in Section 9.2 and Section 9.6 , from and after the Closing Date, each of the Sellers shall jointly and severally indemnify and hold harmless Buyer and its Affiliates and each of their respective directors, officers, employees, and agents (collectively, the “ Buyer Indemnified Parties ”) from and against any and all Losses resulting from or arising out of:
(a)      any breach or inaccuracy of any representation or warranty of the Sellers contained in Article III ;
(b)      any breach of any covenant contained in this Agreement to be performed by the Sellers;

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(c)      the Legal Proceedings described on Schedule 3.5 ; or
(d)      the Sellers Retained Liabilities.
Section 9.4      Indemnification by Buyer . Subject to the terms and conditions of this Article IX , including the limitation set forth in Section 9.2 and Section 9.6 , from and after the Closing, Buyer shall indemnify, defend and hold harmless the Sellers and their Affiliates and each of their respective directors, officers, employees, and agents (collectively, the “ Sellers Indemnified Parties ”) from and against any and all Losses resulting from or arising out of:
(a)      any breach or inaccuracy of any representation or warranty of Buyer contained in Article IV ;
(b)      any breach of any covenant contained in this Agreement to be performed by Buyer; or
(c)      the Assumed Obligations.
Section 9.5      Indemnification Procedures . The obligations of the Sellers to indemnify the Buyer Indemnified Parties under Section 9.3 with respect to Losses incurred by Buyer, and the obligations of Buyer to indemnify the Sellers Indemnified Parties under Section 9.4 with respect to Losses incurred by the Sellers, in either case arising out of or resulting from the assertion of liability or any Legal Proceeding by third parties who are not Affiliated with a Party to this Agreement (each, as the case may be, a “ Third-Party Claim ”), will be subject to the terms and conditions of the following clauses (a) through (e):
(a)      A party claiming indemnification under this Agreement (an “ Indemnified Party ”) shall promptly after receiving written notice of any Third-Party Claim, but in no event later than twenty (20) days thereafter, transmit to the party or parties from whom indemnification is sought under this Agreement (the “ Indemnifying Party ”) a written notice of the Third-Party Claim (a “ Claim Notice ”) describing in reasonable detail the nature of the Third-Party Claim, attaching a copy of all papers served to such Indemnified Party with respect to such Third-Party Claim (if any), setting forth a reasonable estimate of the amount of Losses attributable to the Third-Party Claim to the extent feasible (which estimate shall not be conclusive of the final amount of Losses arising from or relating to such Third-Party Claim), and describing in reasonable detail the basis of the Indemnified Party’s request for indemnification under this Agreement. Any failure or delay to provide such Claim Notice within such specified time period shall not release or relieve the Indemnifying Party from its liability under this Article IX or affect the right of an Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) the Indemnifying Party is prejudiced by such failure or delay.
(b)      Within twenty (20) days after receipt of any Claim Notice (the “ Election Period ”), the Indemnifying Party shall notify the Indemnified Party (i) whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article IX with respect to such Third-Party Claim and (ii) whether the Indemnifying Party desires, at its sole cost and expense and in accordance with Section 9.5(c) , to defend the Indemnified Party against such Third-Party Claim. If the Indemnifying Party does not notify the Indemnified Party within such Election Period that the Indemnifying Party disputes its potential liability with respect to such Third-Party Claim, any liability with respect to such Third-Party Claim shall be deemed a disputed liability of the Indemnifying Party hereunder.

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(c)      Subject to Section 9.5(d) , if the Indemnifying Party notifies the Indemnified Party within the Election Period that the Indemnifying Party elects to assume the defense of such Third-Party Claim, then the Indemnifying Party shall have the right to defend, at its sole cost and expense, such Third-Party Claim by all appropriate proceedings with counsel of its choosing (but reasonably satisfactory to the Indemnified Party); provided , that that the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense. The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however , that the Indemnifying Party shall obtain the prior written consent of the Indemnified Party before entering into any compromise or settlement of such Third-Party Claim, which consent shall not be unreasonably withheld; provided further, that no such consent shall be required for any such compromise or settlement that: (A) is exclusively monetary and will be paid in full by the Indemnifying Party (rather than the Indemnified Party); (B) does not contain an admission of liability on the part of any Indemnified Party; and (C) unconditionally and fully releases the Indemnified Party with respect to such Third Party Claim. If reasonably requested by the Indemnifying Party, the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in contesting any Third-Party Claim that the Indemnifying Party elects to contest in good faith pursuant to this Section 9.5(c) , including by providing the Indemnifying Party with reasonable access during normal business hours of the Indemnified Party to books, records and personnel of the Indemnified Party (but only to the extent relevant to such Third-Party Claim), and in making any related counterclaim against the Person asserting the Third-Party Claim or any cross-complaint against any Person. Except as otherwise provided herein, the Indemnified Party may participate in, but not control, any defense or settlement of any Third-Party Claim controlled by the Indemnifying Party pursuant to this Section 9.5(c) , and to retain counsel of the Indemnified Party’s own choice in connection with such participation, and the Indemnified Party shall bear its own costs and expenses with respect to such participation.
(d)      If within the Election Period the Indemnifying Party has delivered a written notice to the Indemnified Party to the effect that the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article IX with respect to such Third-Party Claim, or by the Indemnifying Party’s failure to respond, the Indemnifying Party is deemed to dispute its potential liability, and if such dispute is finally and conclusively resolved by a court of competent jurisdiction in favor of the Indemnified Party, the Indemnifying Party shall be required to bear the costs and expenses of the Indemnified Party’s defense of such Third-Party Claim pursuant to this Section 9.5(d) .
(e)      The non-controlling party in the defense of a Third-Party Claim shall have the right to consult with the party controlling such defense, and the controlling party shall facilitate such consultation, with respect to the conduct, status, developments and results of the defense of such Third-Party Claim and the controlling party’s strategy for addressing the matters that are the basis of such Third-Party Claim.
(f)      In the event any Indemnified Party should have a claim for indemnification hereunder against any Indemnifying Party that does not involve a Third-Party Claim (an “ Indemnity Claim ”), the Indemnified Party shall promptly transmit to the Indemnifying Party a written notice of such Indemnity Claim (an “ Indemnity Notice ”) describing in reasonable detail the nature of the Indemnity Claim, and setting forth a reasonable estimate of the amount of Losses attributable to such Indemnity Claim to the extent feasible (which estimate shall not be conclusive of the final amount of Losses arising from or relating to such Indemnity Claim) and the basis of the Indemnified Party’s request for indemnification under this Agreement. Any failure or delay to provide such Indemnity Notice shall not release or relieve the Indemnifying Party from its liability under this Article IX or affect the right of an Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) the Indemnifying Party is actually prejudiced by such failure or delay.

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(g)      Within twenty (20) days after receipt of any Indemnity Notice, the Indemnifying Party shall notify the Indemnified Party whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article IX with respect to such Indemnity Claim. If the Indemnifying Party does not notify the Indemnified Party within twenty (20) days from its receipt of the Indemnity Notice that the Indemnifying Party disputes such Indemnity Claim, any liability with respect to such Indemnity Claim shall be deemed a disputed liability of the Indemnifying Party hereunder.
(h)      With respect to Sellers’ obligation to indemnify the Sellers Indemnified Parties pursuant to Section 9.3(c) , Sellers shall use commercially reasonable efforts to continue using counsel currently handling such Legal Proceedings and Buyer hereby consents to Sellers’ use of such counsel.
Section 9.6      Limitations.
(a)      No indemnity shall be payable to the Buyer Indemnified Parties under Section 9.3(a) with respect to any claim resulting from any breach or inaccuracy of any representation or warranty, unless and until the aggregate of all Losses related thereto due from the Sellers exceeds $500,000 (the “ Deductible ”), in which event all Losses so due in excess of the Deductible shall be paid in the aggregate by the Sellers; provided , that the aggregate amount payable by the Sellers for all Losses arising under Section 9.3(a) with respect to any claim resulting from any breach or inaccuracy of any representation or warranty shall not exceed $5,000,000 (the “ Cap ”).
(b)      No indemnity shall be payable to the Sellers Indemnified Parties under Section 9.4(a) with respect to any claim resulting from any breach or inaccuracy of any representation or warranty, unless and until the aggregate of all Losses due from Buyer exceeds the Deductible, in which event all Losses so due in excess of the Deductible shall be paid in full by Buyer; provided , that the aggregate amount payable by Buyer for all Losses arising under Section 9.4(a) of this Agreement shall not exceed the Cap.
(c)      Notwithstanding anything to the contrary contained in this Agreement, neither the Deductible nor the Cap shall apply to Losses arising out of (i) Taxes for which either Party is liable pursuant to this Article IX , (ii) any Indebtedness of the Companies existing prior to the Closing, (iii) the matters described in Section 9.3(b) , Section 9.3(c) or Section 9.3(d) , (iv) the matters described in Section 9.4(b) or Section 9.4(c) , (v) claims for any breach of any representation or warranty in Section 3.7 , or (vi) actual fraud or intentional misrepresentation.
Section 9.7      Mitigation . Each Indemnified Party shall, and is obligated to, take all reasonable steps to mitigate all indemnifiable Losses upon and after becoming aware of any event which could reasonably be expected to give rise to any Losses hereunder.
Section 9.8      No Duplication . Any Losses giving rise to liability for indemnification hereunder shall be determined without duplication of recovery by reason of the same set of facts giving rise to such Losses constituting a breach of more than one representation, warranty, covenant or agreement. For purposes of this Agreement, Losses shall be calculated after giving effect to any amounts actually recovered from third parties, including amounts actually recovered under insurance policies with respect to such Losses, net of any costs to recover such amounts, including any deductibles, co-payments or other reasonable and documented costs and expenses (including attorneys’ fees and other costs of collection) resulting from the related claims under applicable insurance policies. Any Indemnified Party having a claim under these indemnification provisions shall make a good-faith effort to recover all losses, costs, damages and expenses

43




from insurers of such Indemnified Party under applicable insurance policies so as to reduce the amount of any Losses hereunder; provided , that actual recovery of any insurance shall not be a condition to the Indemnifying Party’s obligation to make indemnification payments to the Indemnified Party in accordance with the terms of this Agreement. If the Indemnifying Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for a Loss, after an indemnification payment by the Indemnifying Party has been made for such Loss, then the Indemnified Party shall promptly reimburse the Indemnifying Party for such indemnification payment up to the amount so received or realized by the Indemnified Party, net of any costs to recover such amounts, including any deductibles, co-payments or other reasonable and documented costs and expenses (including attorneys’ fees and other costs of collection) resulting from the related claims under applicable insurance policies.
Section 9.9      Limitation on Damages . NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL, SPECULATIVE OR INDIRECT DAMAGES, ANY LOSS OF FUTURE REVENUE, INCOME OR LOST PROFITS, DIMINUTION IN VALUE, DAMAGE TO REPUTATION OR LOSS OF GOODWILL, WHETHER BASED IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE AND NO “MULTIPLE OF PROFITS” OR “MULTIPLE OF CASH FLOW” OR SIMILAR METHODOLOGY SHALL BE USED IN CALCULATING THE AMOUNT OF ANY DAMAGES; PROVIDED, HOWEVER, THAT THIS SECTION 9.9 SHALL NOT LIMIT A PARTY’S RIGHT TO RECOVER ANY SUCH DAMAGES TO THE EXTENT THAT SUCH PARTY IS REQUIRED TO PAY SUCH DAMAGES TO A THIRD PARTY IN CONNECTION WITH A MATTER FOR WHICH SUCH PARTY IS OTHERWISE ENTITLED TO INDEMNIFICATION PURSUANT TO THIS ARTICLE IX .
Section 9.10      Exclusive Remedies . AS BETWEEN THE BUYER INDEMNIFIED PARTIES AND THE SELLERS, ON THE ONE HAND, AND THE SELLERS INDEMNIFIED PARTIES AND BUYER, ON THE OTHER HAND, AFTER CLOSING, OTHER THAN AS SET FORTH IN SECTION 10.10 , THE PROVISIONS SET FORTH IN THIS ARTICLE IX AND ARTICLE VII SHALL BE THE SOLE AND EXCLUSIVE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH RESPECT TO ANY CLAIM FOR, RELATED TO OR ARISING FROM ANY BREACH OF OR NON-COMPLIANCE WITH THIS AGREEMENT AND ANY CLAIM RELATED TO OR ARISING FROM THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE X     

MISCELLANEOUS PROVISIONS
Section 10.1      Counterparts . This Agreement may be executed in a number of identical counterparts, each of which for all purposes is to be deemed an original, and all of which constitute collectively, one instrument. It is not necessary that each Party hereto execute the same counterpart so long as identical counterparts are executed by each such Party hereto. This Agreement may be validly executed and delivered by facsimile or other electronic transmission.

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Section 10.2      Governing Law; Jurisdiction and Forum; Waiver of Jury Trial .
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION.
EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY TEXAS STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION. THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT FINAL AND UNAPPEALABLE JUDGMENT AGAINST ANY OF THEM IN ANY ACTION CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT, A CERTIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH JUDGMENT.
EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR INSTRUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN THIS SECTION 10.2 .
Section 10.3      Entire Agreement . This Agreement, the Maritech APA, the MIPSA and the Confidentiality Agreement, as well as all documents and instruments required to be delivered hereunder and thereunder, contain the entire understanding between the Parties with respect to the subject matter hereof and thereof and collectively supersede all prior written and oral agreements, understandings, negotiations, and discussions among the Parties with respect to such subject matter.
Section 10.4      Expenses . Except as specifically set forth in this Agreement, whether the transactions contemplated by this Agreement are consummated or not, all legal and other costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the Party incurring such costs and expenses unless expressly otherwise contemplated in this Agreement.
Section 10.5      Notices . All notices and other communications to be given to any Party hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, and shall be directed to the address set forth below (or at such other address as such party shall designate by like notice):

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(a)      if to either of the Sellers, to:
TETRA Technologies, Inc.
24955 Interstate 45 North
The Woodlands, TX 77380
Attention: President

with a copy to:

TETRA Technologies, Inc.
24955 Interstate 45 North
The Woodlands, TX 77380
Attention: General Counsel

with a copy, which shall not constitute notice, to:

Haynes and Boone, LLP
1221 McKinney Street, Suite 2100
Houston, TX 77010
Attention: William C. McDonald

(b)      if to Buyer, to:
Epic Offshore Specialty, LLC
192 Summerfield Court
Roanoke, Virginia 24019
Attention: Thomas M. Clarke

with a copy, which shall not constitute notice, to:

KEWA Financial Inc.
150 York Street, Suite 410
Toronto, Ontario M5H 3S5
Canada
Attention: David Wiley, Chief Executive Officer

Section 10.6      Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided , however , neither Party shall have the right to assign this Agreement without the prior written consent of the other Parties. Any attempted assignment in violation of this Section 10.6 shall be void.
Section 10.7      Third-Party Beneficiaries . This Agreement is not intended to confer upon any Person not a Party hereto any rights or remedies hereunder except as expressly provided in Article IX , and no Person other than the Parties hereto is entitled to rely on any representation, covenant, or agreement contained herein.
Section 10.8      Amendments and Waivers . This Agreement may not be modified or amended except by an instrument or instruments in writing signed by each of the Parties. Any Party may, only by an

46




instrument in writing, waive compliance by the other Parties with any term or provision of this Agreement on the part of such other Parties to be performed or complied with. The waiver by any Party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach.
Section 10.9      Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to affect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.
Section 10.10      Specific Performance; Time of Essence . Each Party acknowledges and agrees that if any of the provisions of this Agreement were not performed in accordance with their specific terms, it would cause irreparable damage to the other Parties hereto for which no adequate remedy at Law would exist. Therefore, the obligations of each Party under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith, including to prevent breaches of this Agreement, and this right shall include the right of the Parties to cause the transactions contemplated hereby to be consummated in each case without posting a bond or undertaking. Each Party hereto waives any defenses in any action for specific performance, including that a remedy at Law would be adequate. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise. The Parties agreement that time is of the essence in this Agreement.
Section 10.11      Waiver of Conflicts Regarding Representation . Recognizing that Haynes and Boone LLP (“ HB ”) has acted as legal counsel to Sellers, Companies and certain of their Affiliates prior to the Closing, and that HB may act as legal counsel to Sellers and certain of its Affiliates after the Closing, the Buyer, on behalf of itself and the Companies, hereby expressly waive any current or future conflicts that may arise in connection with HB representing Sellers or any of its Affiliates after the Closing with respect to the transactions contemplated by this Agreement.
Section 10.12      Attorney-Client Privilege . Each of the Parties also agrees that Sellers have a reasonable expectation of privacy and privilege with respect to their communications (in all forms) with HB prior to the Closing to the extent such communications concern this Agreement, the Maritech APA, and/or the MIPSA, and the agreements and documents delivered hereunder and thereunder and the transactions contemplated hereby and thereby. Each of the Parties likewise agrees that third parties and their counsel with a common legal interest with Sellers also have a reasonable expectation of privacy and privilege with respect to their communications prior to the Closing (“ Common Interest Parties ”). At and after the Closing, the attorney-client privilege of the Companies with HB with respect to such matters, and the Common Interest Parties with their counsel shall be deemed to be the right of Sellers or the Common Interest Party respectively, and not that of the Companies, and may be waived only by Sellers or Common Interest Party as to their

47




respective communications. Absent the consent of Sellers, the Common Interest Party, or except as required to comply with any Law or other regulatory requirement applicable to Buyer or its Affiliates, neither Buyer nor the Companies shall have a right to access attorney-client privileged material of the Companies with respect to this Agreement, the Maritech APA and MIPSA and the other documents contemplated herein and the transactions contemplated hereby and thereby following the Closing. Notwithstanding the foregoing, (a) nothing herein shall be construed as a waiver by the Companies of the attorney-client privilege or the obligations of confidentiality owed by HB to the Companies with respect to matters not regarding this Agreement and the other agreements and documents delivered hereunder and the transactions contemplated hereby and thereby, (b) in the event that a dispute arises between Buyer or the Companies and a third Person other than a Party to this Agreement after the Closing, (i) the Companies may assert the attorney-client privilege to prevent disclosure of confidential communications by HB to such third Person and (ii) to the extent any such privilege or client confidence is required to be waived or otherwise required to be released by any Governmental Entity, under law or pursuant to any orders, decrees, writs, injunctions, judgments, stipulations, determinations or awards entered by or with any Governmental Entity, none of the Companies, Buyer or their Affiliates shall be in breach or violation of any provision of this Agreement or any document or agreement delivered hereunder for providing information, documents, communications or client confidences to any Governmental Entity in response to, and subject to the requirement limitation in, the foregoing.
[Remainder of page left intentionally blank]


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IN WITNESS WHEREOF , each of the undersigned has caused this Agreement to be duly signed as of the date first above written.
TETRA TECHNOLOGIES, INC.
 
 
By:
/s/ Stuart M. Brightman
Name:
Stuart M. Brightman
Title:
Chief Executive Officer
 
 
 
 
 
 
TETRA PRODUCTION TESTING HOLDING LLC
 
 
By:
/s/ Stuart M. Brightman
Name:
Stuart M. Brightman
Title:
President
 
 
 
 
 
 
EPIC OFFSHORE SPECIALTY, LLC
 
 
By:
/s/ Thomas M. Clarke
Name:
Thomas M. Clarke
Title:
Authorized Signatory


Signature Page to Equity Interest Purchase Agreement




EPIC OFFSHORE SPECIALTY, LLC

By:         

Name:         

Title:         

Signature Page to Equity Interest Purchase Agreement
Execution Version


EQUITY INTEREST PURCHASE AGREEMENT
by and among    

THE SELLERS LISTED HEREIN,
SELLERS REPRESENTATIVE

and

TETRA TECHNOLOGIES, INC.
FEBRUARY 13, 2018








TABLE OF CONTENTS
 
 
 
Article I
 
 
DEFINITIONS; INTERPRETATION
Page
Section 1.1
Definitions
1
Section 1.2
Other Definitional and Interpretive Matters
17
Article II
 
 
PURCHASE AND SALE of equity interests; transaction consideration
 
Section 2.1
Transfer of Equity Interests
18
Section 2.2
Transaction Consideration
18
Section 2.3
Closing Date Payment
19
Section 2.4
Post-Closing Adjustment
20
Section 2.5
Earnout Calculation and Procedures
21
Section 2.6
Neutral Accountant Procedures.
23
Section 2.7
Purchase Price Allocation
24
Section 2.8
Withholding
25
Section 2.9
Retention Escrow Amount
26
Section 2.10
Indemnity Escrow Amount
26
Article III
 
 
REPRESENTATIONS AND WARRANTIES OF SELLERs
 
Section 3.1
Organization and Good Standing
27
Section 3.2
Authorization
27
Section 3.3
Capitalization; Title to Equity Interests
28
Section 3.4
Solvency
28
Section 3.5
Conflicts; Consents of Third Parties
28
Section 3.6
Financial Statements
29
Section 3.7
No Undisclosed Liabilities
29
Section 3.8
Absence of Certain Changes
29
Section 3.9
Taxes
31
Section 3.10
Real Property
33
Section 3.11
Tangible Personal Property
34
Section 3.12
Intellectual Property
34
Section 3.13
Material Contracts
35
Section 3.14
Employee Benefits
37
Section 3.15
Labor; Employee Matters
39
Section 3.16
Litigation
40
Section 3.17
Compliance with Laws; Permits
40
Section 3.18
Environmental Matters
41
Section 3.19
Title
42
Section 3.20
Financial Advisors; Transaction Expenses
43
Section 3.21
Insurance
43

ii




Section 3.22
Affiliate Transactions
43
Section 3.23
Bank Accounts; Powers of Attorney
43
Section 3.24
Customers and Vendors
44
Section 3.25
Accounts Receivable
44
Section 3.26
Investment Representations
44
Section 3.27
NO OTHER REPRESENTATIONS OR WARRANTIES
45
Article IV
 
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Section 4.1
Organization and Good Standing
46
Section 4.2
Authorization
46
Section 4.3
Conflicts; Consents of Third Parties.
46
Section 4.4
Litigation
47
Section 4.5
Financial Advisors
47
Section 4.6
Financial Capability
47
Section 4.7
Solvency
47
Section 4.8
Investor Representations
47
Section 4.9
Capital Structure; Issuance of Purchaser Common Stock
48
Section 4.10
Purchaser Financial Statements
49
Section 4.11
SEC Reports
49
Section 4.12
Absence of Violations, Defaults and Conflicts.
50
Section 4.13
NYSE Listing
50
Section 4.14
Condition of the Business
50
Article V
 
 
COVENANTS
 
 
Section 5.1
Access to Information
51
Section 5.2
Conduct of the Business Pending the Closing
52
Section 5.3
Consents; Closing Conditions
53
Section 5.4
Regulatory Approvals
54
Section 5.5
Further Assurances
55
Section 5.6
Confidentiality
55
Section 5.7
Preservation of Records
56
Section 5.8
Publicity
56
Section 5.9
No Shop
57
Section 5.10
Releases
57
Section 5.11
Transaction Expenses
58
Section 5.12
NYSE Listing
58
Section 5.13
Financial Statements
58
Section 5.14
Financial Assurances
59
Article VI
 
 
EMPLOYEES AND EMPLOYEE BENEFITS
 
Section 6.1
Employee Benefits
59
Article VII
 
 

iii




CLOSING; CONDITIONS TO CLOSING; TERMINATION
 
Section 7.1
Conditions Precedent to Obligations of Purchaser
61
Section 7.2
Conditions Precedent to Obligations of Each Seller
63
Section 7.3
Frustration of Closing Conditions
65
Section 7.4
Closing Date
65
Section 7.5
Termination of Agreement
65
Section 7.6
Procedure Upon Termination
66
Section 7.7
Effect of Termination
66
Article VIII
 
 
INDEMNIFICATION
 
Section 8.1
Survival of Representations and Warranties
66
Section 8.2
Indemnification by Sellers
67
Section 8.3
Indemnification by Purchaser
68
Section 8.4
Indemnification Procedures
68
Section 8.5
Certain Limitations on Indemnification
69
Section 8.6
Calculation of Losses
71
Section 8.7
Materiality Disregarded
71
Section 8.8
Tax Treatment of Indemnity Payments
71
Section 8.9
Exclusive Remedy
71
Section 8.10
R&W Policy
71
Article IX
 
 
MISCELLANEOUS
 
Section 9.1
Sellers Representative
72
Section 9.2
Taxes
72
Section 9.3
Expenses
75
Section 9.4
Submission to Jurisdiction; Consent to Service of Process
75
Section 9.5
Entire Agreement; Amendments and Waivers
75
Section 9.6
Governing Law
75
Section 9.7
Notices
76
Section 9.8
Severability
76
Section 9.9
Binding Effect; Assignment
77
Section 9.10
Enforcement
77
Section 9.11
Counterparts
77

Exhibits
Exhibit A −     Earnout Business G&A
Exhibit B −     Lock-Up Agreements
Exhibit C −    List of Seller(s)
Exhibit D −    Earnout Statement



iv




Schedules
Schedule 1.1(a)    Permitted Liens
Schedule 2.3(a)    Estimated Net Working Capital
Schedule 3.1(b)    Jurisdictions
Schedule 3.3    Capitalization; Title to Equity Interests
Schedule 3.5(b)    Consents of Third Parties
Schedule 3.6    Financial Statements
Schedule 3.7    Undisclosed Liabilities
Schedule 3.8    Absence of Certain Changes
Schedule 3.9    Taxes
Schedule 3.10(a)    Real Property
Schedule 3.10(d)    Status of Leased Real Property
Schedule 3.11    Personal Property Leases
Schedule 3.12    Intellectual Property
Schedule 3.13(a)    Material Contracts
Schedule 3.13(c)    Status of Material Contracts
Schedule 3.14(a)    Employee Benefit Plans
Schedule 3.14(j)    Compensation and Benefits Resulting From Transaction
Schedule 3.15(d)    Company Employees, Consultants and Contractors
Schedule 3.15(e)    Employee Status
Schedule 3.15(f)    Compliance with Labor Laws
Schedule 3.16(a)    Litigation
Schedule 3.16(b)    Orders
Schedule 3.17(b)    Permits
Schedule 3.17(d)    Agents
Schedule 3.18    Environmental Matters; Environmental Permits
Schedule 3.19(a)    Title
Schedule 3.19(b)    Condition of Assets
Schedule 3.20    Financial Advisors
Schedule 3.21    Insurance Policies
Schedule 3.22    Affiliate Transactions
Schedule 3.23    Bank Accounts
Schedule 3.24    Material Customers, Material Vendors
Schedule 4.3    Purchaser Conflicts; Consents of Third Parties
Schedule 6.1(a)    Sales Commissions
Schedule 7.1(p)    Required Consents for Closing
Schedule 8.2(a)    Indemnification Matters



i




EQUITY INTEREST PURCHASE AGREEMENT
THIS EQUITY INTEREST PURCHASE AGREEMENT (this “ Agreement ”), dated as of February 13, 2018, is by and among each of the Sellers (as defined below), the Sellers Representative (as defined below) and TETRA TECHNOLOGIES, INC., a Delaware corporation (“ Purchaser ”). Sellers, Sellers Representative and Purchaser are sometimes referred to in this Agreement collectively as the “ Parties ” and each individually as a “ Party .”
WHEREAS, Sellers own 100% of the issued and outstanding equity interests in Swiftwater Energy Services, LLC, an Oklahoma limited liability company (the “ Company ”);
WHEREAS, the Sellers desire to sell, and Purchaser desires to acquire, all of the issued and outstanding equity interests in the Company (collectively, the “ Equity Interests ”) in consideration of the Transaction Consideration (as defined below), subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations, and warranties made in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties agree as follows:
Article I
DEFINITIONS; INTERPRETATION
Section 1.1      Definitions .
(a)      Certain Definitions . For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1 :
2018 Earnout Period ” means the period beginning on (and including) January 1, 2018 and ending on (and including) December 31, 2018.
2      2018 EBITDA Earnout Amount ” means:
(i)      if the EBITDA for the 2018 Earnout Period is less than $29,000,000 then $0;
(ii)      if the EBITDA for the 2018 Earnout Period is equal to or greater than $29,000,000 and less than $37,000,000, then a correspondingly linear amount between $0 and $6,700,000; or
(iii)      if the EBITDA for the 2018 Earnout Period is equal to or greater than $37,000,000, then $6,700,000;
provided , however , that in no event shall the 2018 EBITDA Earnout Amount with respect to the 2018 Earnout Period exceed $6,700,000.

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The threshold EBITDA amount of $29,000,000 and target EBITDA amount of $37,000,000 are each based upon an assumed level of capital expenditures by the Earnout Business of $15,900,000 during the 2018 Earnout Period. If the capital expenditures of the Earnout Business in the 2018 Earnout Period exceed $15,900,000, then the amounts of $29,000,000 and $37,000,000 shall each be increased for the amounts of capital expenditures in excess of $15,900,000 on a pro-rata basis at a return on capital of seventy-five percent (75%), effective with the first month after receipt of the fixed asset relating to such excess capital expenditure.
By way of example, assume an additional $1,000,000 in capital expenditures is received in May 2018. The threshold and target EBITDA levels for the 2018 Earnout Period increase in accordance with the following formula:
Increase = Excess CAPEX x  0.75 x  Number of Months
$375,000 = $1,000,000 x  0.75 x  6/12
Where:
Increase =
the amount of increase in the threshold and target EBITDA

Excess CAPEX =
the capital expenditure in excess of $15,900,000

Number of Months =
the number of remaining months in 2018 following the month of receipt divided by 12

3      2018 Revenue Earnout Amount ” means:
(i)      if the Revenue for the 2018 Earnout Period is less than $132,000,000, then $0;
(ii)      if the Revenue for the 2018 Earnout Period is equal to or greater than $132,000,000 and less than $142,000,000, then a correspondingly linear amount between $0 and $3,300,000; or
(iii)      if the Revenue for the 2018 Earnout Period is equal to or greater than $142,000,000, then $3,300,000;
provided , however , that in no event shall the 2018 Revenue Earnout Amount with respect to the 2018 Earnout Period exceed $3,300,000.
4      2019 Earnout Period ” means the period beginning on (and including) January 1, 2019 and ending on (and including) December 31, 2019.

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5      2019 EBITDA Earnout Amount ” means:
(i)      if the EBITDA for the 2019 Earnout Period is less than $45,000,000, then $0;
(ii)      if the EBITDA for the 2019 Earnout Period is equal to or greater than $45,000,000 and less than $60,000,000, then a correspondingly linear amount between $0 and $3,300,000;
(iii)      if the EBITDA for the 2019 Earnout Period is equal to or greater than $60,000,000, then $3,300,000;
provided , however , that in no event shall the 2019 EBITDA Earnout Amount with respect to the 2019 Earnout Period exceed $3,300,000.
The threshold EBITDA amount of $45,000,000 and target amount of $60,00,000 for the 2019 Earnout Period are each based upon an assumed level of capital expenditures by the Earnout Business of $15,900,00 during the 2018 Earnout Period and $14,500,000 during the 2019 Earnout Period. If the capital expenditures of the Earnout Business in the 2018 Earnout Period exceed $15,900,000, and/or the capital expenditures of the Earnout Business in the 2019 Earnout Period exceed $14,500,000, then the amounts of $45,000,000 and $60,000,000 shall each be increased for the amounts of capital expenditures in excess of $15,900,000 during the 2018 Earnout Period and $14,500,000 during the 2019 Earnout Period on a pro-rata basis at a return on capital of seventy-five percent (75%), effective with the first month after receipt of the fixed asset relating to such excess capital expenditure.
By way of example, assume an additional $1,000,000 in capital expenditures is received in May 2018. The threshold and target EBITDA levels for the 2019 Earnout Period increase in accordance with the following formula:
Increase = Excess CAPEX x  0.75 x  Number of Months
$750,000 = $1,000,000 x  0.75 x  12/12
Where:
Increase =
the amount of increase in the threshold and target EBITDA

Excess CAPEX =
the capital expenditure in the 2018 Earnout Period in excess of $15,900,000 and in the 2019 Earnout Period in excess of $14,500,000, as applicable


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Number of Months =
the number of remaining months in 2019 following the month of receipt divided by 12. As it relates to the 2019 Earnout Period, any excess capital expenditures received in 2018 will result in twelve (12) remaining months in 2019 Earnout Period.

6      2019 Revenue Earnout Amount ” means:
(i)      if the Revenue for the 2019 Earnout Period is less than $162,100,000, then $0;
(ii)      if the Revenue for the 2019 Earnout Period is equal to or greater than $162,100,000 and less than $200,000,000, then a correspondingly linear amount between $0 and $1,700,000; or
(iii)      if the Revenue for the 2019 Earnout Period is equal to or greater than $200,000,000, then $1,700,000;
provided , however , that in no event shall the 2019 Revenue Earnout Amount with respect to the 2019 Earnout Period exceed $1,700,000.
7      Actual Cumulative EBITDA ” means the sum of the EBITDA for the 2018 Earnout Period and the 2019 Earnout Period.
8      Actual Cumulative Revenue Earnout Amount ” means the sum of the 2018 Revenue Earnout Amount and the 2019 Revenue Earnout Amount.
9      Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of more than 50% of the voting securities, by contract or otherwise.
10      Books and Records ” means all files, documents, instruments, books, reports, records, letters, customer lists, regulatory filings, operating data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other similar materials (whether stored in print, magnetic tapes, computer disks, or any other digital or electronic media) in the possession or control of Sellers or the Company and related to the Company.
11      Business ” means the business of providing water management and water solutions to oil and gas operators including (i) fluid and water transfer services for hydraulic fracturing operations, (ii) poly pipe services and rentals, (iii) pipeline engineering, construction, installation, maintenance and repair services for surface and sub-surface pipelines and facilities to transfer fresh

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water, production water, oil and natural gas, (iv) production water treatment and recycling, including water treatment services utilizing chlorine dioxide treatment, (v) liner and containment services for both fresh and produced water, (vi) water sourcing services, (vii) equipment rentals, and (viii) field and technical consulting services, in each case as conducted by the Company as of the date of this Agreement.
12      Business Day ” means any day except Saturday, Sunday or any U.S. federal holiday.
13      CCLP ” means CSI Compressco LP, a Delaware limited partnership.
14      COBRA ” means Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA and any similar state Law.
15      Code ” means the Internal Revenue Code of 1986, as amended.
16      Company Taxes ” means (i) any Liability for Taxes of the Company for any Pre‑Closing Tax Period which is in excess of the amount of such Liability for Taxes included in the calculation of the Final Closing Net Working Capital and (ii) any Liability for Taxes for which the Company or the Purchaser or any of its Affiliates is held liable under Treasury Regulations Section 1.1502-6 (or any analogous provision of state, local or foreign Law) by reason of the Company being included in a consolidated, affiliated, combined or unitary group on or before the Closing Date or for which the Company is or has been liable as a transferee or successor, by Contract or otherwise.
17      Contract ” means any written agreement, arrangement, contract, commitment, purchase order, work order, note, instrument, indenture, guarantee, lease, sublease, license or sublicense, including any amendments and other modifications thereto.
18      Cumulative Earnout Period ” means the period beginning on (and including) January 1, 2018 and ending on (and including) December 31, 2019.
19      Current Assets ” means, with respect to the Company, the following current assets of the Company, as determined in accordance with GAAP (calculated without giving effect to any purchase accounting adjustments resulting from the consummation of the transactions contemplated hereby): (i) accounts receivable, net (ii) inventory, (iii) prepaid expenses, and (iv) accrued revenues. For the avoidance of doubt, Current Assets shall not include (x) cash and cash equivalents, and (y) prepayments and deposits related to the purchase of fixed assets.
20      Current Liabilities ” means, with respect to the Company, the current liabilities of the Company, as determined in accordance with GAAP (calculated without giving effect to any purchase accounting adjustments resulting from the consummation of the transactions contemplated hereby): accounts payable, (ii) accrued liabilities (payroll), (iii) accrued taxes, and (iv) other current liabilities. For the avoidance of doubt, Current Liabilities shall not include any (x) Specified Indebtedness of the Company as of the Closing and Transaction Expenses, (y) capital leases and notes payable related to the purchase of fixed assets, and (z) trade payables related to the purchase of fixed assets.

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21      Earnout Amount ” means (i) for the 2018 Earnout Period, the sum of the 2018 EBITDA Earnout Amount and the 2018 Revenue Earnout Amount; provided, that the Earnout Amount for the 2018 Earnout Period shall not exceed $10,000,000, (ii) for the 2019 Earnout Period, the sum of the 2019 EBITDA Earnout Amount and the 2019 Revenue Earnout Amount; provided that the Earnout Amount for the 2019 Earnout Period does not exceed $5,000,000, and (iii) for the Cumulative Earnout Period, the Cumulative Revenue Make Up Amount, if applicable. In no event will the aggregate Earnout Amount exceed $15,000,000.
22      Earnout Business ” means (i) the Business, as conducted by the Company on the date of this Agreement, and (ii) Purchaser’s water management business as conducted by Purchaser and its Subsidiaries from time to time during the Earnout Period, including, without limitation, water blending, water treatment, water transfer, water storage, automation and monitoring, production testing, flow back, completion fluids and filtration services, in each case, solely as conducted in the Permian Basin Region.
23      Earnout Business G&A ” means, with respect to the applicable Earnout Period, those selling, general and administrative expenses incurred by the Earnout Business during such Earnout Period other than any corporate or division overhead expenses of Purchaser or any of its Affiliates (other than the Company). The Earnout Business G&A shall be calculated substantially in accordance with the format of Exhibit A and the provisions set forth therein.
24      Earnout Period ” means the 2018 Earnout Period, the 2019 Earnout Period or the Cumulative Earnout Period, as applicable.
25      EBITDA ” means, with respect to the applicable Earnout Period (i) the Revenues for such Earnout Period minus (ii) the sum of the operating costs for the Earnout Business and the Earnout Business G&A for such Earnout Period.
26      Employee ” means all individuals, as of the date hereof, who are employed by the Company, together with individuals who are hired by the Company in accordance with the terms of this Agreement after the date hereof and prior to the Closing.
27      Environmental Claim ” means any Legal Proceeding, Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.
28      Environmental Law ” means any applicable Law, and any Order or binding agreement with any Governmental Body: (a) relating to pollution (or the prevention, abatement or cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); (b) concerning the presence of, exposure to, or the management, manufacture,

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use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials; or (c) the safety of employees or other individuals. Without limiting the generality of the foregoing, the term “ Environmental Law ” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“ CERCLA ”), as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; and the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.; the Oil Pollution Act of 1990, as amended, 33 U.S.C. §§ 2701 et seq.
29      Environmental Notice ” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.
30      Environmental Permit ” means any Permit, consent, waiver, closure, exemption or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
31      ERISA ” means the Employment Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
32      Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
33      Final Closing Statement ” means the final Closing Statement calculating the Closing Net Working Capital, as prepared in accordance with the procedures set forth in Section 2.4 .
34      Final Closing Net Working Capital ” means the final Closing Net Working Capital as determined in accordance with the procedures set forth in Section 2.4 .
35      Fundamental Representations ” means (i) with respect to the Sellers, the representations and warranties contained in Section 3.1 , Section 3.2 , Section 3.3 , Section 3.5(a) , and Section 3.20 , and (ii) with respect to the Purchaser, the representations and warranties contained in Section 4.1 , Section 4.2 , Section 4.5 and Section 4.9 .
36      GAAP ” means generally accepted accounting principles in the United States as of the date hereof, as historically applied by the Company.

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37      Governing Documents ” means (a) with respect to any Person that is a corporation, its articles or certificate of incorporation or memorandum and articles of association, and its bylaws; (b) with respect to any Person that is a partnership, its certificate of partnership or certificate of formation, and its partnership agreement; (c) with respect to any Person that is a limited liability company, its articles of organization or certificate of formation and its limited liability company agreement or operating agreement; (d) with respect to any Person that is a trust or other entity, its declaration or agreement of trust or other constituent document; (e) with respect to any other Person, its comparable governing instruments as required or contemplated by the Laws of its jurisdiction of organization; (f) in each case, all related equityholders’ agreements, voting agreements, voting trust agreements, joint venture agreements or registration rights agreements; and (g) any amendment or supplement to any of the foregoing.
38      Governmental Body ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign, federal, state, or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).
39      Hazardous Material ” means any substance, material or waste which is regulated by any Governmental Body, including petroleum and its by-products, asbestos, and any material or substance which is defined as a “hazardous waste,” “hazardous substance,” “hazardous material,” “restricted hazardous waste,” “industrial waste,” “solid waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance” under any provision of Environmental Law.
40      Immediate Family Member ” means an “immediate family member” as such term is used in Item 404 of Regulation S-K promulgated under the Exchange Act.
41      Indebtedness ” of any Person means, without duplication, (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for borrowed money and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business); (iii) all obligations of such Person under leases required to be capitalized in accordance with GAAP; (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; (v) any indebtedness secured by a Lien on any of the properties or assets of the Company; (vi) all obligations of the type referred to in clauses (i) through (v) above of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person); and (viii) accrued interest in respect of any of the obligations or liabilities described in clauses (i) through (vii), and all premiums, penalties, charges, fees, expenses and such other amounts that are due and payable in connection with the payment and satisfaction of such obligations or liabilities arising from or in connection with the consummation of the transactions contemplated by this Agreement. For the avoidance of doubt, with respect to the Company, Indebtedness shall

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not include accounts payable to trade creditors in the Ordinary Course of Business and accrued expenses arising in the Ordinary Course of Business, in each case, only to the extent included in Net Working Capital.
42      Indemnity Escrow Agent ” means the escrow agent designated pursuant to the Indemnity Escrow Agreement.
43      Indemnity Escrow Agreement ” means the Escrow Agreement to be entered into effective as of the Closing Date by and among Sellers Representative, Purchaser and Indemnity Escrow Agent in a form mutually acceptable to the Sellers Representative and Purchaser.
44      Indemnity Escrow Amount ” means $1,150,000.
45      Indemnity Escrow Fund ” means, on the date of determination, the Indemnity Escrow Amount, as the same may be reduced by amounts paid in satisfaction of indemnification claims pursuant to this Agreement and amounts otherwise distributed pursuant to this Agreement and the Indemnity Escrow Agreement.
46      Intellectual Property ” means all intellectual property rights owned by the Company including those arising from or in respect of the following: (i) all trademarks, service marks, trade names, service names, brand names, all trade dress rights, logos, and corporate names and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof; (ii) all Software and Technology owned by the Company; (iii) all internet domain names, internet websites, uniform resource locators (URLs) and alphanumeric designations associated therewith, and all applications for registration and registrations thereof; (iv) issued patents and patent applications (whether provisional or non‑provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing and other Governmental Body-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models); (v) all rights relating to any of the foregoing (including associated goodwill and remedies against infringements thereof); and (vi) all licenses, sublicenses, and arrangements (other than licenses of commercially available software) pursuant to which the Company has the right to use intellectual property of a third Person.
47      IRS ” means the Internal Revenue Service.
48      Knowledge ” means (i) with respect to the Sellers, the actual knowledge of Hunter J. Morris, Brayden R. Woods, Patricia Faychak and Shawn Rye (in each case, after reasonable inquiry) and (ii) with respect to any Seller, the actual knowledge (after reasonable inquiry) of such Seller and if such Seller is not an individual, the actual knowledge (after reasonable inquiry) of the executive officers of such Seller.  
49      Law ” means any foreign, federal, state or local law (including common and civil law), statute, code, ordinance, rule or regulation, treaty, Order, arbitration award, agency requirement, license or permit of any Governmental Body.

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50      Legal Proceeding ” means any claim, action, cause of action, demand, lawsuit, arbitration, audit, notice of violation, proceeding (including any worker’s compensation claim or proceeding), litigation, hearing, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
51      Liability ” means any debt (including any Indebtedness), loss, damage, claim, fine, penalty, liability or obligation (whether direct or indirect, known or unknown absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due and whether in contract, tort, strict liability or otherwise), and including all costs and expenses relating thereto (including all fees, disbursements and expenses of legal counsel, experts and consultants and costs of investigation and any response, remediation or removal costs under CERCLA (including natural resource damages) or incurred or arising under or in connection with any Environmental Law).
52      Lien ” means all liens, pledges, charges, claims, mortgages, deeds of trust, security interests, options, restrictions on transfer, imperfections of title, easements, encroachments, options, preemptive rights, rights of first refusal, rights of first offer or other encumbrances, whether consensual, statutory or otherwise, including the interest of a vendor or lessor under any conditional sale, capital lease or other title retention arrangement.
53      Lock-Up Agreements ” means the Lock-Up Agreements, dated as of the Closing Date, between Purchaser and the Sellers in the forms attached hereto as Exhibit B .
54      Net Working Capital ” means (a) the Current Assets of the Company, less (b) the Current Liabilities of the Company.
55      Neutral Accountant ” means BDO USA, LLP (or if such firm shall decline or is unable to act, or has a conflict of interest with Purchaser or Sellers, or any of their respective Affiliates, another nationally recognized accounting firm mutually acceptable to Purchaser and Sellers Representative).
56      Order ” means any order, injunction, judgment, decree, ruling, writ, assessment, stipulation, award or other determination of a Governmental Body.
57      Ordinary Course of Business ” means the ordinary course of the Business, as conducted by the Company consistent with past customs and practices.
58      Permian Basin Region ” means (i) the following Texas counties: Andrews, Borden, Cochran, Coke, Crane, Crockett, Crosby, Culberson, Dawson, Dickens, Ector, Edwards, Fisher, Gaines, Garza, Glasscock, Haskell, Hockley, Howard, Irion, Jeff Davis, Jones, Kent, King, Loving, Lubbock, Lynn, Martin, Midland, Mitchell, Nolan, Pecos, Reagan, Reeves, Schleicher, Scurry, Sterling, Stonewall, Sutton, Terrell, Terry, Tom Green, Upton, Val Verde, Ward Winkler, Yoakum, and (ii) the following New Mexico counties: Chaves, Eddy, Lea, Roosevelt.
59      Permits ” means any approvals, authorizations, consents, licenses, permits, certificates, tariffs, concessions, variances, filings, or qualifications which are granted or issued by or of a Governmental Body.

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60      Permitted Liens ” means (i) statutory Liens for current Taxes, assessments or other governmental charges (a) not yet delinquent or (b) the amount or validity of which is being contested in good faith by appropriate proceedings and are set forth on Schedule 1.1(a) ; (ii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business that are not overdue for a period of more than thirty (30) days or that are being contested in good faith by appropriate proceedings and are set forth on Schedule 1.1(a) ; (iii) zoning, entitlement and other land use and environmental regulations by any Governmental Body provided that such regulations have not been violated in any material respect and do not materially interfere with the continued use and operation of the property as presently used or operated; (iv) easements, rights-of-way, servitudes, surface leases, sub-surface leases, reservoirs, pipelines, utility lines, telephone lines, power lines, railways, streets, roads, alleys, highways and structures on, over and through any asset or property of the Company, to the extent such rights, interests or structures do not materially interfere with the operation of any of the affected assets or properties of the Company as presently used or operated; (v) Liens securing capital or operating leases, including title of the lessor, and the terms of any such leases to the extent the liability with respect to such lease is included as a Current Liability in the calculation of the Net Working Capital; (vi) in the case of Real Property Leases, any interest of, or Liens created by, the owner of fee title to the land covered thereby; and (vii) Liens arising under the Governing Documents of the Company.
61      Person ” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.
62      Pre-Closing Tax Period ” means any Tax period ending on or before the Closing Date and that portion of any Straddle Period ending on the Closing Date.
63      Property Taxes ” means ad valorem, property, excise, severance, production, sales, use, or similar Taxes.
64      Purchaser Change of Control ” means (a) a merger or consolidation of Purchaser with or into any other corporation or other entity or Person or (b) a sale, lease, exchange or other transfer in one transaction or series of related transactions of all or substantially all of Purchaser’s outstanding securities or all or substantially all of Purchaser’s assets; provided , that the following events shall not constitute a Purchaser Change of Control: (i) a merger or consolidation of Purchaser in which the holders of the voting securities of Purchaser immediately prior to the merger or consolidation hold at least a majority of the voting securities in the successor corporation immediately after the merger or consolidation; (ii) a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of Purchaser’s assets to a wholly-owned subsidiary; or (iii) the reincorporation of Purchaser.
65      Purchaser Material Adverse Effect ” means any result, occurrence, change, condition, fact, event, circumstance or development that, individually or in the aggregate with all other results, occurrences, changes, conditions, facts, events, circumstances, or developments, has, is, or could reasonably be expected to have, (i) a material adverse effect on the business, assets, properties, results of operations, earnings or financial condition of Purchaser and its Subsidiaries, taken as a whole, or (ii) a material adverse effect on the ability of Purchaser to consummate the

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transactions contemplated by this Agreement, other than an effect resulting from: (i) any change in the United States or foreign economies or securities or financial markets in general; (ii) any change that generally affects any industry in which such Purchaser and its Subsidiaries operate; (iii) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof; (iv) any action taken by Sellers or their Affiliates, including the Company, with respect to the transactions contemplated hereby; (v) any action (or inaction) Purchaser is permitted to take (or not take) under this Agreement; (vi) any changes in applicable Law, GAAP or accounting rules; or (vii) the public announcement of this Agreement, compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement; provided, however , that any result, occurrence, change, condition, fact, event, circumstance or development referred to in clause (i) through (iii) immediately above shall be taken into account in determining whether a Purchaser Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such result, occurrence, change, condition, fact, event, circumstance or development, condition or change has a disproportionate and adverse effect on Purchaser and its Subsidiaries compared to other participants in the industry in which Purchaser and its Subsidiaries conduct their businesses.
66      Purchaser Volume-Weighted Average Price ” means (a) the sum of the daily dollar volume-weighted average price for a share of Purchaser Common Stock on The New York Stock Exchange, as reported by Bloomberg, L.P. (or, if Bloomberg, L.P. ceases to provide such information, by any substitute function or service mutually agreed among the Parties) for each of the ten (10) trading days ending on and including the final determination date of the Earnout Amount (as used in the calculation pursuant to Section 2.5(d) ), divided by (b) ten (10).
67      R&W Policy ” means that certain representations and warranty insurance policy between Purchaser and Beazley USA Services, Inc., entered into on the date hereof.
68      Release ” means any actual or threatened release, spill, emission, leaking, migrating, pumping, emitting, emptying, dumping, disposing, injection, deposit, disposal, discharge, dispersal, escape or leaching into the indoor or outdoor environment.
69      Registration Rights Agreement ” means a Registration Rights Agreement, dated as of the Closing Date, between Purchaser and Hunter J. Morris in a form mutually acceptable to Hunter J. Morris and Purchaser.
70      Remedial Action ” means all actions to (i) clean up, remove, treat, remediate or in any other way address any Hazardous Material, (ii) prevent the Release of, or minimize any further Release of, any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (iii) perform or otherwise conduct any studies, investigations, analyses, monitoring or similar activities (whether pre-remediation, during remediation or post-remediation), or (iv) to correct a condition of noncompliance with Environmental Laws.

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71      Representatives ” means a Party’s Affiliates, and its and their respective officers, managers, directors, members, partners, stockholders, employees, agents, consultants, advisors (including counsel, accountants and financial advisors) and other representatives.
72      Retention Escrow Agent ” means the escrow agent designated pursuant to the Retention Escrow Agreement.
73      Retention Escrow Agreement ” means the Escrow Agreement to be entered into effective as of the Closing Date by and among the Sellers Representative, Purchaser and Retention Escrow Agent in a form mutually acceptable to Sellers Representative and Purchaser.
74      Retention Escrow Amount ” means $700,000.
75      Retention Escrow Fund ” means, on the date of determination, the Retention Escrow Amount, as the same may be reduced by amounts paid in satisfaction of indemnification claims pursuant to this Agreement and amounts otherwise distributed pursuant to this Agreement and the Retention Escrow Agreement.
76      Revenues ” means, with respect to the applicable Earnout Period, the revenues generated by the Earnout Business during such Earnout Period, calculated in accordance with GAAP.
77      Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
78      Seller Material Adverse Effect ” means any result, occurrence, change, condition, fact, event, circumstance or development that, individually or in the aggregate with all other results, occurrences, changes, conditions, facts, events, circumstances, or developments, has, is, or could reasonably be expected to have, (i) a material adverse effect on the business, assets, properties, results of operations, earnings or financial condition of the Company, taken as a whole, or (ii) a material adverse effect on the ability of any Seller to consummate the transactions contemplated by this Agreement, other than an effect resulting from: (i) any change in the United States or foreign economies or securities or financial markets in general; (ii) any change that generally affects any industry in which the Company operates; (iii) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof; (iv) any action taken by Purchaser or its Affiliates with respect to the transactions contemplated hereby; (v) any action (or inaction) any Seller is permitted to take (or not take) under this Agreement; (vi) any changes in applicable Law, GAAP or accounting rules; or (vii) the public announcement of this Agreement, compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement; provided, however, that any result, occurrence, change, condition, fact, event, circumstance or development referred to in clause (i) through (iii) immediately above shall be taken into account in determining whether a Seller Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such result, occurrence, change, condition, fact, event, circumstance or development, condition or change has a disproportionate and adverse effect on the Company compared to other participants in the industry in which the Company conducts its business.

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79      Sellers ” means each of the Persons listed on Exhibit C and “ Seller ” means any one of the Persons listed on Exhibit C .
80      Software ” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, and (iv) all documentation including user manuals and other training documentation related to any of the foregoing.
81      Straddle Period ” means any Tax period beginning before or on and ending after the Closing Date.
82      Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which such Person owns a majority of the outstanding voting securities or other voting equity interests, directly or indirectly, or which such Person otherwise has the right to direct the management and policies of such other corporation, limited liability company, partnership, association or other business entity.
83      Target Cumulative EBITDA ” means $97,000,000.
84      Target Cumulative Revenue Earnout Amount ” means $5,000,000.
85      Target Net Working Capital ” means an amount equal to $6,937,220.
86      Tax Authority ” means any state, local, federal or foreign government, or any agency, instrumentality or employee of the foregoing, charged with the administration of any Law relating to Taxes.
87      Tax Return ” means all returns, declarations, reports, estimates, renditions, information returns and statements filed or required to be filed in respect of any Taxes, including any schedule or attachment thereto, and including any amendment thereof.
88      Taxes ” means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, escheat, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Tax Authority in connection with any item described in clause (i).
89      Technology ” means, collectively, all designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses,

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and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein, and all related technology, that are used in, incorporated in, embodied in, displayed by or relate to, or are used by the Company in connection with the Business.
90      Transaction Expenses ” means all third-party out-of-pocket fees, costs and expenses incurred by or on behalf of the Company or the Sellers in anticipation of, in connection with, or otherwise related to, the transactions contemplated by this Agreement or any other Seller Document (including all of the fees, expenses and other costs of legal counsel, investment bankers, brokers, accountants and other representatives and consultants), regardless of whether such fees, expenses and costs are incurred directly by the Company or by one or more of the Sellers.
91      Transfer Taxes ” means all transfer, stamp, documentary, sales, use, registration, value‑added, filing, recording and other similar fees, governmental charges and Taxes (including all applicable real estate transfer Taxes) incurred in connection with this Agreement and the transactions contemplated hereby.
92      WARN Act ” means the United States Worker Adjustment and Retraining Notification Act.
(b)      Terms Defined Elsewhere . For purposes of this Agreement, the following terms have the meanings set forth in the Sections indicated:

Term
 

Section
2017 Financial Statements
 
Section 5.13(a)
Acquisition Transaction
 
Section 5.9
Agreement
 
Preamble
Agreements and Instruments
 
Section 4.12
Allocation Statement
 
Section 2.7(a)
Annual Financial Statements
 
Section 3.6
Antitrust Laws
 
Section 5.4(b)
Balance Sheet
 
Section 3.6
Balance Sheet Date
 
Section 3.6
Basket
 
Section 8.5(a)
Cash Consideration Amount
 
Section 2.2(a)
Closing
 
Section 7.4
Closing Cash Consideration
 
Section 2.3
Closing Date
 
Section 7.4
Closing Net Working Capital
 
Section 2.4(a)
Closing Statement
 
Section 2.4(a)
Company Released Parties
 
Section 5.10(a)
Cumulative Revenue Make Up Amount
 
Section 2.5(a)
Dispute Notice
 
Section 2.4(b)

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Term
 

Section
Disputed Amount
 
Section 2.6(b)
Earnout Recipients
 
Section 2.5(d)
Earnout Statement
 
Section 2.5
Employee Benefit Plans
 
Section 3.14(a)
Equity Interests
 
Recitals
Estimated Closing Statement
 
Section 2.3
Estimated Net Working Capital
 
Section 2.3
FCPA
 
Section 3.17(c)
Financial Statements
 
Section 3.6
Fraud Claims
 
Section 8.1(b)
H. Morris Guaranties
 
Section 5.14
HSR Act
 
Section 3.5(b)
Indemnification Claim
 
Section 8.4(a)
Indemnity Cap
 
Section 8.5(d)
Insurance Policies
 
Section 3.21
Interim Financial Statements
 
Section 3.6
Leased Real Property
 
Section 3.10(a)
Losses
 
Section 8.2(a)
Material Contracts
 
Section 3.13(a)
Material Customers
 
Section 3.24(a)
Material Vendors
 
Section 3.24(a)
Non-Disclosure Agreement
 
Section 5.6(a)
NYSE
 
Section 4.13
Objection Notice
 
Section 2.5(c)
Party and Parties
 
Preamble
Payoff Letters
 
Section 7.1(i)
Personal Property Leases
 
Section 3.11
Purchaser
 
Preamble
Purchaser Common Stock
 
Section 2.2(a)
Purchaser Documents
 
Section 4.2
Purchaser Financial Statements
 
Section 4.10
Purchaser Indemnified Parties
 
Section 8.2(a)
Purchaser Plans
 
Section 6.1(b)
Purchaser Preferred Stock
 
Section 4.9(a)
Purchaser SEC Documents
 
Section 4.11(a)
R&W Policy Premium
 
Section 8.10
Real Property Leases
 
Section 3.10(a)

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Term
 

Section
93      Required Quarter Financial Statements
 
Section 5.13(a)
Rights-of-Way
 
Section 3.10(a)
SEC
 
Section 4.10
Seller Documents
 
Section 3.2
Seller Indemnified Parties
 
Section 8.3
Sellers Representative
 
Section 9.1(a)
Sellers
 
Preamble
Specified Creditors
 
Section 2.3(b)
Specified Indebtedness
 
Section 2.3(b)
Specified Indebtedness Statement
 
Section 2.3(b)
Tax Matter
 
Section 9.2(d)
Termination Date
 
Section 7.5(a)
Transaction Consideration
 
Section 2.2

Section 1.2      Other Definitional and Interpretive Matters .
(a)      Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:
(i)      Calculation of Time Period . When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non‑Business Day, the period in question shall end on the next succeeding Business Day.
(ii)      Dollars . Any reference in this Agreement to $ shall mean U.S. dollars.
(iii)      Exhibits/Schedules . The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Disclosure of any item on any Schedule shall not constitute an admission or indication that such item or matter is material or would have a Seller Material Adverse Effect or Purchaser Material Adverse Effect, as applicable. No disclosure on a Schedule relating to a possible breach or violation of any Contract, Law or Order shall be construed as an admission or indication that breach or violation exists or has actually occurred. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.
(iv)      Gender and Number . Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

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(v)      Headings . The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.
(vi)      Herein . The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.
(vii)      Including . The word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(viii)      Reflected On or Set Forth In . An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet or financial statements, to the extent any such phrase appears in such representation or warranty, if (a) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that related to the subject matter of such representation, (b) such item is otherwise specifically set forth on the balance sheet or financial statements or (c) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.
(ix)      GAAP . Unless otherwise specified herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP.
(x)      Or . The word “or” is not exclusive.
(xi)      Day or Days . All references to day or days shall mean calendar days unless specified as a “Business Day.”
(xii)      Available . All materials or information stated herein as having been made available to Purchaser shall have been posted in the electronic data room maintained for the use and benefit of Purchaser on or before February 13, 2018.
(b)      The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
ARTICLE II     
PURCHASE AND SALE OF EQUITY INTERESTS; TRANSACTION CONSIDERATION

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Section 2.1      Transfer of Equity Interests . Upon the terms and subject to the conditions set forth herein, at the Closing, Sellers shall sell, assign, transfer and convey the Equity Interests to Purchaser, and Purchaser shall purchase, acquire and accept from Sellers, the Equity Interests.
Section 2.2      Transaction Consideration . The aggregate consideration to be paid by Purchaser for the Equity Interests (the “ Transaction Consideration ”) shall be:
(a)      cash in the amount of $40,000,000 (the “ Cash Consideration Amount ”) and 7,772,021 shares of Purchaser’s common stock, $0.01 par value per share (“ Purchaser Common Stock ”); minus
(b)      the amount, if any, by which the Final Closing Net Working Capital is less than the Target Net Working Capital; plus
(c)      the amount, if any, by which the Final Closing Net Working Capital is greater than the Target Net Working Capital; plus
(d)      the aggregate Earnout Amounts paid by Purchaser.
Section 2.3      Closing Date Payment .
(a)      At least three (3) Business Days, but no more than seven (7) Business Days, prior to the Closing Date, Sellers Representative shall prepare and deliver to Purchaser a statement (the “ Estimated Closing Statement ”) setting forth a good faith estimate of the Net Working Capital as of immediately prior to the Closing, which shall be prepared in a manner consistent with the format set forth on Schedule 2.3(a) and the provisions thereof (the “ Estimated Net Working Capital ”), including the components and calculation thereof. On the Closing Date, Purchaser shall (i) issue to Sellers that number of shares of Purchaser Common Stock as determined above, the number of shares of Purchaser Common Stock to be received by each Seller to be specified in writing by Sellers Representative, and (ii) pay an aggregate amount in cash, payable by wire transfer of immediately available funds equal to the following (collectively, the “ Closing Cash Consideration ”):
(i)      the Specified Indebtedness owed to the Specified Creditors (which amount shall not, in the aggregate, exceed an amount equal to the Cash Consideration Amount less the sum of the amounts payable under clauses (ii), (iii) and (iv) below), which amount shall be payable by the Purchaser to the Specified Creditors as set forth on the Specified Indebtedness Statement;
(ii)      to the extent not already paid by Sellers, fifty percent (50%) the R&W Policy Premium, which shall be payable in accordance with the R&W Policy and this Agreement;
(iii)      the Retention Escrow Amount, which shall be payable by the Purchaser to the Retention Escrow Agent;

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(iv)      the Indemnity Escrow Amount, which shall be payable by the Purchaser to the Indemnity Escrow Agent; and
(v)      an aggregate amount equal to (A) the Cash Consideration Amount less the amounts payable under clauses (i) through (iv) above, less (B) the amount, if any, by which the Estimated Net Working Capital is less than the Target Net Working Capital, plus (C) the amount, if any, by which the Estimated Net Working Capital is greater than the Target Net Working Capital, to be payable by Purchaser to the Sellers in the proportions and to the account or accounts specified in writing by the Sellers Representative.
(b)      Not less than three (3) Business Days prior to the Closing Date, the Sellers Representative shall prepare and deliver to Purchaser a statement (the “ Specified Indebtedness Statement ”) of all amounts required to discharge and pay in full the aggregate amount of outstanding Indebtedness of the Company as of the Closing Date (the “ Specified Indebtedness ”), which shall be payable by Purchaser in accordance with this Section 2.3 , to the applicable creditors (the “ Specified Creditors ”) of such Indebtedness as set forth on the Specified Indebtedness Statement.
Section 2.4      Post-Closing Adjustment .
(a)      Within one hundred twenty (120) days after the Closing Date, Purchaser shall, at its expense, prepare and deliver to Sellers Representative a statement (the “ Closing Statement ”) calculating the Net Working Capital as of immediately prior to the Closing, which shall be prepared in a manner consistent with Schedule 2.3(a) (the “ Closing Net Working Capital ”); provided, however , that a failure by Purchaser to deliver the Closing Statement within such one hundred twenty (120) day period shall not impair Purchaser’s rights under this Section 2.4 . Sellers Representative shall reasonably cooperate with Purchaser in its preparation of the Closing Statement, including by making available individuals and such information as may be reasonably requested by Purchaser in connection with Purchaser’s preparation of the Closing Statement.
(b)      If Sellers Representative disputes any amounts as shown on the Closing Statement, Sellers Representative shall deliver to Purchaser within thirty (30) days after receipt of the Closing Statement a notice (the “ Dispute Notice ”) setting forth Sellers Representative’s calculation of Closing Net Working Capital and describing in reasonable detail the basis (including for each component, the difference and the amount thereof and reasons therefor) for the determination of such different amount. If Sellers Representative does not deliver a Dispute Notice to Purchaser within such thirty (30) day period, the Closing Statement (and the determination of Closing Net Working Capital therein) prepared and delivered by Purchaser shall be deemed to be the Final Closing Statement and the Final Closing Net Working Capital. Any such disputes shall be limited to assertions that the Closing Statement (and the determination of Closing Net Working Capital therein) was not calculated in accordance with the terms of this Agreement. Any component not disputed in the Dispute Notice shall be treated as final and binding. Sellers Representative and Purchaser shall use commercially reasonable efforts to resolve such differences within a period of thirty (30) days after Sellers Representative has given the Dispute Notice. If Sellers Representative and Purchaser resolve such differences, the Closing Statement and the Closing Net Working Capital agreed to by Sellers Representative and Purchaser shall be deemed to be the Final Closing Statement and Final Closing Net Working Capital. If Sellers Representative and Purchaser do not reach a

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final resolution on the Closing Statement and the Closing Net Working Capital within thirty (30) days after Sellers Representative has delivered the Dispute Notice, unless Sellers Representative and Purchaser mutually agree to continue their efforts to resolve such differences, the Neutral Accountant shall resolve such differences with respect to the applicable adjustment under this Section 2.4 pursuant to an engagement agreement among Sellers Representative, Purchaser, and the Neutral Accountant (which Sellers Representative and Purchaser agree to execute promptly), in the manner provided in Section 2.6 . Each of Sellers Representative and Purchaser shall be deemed to have executed such engagement agreement if it fails to do so within twenty (20) days of receiving a draft thereof. The Closing Statement and determination of Closing Net Working Capital therein determined by the Neutral Accountant shall be deemed to be the Final Closing Statement and the Final Closing Net Working Capital.
(c)      Promptly, but no later than ten (10) Business Days after the final determination thereof, if the Final Closing Net Working Capital set forth in the Final Closing Statement: (i) exceeds the Estimated Net Working Capital, Purchaser shall pay an amount in cash equal to such excess amount to Sellers (in the proportions and to the account or accounts specified in writing by the Sellers Representative); or (ii) is less than the Estimated Net Working Capital, Sellers Representative, on behalf of Sellers, shall pay or cause to be paid an amount in cash equal to such shortfall to Purchaser.
Section 2.5      Earnout Calculation and Procedures .
(a)      If the Actual Cumulative Revenue Earnout Amount is less than the Target Cumulative Revenue Earnout Amount, the deficiency may be recovered and shall be paid by Purchaser if the Actual Cumulative EBITDA exceeds the Target Cumulative EBITDA in accordance with the following terms; provided that in no event will the Actual Cumulative Revenue Earnout Amount plus the Cumulative Revenue Make Up Amount exceed the amount of $5,000,000. The deficiency that may be recovered and paid by Purchaser (the “ Cumulative Revenue Make Up Amount ”) shall be determined in accordance with the following formula:
Cumulative Revenue Make Up Amount = Actual Cumulative EBITDA - Target Cumulative EBITDA x .775
(b)      Within ninety (90) days after the completion of each Earnout Period, Purchaser shall deliver to the Sellers Representative a written statement, substantially in the format set forth on Exhibit D , setting forth the Revenues and EBITDA together with a calculation of the Earnout Amount (if any) for such Earnout Period (the “ Earnout Statement ”). Following the delivery of an Earnout Statement to the Sellers Representative, Purchaser shall afford the Sellers Representative and its representatives the opportunity to examine such Earnout Statement and such supporting schedules, analyses, work papers and other underlying records or documentation that are in Purchaser’s possession or control as are reasonably necessary or desired for the Sellers Representative to confirm or object to the calculations of Revenues, EBITDA and the Earnout Amount (if any). Purchaser shall reasonably cooperate with the Sellers Representative and its Representatives in connection with such examination.
(c)      If Sellers Representative disputes any amounts as shown on an Earnout Statement, Sellers Representative shall deliver to Purchaser within sixty (60) days after receipt of

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such Earnout Statement a notice (the “ Objection Notice ”) setting forth Sellers Representative’s calculations of Revenues, EBITDA and/or the Earnout Amount and describing in reasonable detail the basis (including for each component, the difference and the amount thereof and reasons therefor) for the determination of such different amount(s). If Sellers Representative does not deliver an Objection Notice to Purchaser within such sixty (60) day period, then the Earnout Statement shall be deemed final and binding on the Parties and the Earnout Amount (if any) shall be due and payable as provided in Section 2.5(d) . Any such disputes shall be limited to assertions that the Earnout Statement (and the Revenues, EBITDA and/or the Earnout Amount therein) was not calculated in accordance with the terms of this Agreement. Any component(s) not disputed in the Objection Notice shall be treated as final and binding. Sellers Representative and Purchaser shall use commercially reasonable efforts to resolve such differences within a period of thirty (30) days after Sellers Representative has given the Objection Notice. If Sellers Representative and Purchaser resolve such differences, then the Earnout Statement, as resolved, shall be deemed final and binding on the Parties and the applicable Earnout Amount (if any) shall be due and payable as provided in Section 2.5(d) . If Sellers Representative and Purchaser do not reach a final resolution on the Earnout Statement and the calculation of Revenues, EBITDA and the Earnout Amount within thirty (30) days after Sellers Representative has delivered the Objection Notice, unless Sellers Representative and Purchaser mutually agree to continue their efforts to resolve such differences, the Neutral Accountant shall resolve such differences with respect to the adjustment under this Section 2.5 pursuant to an engagement agreement among Sellers Representative, Purchaser, and the Neutral Accountant (which Sellers Representative and Purchaser agree to execute promptly), in the manner provided in Section 2.6 . Each of Sellers Representative and Purchaser shall be deemed to have executed such engagement agreement if it fails to do so within twenty (20) days of receiving a draft thereof. The Earnout Statement and determination of Revenues, EBITDA and the Earnout Amount (if any) determined by the Neutral Accountant shall be deemed to be the final Earnout Statement and, as applicable, Revenues, EBITDA and Earnout Amount (if any).
(d)      Promptly, but no later than ten (10) Business Days after the final determination thereof, if an Earnout Amount is payable by Purchaser as set forth in the Earnout Statement, Purchaser shall pay such Earnout Amount to the Sellers in the proportions and to the account or accounts specified in writing by the Sellers Representative. Purchaser shall have the option to pay any Earnout Amount (i) in cash or (ii) in shares of Purchaser Common Stock determined by dividing such Earnout Amount by the Purchaser Volume-Weighted Average Price; provided , that the aggregate amount of Purchaser Common Stock issued by Purchaser pursuant to this Section 2.5(d) and Section 2.2(a) shall not exceed 19.99% of Purchaser’s outstanding Purchaser Common Stock as of the date hereof.
(e)      From the Closing through and including December 31, 2019, Purchaser will cause the Earnout Business to be conducted in a manner that is consistent, in all material respects, with the operation of the Purchaser’s business included in the Earnout Business as conducted by Purchaser prior to the Closing Date and will not do any of the following:
(i)      take or omit to take, or permit any of its Affiliates to take or omit to take, any action outside the ordinary course of business of Purchaser with the intent of (A) materially reducing the Earnout Amount payable by Purchaser, (B) materially restricting

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the ability of the Earnout Business to generate Revenues and EBITDA or (C) deferring sales until the period after the Earnout Period expires;
(ii)      allocate to the Earnout Business the costs of any software programs implemented by Purchaser to operate the Earnout Business that are materially more expensive than the current software solutions in use by the Earnout Business;
(iii)      fail to use commercially reasonable efforts at least as diligent as those used by Purchaser in the ordinary course of its business to collect all accounts receivable;
(iv)      direct any business away from the Earnout Business to any of Purchaser’s Affiliates (other than the Company);
(v)      except as provided in this Section 2.5(e)(v) , merge or consolidate the Earnout Business with, transfer all of the stock of the Company to, or transfer or sell any of the assets of the Earnout Business to, any Person, except for sales of products to customers in the ordinary course of Purchaser’s business consistent with past practice, or the sale or abandonment of obsolete, unnecessary or non‑material assets, in each case unless Purchaser pays the Earnout Amount in an amount equal to the lesser of (A) $15,000,000 or (B) $15,000,000 minus any of the Earnout Amount previously paid, in each case to the Sellers at the closing of any such merger, consolidation, stock or asset sale transaction in accordance with Section 2.5(d) . Notwithstanding the foregoing, (x) Purchaser may merge the Company into, or otherwise transfer the Earnout Business to, Purchaser or any of its Affiliates so long as the Purchaser or its Affiliate, as applicable, complies with the provisions of this Section 2.5 , and Purchaser shall cause any such Affiliate to comply with the provisions of this Section 2.5 , and (y) the accelerated payment of the Earnout Amount shall not be required in the event of a Purchaser Change in Control;
(vi)      Hunter J. Morris’s employment with the Purchaser, the Company or any of their respective Affiliates is terminated by Purchaser, the Company or any of their respective Affiliates without “cause” or terminated by Hunter J. Morris “with good reason” (as such terms are defined in Hunter J. Morris’s employment agreement with the Purchaser, the Company or any of their respective Affiliates), unless Purchaser pays the Earnout Amount in an amount equal to the lesser of (A) $15,000,000 or (B) $15,000,000 minus any of the Earnout Amount previously paid, in each case to the Sellers on the effective date of any such termination in accordance with Section 2.5(d) ; or
(vii)      make any change in Tax or accounting methods or principles, except as specifically required or permitted by GAAP or applicable Law.
Sellers acknowledge and agree that (i) all capital expenditures made by the Earnout Business during the Earnout Period shall be subject to approval by the management of Purchaser (excluding for this purpose former employees or officers of the Company) or, as applicable, the board of directors of Purchaser, in each case, after reasonable consultation with former employees or officers of the Company who are employed by Purchaser or its Affiliates and (ii) pricing of goods sold or services provided by the Earnout Business shall be approved

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in advance by the management of Purchaser (excluding for this purpose former employees or officers of the Company) or within parameters established in writing by such management of Purchaser, in each case after reasonable consultation with former employees or officers of the Company who are employed by Purchaser.
The Parties acknowledge and agree that the foregoing provisions of this Section 2.5(e) represent the Parties’ negotiations and agreements regarding the conduct of the Earnout Business from the Closing through and including December 31, 2019 and that there shall be no implied duties or covenants applicable to the operation of the Earnout Business including, without limitation, any implied duties of good faith and fair dealing.
Section 2.6      Neutral Accountant Procedures.
(a)      The Neutral Accountant shall have full authority to arbitrate all of the issues or matters relating to the adjustments under Section 2.4 and Section 2.5 , but solely in accordance with the terms of this Section 2.6 and the other provisions of this Agreement.
(b)      Each of the Sellers Representative and Purchaser shall be entitled to make a presentation to the Neutral Accountant, at which the other shall be entitled to be present and participate, pursuant to procedures to be agreed to among the Parties and the Neutral Accountant (or, if they cannot agree on such procedures, pursuant to procedures determined by the Neutral Accountant), regarding the Closing Statement or Earnout Statement (as applicable) and the calculations of the Closing Net Working Capital, Revenues, EBITDA, and/or the Earnout Amount (as applicable) (the “ Disputed Amount ”) and each of Sellers Representative and Purchaser shall use commercially reasonable efforts to cause the Neutral Accountant to resolve the differences between them and determine the Disputed Amount within twenty (20) days after the engagement of the Neutral Accountant. Each of the Sellers Representative and Purchaser, as a condition precedent to making a presentation to the Neutral Accountant and having the Neutral Accountant review its calculations, shall provide reasonable advance access to the other Party with respect to such materials and reasonably cooperate with the other Party in its review and analysis thereof. With respect to the Closing Statement, if applicable, the Neutral Accountant shall choose either the Closing Statement and calculation of Closing Net Working Capital of Purchaser or the Closing Statement and calculation of Closing Net Working Capital of Sellers Representative, and shall not be entitled to choose any Closing Statement or calculation of Closing Net Working that is not proposed by either Party. With respect to an Earnout Statement, if applicable, the Neutral Accountant shall choose either the Earnout Statement and calculation of Revenues, EBITDA and/or Earnout Amount of Purchaser or the Earnout Statement and calculation of Revenues, EBITDA and/or Earnout Amount of Sellers Representative, and shall not be entitled to choose any Earnout Statement or calculations of Revenues, EBITDA and/or Earnout Amount that is not proposed by either Party. The Neutral Accountant’s determination shall be based solely on such presentations of the Parties (i.e., not on independent review) and on the definitions and other terms included in this Agreement.
(c)      Such determination by the Neutral Accountant shall be conclusive and binding upon the Parties, absent fraud or manifest error, and shall be an arbitral award that is non‑appealable. As between Sellers Representative and Purchaser, the fees and expenses of the

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Neutral Accountant shall be paid by the Party whose calculation of the Closing Statement or the Earnout Statement (as applicable) and the Disputed Amount is not chosen by the Neutral Accountant.
Section 2.7      Purchase Price Allocation .
(a)      Within thirty (30) days following the final determination of the Final Closing Net Working Capital, Purchaser shall prepare and deliver to Sellers Representative a draft of a statement (the “ Allocation Statement ”) setting forth its proposed allocation of the Transaction Consideration (including the amount of any assumed liabilities) among the assets of the Company. Sellers agree to Purchaser’s engagement of Grant Thornton LLP for purposes of providing a valuation of the Company’s assets and the Parties agree that the Allocation Statement shall reflect an allocation within the ranges of values as determined by Grant Thornton LLP. If within thirty (30) days after Sellers Representative’s receipt of the draft Allocation Statement, Sellers Representative shall not have objected in writing to such draft Allocation Statement, the draft Allocation Statement shall become the Allocation Statement. In the event that Sellers Representative objects in writing within such thirty (30)-day period, Sellers Representative and Purchaser shall negotiate in good faith to resolve the dispute. If Sellers Representative and Purchaser are unable to reach an agreement within thirty (30) days after Purchaser’s receipt of Sellers Representative’s written objection, the dispute shall be resolved and the Allocation Statement shall be determined by the Neutral Accountant. The Allocation Statement, as agreed upon by Purchaser and Sellers Representative and/or determined under this Section 2.7 , shall be final and binding upon the Parties hereto. Each of Purchaser and Sellers shall bear all fees and costs incurred by it in connection with the determination of the Allocation Statement, except that Purchaser on one hand and Sellers on the other hand shall each pay one-half (50%) of the fees and expenses of the Neutral Accountant.
(b)      The Allocation Statement will be prepared in accordance with Section 1060 of the Code as the case may be and the rules and Treasury Regulations promulgated thereunder and shall control for all purposes of the information reporting requirements of Section 1060 of the Code.
(c)      The Parties hereto agree to report the allocation of the Transaction Consideration (including the amount of any assumed liabilities) among the Company’s assets in a manner consistent with the Allocation Statement and agree to act in accordance with the Allocation Statement in the preparation and filing of all Tax Returns (including any other forms or statements required by the Code, Treasury Regulations, the Internal Revenue Service or any applicable state or local Governmental Body) and in the course of any Tax audit, Tax review or Tax litigation relating thereto except as otherwise required by applicable Law. The Parties shall not take any position in any Tax Return which is contrary to such allocation except as otherwise required by applicable Law.
(d)      To the extent an Earnout Amount is due to the Sellers pursuant to Section 2.5 , the Parties agree to work in good faith to amend the Allocation Statement in a manner consistent with the Allocation Statement to account for additional consideration paid to the Sellers. To the extent the Parties are unable to resolve any dispute with respect to such amendment, the dispute shall be resolved and the Allocation Statement shall be amended as determined by the Neutral Accountant. Each of Purchaser and Sellers shall bear all fees and costs incurred by them in connection with the determination of the amendment to the Allocation Statement, except that

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Purchaser on one hand and Sellers on the other hand shall each pay one-half (50%) of the fees and expenses of the Neutral Accountant.
(e)      The Parties hereto will promptly inform one another in writing of any challenge by any Governmental Body to the purchase price allocation made pursuant to this Section 2.7 and agree to cooperate in good faith in any discussion, proposal or submission with respect to such challenge in order to preserve the effectiveness of such purchase price allocation.
Section 2.8      Withholding . Purchaser, Sellers and their respective Affiliates shall not be entitled to deduct or withhold any amount otherwise payable to any Person pursuant to this Agreement, except such amounts as Purchaser, Sellers or such Affiliate (as applicable) is required to deduct and withhold with respect to the making of such payment under applicable Law. Not less than five (5) Business Days prior to so deducting or withholding, Purchaser, Sellers Representative or such Affiliate (as applicable) shall provide written notice to the Person in respect of whom such amount is to be deducted or withheld identifying the amount of and applicable Law requiring such deduction or withholding, and Purchaser, Sellers Representative or such Affiliate (as applicable) shall cooperate in good faith with such Person to the extent reasonable to obtain reduction of or relief from such obligation to so deduct or withhold. Any amount so deducted or withheld shall be timely remitted to the relevant Tax Authority. To the extent that such amounts are so deducted or withheld in accordance with the foregoing provisions of this Section 2.8 , such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such amounts were deducted or withheld.
Section 2.9      Retention Escrow Amount . At the Closing, Purchaser shall transfer the Retention Escrow Amount in immediately available funds to the Retention Escrow Agent. The Retention Escrow Fund shall be held in escrow and disbursed pursuant to the terms and conditions of the Retention Escrow Agreement and this Agreement (and Purchaser and the Sellers Representative agree to issue joint written instructions to the Retention Escrow Agent accordingly), including that the Retention Escrow Fund shall be disbursed to Purchaser to satisfy amounts finally determined to be due to Purchaser in accordance with Article VIII , other than pursuant to Section 8.2(a)(ii) ; provided, however , that (i) if any portion of the Retention Escrow Fund remains undisbursed to Purchaser on the date that is the eighteen (18)-month anniversary of the Closing Date, then upon receipt of joint written instructions from the Purchaser and the Sellers Representative, the Retention Escrow Agent shall release for distribution to the Sellers Representative within five (5) Business Days thereafter an amount equal to (1) the Retention Escrow Fund, minus (2) the amount of any claims for coverage asserted by Purchaser either under the R&W Policy or pursuant to Article VIII , other than pursuant to Section 8.2(a)(ii) , which remain outstanding at such time. Purchaser agrees to pay the fees payable to the Retention Escrow Agent for establishing the Retention Escrow Fund.
Section 2.10      Indemnity Escrow Amount . At the Closing, Purchaser shall transfer the Indemnity Escrow Amount in immediately available funds to the Indemnity Escrow Agent. The Indemnity Escrow Fund shall be held in escrow and disbursed pursuant to the terms and conditions of the Indemnity Escrow Agreement and this Agreement (and Purchaser and the Seller Representative agree to issue joint written instructions to the Indemnity Escrow Agent accordingly),

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including that the Indemnity Escrow Fund shall be disbursed to Purchaser to satisfy amounts finally determined to be due to Purchaser with respect to indemnification claims, if any, pursuant to Section 8.2(a)(ii) ; provided , however , that (i) if any portion of the Indemnity Escrow Fund remains undisbursed to Purchaser on the date that is the eighteen (18)-month anniversary of the Closing Date, then the Indemnity Escrow Agent shall release for distribution to the Seller Representatives within five (5) Business Days thereafter an amount equal to (1) the Indemnity Escrow Fund, minus (2) the amount of any claims for indemnity asserted pursuant to Section 8.2(a)(ii) that remain unresolved as of such date. Purchaser agrees to pay the fees payable to the Indemnity Escrow Agent for establishing the Indemnity Escrow Fund. In the event Sellers Representative delivers to Purchaser written confirmation from the Company’s insurers, in a form reasonably acceptable to Purchaser, that the environmental matter described in Item 3 on Schedule 8.2(a)(ii) is covered by the insurance maintained by the Company, the Company agrees to promptly execute a joint written instruction authorizing the release of $550,000 from the Indemnity Escrow Fund to Sellers Representative.
ARTICLE III     
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby represents and warrants to Purchaser as follows (i) with respect to any representations and warranties that relate specifically to a Seller contained in Section 3.1(a) , Section 3.2 , Section 3.3 , Section 3.4 and Section 3.5 , each Seller will only be deemed to make or have made such representation and warranty severally and not jointly as to itself and not as to any other Seller, and (ii) with respect to all other representations and warranties in this Article III , each Seller will be deemed to make or have made such representations and warranties jointly and severally with all other Sellers:
Section 3.1      Organization and Good Standing .
(a)      If such Seller is not a natural person, such Seller is duly organized, validly existing and in good standing under the Laws of the state of its formation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now conducted.
(b)      The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Oklahoma and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now conducted. Schedule 3.1(b) sets forth each jurisdiction in which the Company is qualified or authorized to do business, and the Company is duly qualified or authorized to do business and is in good standing under the Laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, in each case except where the failure to be so qualified, authorized or in good standing would not be expected to result in a material Liability to the Company. Correct and complete copies of the Governing Documents, minute book and record books of the Company have been made available to Purchaser or its Representatives.
(c)      The Company does not have any Subsidiaries or any direct or indirect equity interest in any Person.

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Section 3.2      Authorization . If such Seller is a natural person, such Seller has the full legal capacity and authority to execute and deliver this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement to be executed by such Seller in connection with the consummation of the transactions contemplated by this Agreement (collectively, the “ Seller Documents ”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. If such Seller is not a natural person, the execution and delivery of this Agreement and the Seller Documents to which it is or is to become a party the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of such Seller. This Agreement has been, and each of the Seller Documents will be at or prior to the Closing, duly and validly executed and delivered by such Seller, and (assuming the due authorization, execution and delivery by the other parties and thereto) this Agreement constitutes, and each of the Seller Documents when so executed and delivered will constitute, legal, valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity).
Section 3.3      Capitalization; Title to Equity Interests .
(a)      With respect to the Company, Schedule 3.3 sets forth (i) the total number of authorized Equity Interests, (ii) the number and class of Equity Interests issued and outstanding, and (iii) the record owner of all the issued and outstanding Equity Interests of the Company. Such Seller owns of record and beneficially all of the Equity Interests set forth opposite such Seller’s name on Schedule 3.3 and such Seller has good and marketable title to such Equity Interests, in each case free and clear of any and all Liens, other than restrictions on transfer that may be imposed by federal or state securities Laws or the Governing Documents of the Company. Such Seller does not have any equity interest in or right to receive monies from the Company in connection with any securities (equity, debt or otherwise) of the Company, except as disclosed on Schedule 3.3 . The Equity Interests constitute all of the outstanding equity interests in the Company. The Equity Interests: (i) are duly authorized, validly issued, fully paid (to the extent required under the Governing Documents of the Company) and nonassessable and were not issued in violation of (A) the Securities Act or any applicable state securities laws or (B) any preemptive rights, rights of first refusal, rights of first offer, purchase options or other similar rights of any Person; (ii) are free and clear of all Liens, other than restrictions on transfer that may be imposed by federal or state securities Laws or the Governing Documents of the Company; (iii) other than this Agreement, are not subject to any agreements or understandings among any Persons with respect to the voting or transfer thereof; and (iv) other than this Agreement, are not subject to any outstanding subscriptions, options, convertible securities, warrants, calls granting rights to purchase or otherwise acquire any of such Equity Interests. The Company has no outstanding, nor has authorized any, unit appreciation, phantom units, profit participation or similar rights.
(b)      Except as set forth on Schedule 3.3 , there are no outstanding options, warrants, rights to subscribe to, purchase rights, preemptive rights, calls or similar rights relating

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to, or contracts, commitments, understandings or arrangements by which the applicable Seller or the Company is or may become bound to issue, additional securities or other equity interests of the Company, or rights or other securities convertible into or exchangeable or exercisable for securities or other equity interests in the Company.
Section 3.4      Solvency . Such Seller is not insolvent and will not be rendered insolvent by any of the transactions contemplated by this Agreement and the other Seller Documents to which such Seller is a party.
Section 3.5      Conflicts; Consents of Third Parties .
(a)      None of the execution and delivery by such Seller of this Agreement or by such Seller of the Seller Documents to which it is a party, the consummation by such Seller of the transactions contemplated hereby or thereby, or compliance by such Seller with any of the provisions hereof or thereof will (i) conflict with or result in any breach or violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under any provision of (A) the Governing Documents of such Seller; (B) any Contract or Permit to which such Seller or the Company is a Party or by which such Seller or the Company is bound; (C) any Order of any Governmental Body by which such Seller or the Company or any of their respective assets are bound; or (D) any applicable Law, or (ii) result in the creation of any Lien on the Equity Interest held by such Seller or the assets of the Company.
(b)      Except as set forth on Schedule 3.5(b) , no consent, waiver, approval, Order, Permit, authorization of, or filing with, or notification to, any Person or Governmental Body is required on the part of such Seller or the Company in connection with the execution and delivery of this Agreement or the Seller Documents, the compliance by such Seller with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, or the taking by such Seller of any other action contemplated hereby or thereby, except for compliance with the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “ HSR Act ”) and such other consents, waivers, approvals, Orders, Permits, authorizations or filings, the failure of which to obtain would not result in a Seller Material Adverse Effect.
Section 3.6      Financial Statements . True and complete copies of (a) the audited balance sheet of the Company as of December 31, 2016 and the unaudited balance sheet as of December 31, 2015 and the related audited statements of income, changes in stockholders’ equity and of cash flows of the Company for the years then ended (collectively, the “ Annual Financial Statements ”) and (b) the unaudited balance sheet of the Company as of September 30, 2017 and the related unaudited consolidated statements of income and of cash flows of the Company for the nine months then ended (collectively, the “ Interim Financial Statements ” and collectively with the Annual Financial Statements, the “ Financial Statements ”) are attached as Schedule 3.6 . Except as set forth on Schedule 3.6 , the Financial Statements have been prepared in accordance with GAAP consistently applied and present fairly in all material respects the consolidated financial position, results of operations and cash flows of the Company as of the dates and for the periods indicated therein (subject in the case of the Interim Financial Statements, to audit and normal year adjustments and the absence of notes). For the purposes hereof, the unaudited consolidated balance sheet of the

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Company as of September 30, 2017 is referred to as the “ Balance Sheet ” and September 30, 2017 is referred to as the “ Balance Sheet Date .”
Section 3.7      No Undisclosed Liabilities . The Company has no Liabilities of any kind that would have been required to be reflected in, reserved against or otherwise described in the Balance Sheet and were not so reflected, reserved against or described, other than (i) Liabilities incurred in the Ordinary Course of Business after the Balance Sheet Date, (ii) Liabilities incurred in connection with the transactions contemplated hereby (none of which results from, relates to, or was caused by a breach of a Contract, breach of warranty, tort or violation of Law), and (iii) Liabilities listed on Schedule 3.7 , which will be repaid, terminated, forgiven, settled, cancelled or otherwise extinguished at Closing.
Section 3.8      Absence of Certain Changes . Except as contemplated by this Agreement or as set forth on Schedule 3.8 , since the Balance Sheet Date (i) the Company has conducted the Business in the Ordinary Course of Business, (ii) there has not been with respect to the Business or the Company a Seller Material Adverse Effect, and (iii) the Company:
(a)      has not made any amendment to its Governing Documents or any amendment to the terms of its outstanding securities or other equity interests;
(b)      has not made any change in any method of accounting or accounting practice or policy other than those required by GAAP;
(c)      has not suffered any material theft, damage, destruction, loss or other casualty, whether or not covered by insurance, with respect to any of its properties;
(d)      has not (i) agreed to award or pay, awarded or paid any bonuses to employees with respect to any period after the Balance Sheet Date, or (ii) entered into or amended any written or material unwritten employment, consulting, deferred compensation, severance, change in control, employee retention or similar agreement or arrangements (except for entering into agreements or arrangements to employ or engage new employees or service providers on or after the Balance Sheet Date, in exchange for an annual compensation of less than $150,000), or (iii) agreed to increase the compensation payable or to become payable by the Company to any officer, director, employee, consultant, agent or representative of the Company (except for increases to the compensation payable to employees who were employed as of the Balance Sheet Date, by an amount, with respect to each such employee, consistent with prior practices in the Ordinary Course of Business), (iv) taken any action to accelerate the vesting, funding or payment of any compensation or benefit for any officer, director, employee, consultant, agent or representative of the Company, or (v) agreed to materially increase the coverage or benefits available under any severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or any other Employee Benefit Plan;
(e)      has not made any loans, advances or capital contributions to, or guarantees for the benefit of, or investments, or paid or reimbursed any fees to any Person (including any Affiliate of the Company), except for advances and reimbursements for business expenses to employees in the Ordinary Course of Business;

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(f)      has not incurred or assumed any material Indebtedness for borrowed money except unsecured current obligations and liabilities incurred in the Ordinary Course of Business;
(g)      has not mortgaged, pledged or subjected to any Lien, other than Permitted Liens, any of its assets or properties;
(h)      has not sold, leased, assigned, transferred, conveyed or otherwise disposed of any material assets or properties, except in the Ordinary Course of Business;
(i)      has not canceled, settled, compromised or accelerated any Indebtedness or claim, or amended, canceled, terminated, waived or released any Contract or right, except in the Ordinary Course of Business and which, in the aggregate, is not and would not be material to the Company or the Business;
(j)      has not instituted, settled or compromised any Legal Proceeding;
(k)      has not entered into, or made any commitments for, any lease of capital equipment or real property, in each case, involving payments in excess of $100,000 per year;
(l)      has not entered into any material transaction or entered into any transaction with any of its Affiliates, in each case, that was or not in the Ordinary Course of Business;
(m)      has not committed to make any capital expenditures requiring any payment following the Closing Date in excess of $100,000 individually or $250,000 in the aggregate;
(n)      has not materially changed the cash management practices of the Company and the policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits employed thereby;
(o)      has not entered into, amended or modified in any material respect, waived any material rights under, or terminated any Material Contract (or any Contract that would be a Material Contract if in existence as of the date hereof), other than any expiration of any such Material Contract or Contract in accordance with its terms; and
(p)      has not entered into any Contract or otherwise agreed to do, or taken any action that would reasonably be expected to result in, anything set forth in this Section 3.8 .
Section 3.9      Taxes .
(a)      Except as set forth on Schedule 3.9 : (i) the Company has duly and timely filed or caused to be timely filed with the appropriate Tax Authority all material Tax Returns required to be filed by the Company and all Tax Returns required to be filed with respect to the assets of the Company, all such Tax Returns are true, complete and accurate in all material respects, and all Taxes payable by the Company or payable with respect to the assets of the Company have been timely paid; (ii) there are not currently in effect any extensions or waivers of any statute of limitations of

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any jurisdiction regarding the assessment or collection of any Taxes of the Company or with respect to the assets of the Company, and no request for such waiver or extension is pending; (iii) there are no claims, demands, actions, suits, proceedings, audits or other Legal Proceedings asserted in writing or now in progress against the Company or its assets with respect to Taxes; (iv) none of the Sellers is a foreign person within the meaning of Section 1445 of the Code; (v) there are no Liens for Taxes upon any property or assets of the Company, except for Permitted Liens; (vi) no federal, state or local audits, examinations, investigations or other administrative proceedings or court proceedings are presently pending with regard to any Tax Returns filed by or on behalf of the Company or its assets; (vii) no assessment, deficiency or adjustment has been asserted in writing by any Tax Authority against the Company that has not been finally resolved and satisfied; (viii) no written claim has been made by any Tax Authority that the Company has not properly paid Taxes or filed Tax returns in a jurisdiction in which such entity does not file a Tax Return; (ix) all of the assets and properties of the Company have been properly listed and described on the property tax rolls for all periods prior to and including the date hereof and the Closing Date; and (x) no portion of the assets of the Company constitute omitted property for tax purpose.
(b)      The Company has complied, in all material respects, with all applicable Laws relating to the withholding and payment of all Taxes required to have been withheld and paid in connection with amounts paid or owing to any Employee, independent contractor, creditor, equity holder, or other third party of the Company, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed.
(c)      Other than commercial agreements entered into in the Ordinary Course of Business that do not primarily concern Taxes, the Company has not entered into any Tax sharing agreement, Tax allocation agreement, Tax indemnity agreement, or similar contract or arrangement or any current or potential contractual obligation to indemnify any other Person with respect to Taxes that will remain in effect as to such entity or require any payment after the Closing.
(d)      The Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of Tax within the meaning of Section 6662 of the Code.
(e)      Neither the Company nor any of the Sellers with respect to the Company, has participated in a listed transaction within the meaning of Treasury Regulations § 1.6011-4.
(f)      The Company has never been a member of an “affiliated group” within the meaning of Section 1504 of the Code, or other consolidated, combined or unitary group for federal, state, local or non-US Tax purposes.
(g)      (i) The Company is not required to include income in any amount under Section 481 of the Code (or any comparable provisions of state, local or foreign law), by reason of a change in accounting methods or otherwise, as a result of actions taken prior to the date of Closing; (ii) the Company will not be required to include in a taxable period on or after the Closing Date, taxable income attributable to income that economically accrues in a taxable period ending on or before the Closing Date, including as a result of the installment method of accounting, the completed contract method of accounting or the cash method of accounting; (iii) the Company currently uses

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the accrual method of accounting for income Tax purposes; and (iv) the Company will not be required to include any amount in taxable income or exclude any item of deduction or loss from any taxable period (or portion thereof) ending after the Closing Date as a result of any “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date.
(h)      The Company has been classified as a partnership for U.S. federal income Tax (and applicable state Tax) purposes since formation.
(i)      The Company does not have any Liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any corresponding provision of state, local or non-U.S. Tax Law), as a transferee or successor, by Contract, or otherwise.
(j)      Schedule 3.9 sets forth all jurisdictions in which the Company is subject to Tax, is engaged in business or has a permanent establishment.
(k)      There is no property or obligation of the Company, including uncashed checks to vendors, customers or employees, non-refunded overpayments or credits, that is escheatable or payable to any state or municipality under any applicable escheatment or unclaimed property Laws or that may at any time become escheatable to any state or municipality under any such Laws.
Section 3.10      Real Property .
(a)      The Company does not currently own, nor has the Company ever owned, any real property in fee simple. Schedule 3.10(a) sets forth a complete list of (i) all real property leased, used or occupied by the Company in connection with the conduct of the Business as currently conducted (such real property, together with all improvements thereon, the “ Leased Real Property ”), (ii) all leases relating to the Leased Real Property by the Company (individually, a “ Real Property Lease ” and collectively, the “ Real Property Leases ”) as lessee, and (iii) all material easements, rights-of-way agreements, surface use agreements, land-related licenses and similar type land-related agreements held by the Company and used in connection with the Business as currently conducted (the “ Rights-of-Way ” and the related agreements being referred to as the “ Rights-of-Way Agreements ”). The Company has (i) a good and valid leasehold interest to the Leased Real Property, free and clear of all Liens except Permitted Liens, and (ii) title to or a valid interest in the Rights-of-Way sufficient to conduct the Business as currently conducted. The Sellers have made available to Purchaser true, complete and correct copies of the Real Property Leases and Rights-of-Way Agreements. Neither the Company nor, to the Knowledge of Sellers, any other party to a Real Property Lease or Rights-of-Way Agreement, is in breach of or default under any Real Property Lease or Rights-of-Way Agreement, as applicable. The Company has not received any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company under any of the Real Property Leases or Rights-of-Way Agreements, in each case that has not been fully cured or resolved. Each of the Real Property Leases is (i) a legal, valid and binding obligation of the Company, and (ii) enforceable against the Company and, to the Knowledge of Sellers, the other party or parties thereto in accordance with its terms, in each case except (A) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar applicable Laws of general application affecting enforcement of creditors’ rights

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generally and (B) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any such proceeding may be brought.
(b)      The Company has not leased, subleased, assigned or otherwise granted to any Person (other than a lessor’s right under a Real Property Lease) the right to use or occupy the Leased Real Property or any portion thereof.
(c)      The (i) Leased Real Property constitutes all of the real property used by the Company to conduct the Business as currently conducted, (ii) buildings, facilities and improvements located on the Leased Real Property are in good operating condition and in a state of good maintenance and repair and are suitable for the purposes for which they are currently being used and (iii) the Leased Real Property is adequately serviced in all material respects by all utilities and public services necessary for the conduct of the Business thereon as presently conducted.
(d)      Except as set forth on Schedule 3.10(d) , the Company has not received any written notice of (i) material violations of building codes and/or zoning ordinances or other Laws applicable the Leased Real Property, (ii) existing, pending or threatened condemnation, appropriation, special assessment or other proceedings affecting the Leased Real Property, or (iii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters.
(e)      There are no Legal Proceedings or other condemnation, appropriation, moratorium or special assessments pending or, to the Knowledge of Sellers, threatened in writing by any Person that (i) affect any Leased Real Property or (ii) would impair the right of the Company to use any Leased Real Property for its current uses.
Section 3.11      Tangible Personal Property . Schedule 3.11 sets forth (i) all leases of vehicles utilized by the Company in the conduct of the Business, and (ii) all leases of personal property by the Company involving actual or estimated payments in excess of $20,000 (“ Personal Property Leases ”) per calendar year. Each of the Personal Property Leases is (a) a legal, valid and binding obligation of the Company, and (b) is enforceable against the Company and, to the Knowledge of Sellers, the other party or parties thereto in accordance with its terms, in each case except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar applicable Laws of general application affecting enforcement of creditors’ rights generally and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any such proceeding may be brought. Neither the Company, nor, to the Knowledge of Sellers, any other party to a Personal Property Lease, is in breach of or default under any Personal Property Lease. The Company has not received any written notice of any default or event that with notice or lapse of time or both would constitute a default by the Company under any of the Personal Property Leases, in each case which has not been fully cured or resolved.

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Section 3.12      Intellectual Property .
(a)      Schedule 3.12 contains a true and complete list of all material Intellectual Property owned, licensed or used by the Company. Except as set forth on Schedule 3.12 , (i) the Company owns and possesses good and valid legal and beneficial title to, or has a valid and enforceable right to use, all Intellectual Property used in connection with the Business together with the goodwill associated therewith, free and clear of all Liens other than Permitted Liens, and (ii) all necessary registration, maintenance and renewal fees currently due in connection with the Intellectual Property identified on Schedule 3.12 have been paid. As of the date of this Agreement, there are no oppositions, cancellations, invalidity proceedings, interferences or re-examination proceedings presently pending with respect to any Intellectual Property owned by the Company.
(b)      Schedule 3.12 contains a true and complete list of all material license agreements to which the Company is a party, other than commercially available off-the-shelf software. With respect to all Intellectual Property held by the Company under such license agreements, the Company has the right to use such Intellectual Property in the manner and subject to applicable Law and limitations on the scope of such use as set forth in such license agreements, free from any Lien other than Permitted Liens and not subject to any restrictions, other than as set forth in the applicable license agreement.
(c)      Except as set forth on Schedule 3.12 , (i) to the Knowledge of Sellers, the operation of the Business as currently conducted does not infringe or misappropriate any Intellectual Property rights of any other Person, (ii) the material Intellectual Property used by the Company is not the subject of any challenge received by the Company or any Seller in writing, (iii) neither the Company nor any Seller has received any written notice of any default or any event that with notice or lapse of time, or both, would constitute a default under any material Intellectual Property license to which the Company is a party or by which it is bound, in each case which has not been fully cured or resolved (iv) to the Knowledge of Sellers, no third party is infringing or misappropriating any of the Company’s rights in any of the material Intellectual Property, and (v) the Company not has granted any rights or interest in any of the material Intellectual Property owned by the Company to any other Person.
Section 3.13      Material Contracts .
(a)      Schedule 3.13(a) sets forth a list of all of the following Contracts to which the Company is a party or by which it is bound (collectively, the “ Material Contracts ”):
(i)      Contracts with any Affiliate or current or former director, manager, officer, employee or equity interest holder of the Company (other than Governing Documents of the Company and compensation arrangements with or for employees, officers or directors);
(ii)      Contracts with any labor union or association representing any Employees;

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(iii)      Contracts for the sale of any of the assets of the Company, other than in the Ordinary Course of Business, for consideration in excess of $100,000;
(iv)      Contracts relating to the acquisition or disposition by the Company of any operating business or the capital stock of any other Person, in each case for consideration in excess of $100,000;
(v)      Contracts relating to incurrence of (A) Indebtedness and (B) indebtedness of any third party of which the Company is an obligor, guarantor, surety or otherwise liable or which is secured by any assets of the Company;
(vi)      master service agreements or other Contracts pursuant to which the Company provides products or services to its customers in the Business, together with any related pricing agreements, and material open written work/purchase orders as of the date hereof, in each case, including a summary of open oral work/purchase orders;
(vii)      to the extent not identified under clause (vi), Contracts of the Company (A) involving customers, suppliers or vendors providing for annual expenditures or receipts or payments by or to the Company in each case of $20,000 or more or (B) that require performance by the Contract more than one (1) year from the date hereof, in either case that are not terminable by the Company without penalty on notice of thirty (30) days or less;
(viii)      Contracts that require the Company to purchase its requirements of any product or service from a third party or that contain “take or pay” provisions;
(ix)      Contracts that are entered into for the primary purpose of providing for the indemnification of any specific Loss, including environmental liability, by the Company of any Person;
(x)      Contracts granting to any Person a right of first refusal, first offer or other right to purchase any of the assets or Business of the Company;
(xi)      employment agreements and Contracts with consultants and independent contractors (or similar arrangements) excluding such Contracts that are cancellable upon not more than thirty (30) days’ notice without any penalty or payment, and all severance, change of control, employee retention and other similar Contracts;
(xii)      Contracts that provide for or create any joint venture, partnership or similar arrangement;
(xiii)      Contracts that contain any restriction on the ability of the Company to engage in the Business in any geographic region and will be binding on the Company following the Closing; and
(xiv)      broker, distributor, dealer and agency contracts.

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(b)      Each of the Material Contracts is (i) in full force and effect and a legal, valid and binding obligation of the Company, and (ii) enforceable against the Company and, to the Knowledge of Sellers, the other party or parties thereto in accordance with its terms, in each case except as limited by (A) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar applicable Laws of general application affecting enforcement of creditors’ rights generally and (B) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any such proceeding may be brought.
(c)      Neither the Company nor, to the Knowledge of Sellers, any other party to a Material Contract is in material breach of or default under any Material Contract. Except as set forth on Schedule 3.13(c) , the Company has not received any written notice of any default or event that with notice or lapse of time or both would constitute a default by the Company under any Material Contract, in each case which has not been fully cured or resolved. The Company has performed all material obligations to be performed by it to date under the Material Contracts and no warranty claims are currently pending under any of the Material Contract. The Company has not received any written notice of termination or cancellation with respect to any Material Contract. The Sellers have made available to the Purchaser or its Representatives true and correct copies of all Material Contracts.
Section 3.14      Employee Benefits .
(a)      Schedule 3.14(a) lists all material Employee Benefit Plans. For purposes of this Agreement, “ Employee Benefit Plan ” means each “employee benefit plan,” as defined in Section 3(3) of ERISA (whether or not subject to ERISA), and all other benefit or compensation plans, programs, policies, understandings and arrangements, including, without limitation, retirement, pension, welfare, bonus, employment, consulting and other compensation, incentive, equity and equity-based compensation, deferred compensation, stock purchase, severance pay, retention, change in control, sick leave, vacation pay, salary continuation, disability, hospitalization, medical insurance, life insurance, cafeteria, pre-tax premium, flexible spending, dependent care, and scholarship plans, programs, policies, understanding and arrangements (i) that are sponsored or maintained by the Company or to which the Company contributes or is obligated to contribute thereunder or (ii) with respect to which the Company has or could reasonably be expected to have any Liability.
(b)      True, correct and complete copies of the following documents, with respect to each of the Employee Benefit Plans, have been made available to Purchaser or its Representatives: (i) all plans and related trust, insurance policy and other funding documents, and all amendments thereto, (ii) administration, investment, service and similar agreements, (iii) the most recent Forms 5500 for the past three (3) years and all schedules and attachments thereto, (iii) the most recent financial statements and actuarial valuations for the past three (3) years, (iv) the most recent IRS determination, opinion or advisory letter, (v) the most recent summary plan descriptions (including letters or other documents updating such descriptions) and summaries of material modifications thereof, (vi) written descriptions of the material terms of all non‑written Employee Benefit Plans or agreements relating to Employee Benefit Plans and (vii) copies of material notices, letters or

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other correspondence with the IRS, Department of Labor, Pension Benefit Guaranty Corporation or any other Governmental Body relating to the Employee Benefit Plan during the past three (3) years.
(c)      The Company does not sponsor, maintain, contribute to, have an obligation to contribute or have any Liability with respect to any plan, program, policy, understanding, arrangement or account that is qualified or intended to be qualified under Section 401 or 408 of the Code.
(d)      As of the date of this Agreement and the Closing Date, all contributions and premiums required by Law or by the terms of any Employee Benefit Plan or any agreement relating thereto, to the extent due, have been, or will have been, timely made.
(e)      None of the Employee Benefit Plans provide for continuing health or other welfare benefits or coverage for any individual after termination of employment or other service, except as may be required under COBRA. The Company does not have any Liability on account of a violation of COBRA.
(f)      None of the Employee Benefit Plans are subject to, and the Company has no Liability under, Section 302 or Title IV of ERISA or Section 412 of the Code. None of the Employee Benefit Plans is (i) a “multiemployer plan” as defined in Section 3(37) of ERISA, (ii) a multiple employer plan as described in Section 413(c) of the Code, or (iii) a “multiple employer welfare arrangement” within the meaning of Section 3(40)(A) of ERISA.
(g)      Each of the Employee Benefit Plans has been established, maintained, operated and administered, in all material respects, in accordance with its terms and all provisions of applicable Law, including the Code and ERISA, and the Company has not been required to withhold or pay any Taxes as a result of a failure to comply with Section 409A of the Code. The Company does not have any obligation to make a “gross-up” or similar payment in respect of any Taxes that may become payable under Section 409A of the Code.
(h)      No act, omission or transaction has occurred which could result in imposition on the Company, directly or indirectly, of (i) any material Liability under Section 409 of ERISA for breach of fiduciary duties, (ii) a material civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA, (iii) a material tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (iv) any material Liability for any non‑exempt prohibited transaction under Section 406 or 407 of ERISA.
(i)      Each Employee Benefit Plan that is subject to Section 409A of the Code has been administered, operated and maintained at all times in compliance with such section and all applicable regulatory guidance (including notices, rulings and proposed and final regulations).
(j)      Except as set forth on Schedule 3.14(j) , neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or upon the occurrence of any additional or subsequent events) (i) result in any payment, benefit or other remuneration becoming due with respect to any current or former Employee, officer,

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director, independent contractor or consultant of the Company; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due with respect to any such individual, or (iii) increase any compensation or benefits otherwise payable under any Employee Benefit Plan. No amount paid or payable (whether in cash, in property, or in the form of benefits) in connection with the transactions contemplated by this Agreement (either alone or upon the occurrence of any additional or subsequent events) will be an “excess parachute payment” within the meaning of Section 280G of the Code or result in a penalty under Section 4999 of the Code.
(k)      There are no pending, or to the Knowledge of Sellers, threatened claims, assessments, demands, actions, suits, proceedings or audits with respect to any Employee Benefit Plans (other than claims for benefits in the Ordinary Course of Business).
(l)      No provision of any Employee Benefit Plan or other agreement, whether written or oral, could reasonably be expected to result in any limitation on the Company, Purchaser or any of its Affiliates from amending or terminating any Employee Benefit Plan. Each Employee Benefit Plan may be terminated without Liability to the Company, other than Liability for expenses in the Ordinary Course of Business associated with the termination and winding down thereof.
(m)      No Employee Benefit Plan is, and the Company with respect to any Employee Benefit Plan is not, the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Body and, to the Knowledge of Sellers, no circumstances exist pursuant to which any Employee Benefit Plan would have any cause or reason to make such an application or filing or otherwise participate in any such program.
Section 3.15      Labor; Employee Matters .
(a)      The Company is not a party to any labor or collective bargaining agreement and to the Knowledge of Sellers, there have been no unionization activities involving employees of the Company during the past three years.
(b)      There are no (i) strikes, work stoppages, work slowdowns or lockouts pending or, to the knowledge of the Sellers, threatened against or involving the Company, or (ii) unfair labor practice charges, material grievances or material complaints pending or, to the knowledge of the Sellers, threatened by or on behalf of any employee or group of employees of the Company. The Company has not experienced any material labor strike, slowdown, stoppage or lockout during the past three (3) years.
(c)      During the past three (3) years, (i) the Company has not effectuated a “plant closing” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment, (ii) there has not occurred a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of the Company and (iii) as of the date of this Agreement, Sellers have not closed, and do not intend to close, any plant or facility and has not effectuated, and does not intend to effectuate, any mass layoff of employees, as defined under the WARN Act or any other similar state or local Law.

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(d)      Schedule 3.15(d) contains a true and correct list of all persons who are employees, consultants or contractors of the Company as of the date that is five (5) Business Days prior to the date hereof, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full or part time); (iii) hire date (and adjusted hire date, if applicable); (iv) current annual base compensation rate; (v) commission, bonus or other incentive-based compensation arrangement (including target bonus, if applicable); and (vi) whether such individual is actively at work and, if not, the nature of the absence, the policy or Employee Benefit Plan under which such absence is authorized, the start date of such absence and the expected return date therefrom.
(e)      Except as set forth on Schedule 3.15(e) , (i) each employee listed on Schedule 3.15(d) is an “at-will” employee as such term is defined by applicable Law, and (ii) the Company is not a party to any written employment Contract or any consulting or similar Contract for the provision of services to the Company, or any severance, change of control, retention or other similar agreement, plan or arrangement with any employee.
(f)      Except as set forth on Schedule 3.15(f) , the Company is in compliance, and during each of the past three (3) years has complied, in all material respects, with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, occupational health and safety, workers’ compensation, leaves of absence, collection any payment of withholding Taxes, Social Security Taxes and similar Taxes and unemployment insurance. Except as set forth on Schedule 3.15(f) , each individual who is classified by the Company as an independent contractor has been properly so classified and all individuals that are or were required by applicable Laws to be characterized or treated as employees have been properly so characterized or treated at all relevant times, and all employees classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified. There are no material Legal Proceedings or other notice of violations against the Company pending, or to the Knowledge of Sellers, threatened to be brought or filed, by or with any Governmental Body or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Company, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage and hours, occupational exposure to Hazardous Materials or any other employment related matter arising under applicable Laws.
(g)      As of the Closing Date, all compensation, including wages, commissions and bonuses, payable to Employees, consultants, or contractors of the Company for services performed on or prior to the Closing Date will have been paid in full or properly accrued in the Estimated Closing Statement setting forth the Estimated Net Working Capital.
Section 3.16      Litigation .
(a)      Except as set forth on Schedule 3.16(a) , there are no Legal Proceedings pending or, to the Knowledge of Sellers, threatened against the Company before any Governmental

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Body that (i) affect in any respect the Company, its business or its assets or (ii) would materially and adversely affect the ability of Sellers to execute and deliver this Agreement or any of the other Seller Documents or to consummate the transactions contemplated hereby or thereby. Schedule 3.16(a) also lists Legal Proceedings since January 1, 2016 and sets forth a description of the final resolution of such Legal Proceeding.
(b)      Except as set forth on Schedule 3.16(b) , there are no outstanding Orders and no unsatisfied judgments, penalties or awards against or affecting the Company or any of its properties or assets. The Company is in material compliance with the terms of each Order set forth on Schedule 3.16(b) . Except as set forth on Schedule 3.16(b) , to the Knowledge of Sellers, no event has occurred that may constitute or result in (with or without notice or lapse of time) a violation of any such Order.
Section 3.17      Compliance with Laws; Permits .
(a)      The Company is now complying, and has complied, with all Laws applicable to its respective operations or assets other than any noncompliance, default or violation that would not reasonably be expected to, individually or in the aggregate, have a Seller Material Adverse Effect. The Company has not received any written notice of or been charged with the violation of any Laws that has not been fully resolved.
(b)      The Company currently has all material Permits which are required for the operation of the Business as presently conducted and all such Permits are valid and in full force and effect. Schedule 3.17(b) lists all material Permits (excluding Environmental Permits) held by the Company. The Company is in compliance, in all material respects, with (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation under) the terms, conditions and provisions of each Permit set forth on Schedule 3.17(b) . The Company has not received any written notice from any Governmental Body asserting any revocation, suspension, lapse or limitation of any Permit set forth on Schedule 3.17(b) .
(c)      None of the Sellers, the Company nor, to the knowledge of the Sellers, any respective Representative (with respect to any third party Representatives, only as it relates to the Business) thereof has directly or indirectly, (i) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns or violated any provisions of any applicable anti-bribery Laws, including the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “ FCPA ”), or (ii) taken any action that would constitute a violation of any applicable anti-bribery Laws, including the FCPA, including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any domestic government official or “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. To the Knowledge of Sellers, the Business has been conducted in compliance with the FCPA.

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(d)      Schedule 3.17(d) contains a list of all agents, intermediaries, importers and other similar Persons of the Company used in the preceding two years outside of the U.S. to arrange or facilitate the sale, purchase, export, import or transport of any materials or goods.
Section 3.18      Environmental Matters . Except as set forth on Schedule 3.18 hereto and for matters that would not reasonably be expected to, individually or in the aggregate, have a Seller Material Adverse Effect:
(a)      the Company is now complying, and has complied, with all applicable Environmental Laws and all material Environmental Permits in all material respects;
(b)      (i) the Company has duly obtained and is in material compliance with all material Environmental Permits (each of which is disclosed on Schedule 3.18 ) necessary to own and operate Business and such Environmental Permits are currently valid and in full force and effect; and (ii) the Company has not received any written notice that remains pending or unresolved that (A) any such existing Environmental Permits will be revoked, (B) any application currently pending or to be made prior to the Closing Date for any new Environmental Permit will be protested or denied, or (C) any renewal of any existing Environmental Permit will be protested or denied;
(c)      (i) there has been no Release of Hazardous Materials in contravention of or creating liability under Environmental Laws with respect to the Business or assets of the Company or any real property currently or formerly operated or leased by a Company or, to the Knowledge of Sellers, to any third party site to which Hazardous Materials generated by the Company were sent for treatment or disposal, and the Company has not received an Environmental Notice that any real property currently or formerly operated or leased in connection with the Business of the Company (including soils, groundwater, surface water, buildings and other structure located on any such real property), or any third party disposal site, has been contaminated with any Hazardous Material in a quantity or condition which could result in an Environmental Claim against, or constitutes a violation of Environmental Law or the terms of any Environmental Permit by, the Company; and (ii) the Company is not the subject of any outstanding Order or Contract with any Governmental Body respecting any Remedial Action or any material Release of a Hazardous Material;
(d)      the Company has not received any Environmental Notice alleging that the Company may be in violation of any Environmental Law, or any Environmental Permit, or may have any Liability under any Environmental Law, in each case which has not been fully resolved;
(e)      to the Knowledge of Sellers, there are no other facts or circumstances which would reasonably be expected to result in the imposition of any Liability pursuant to any Environmental Law at or otherwise in connection with the Business or the assets owned by the Company; and
(f)      Sellers have furnished to Purchaser complete and accurate copies of all environmental audits, assessments, reports, studies, analyses and correspondence on alleged material environmental matters (including any alleged non‑compliance with any Environmental Law, any Release or threatened Release of, or exposure to, Hazardous Materials or any other

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environmental Liabilities) that are in Sellers’ possession or control and arise out of or relate to the ownership or operation of the Company.
Section 3.19      Title . Except as set forth on Schedule 3.19(a) , the Company has good and valid title to, or a valid leasehold interest in, all buildings, fixtures, machinery, equipment, tools, vehicles, furniture, improvements and other properties and assets owned or leased by the Company, including those that are reflected in the Balance Sheet or acquired after the Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the Ordinary Course of Business since the Balance Sheet Date. All such properties and assets (including leasehold interest) are free and clear of all Liens, except for Permitted Liens and for such Liens as set forth on Schedule 3.19(a) . Without limiting the generality of the immediately preceding sentence, none of such properties or assets is owned by any Seller or any Affiliate of any Seller (other than the Company) or any Representative thereof.
(a)      Except as set forth on Schedule 3.19(b) , the buildings, fixtures, machinery, equipment, tools, vehicles, furniture, improvements and other tangible assets of the Company are structurally sound, in good operating condition and repair, normal wear and tear excepted, and sufficient for the continued conduct the Business and constitute all of the rights, property and assets necessary to conduct the Business, in each case as such operations are currently conducted or have been conducted consistent with past practices, except as would not reasonably be expected to, individually or in the aggregate, have a Seller Material Adverse Effect.
Section 3.20      Financial Advisors; Transaction Expenses . Except as set forth on Schedule 3.20 , no Person has acted, directly or indirectly, as a broker, finder or financial advisor for any Seller in connection with the transactions contemplated by this Agreement or is entitled to any fee or commission or like payment in respect thereof. As of the Closing, the Company will have no Liability for any Transaction Expenses.
Section 3.21      Insurance . Schedule 3.21 sets forth a true and complete list of all current insurance policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability and other casualty and property insurance maintained by the Company and relating to the assets, business, operations, employees, officers and directors of the Company (collectively, the “ Insurance Policies ”) and true and complete copies of such Insurance Policies have been made available to Purchaser. Such Insurance Policies are in full force and effect and shall remain in full force and effect immediately following the Closing. Such Insurance Policies are sufficient for compliance with all requirements of applicable Law and all Material Contracts. The Company has not received any written notice of cancellation or non-renewal of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of the Company. All such Insurance Policies (a) are valid and binding in accordance with their terms; and (b) have not been subject to any lapse in coverage. There are no claims related to the Company or the Business pending under any such Insurance Policies as to which coverage has been

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questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Schedule 3.21 sets forth a list of all pending claims under any such Insurance Policies. The Company has not been notified in writing that the Company is in default, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy.
Section 3.22      Affiliate Transactions . Except as set forth on Schedule 3.22 , and other than the Governing Documents of the Company, there are no contracts, arrangements or transactions with any Seller, any director, manager, officer, employee, equity interest holder or Affiliate of any Seller or the Company, or any Immediate Family Member thereof, on the one hand, and the Company, on the other hand. Except as set forth on Schedule 3.22 , no Seller and no director, manager, officer, employee, equity interest holder or Affiliate of any Seller or the Company owns any properties or assets that are necessary to operate the Business in the manner as it is now being conducted by the Company.
Section 3.23      Bank Accounts; Powers of Attorney . Schedule 3.23 sets forth the name of each bank or other financial institution in which the Company has an account or lock box, the names of all Persons authorized to draw thereon or to have access thereto, and the account number for each such bank account. There are no outstanding powers of attorney executed on behalf of the Company or other similar appointment authorizing an agent of the Company to execute Contracts on its behalf.
Section 3.24      Customers and Vendors .
(a)      Schedule 3.24 sets forth (i) each of the ten (10) largest customers of the Business (by dollar volume of sales or services to such customers) for the twelve (12) month period ended December 31, 2017 (collectively, the “ Material Customers ”) and (ii) each of the ten (10) largest suppliers to the Business (by dollar volume of purchases from such suppliers) for the twelve (12) month period ended December 31, 2017 (collectively, the “ Material Vendors ”).
(b)      Except as set forth on Schedule 3.24 , no Material Customer or Material Vendor during the twelve (12) month period ended December 31, 2017 has terminated or cancelled its relationship with the Business.
(c)      Except as set forth on Schedule 3.24 , to the Knowledge of Sellers, the Company has not received written notice that any Material Customer or Material Vendor has or intends to cancel or otherwise substantially modify its relationship with the Company.
Section 3.25      Accounts Receivable . The Accounts Receivable of the Company included in the Final Closing Net Working Capital as of the Closing Date (i) will be valid and genuine, (ii) will have arisen solely out of bona fide sales and deliverance of goods, performance of services and other business transactions in the Ordinary Course of Business, (iii) will not be subject to any material defenses, set-offs or counterclaims, (iv) will be reasonably expected to be collectible in the Ordinary Course of Business within ninety (90) days after billing, net of any reserve for doubtful accounts set forth in the Final Closing Net Working Capital, and (v) have not been assigned or pledged to any Person (except for the Liens securing the Specified Indebtedness).

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Section 3.26      Investment Representations .
With respect to that portion of the Purchaser Common Stock to be received by a Seller:
(a)      Such Seller is acquiring such Purchaser Common Stock for its own account as principal, for investment purposes only, and not with a view to, or for, resale or distribution thereof, in whole or in part in a manner that would require registration under or violate the registration requirements of any state or federal securities Law. Such Seller has no contract, undertaking, agreement or arrangement with any Person to sell, transfer or pledge to such Person or to anyone else the Purchaser Common Stock, or any part thereof, and such Seller has no present plans to enter into any such contract, undertaking, agreement or arrangement.
(b)      Such Seller is an “accredited investor” as that term is defined under Rule 501 of Regulation D of the Securities Act.
(c)      Such Seller has been given the opportunity to ask questions of, and receive answers from, Purchaser and its officers concerning the terms and conditions of the sale of such Purchaser Common Stock and other matters pertaining to its investment. Such Seller acknowledges that such Seller has been furnished all information that such Seller has requested to the extent that such Seller considers necessary and advisable, and such information is sufficient upon which to base an investment decision.
(d)      Such Seller understands that, until the sale, transfer or assignment of the Purchaser Common Stock has been registered under the Securities Act, the Purchaser Common Stock cannot be sold, transferred or assigned except as may be otherwise permitted under the Securities Act and the rules and regulations promulgated thereunder in effect at the time of sale, transfer or assignment, and then only in compliance with all applicable state securities laws. A legend will be placed on any certificates representing the shares of the Purchaser Common Stock to that effect (and similar restrictions will be recorded in the transfer agent’s and registrar’s records for any shares issued in book-entry form), and Purchaser may prevent transfers that Purchaser reasonably believes do not comply with such requirements.
(e)      Such Seller understands and is fully aware that no federal or state agency has made any finding or determination as to the fairness of an investment in, or made a recommendation or endorsement of, the Purchaser Common Stock.
(f)      Such Seller acknowledges and understands that Purchaser is relying upon, among other things, the representations and warranties of such Seller in this Agreement in concluding that the offer and issuance of such Purchaser Common Stock hereunder will be exempt from the registration requirements of the Securities Act and the rules and regulations promulgated thereunder.
Section 3.27      NO OTHER REPRESENTATIONS OR WARRANTIES . EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (AS MODIFIED BY THE SCHEDULES HERETO), NEITHER SELLERS NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO ANY SELLER, THE BUSINESS, THE EQUITY

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INTERESTS, THE COMPANY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EACH SELLER HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY ANY SELLER, ANY AFFILIATE OF A SELLER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III HEREOF (AS MODIFIED BY THE SCHEDULES HERETO), EACH SELLER (I) EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO THE EQUITY INTERESTS, THE BUSINESS OR THE COMPANY (INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS) AND (II) HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO PURCHASER OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE MADE AVAILABLE TO PURCHASER BY ANY REPRESENTATIVE OF ANY SELLER, THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES).
ARTICLE IV     
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to each Seller as follows:
Section 4.1      Organization and Good Standing . Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted.
Section 4.2      Authorization . Purchaser has full corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated hereby and thereby (the “ Purchaser Documents ”), and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement and each Purchaser Document have been duly authorized by all necessary corporate action on behalf of Purchaser. This Agreement has been, and each Purchaser Document will be at or prior to the Closing, duly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery by the other Parties and thereto) this Agreement constitutes, and each Purchaser Document when so executed and delivered will constitute, the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity).

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Section 4.3      Conflicts; Consents of Third Parties.
(a)      Except as set forth on Schedule 4.3 , none of the execution and delivery by Purchaser of this Agreement or the Purchaser Documents, the consummation of the transactions contemplated hereby or thereby, or the compliance by Purchaser with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under any provision of (i) the Governing Documents of Purchaser, (ii) any Contract or Permit to which Purchaser is a Party or by which Purchaser or its properties or assets are bound; (iii) any Order of any Governmental Body applicable to Purchaser or by which any of the properties or assets of Purchaser are bound or (iv) any applicable Law.
(b)      Except as set forth on Schedule 4.3 , no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby (including the issuance of Purchaser Common Stock) or the taking by Purchaser of any other action contemplated hereby, or for Purchaser to conduct the Business, except for compliance with the applicable requirements of the HSR Act.
Section 4.4      Litigation . Except as disclosed in the Purchaser SEC Documents, there is no action, suit, proceeding, inquiry, audit, review or investigation before or brought by any Governmental Body now pending or, to the knowledge of the Purchaser, threatened, against or affecting the Purchaser or any of its Subsidiaries, or, to the knowledge of the Purchaser, otherwise involving the Purchaser or any of its Subsidiaries, which is required to be disclosed in the Purchaser SEC Documents or which would reasonably be expected to result in a Purchaser Material Adverse Effect.
Section 4.5      Financial Advisors . No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in connection with the transactions contemplated by this Agreement or is entitled to any fee or commission or like payment in respect thereof, in each case for which any Seller would be liable.
Section 4.6      Financial Capability . Purchaser (a) will have, as of the Closing, sufficient funds available to pay the Cash Consideration Amount and any and all other payments required to be made by Purchaser in connection with the transactions contemplated by this Agreement, (b) will have, as of the Closing, the resources and capabilities (financial or otherwise) to perform its obligations hereunder, and (c) has not incurred any obligation, commitment, restriction or Liability of any kind, which could reasonably be expected to impair or adversely affect such resources and capabilities.

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Section 4.7      Solvency .
(a)      Immediately after giving effect to the consummation of the transactions contemplated by this Agreement (including, without limitation, the debt and equity financings being entered into in connection therewith):
(i)      the fair saleable value (determined on a going concern basis) of the assets of Purchaser will be greater than the total amount of Purchaser’s liabilities (including all liabilities, whether or not reflected in a balance sheet prepared in accordance with GAAP, and whether direct or indirect, fixed or contingent, secured or unsecured, disputed or undisputed);
(ii)      Purchaser will be able to pay its debts and obligations in the ordinary course of business as they become due; and
(iii)      Purchaser will have adequate capital to carry on its business.
(b)      In completing the transactions contemplated by this Agreement, Purchaser does not intend to hinder, delay or defraud any present or future creditors of Purchaser or any Seller or its Subsidiaries.
Section 4.8      Investor Representations . With respect to the Equity Interests to be purchased by Purchaser hereunder:
(a)      Purchaser is acquiring such Equity Interests for its own account as principal, for investment purposes only, and not with a view to, or for, resale or distribution thereof, in whole or in part in a manner that would require registration under or violate the registration requirements of any state or federal securities Law. Purchaser has no contract, undertaking, agreement or arrangement with any Person to sell, transfer or pledge to such Person or to anyone else the Equity Interests, or any part thereof, and Purchaser has no present plans to enter into any such contract, undertaking, agreement or arrangement.
(b)      Purchaser is an “accredited investor” as that term is defined under Rule 501 of Regulation D of the Securities Act.
(c)      Purchaser has been given the opportunity to ask questions of, and receive answers from, Sellers and their officers concerning the terms and conditions of the sale of the Equity Interests and other matters pertaining to its investment. Purchaser acknowledges that Purchaser has been furnished all information that Purchaser has requested to the extent that Purchaser considers necessary and advisable, and such information is sufficient upon which to base an investment decision. The foregoing shall not in any manner diminish or adversely affect any representation or warranty of the Sellers contained in this Agreement and the Purchaser’s rights to indemnification hereunder or recovery under the R&W Policy shall not be affected by any such investigation by the Purchaser.

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(d)      Purchaser understands that, until the sale, transfer or assignment of the Equity Interests has been registered under the Securities Act, the Equity Interests cannot be sold, transferred or assigned except as may be otherwise permitted under the Securities Act and the rules and regulations promulgated thereunder in effect at the time of sale, transfer or assignment, and then only in compliance with all applicable state securities Laws.
(e)      Purchaser understands and is fully aware that no federal or state agency has made any finding or determination as to the fairness of an investment in, or made a recommendation or endorsement of, the Equity Interests.
(f)      Purchaser acknowledges and understands that Sellers are relying upon, among other things, the representations and warranties of Purchaser in this Agreement in concluding that the sale of the Equity Interests hereunder will be exempt from the registration requirements of the Securities Act and the rules and regulations promulgated thereunder.
Section 4.9      Capital Structure; Issuance of Purchaser Common Stock .
(a)      The authorized capital stock of the Company consists of 250,000,000 shares of Purchaser Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share (the “ Purchaser Preferred Stock ”). At the close of business on September 30, 2017, 118,518,896 shares of Purchaser Common Stock were issued and outstanding and no shares of Purchaser Preferred Stock were issued and outstanding.
(b)      (i) All outstanding shares of Purchaser Common Stock issued prior to the date of this Agreement has been duly authorized, validly issued, fully paid, non‑assessable and issued without application of preemptive rights, rights of first refusal or similar rights; and (ii) the issuance of the Purchaser Common Stock pursuant to this Agreement has been duly authorized and upon consummation of the transactions contemplated by this Agreement, the shares of Purchaser Common Stock will have been validly issued, fully paid, non‑assessable and issued without application of preemptive rights, rights of first refusal or similar rights and will be free and clear of all Liens and restrictions, other than the restrictions imposed pursuant to this Agreement, the Standstill Agreement and applicable securities laws.
(c)      Except as set forth in the Purchaser’s Governing Documents or in the Purchaser SEC Documents, there are no preemptive rights, rights of first refusal or other outstanding options, warrants, conversion rights, redemption rights, repurchase rights, calls or subscription agreements pursuant to Purchaser’s Governing Documents or any other Contract to which Purchaser is party that are or will be exercisable in connection with the execution and delivery of this Agreement or the Purchaser Documents or the consummation of the transactions contemplated hereby and thereby, including the issuance and sale of the Purchaser Common Stock to Sellers.
(d)      Purchaser does not have outstanding any bonds, debentures, notes or other debt obligations the holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) with the holders of equity interests in Purchaser on any matter.

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Section 4.10      Purchaser Financial Statements . The consolidated financial statements of Purchaser, together with the related schedules and notes thereto, if any, included in the Purchaser SEC Documents (collectively, the “ Purchaser Financial Statements ”) complied in all material respects with applicable accounting requirements and with the published rules and regulations of the Securities and Exchange Commission (“ SEC ”) with respect thereto as of their respective dates, present fairly in all material respects the financial position of Purchaser and its consolidated Subsidiaries at the dates indicated and have been prepared in conformity with GAAP applied on a consistent basis throughout the periods indicated (subject, in the case of unaudited statements, to normal year-end adjustments and the absence of footnotes), except as expressly stated in the related notes thereto. Except as described in the Purchaser Financial Statements, there are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), or any other relationships with unconsolidated entities or other persons, that may have a material current or future effect on Purchaser’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenue or expenses.
Section 4.11      SEC Reports .
(a)      Purchaser has filed with the SEC all forms, reports, schedules, statements, exhibits and other documents required to be filed by it from January 1, 2016 to the date hereof (such forms, documents, statements and reports, including supplements or amendments thereto, as amended since the respective dates of filing, the “ Purchaser SEC Documents ”) and has furnished or made available (including via EDGAR) to the Sellers complete and correct copies of all such Purchaser SEC Documents. As of their respective filing dates, the Purchaser SEC Documents complied as to form in all material respects with the requirements of the Exchange Act and the Securities Act.
(b)      As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing amending or superseding same), each Purchaser SEC Document filed pursuant to the Exchange Act did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(c)      Each Purchaser SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration statement or amendment became effective or is deemed to have become effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
(d)      Purchaser has established and maintains disclosure controls and procedures and a system of internal control over financial reporting (as such terms are defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) as required by the Exchange Act. Except as described in the Purchaser SEC Documents, since December 31, 2016, there has been (1) no material weakness in the Purchaser’s internal control over financial reporting (whether or not remediated) and (2) no change in Purchaser’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, Purchaser’s internal control over financial reporting.

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Section 4.12      Absence of Violations, Defaults and Conflicts. Neither the Purchaser nor any of its Subsidiaries is (A) in violation of its Governing Documents, (B) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Purchaser or any of its Subsidiaries is a party or by which it or any of them may be bound or to which any of the properties or assets of the Purchaser or any Subsidiary is subject (collectively, “ Agreements and Instruments ”), except for such defaults that would not, individually or in the aggregate, reasonably be expected to result in a Purchaser Material Adverse Effect, or (C) in violation of any Law or Order, except for such violations that would not, individually or in the aggregate, reasonably be expected to result in a Purchaser Material Adverse Effect.
Section 4.13      NYSE Listing . All outstanding shares of Purchaser Common Stock are listed on the New York Stock Exchange (“ NYSE ”) and Purchaser has not received any notice of delisting.
Section 4.14      Condition of the Business . NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, PURCHASER ACKNOWLEDGES AND AGREES THAT SELLERS ARE NOT MAKING ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN BY SELLERS IN ARTICLE III HEREOF (AS MODIFIED BY THE SCHEDULES HERETO) OR IN ANY CERTIFICATE DELIVERED AT CLOSING, AND PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III HEREOF OR IN ANY CERTIFICATE DELIVERED AT CLOSING, THE EQUITY INTERESTS ARE BEING TRANSFERRED ON AN “AS IS, WHERE IS” BASIS. ANY CLAIMS PURCHASER MAY HAVE FOR BREACH OF REPRESENTATION OR WARRANTY SHALL BE BASED SOLELY ON THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN ARTICLE III HEREOF (AS MODIFIED BY THE SCHEDULES HERETO) OR IN ANY CERTIFICATE DELIVERED AT CLOSING. PURCHASER REPRESENTS THAT PURCHASER IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY, OTHER THAN THOSE SET FORTH IN ARTICLE III HEREOF (AS MODIFIED BY THE SCHEDULES HERETO) OR IN ANY CERTIFICATE DELIVERED AT CLOSING, MADE BY SELLERS, ANY OF THEIR AFFILIATES, OR ANY OTHER PERSON WHETHER EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING SELLERS, THE EQUITY INTERESTS, THE BUSINESS, THE COMPANY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. PURCHASER REPRESENTS THAT IT HAS CONDUCTED TO ITS SATISFACTION, ITS OWN INDEPENDENT INVESTIGATION OF THE COMPANY AND, IN MAKING THE DETERMINATION TO PROCEED WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, PURCHASER HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT INVESTIGATION AND THE REPRESENTATIONS AND WARRANTIES OF THE SELLERS IN ARTICLE III HEREOF (AS MODIFIED BY THE SCHEDULES HERETO) OR IN ANY CERTIFICATE DELIVERED AT CLOSING.
ARTICLE V     
COVENANTS

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Section 5.1      Access to Information .
(a)      Prior to the Closing Date, Sellers shall, and shall cause the Company to, provide to the Purchaser and its Representatives reasonable access to and the right to make such investigation of the properties, businesses, operations and personnel of the Company and such examination of the Books and Records as it reasonably requests. Notwithstanding the foregoing, Purchaser shall make all requests for access and all due diligence requests directly to Sellers Representative who shall coordinate any such access and production of documents. Any such investigation and examination shall be conducted during regular business hours upon reasonable advance notice and under reasonable circumstances and shall be subject to restrictions under applicable Law. Each Seller shall cause its Representatives and the Company and its Representatives to reasonably cooperate with Purchaser and Purchaser’s Representatives in connection with such investigation and examination, and Purchaser and its Representatives shall cooperate with Sellers and their Representatives and shall use their reasonable efforts to minimize any disruption to the Company. Notwithstanding anything to the contrary contained herein, prior to the Closing, without the prior written consent of the Sellers Representative, (i) Purchaser shall not contact any suppliers to, or customers or other business relations of, the Company, and (ii) Purchaser shall have no right to perform invasive or subsurface investigations of the properties or facilities of the Company.
(b)      In the event Purchaser or its Representatives desire physical access to any of the Company’s properties, and if Purchaser and its Representatives receive requisite approval from the Sellers Representative to visit and inspect such properties, Purchaser hereby assumes the risk of, and releases, the Sellers and the Company, and their respective Representatives from any and all liability for, and Purchaser shall indemnify, defend and hold the Sellers and the Company harmless from and against, any and all Liabilities, causes of action and claims for damage and/or injury or death to any and all Persons and any and all Persons’ property, in each case arising out of, incident to, or in connection with Purchaser’s or its Representatives’ entry on the Company’s properties, WHETHER OR NOT SUCH PERSONAL INJURY, DEATH OR PROPERTY DAMAGE IS OCCASIONED BY OR INCIDENT TO OR THE RESULT OF THE NEGLIGENCE OR FAULT OF THE SELLERS, THE COMPANY OR THEIR RESPECTIVE REPRESENTATIVES, EXCEPT TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SELLERS, THE COMPANY OR THEIR RESPECTIVE REPRESENTATIVES.
Section 5.2      Conduct of the Business Pending the Closing .
(a)      Prior to the Closing, except (i) as required by applicable Law or GAAP, (ii) as otherwise expressly contemplated or required by this Agreement or (iii) with the prior written consent of Purchaser, Sellers shall cause the Company to (A) conduct the Business in the Ordinary Course of Business in all material respects; and (B) use its commercially reasonable efforts to (1) preserve the present business operations, organization and goodwill of the Company, and (2) preserve the present relationships with customers and suppliers of the Company.
(b)      Prior to the Closing, except (i) as required by applicable Law or GAAP, (ii) as otherwise expressly contemplated or required by this Agreement or (iii) with the prior written consent of Purchaser, Sellers shall not, and shall not permit the Company to:

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(A)      other than in the Ordinary Course of Business, (1) grant any new or increase existing compensation or benefits of any officer or Employee of the Company or any other individual who is a service provider to the Company (2) increase the coverage or benefits available under any (or create, commence participation in or become liable with respect to any new) Employee Benefit Plan or amend, modify, suspend or terminate any Employee Benefit Plan, (3) take any action to accelerate the vesting, funding or payment of any compensation or benefit for any individual who is a service provider to the Company, or (4) enter into any employment, deferred compensation, severance, change in control, retention, consulting, non‑competition or similar agreement (or amend any such agreement) to which the Company is party or involving an executive officer of the Company;
(B)      (1) terminate (other than for cause as determined by the Company in good faith) or hire any executive officer of the Company or (2) other than in the Ordinary Course of Business, terminate or hire any Employee who is not an executive officer of the Company;
(C)      make or rescind any material election relating to Taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes or make any material change to any of its methods of accounting or methods of reporting income or deductions for Tax or accounting practice or policy from those employed in the preparation of its most recent Tax Returns;
(D)      subject the assets or properties of the Company to any Lien to which they are not subject as of the date of this Agreement, in each case except in the Ordinary Course of Business or for Permitted Liens;
(E)      sell, transfer, dispose of or subject to any Lien any of the Equity Interests held by the Sellers in the Company;
(F)      cause or permit the Company to issue any additional Equity Interests of the Company or any securities convertible into or exchangeable for Equity Interests of the Company;
(G)      acquire any material properties or assets or sell, assign, license, transfer, convey, lease or otherwise dispose of any material asset of the Company (except pursuant to an existing Contract for fair consideration, for the purpose of disposing of obsolete or worthless assets or otherwise in the Ordinary Course of Business);
(H)      cancel or compromise any material debt or claim or waive or release any material right of the Company except in the Ordinary Course of Business;
(I)      enter into, modify or terminate any labor or collective bargaining agreement or, through negotiation or otherwise, make any commitment or incur any liability to any labor organization;

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(J)      enter into or agree to enter into any merger or consolidation with any Person;
(K)      amend or propose to amend the Company’s Governing Documents or split, subdivide, combine or reclassify its outstanding equity interests;
(L)      enter into any transaction for, or make any material acquisition of or investment in any businesses, product lines, business units, business operations or stock except in the Ordinary Course of Business;
(M)      make any single capital expenditure or commitment in excess of $50,000, or aggregate capital expenditures and commitments in excess of $150,000, including such capital expenditures for additions to property or equipment;
(N)      terminate or waive any material provision of, amend or otherwise modify any material provision of, a Material Contract; and
(O)      agree to do anything prohibited by this Section 5.2(b) .
(c)      Nothing contained in this Agreement, including this Section 5.2 , shall give Purchaser, directly or indirectly, any right to control or direct the operations of the Company prior to the Closing. Prior to the Closing, the Company and Purchaser shall each exercise, consistent with the other terms and conditions of this Agreement, complete control and supervision over their respective businesses.
Section 5.3      Consents; Closing Conditions .
(a)      Each Seller shall use its commercially reasonable efforts, and Purchaser shall cooperate with Sellers, to obtain at the earliest practicable date all consents and approvals required by the Sellers and/or the Company to consummate the transactions contemplated by this Agreement, including, without limitation, the consents and approvals referred to in Section 3.5(b) hereof; provided, however , that Sellers shall not be obligated to pay any consideration therefor to any third Party from whom consent or approval is requested.
(b)      Prior to the Closing, except as set forth in Section 5.4 , each Party hereto shall, and Sellers shall cause the Company to, use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.
Section 5.4      Regulatory Approvals .
(a)      Each of Purchaser, Sellers and Sellers Representative (if necessary) shall (i) make or cause to be made all filings required of each of them or any of their respective Affiliates under the HSR Act or other Antitrust Laws with respect to the transactions contemplated hereby as promptly as practicable and, in any event, within ten (10) Business Days after the date of this Agreement in the case of all filings required under the HSR Act and within four (4) weeks in the case of all other filings required by other Antitrust Laws, (ii) comply at the earliest practicable date with any request under the HSR Act or other Antitrust Laws for additional information, documents,

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or other materials received by each of them or any of their respective Affiliates from the Federal Trade Commission or any other Governmental Body in respect of such filings or such transactions, and (iii) cooperate with each other in connection with any such filing (including, to the extent permitted by applicable Law, providing copies of all such documents to the non‑filing Parties prior to filing and considering all reasonable additions, deletions or changes suggested in connection therewith) and in connection with resolving any investigation or other inquiry of any of the Federal Trade Commission or other Governmental Body under the HSR Act or other applicable Antitrust Laws with respect to any such filing or any such transaction. Each such Party shall use commercially reasonable efforts to furnish to each other all information required for any application or other filing to be made pursuant to any applicable Law in connection with the transactions contemplated by this Agreement. Each such Party shall promptly inform the other Party of any oral communication with, and provide copies of written communications with, any Governmental Body regarding any such filings or any such transaction. No such Party shall independently participate in any formal meeting with any Governmental Body in respect of any such filings, investigation, or other inquiry without giving the other Party prior notice of the meeting and, to the extent permitted by such Governmental Body, the opportunity to attend and/or participate. Subject to applicable Law, Purchaser and Sellers Representative will consult and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party relating to proceedings under the HSR Act or other Antitrust Laws. Purchaser and Sellers Representative may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this Section 5.4 as “outside counsel only.” Such materials and the information contained therein shall be given only to the outside legal counsel of the recipient and will not be disclosed by such outside counsel to employees, officers, or directors of the recipient, unless express written permission is obtained in advance from the source of the materials. Sellers and Purchaser shall each pay, or reimburse the other, fifty percent (50%) of any filing fees in connection with the filings required under the HSR Act.
(b)      Purchaser and Sellers Representative shall each use commercially reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental Body with respect to the transactions contemplated by this Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other United States federal or state or foreign statutes, rules, regulations, orders, decrees, administrative or judicial doctrines or other Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, the “ Antitrust Laws ”). In connection therewith, if any Legal Proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as in violation of any Antitrust Law, Purchaser and Sellers Representative shall cooperate and use their respective commercially reasonable efforts to have vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents, or restricts consummation of the transactions contemplated by this Agreement; provided that in no event shall Purchaser or its Affiliates (including the Company as it relates to the period following the Closing) be required hereunder (i) to divest any businesses, services, products or assets owned or operated by Purchaser as of the date of this Agreement or (ii) to initiate or contest and defend any Legal Proceeding challenging any transaction contemplated

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by this Agreement. Purchaser and Sellers Representative shall each use their respective commercially reasonable efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of this Agreement.
Section 5.5      Further Assurances . Each Party shall use its commercially reasonable efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement, which shall include, without limitation, Sellers causing the Company to provide any information that Purchaser reasonably requests to obtain the financing necessary to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement. If at any time after the Closing any further reasonable action is necessary or desirable to carry out the purposes and intents of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the requesting Party’s expense (unless the requesting Party is entitled to indemnification therefor under Article VIII ).
Section 5.6      Confidentiality .
(a)      Each Seller and Purchaser acknowledge that the information provided to it or any of its Representatives in connection with this Agreement and the transactions contemplated hereby is subject to the terms of the Non-Disclosure Agreement between Purchaser and the Company dated July 11, 2017, as amended by that certain Amended and Restated Non-Disclosure Agreement effective as of January 15, 2018 (as amended, the “ Non-Disclosure Agreement ”), the terms of which are incorporated herein by reference. Effective upon, and only upon, the Closing Date, the Non-Disclosure Agreement shall terminate with respect to information relating solely to the Company or the Business; provided, however , that (i) Purchaser acknowledges that any and all other Confidential Information provided to it or any of its Representatives by any Seller or any of its Representatives concerning Sellers, and (ii) Sellers acknowledge that any and all Confidential Information provided to them or any of their Representatives by Purchaser or any of its Representatives concerning Purchaser and its Affiliates, shall in each case remain subject to the terms and conditions of the Non-Disclosure Agreement after the Closing Date.
(b)      From and after the Closing, each Seller shall, and shall cause its respective Affiliates to, hold, and shall use its commercially reasonable efforts to cause its or their respective Representatives to hold, in confidence any and all confidential or proprietary information, whether written or oral, concerning the Business and the Company, except to the extent that any Seller can show that such information is generally available to the public as of the date of this Agreement, or at any subsequent date through no fault of any Seller or any of their Affiliates or Representatives. If any Seller or its Affiliates or Representatives receive a request to disclose any information by judicial or administrative process or by other requirements of Law, such Seller shall, to the extent legally permitted, promptly notify Purchaser in writing and shall disclose only that portion of such information such Seller is legally required to be disclosed; provided , that such Seller shall, at Purchaser’s expense, use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

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Section 5.7      Preservation of Records . Sellers and Purchaser agree that each of them shall preserve and keep the records held by it or their Affiliates relating to the Company for a period of seven (7) years from the Closing Date and shall make such records and personnel available to the other as may be reasonably required by such Party in connection with, among other things, any insurance claims by, Legal Proceedings or Tax audits against or governmental investigations of Sellers or Purchaser or any of their respective Affiliates or in order to enable Sellers or Purchaser to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby; provided, however , that nothing in this Section 5.7 shall require any Party to disclose information to the other Party if such disclosure would violate applicable Law. In the event any Seller or Purchaser wishes to destroy such records after that time, such Party shall first give ninety (90) days prior written notice to the other and such other Party shall have the right at its option and expense, upon prior written notice given to such Party within that ninety (90) day period, to take possession of the records within one hundred and eighty (180) days after the date of such notice.
Section 5.8      Publicity . Neither Sellers nor Purchaser shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other Party, which approval will not be unreasonably withheld or delayed, unless such disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange on which a Party lists securities; provided , that the Party intending to make such release pursuant to applicable Law or applicable rules of any stock exchange shall use its commercially reasonable efforts consistent with such applicable Law and applicable rules of any stock exchange to consult with the other Party with respect to the text of such disclosure, including by allowing reasonable opportunity to review such proposed disclosure and implementing any changes reasonably requested by such other Party.
Section 5.9      No Shop . From and after the date hereof until the earlier of the termination of this Agreement and the Closing Date, Sellers shall not, and shall cause their Affiliates (including the Company) and their respective directors, managers, partners, officers and employees, and use commercially reasonable efforts to cause their respective Representatives not to, do any of the following, directly or indirectly, with or for the benefit of any third party (other than Purchaser regarding the transactions contemplated by this Agreement): (a) discuss, negotiate, authorize, assist, participate in, recommend, propose or enter into, either as the proposed surviving, merged, acquiring or acquired corporation or other entity, any transaction (or series of transactions) involving a merger, consolidation, reorganization, recapitalization, transfer, sale, conveyance, business combination, purchase or disposition of (i) all or any portion of the Business or all or any substantial portion of the assets or properties of the Company, or (ii) any membership or other equity interest in the Company (any such transaction, an “ Acquisition Transaction ”), or (b) facilitate, engage in, encourage, solicit or initiate discussions, negotiations or submissions of proposals or offers from any third party in respect of an Acquisition Transaction.
Section 5.10      Releases .
(a)      Effective as of the Closing, each Seller hereby irrevocably and unconditionally releases and discharges (on behalf of itself and its Affiliates) the Company and its

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Representatives, successors, transferees and assignees, excluding Purchaser and its Affiliates (other than the Company) (collectively, the “ Company Released Parties ”), from any and all obligations (including indemnification obligations) and Liabilities, known and unknown, that have accrued or may accrue and that relate to acts or omissions relating to the Company, the Equity Interests, the Business or the Company’s assets, that occurred at or prior to the Closing, including any and all obligations and Liabilities, whether such obligations or Liabilities arise in tort, contract or statute, including all obligations or Liabilities (i) arising under each Company Released Party’s Governing Documents, any Contract or the Oklahoma Limited Liability Company Act or (ii) relating to actions or omissions of any Company Released Party, including those committed while serving in their capacity as Representatives of the Company or its Affiliates or similar capacities, and including in each case any and all obligations and Liabilities that such Person does not know or suspect to exist in such Person’s favor as of the date of this Agreement.
(b)      Each Seller hereby (i) waives any preferential purchase right, right of first refusal, right of first offer, buy-sell right, tag-along right, drag-along right, preemptive right, registration right or other right applicable to any previous issuance of interests of the Company or that could adversely affect the consummation of the transactions contemplated by this Agreement, including all such rights arising under any provision of the Company’s Governing Documents and (ii) agrees that the transfer of the Equity Interests contemplated by this Agreement is not void or voidable by reason of any restriction set forth in the Governing Documents of the Company.
(c)      Nothing in this Section 5.10 will be construed to release any Party from any Liabilities or obligations under this Agreement or the Purchaser Documents or Seller Documents to which such Party is a party.
Section 5.11      Transaction Expenses . Sellers shall (a) on or prior to the Closing Date, pay all Transaction Expenses for which the Company is liable and of which the Company or any Seller has received a request for payment in respect thereof prior to the Closing Date and (b) following the Closing Date, pay all Transaction Expenses for which the Company is liable and of which the Company or any Seller has received a request for payment in respect thereof on or after the Closing Date. Purchaser shall, and shall cause its Affiliates to, promptly forward to the Sellers Representative any request for payment of Transaction Expenses that is received by Purchaser or any of its Affiliates on or after the Closing Date.
Section 5.12      NYSE Listing . Prior to the Closing, Purchaser will use its best efforts to obtain approval for listing of the Purchaser Common Stock on the NYSE, subject to official notice of issuance.
Section 5.13      Financial Statements .
(a)      Sellers have made available to Purchaser true and complete copies of the Annual Financial Statements. Prior to the Closing, Sellers will deliver to Purchaser (i) the unaudited balance sheet of the Company as of September 30, 2017 and September 30, 2016, and (ii) the related unaudited statements of income and cash flows of the Company for the respective nine months then ended (the “ Required Quarter Financial Statements ”). Subject to Section 5.13(d) and unless otherwise directed in writing by Purchaser, Sellers shall retain Johnson, Miller & Co. to provide

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their audit report to Purchaser as soon as practicable, and shall use commercially reasonable efforts to cause Johnson, Miller & Co. to provide their audit report to Purchaser within thirty (30) days following the Closing, together with the financial statements for the year ended December 31, 2017 for the Company in a form that is acceptable to the SEC (the “ 2017 Financial Statements ”). The 2017 Financial Statements shall be audited by Johnson, Miller & Co.. Subject to Section 5.13(d) , Sellers shall use their commercially reasonable efforts to cooperate with any reasonable request by Purchaser for changes or modifications to such Annual Financial Statements, Required Quarter Financial Statements and 2017 Financial Statements so that such Annual Financial Statements, Required Quarter Financial Statements and 2017 Financial Statements are in a form that would satisfy the requirements of Item 9.01 of Form 8-K with respect to the financial statements of the business being acquired if included on a Form 8 K/A following the Closing.
(b)      Sellers hereby consent to the inclusion or incorporation by reference of the financial statements of the Company in any registration statement, offering memorandum, report or other filing of Purchaser, as to which such financial statements are required to be included or incorporated by reference to satisfy any rule or regulation of the SEC, to satisfy relevant disclosure obligations under the Securities Act or Exchange Act. Sellers shall use commercially reasonable efforts to cause the Company’s independent accountants to provide to Purchaser any consent necessary for the filing of such financial statements with the SEC.
(c)      From and after the date hereof, Sellers shall, and shall cause the Company to, reasonably cooperate and use commercially reasonable efforts to cause the Company’s independent accountant to reasonably cooperate with Purchaser in the preparation of unaudited pro forma statements of Purchaser that are derived in part from the financial statements of the Company, and that are (i) required to be included or incorporated by reference in any registration statement, offering memorandum, report or other filing of Purchaser to satisfy any rule or regulation of the SEC, or (ii) required to satisfy any disclosure obligations under the Securities Act or Exchange Act.
(d)      Purchaser shall promptly, upon request by Seller Representative from time to time, reimburse Sellers for all reasonable, documented out-of-pocket costs incurred by Sellers in connection with any such cooperation contemplated by this Section 5.13 (including reasonable attorneys’ and accountants’ fees), which, for the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, shall not be considered Transaction Expenses.
Section 5.14      Financial Assurances . Purchaser shall cooperate with the Company and Hunter J. Morris and use its commercially reasonable efforts to amend or cancel existing personal guaranty agreements previously executed by Hunter J. Morris for the purpose of guaranteeing the obligations of the Company to its vendors, equipment lessors and vehicle lessors (the “ H. Morris Guaranties ”) such that Hunter J. Morris shall have no liability under the H. Morris Guaranties for obligations of the Company arising after the Closing. Purchaser shall have no obligation to take any such actions with respect to any obligations of the Company covered by such H. Morris Guaranties that arose prior to the Closing. Purchaser agrees to indemnify and hold Hunter J. Morris harmless from any Losses suffered or incurred by Hunter J. Morris arising from any claims made under the H. Morris Guaranties relating to any obligations of the Company after the Closing.

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Purchaser’s indemnification obligation under this Section 5.14 shall not be subject to the any limitations set forth in Article VIII .
ARTICLE VI     
EMPLOYEES AND EMPLOYEE BENEFITS
Section 6.1      Employee Benefits .
(a)      Except as provided in this Section 6.1, Purchaser shall provide, or cause to be provided, for a period of sixty (60) days following the Closing Date, to each of the Employees for so long as such Employees remain continuously employed from the Closing with the Company, Purchaser or other Subsidiary of Purchaser during such period, base salary or hour wage rates that are substantially equivalent to those provided to such Employee immediately prior to the Closing, subject to any reclassifications of employment status as may be required by applicable Law. Thereafter, Purchaser may integrate each of the Employees into the base salary and hourly wages available to similarly-situated employees of Purchaser and its Affiliates. With respect to the Employees identified on Schedule 6.1(a) , Purchaser agrees to pay to each such Employee a sales commission consistent with that described on Schedule 6.1(a) with respect to such Employee for a period of twelve (12) months following the Closing, subject to such Employee remaining continuously employed by the Company, Purchaser or other Subsidiary of Purchaser during such twelve (12) month period. In addition, Purchaser shall cause the Company to continue to provide, except as provided in Section 6.1(b) below, to each of the Employees for so long as such Employees remain continuously employed from the Closing Date with the Company, Purchaser or other Subsidiary of Purchaser, other compensation and benefits as provided by the Company to the Employees immediately prior to the Closing until such time as such other compensation and benefits are transitioned to the Purchaser Plans. Following such transition, Purchaser shall provide, or cause to be provided, to each of the Employees for so long as such Employees remain continuously employed from the Closing Date with the Company, Purchaser or other Subsidiary of Purchaser, other compensation and benefits pursuant to the Purchaser Plans as Purchaser and its Affiliates make available to their similarly-situated employees, subject to the terms and provisions of the applicable Purchaser Plan; provided , that Purchaser shall not have any obligation to issue, or adopt any plans or arrangements providing for the issuance of, shares of capital stock, warrants, options or other rights in respect of any shares of capital stock of any entity or any securities convertible or exchangeable into such shares pursuant to any such plans or arrangements; provided , further , that no plans or arrangements of the Company providing for such issuance shall be taken into account in determining whether employee benefits are substantially equivalent in the aggregate.
(b)      For purposes of eligibility and vesting and for purposes of determining level of vacation (but not for vesting under equity, equity-based or similar incentive plans and not for benefit accrual, benefit levels or similar purposes under plans other than vacation) under the employee benefit plans of Purchaser that provide benefits to Employees and that are in effect on the Closing Date (the “ Purchaser Plans ”), Purchaser shall take commercially reasonable steps to credit each Employee with his or her years of service with the Company to the same extent as such Employee was properly credited for such service under any similar Employee Benefit Plan immediately prior to Closing, but only to the extent that (i) any applicable third party administrators

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and insurers consent thereto, (ii) such crediting would not result in duplication of benefits, and (iii) Sellers timely provide Purchaser with all information required by Purchaser to comply with these covenants. Following the Closing Date, in determining severance benefits available to Employees, Purchaser shall consider the Employees’ years of service with the Company when applying any applicable severance formulas. Purchaser shall take commercially reasonable steps to ensure the Purchaser Plans that provide medical benefits shall not deny Employees coverage on the basis of pre-existing conditions and shall credit such Employees for any deductibles and out-of-pocket expenses paid by such Employee under Employee Benefit Plan that provides medical benefits in the year of initial participation in the Purchaser Plans, in all cases, only to the extent (i) applicable third party administrators and insurers consent and (ii) Sellers timely provide Purchaser with all information required by Purchaser to comply with these covenants.
(c)      Nothing contained in this Agreement shall (i) confer upon any Employee any right with respect to continuance of employment by the Company, the Purchaser or any of its Affiliates, nor shall anything herein interfere with the right of the Company, the Purchaser or any of its Affiliates to terminate the employment of any of the Employees at any time after Closing, with or without cause, or (ii) create any third party beneficiary rights in any current or former employee, director or consultant, any beneficiary or dependents thereof, or any collective bargaining representative thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to any current or former employee, director or consultant by the Purchaser or any of its Affiliates or under any benefit plan which the Company, Purchaser or any of their respective Affiliates may maintain.
ARTICLE VII     
CLOSING; CONDITIONS TO CLOSING; TERMINATION
Section 7.1      Conditions Precedent to Obligations of Purchaser . The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law):
(a)      (i) the representations and warranties of the Sellers set forth in Section 3.2 (Authorization) and Section 3.3 (Capitalization; Title to Equity Interests) shall be true and correct in all respects, (ii) the representations and warranties of Sellers set forth in this Agreement (other than Sections 3.2 and 3.3 ) that are qualified by materiality (whether by reference to the terms “material” or “Seller Material Adverse Effect,” any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of Sellers that are not so qualified by materiality (other than Sections 3.2 and 3.3 ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(b)      Sellers shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Sellers prior to the Closing Date;

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(c)      between the date of this Agreement and the Closing Date, no Seller Material Adverse Effect shall have occurred;
(d)      each Seller shall have delivered to Purchaser a certificate dated the Closing Date, certifying the statements set forth in Section 7.1(a) , Section 7.1(b) and Section 7.1(c) are true and correct;
(e)      there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;
(f)      the waiting period applicable to the transactions contemplated by this Agreement under the HSR Act shall have expired or early termination shall have been granted;
(g)      each Seller shall have delivered, or caused to be delivered, an assignment or similar instrument effecting the transfer of the Equity Interests to Purchaser, duly executed by each such Seller;
(h)      Purchaser shall have received resignation letters from each individual who serves as a director, manager or officer of the Company, in each case effective as of the Closing, pursuant to which each such individual resigns from his position as a director, manager or officer, as applicable, of the Company;
(i)      Sellers Representative shall have delivered, or caused to be delivered, payoff letters (the “ Payoff Letters ”) setting forth the payoff amount as of the Closing Date with respect to the Specified Indebtedness, releases of Liens and other documentation reasonably satisfactory to Purchaser confirming that (A) all Liens (other than Permitted Liens) arising under the Specified Indebtedness, including all UCC financing statements, encumbering any Equity Interests or assets or properties of the Company shall have been irrevocably released, and (B) the Company shall have been released from any liability with respect to the Specified Indebtedness;
(j)      Sellers shall have delivered to Purchaser the Lock-Up Agreements, duly executed by Sellers;
(k)      Purchaser shall have bound coverage under the R&W Policy in accordance with the terms set forth in this Agreement;
(l)      Sellers Representative shall have delivered to Purchaser the Retention Escrow Agreement duly executed by Sellers Representative;
(m)      Sellers Representative shall have delivered to Purchaser the Indemnity Escrow Agreement duly executed by Sellers Representative;
(n)      each Seller shall, as applicable, have delivered a certificate of good standing and legal existence of such Seller and the Sellers Representative shall have delivered a certificate of good standing and legal existence the Company, in each case issued by the Secretary of State or

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similar Governmental Body of the jurisdiction of formation or incorporation of such Seller and the Company, as of a date within five (5) Business Days preceding the Closing Date;
(o)      Sellers shall have delivered (i) a certificate from each applicable transferor in the form specified in Treasury Regulation Section 1.1445-2(b)(2)(iv) that such entity is not a “foreign person” within the meaning of Section 1445 of the Code and (ii) a properly completed and executed Form W-9;
(p)      Sellers Representative shall have delivered evidence satisfactory to Purchaser that all Consents listed on Schedule 7.1(p) have been received or given;
(q)      Sellers Representative shall have delivered the original minute books of the Company and any Books and Records that may be in the possession or under the control of Sellers or any of their Affiliates, other than any books and records that Sellers or any of their Affiliates are required by Law to retain the originals of, in which case copies thereof shall be delivered to Purchaser (it being understood that Sellers shall not be required to deliver the minute books and any Books and Records which are already within the possession or control of the Company); provided , that Sellers and their Affiliates shall have reasonable access to, or the right to retain a copy of, all Books and Records delivered to Purchaser to the extent reasonably necessary for, and for use solely in connection with, Tax, regulatory or litigation purposes;
(r)      each Seller shall have delivered a certificate, dated as of the Closing Date and duly executed by the Secretary or other authorized officer of such Seller, certifying (A) that a true, complete and correct copy of the resolutions of the governing body of such Seller, authorizing the execution, delivery and performance by such Seller of this Agreement and the Seller Documents to which such Seller is a party, and the consummation of the transactions contemplated hereby and thereby, is attached thereto, and that such resolutions have not been amended, modified or rescinded and remain in full force and effect on the Closing Date, and (B) the names and signatures of the officer(s) of such Seller authorized to execute this Agreement and each Seller Document to which such Seller is a party;
(s)      Sellers Representative shall have delivered a certificate, dated as of the Closing Date and duly executed by the Secretary or other authorized officer of the Company, certifying that a true, complete and correct copy of the Company’s Governing Documents, as amended and in effect on the Closing, is attached thereto;
(t)      immediately prior to the Closing, the Sellers shall have caused the Company to pay a bonus in the amount of $750,000 to certain employees of the Company as previously disclosed by Sellers to Purchaser and the amount of such bonus shall not be a liability of the Company from and after the Closing; and
(u)      such other documents and instruments required to be delivered by the Sellers at Closing pursuant to this Agreement, and all such other agreements, certificates, documents and other instruments as Purchaser reasonably requests in writing and as are reasonably necessary to consummate the transactions contemplated by this Agreement and/or any of the Seller Documents, in each case, in form and substance reasonably satisfactory to Purchaser and its counsel.

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Section 7.2      Conditions Precedent to Obligations of Each Seller . The obligations of each Seller to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by each Seller in whole or in part to the extent permitted by applicable Law):
(a)      (i) the representations and warranties of the Purchaser set forth in Section 4.2 (Authorization) and Section 4.9 (Issuance of Purchaser Common Stock) shall be true and correct in all respects, (ii) the representations and warranties of Purchaser set forth in this Agreement (other than Sections 4.2 and 4.9 ) that are qualified by materiality (whether by reference to the terms “material” or “Purchaser Material Adverse Effect,” any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of Purchaser that are not so qualified by materiality (other than in Sections 4.2 and 4.9 ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(b)      Purchaser shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date;
(c)      between the date of this Agreement and the Closing Date, no Purchaser Material Adverse Effect shall have occurred;
(d)      Purchaser shall have delivered to Sellers a certificate of an executive officer thereof, dated the Closing Date, certifying to the effect that the statements set forth in Section 7.2(a) , Section 7.2(b) and Section 7.2(c) are true and correct;
(e)      there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;
(f)      the waiting period applicable to the transactions contemplated by this Agreement under the HSR Act shall have expired or early termination shall have been granted;
(g)      Purchaser shall have bound coverage under the R&W Policy in accordance with the terms set forth in this Agreement;
(h)      Purchaser shall have delivered, or caused to be delivered, to each Seller a counterpart of the assignment or other instrument effecting the transfer of the Equity Interests to Purchaser, duly executed by Purchaser;
(i)      Purchaser shall have delivered, or caused to be delivered, to Sellers evidence of payment by wire transfer of the Closing Cash Consideration in accordance with Section 2.3 ;
(j)      Purchaser shall have delivered, or caused to be delivered, evidence of book-entry registration of the Purchaser Common Stock, in accordance with Section 2.3 ;

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(k)      Purchaser shall have delivered to Sellers the Lock-Up Agreements, duly executed by Purchaser;
(l)      Purchaser shall have delivered to Sellers the Retention Escrow Agreement duly executed by Purchaser;
(m)      Purchaser shall have delivered to Sellers the Indemnity Escrow Agreement duly executed by Purchaser;
(n)      Purchaser shall have delivered a certificate of good standing and legal existence of Purchaser issued by the Secretary of State of the State of Delaware as of a date within five (5) Business Days preceding the Closing Date;
(o)      Purchaser shall have delivered a certificate, dated as of the Closing Date and duly executed by the Secretary of the Purchaser, certifying (A) that a true, complete and correct copy of the Purchaser’s Governing Documents, as amended and in effect on the Closing, is attached thereto, (B) that a true, complete and correct copy of the resolutions of the board of directors of the Purchaser, authorizing the execution, delivery and performance by the Purchaser of this Agreement and the Purchaser Documents, and the consummation of the transactions contemplated hereby and thereby, is attached thereto, and that such resolutions have not been amended, modified or rescinded and remain in full force and effect on the Closing Date, and (C) the names and signatures of the officer(s) of the Purchaser authorized to execute this Agreement and each Purchaser Document;
(p)      the shares of Purchaser Common Stock issuable to the Sellers at the Closing shall have been authorized for listing on the NYSE, subject to official notice of issuance; and
(q)      such other documents and instruments required to be delivered by the Purchaser at Closing pursuant to this Agreement, and all such other agreements, certificates, documents and other instruments as Sellers reasonably request in writing and as are reasonably necessary to consummate the transactions contemplated by this Agreement and/or any of the Purchaser Documents, in each case, in form and substance reasonably satisfactory to Sellers and their counsel.
Section 7.3      Frustration of Closing Conditions . Neither Sellers nor Purchaser may rely on the failure of any condition set forth in Section 7.1 or Section 7.2 , as the case may be, if such failure was caused by such Party’s failure to comply with any provision of this Agreement.
Section 7.4      Closing Date . Subject to the satisfaction of the conditions set forth in Section 7.1 and Section 7.2 hereof (or the waiver thereof by the Party entitled to waive that condition), the closing of the transactions contemplated by this Agreement, including the purchase and sale of the Equity Interests (the “ Closing ”) shall take place at the offices of Haynes and Boone, LLP., 1221 McKinney Street, Suite 2100, Houston, Texas 77010 (or at such other place as Purchaser and Sellers Representative may designate in writing or remotely via electronic exchange of documents and signatures) at 10:00 a.m. (Houston time) on a date to be specified by Purchaser and Sellers Representative, which date shall be no later than the second (2 nd ) Business Day after satisfaction or waiver of the conditions set forth in Article VII (other than conditions that by their nature are to

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be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), unless another time or date, or both, are agreed to in writing by Purchaser and Sellers Representative. The date on which the Closing shall be held is referred to in this Agreement as the “ Closing Date .”
Section 7.5      Termination of Agreement . This Agreement may be terminated prior to the Closing as follows:
(a)      At the election of Sellers Representative or Purchaser on or after March 30, 2018 (the “ Termination Date ”), if the Closing shall not have occurred by the close of business on such date; provided, however , that the terminating Party is not in material default of any of its obligations hereunder; provided further that such date shall be automatically extended for sixty (60) days if only the conditions to Closing set forth in Section 7.1(f) and Section 7.2(f) remain unsatisfied or unwaived at the Termination Date;
(b)      by mutual written consent of Sellers Representative and Purchaser; or
(c)      by Sellers Representative or Purchaser if there shall be in effect a final nonappealable Order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the Parties shall promptly appeal any adverse determination which is not nonappealable (and pursue such appeal with reasonable diligence).
Section 7.6      Procedure Upon Termination . In the event of termination and abandonment by Purchaser or Sellers Representative, or both, pursuant to Section 7.5 , written notice thereof shall forthwith be given to the other Party, and this Agreement shall terminate, and the purchase of the Equity Interests hereunder shall be abandoned, without further action by any Party.
Section 7.7      Effect of Termination .
(a)      In the event that this Agreement is terminated in accordance with Section 7.5 , then each of the Parties shall be relieved of their respective duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Purchaser or Sellers; provided , that (i) no such termination shall relieve any Party from liability for any breach of this Agreement and (ii) the obligations of the Parties set forth in Article IX hereof shall survive any such termination and shall be enforceable hereunder.
(b)      Nothing in this Section 7.7 shall relieve Purchaser or Sellers of any liability for a breach of this Agreement prior to the date of termination and the non‑breaching Party’s right to pursue all legal and equitable remedies will survive such termination. The damages recoverable by the non‑breaching Party shall include all attorneys’ fees reasonably incurred by such Party in connection with the transactions contemplated hereby. Nothing in this Section 7.7 shall be deemed to limit the rights of the Purchaser contained in Section 9.10 .
ARTICLE VIII     
INDEMNIFICATION

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Section 8.1      Survival of Representations and Warranties .
(a)      Subject to the limitations and other provisions of this Agreement, the representations and warranties contained in Article III and Article IV and the right of any Person to assert any claim for indemnification or recovery in respect thereof pursuant to this Article VIII shall survive the Closing and shall remain in full force and effect until the date that is the twenty-four month anniversary of the Closing Date; provided that (i) the Fundamental Representations of Sellers and Purchaser shall survive the Closing indefinitely, (ii) the representations and warranties of Sellers set forth in Section 3.14 (Employee Benefits) and Section 3.9 (Taxes) shall survive the Closing until the expiration of the applicable statute of limitations plus ninety (90) days, and (iii) the representations and warranties of Sellers set forth in Section 3.18 (Environmental Matters) shall survive the Closing for a period of four (4) years following the Closing Date.
(b)      There shall be no time limit for any claim arising from or relating to fraud or intentional misrepresentation (collectively, “ Fraud Claims ”).
(c)      Except as otherwise specifically provided in this Agreement, (i) all covenants and agreements contained in this Agreement to be performed before the Closing shall survive the Closing for a period of twenty-four months following the Closing Date and (ii) all covenants and agreements contained in this Agreement to be performed at or after the Closing shall survive the Closing in accordance with their terms, or until the expiration of the applicable statute of limitations plus ninety (90) days. This Section 8.1 shall not in any manner limit the survival period for, or any Party’s right or ability to bring any claims for indemnification under this Agreement with respect to damages arising from or relating to, a breach or nonperformance of any covenant or agreement of the Parties contained in this Agreement or any of the other Seller Documents or Purchaser Documents which by its terms contemplates performance after the Closing.
(d)      No claim for indemnification may be brought against any Party under this Article VIII in respect of a breach of any representation, warranty, covenant or agreement contained in this Agreement after the expiration of the applicable survival period for such representation, warranty, covenant or agreement; provided, however, that if a claim for indemnification is made in accordance with the terms of this Agreement before the expiration of such applicable survival period, such claim shall survive and may be pursued until such time as it is fully and finally resolved.
Section 8.2      Indemnification by Sellers .
(a)      Subject to the other provisions of this Article VIII , from and after the Closing, Sellers hereby agree to jointly and severally indemnify and hold Purchaser, its Subsidiaries, their respective successors and permitted assigns and its and their Representatives (collectively, the “ Purchaser Indemnified Parties ”) harmless from and against any and all losses, Liabilities, obligations and damages (individually, a “ Loss ” and, collectively, “ Losses ”) for:
(i)      any inaccuracy in or breach of any of the representations or warranties of Sellers contained in Article III (other than the representations and warranties that relate specifically to a Seller contained in Section 3.1(a) , Section 3.2 , Section 3.3 , Section 3.4 and Section 3.5 ) or in any certificate or instrument delivered by or on behalf of Sellers or the

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Company pursuant to this Agreement as of the date that such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);
(ii)      those matters set forth on Schedule 8.2(a)(ii) ;
(iii)      Company Taxes;
(iv)      Transaction Expenses; and
(v)      any breach of non-fulfillment of any covenant, agreement or obligation to be performed by the Sellers pursuant to this Agreement.
(b)      Subject to the other provisions of this Article VIII , from and after the Closing, each Seller shall severally, and not jointly, indemnify and hold the Purchaser Indemnified Parties harmless from and against any and all Losses for:
(i)      any inaccuracy in or breach of any of the representations and warranties of such Seller contained in Section 3.1(a) , Section 3.2 , Section 3.3 , Section 3.4 and Section 3.5 or in any certificate or instrument delivered by or on behalf of such Seller pursuant to this Agreement, as of the date that such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);
(ii)      any breach or non-fulfillment of any covenant, agreement or obligation to be performed by such Seller pursuant to this Agreement.
Section 8.3      Indemnification by Purchaser . Subject to the other provisions of this Article VIII , from and after the Closing, Purchaser hereby agrees to indemnify and hold each Seller, its successors and permitted assigns and its and their respective Representatives (collectively, the “ Seller Indemnified Parties ”) harmless from and against any and all Losses for:
(a)      any inaccuracy in or breach of any of the representations or warranties of Purchaser contained in Article IV or in any certificate or instrument delivered by or on behalf of Purchaser pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); and
(b)      any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Purchaser pursuant to this Agreement.

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Section 8.4      Indemnification Procedures .
(a)      In the event that any Legal Proceedings shall be instituted or that any claim or demand shall be asserted by any Person in respect of which payment may be sought under Section 8.2 or Section 8.3 hereof (regardless of the limitations set forth in Section 8.5 ) (an “ Indemnification Claim ”), the indemnified Party shall reasonably and promptly cause written notice of the assertion of such Indemnification Claim. The indemnifying Party shall have the right, at its sole option and expense, to be represented by counsel of its choice, and to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against hereunder. If the indemnifying Party elects to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against hereunder, it shall within twenty (20) days of receipt of notice of the Indemnification Claim notify the indemnified Party of its intent to do so. If the indemnifying Party elects not to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against hereunder, the indemnified Party may defend against, negotiate, settle or otherwise deal with such Indemnification Claim. If the indemnifying Party shall assume the defense of any Indemnification Claim, the indemnified Party may participate, at his or its own expense, in the defense of such Indemnification Claim; provided, however , that such indemnified Party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying Party if in the reasonable opinion of counsel to the indemnified Party a conflict or potential conflict exists between the indemnified Party and the indemnifying Party that would make such separate representation required; provided, further , that the indemnifying Party shall not be required to pay for more than one such counsel for all indemnified Parties in connection with any Indemnification Claim. The Parties agree to reasonably cooperate with each other in connection with the defense, negotiation or settlement of any such Indemnification Claim (including in relation to the R&W Policy and pursuit of claims thereunder). Notwithstanding anything in this Section 8.4 to the contrary, neither the indemnifying Party nor the indemnified Party shall, without the written consent of the other Party, settle or compromise any Indemnification Claim or consent to entry of any judgment unless the claimant and such Party provide to such other Party an unqualified release from all liability in respect of the Indemnification Claim. Notwithstanding the foregoing, if a settlement offer solely for money damages is made by the applicable third Party claimant, and the indemnifying Party notifies the indemnified Party in writing of the indemnifying Party’s willingness to accept the settlement offer and, subject to the applicable limitations of this Article VIII , pay the amount called for by such offer, and the indemnified Party declines to accept such offer, the indemnified Party may continue to contest such Indemnification Claim, free of any participation by the indemnifying Party, and the amount of any ultimate liability with respect to such Indemnification Claim that the indemnifying Party has an obligation to pay hereunder shall be limited to the lesser of (A) the amount of the settlement offer that the indemnified Party declined to accept or (B) the aggregate Losses of the indemnified Party with respect to such Indemnification Claim. If the indemnifying Party makes any payment on any Indemnification Claim, the indemnifying Party shall be subrogated, to the extent of such payment, to all rights and remedies of the indemnified Party to any insurance benefits or other claims of the indemnified Party with respect to such Indemnification Claim.

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(b)      After any final decision, judgment or award shall have been rendered by a Governmental Body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified Party and the indemnifying Party shall have arrived at a mutually binding agreement with respect to an Indemnification Claim hereunder, the indemnified Party shall forward to the indemnifying Party notice of any sums due and owing by the indemnifying Party pursuant to this Agreement with respect to such matter.
Section 8.5      Certain Limitations on Indemnification . The indemnification provided for in Section 8.2 and Section 8.3 shall be subject to the following limitations:
(a)      Sellers shall not be liable to the Purchaser Indemnified Parties for indemnification under Section 8.2(a)(i) until the aggregate amount of all Losses in respect thereof exceeds $350,000 (the “ Basket ”), at which time Sellers shall be required to pay or be liable only for indemnified Losses exceeding such amount. Notwithstanding the foregoing, the Basket shall not be applicable to any claims in respect of any Fundamental Representations of Sellers, representations of Sellers under Section 3.9 (Taxes) and Section 3.18 (Environmental Matters), claims for indemnification pursuant to Section 8.2(a)(ii) , Section 8.2(a)(iii) , Section 8.2(a)(iv) , Section 8.2(a)(v) or Fraud Claims.
(b)      Purchaser shall not be liable to the Seller Indemnified Parties for indemnification under Section 8.3(a) until the aggregate amount of all Losses in respect thereof exceeds the Basket, at which time Purchaser shall be required to pay or be liable only for indemnified Losses exceeding such amount. Notwithstanding the foregoing, the Basket shall not be applicable to any claims in respect of any Fundamental Representations of Purchaser, claims for indemnification pursuant to Section 8.3(b) or Fraud Claims.
(c)      No Seller shall be liable to the Purchaser Indemnified Parties for indemnification under Section 8.2(b)(i) until the aggregate amount of all Losses in respect thereof exceeds the Basket, at which time such Seller shall be required to pay or be liable only for indemnified Losses exceeding such amount. Notwithstanding the foregoing, the Basket shall not be applicable to any claims in respect of any Fundamental Representations of a Seller, claims for indemnification pursuant to Section 8.2(b)(ii) or Fraud Claims.
(d)      With respect to Sellers’ indemnity obligations under Section 8.2(a)(i) , the aggregate liability of Sellers to indemnify the Purchaser Indemnified Parties from and against any such Losses under Section 8.2(a)(i) shall not exceed the amount of the $7,000,000 (the “ Indemnity Cap ”); provided that the Indemnity Cap shall not be applicable to any claims in respect of any Fundamental Representations of Sellers, representations of Sellers under Section 3.9 (Taxes) and Section 3.18 (Environmental Matters), claims for indemnification pursuant to Section 8.2(a)(ii) , Section 8.2(a)(iii) , Section 8.2(a)(iv) , Section 8.2(a)(v), Section 8.2(b) or Fraud Claims.
(e)      The source of indemnification of the Purchaser Indemnified Parties for any Losses pursuant to Section 8.2(a)(i) and Section 8.2(b)(i) that are covered by the R&W Policy shall (after satisfying the Basket, as and if applicable) be paid (i) first from the Retention Escrow Fund, (ii) then by the R&W Policy in accordance with the terms thereof and (iii) only to the extent such

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Losses exceed the aggregate of both the amount of the remaining Retention Escrow Funds and the policy limit under the R&W Policy, jointly and severally from the Sellers, provided , that (x) with respect to any Losses under Section 8.2(a)(i) , the aggregate liability of the Sellers shall not exceed the Indemnity Cap, and (y) in no event shall such recovery against a Seller exceed the portion of the Purchase Price actually received by such Seller.
(f)      The source of indemnification of Purchaser Indemnified Parties for any Losses pursuant to Section 8.2(a)(i) or Section 8.2(b)(i) that are not covered by the R&W Policy, or pursuant to Section 8.2(a)(iii) , Section 8.2(a)(iv) , Section 8.2(a)(v) or Section 8.2(b)(ii) shall (after satisfying the Basket, as and if applicable) be paid (i) first, from the Retention Escrow Fund and (ii) then jointly and severally by the Sellers, provided , that (x) with respect to any Losses under Section 8.2(a)(i) , the aggregate liability of the Sellers shall not exceed the Indemnity Cap, and (y) in no event shall such recovery against a Seller exceed the portion of the Purchase Price actually received by such Seller.
(g)      The source of indemnification of Purchaser Indemnified Parties for any Losses pursuant to Section 8.2(a)(ii) shall be limited to the Indemnity Escrow Fund.
(h)      With respect to Purchaser’s indemnity obligations under Section 8.3 , the aggregate liability of Purchaser to indemnify the Seller Indemnified Parties from and against any Losses shall not exceed the Indemnity Cap; provided that the Indemnity Cap shall not be applicable to any claims in respect of Fundamental Representations of Purchaser, claims for indemnification pursuant to Section 8.3(b) or Fraud Claims.
Section 8.6      Calculation of Losses . The amount of any Losses for which indemnification is provided under this Article VIII shall be net of any amounts actually recovered by the indemnified Party under the R&W Policy or otherwise with respect to such Losses (net of any Tax or expenses incurred in connection with such recovery). The indemnified Party shall use commercially reasonable efforts to obtain recovery of any Losses, as applicable, under all available insurance policies. If an insurance, indemnification or other recovery or redress is made by any indemnified Party with respect to any Losses, as applicable, for which any such Person has been indemnified hereunder and has received funds (or exercised set-off rights) in the amount of the Losses from an indemnifying Party, or portion thereof, then a refund equal to the aggregate amount of the recovery shall be made promptly to such indemnifying Party.
Section 8.7      Materiality Disregarded . Notwithstanding anything to the contrary in this Agreement, (i) in determining whether any breach of any representation or warranty in this Agreement has occurred and (ii) for purposes of determining the amount of any Losses attributable to the inaccuracy of any representation or warranty subject to indemnification under this Article VIII , all “Seller Material Adverse Effects,” “material,” “materiality,” “in all material respects,” and other like qualifications shall be disregarded.
Section 8.8      Tax Treatment of Indemnity Payments . Sellers and Purchaser agree to treat any indemnity payment made pursuant to this Article VIII as an adjustment to the Transaction Consideration for federal, state, local and foreign income Tax purposes.

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Section 8.9      Exclusive Remedy . From and after Closing, other than with respect to Fraud Claims, claims for injunctive and other equitable relief, the Parties agree that the sole and exclusive remedy for any breach or inaccuracy, or alleged breach or inaccuracy, of any representation or warranty in this Agreement or any covenant or agreement to be performed on or prior to the Closing Date, shall be indemnification in accordance with this Article VIII . In furtherance of the foregoing and effective upon the Closing, the Parties hereby waive, to the fullest extent permitted by applicable Law, any and all other rights, claims and causes of action (including rights of contributions, if any), known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against the other Party not pursuant to the terms of this Article VIII , arising under or based upon any federal, state or local Law (including any Environmental Law or arising under or based upon any securities Law, common Law or otherwise), for any breach or inaccuracy, or alleged breach or inaccuracy, of any representation or warranty in this Agreement or any covenant or agreement to be performed on or prior to the Closing Date.
Section 8.10      R&W Policy . Purchaser shall cause the R&W Policy to be finally issued and coverage thereunder to be in full force and effect substantially contemporaneously with the execution of this Agreement, which R&W Policy shall be in a form reasonably satisfactory to Sellers Representative, and shall provide that the insurer under the R&W Policy shall have no rights of subrogation against any Party to this Agreement, any Representatives thereof, or the Company except against Sellers solely in the case of Sellers’ knowing and intentional fraud in connection with the transactions contemplated by this Agreement as determined by a final, non‑appealable order in a court of competent jurisdiction. The premiums, and all the other costs and expenses relating to the origination of the R&W Policy, including any underwriting fees, broker commissions and surplus lines taxes (the “ R&W Policy Premium ”), shall be paid fifty percent (50%) by each of the Sellers and Purchaser. Purchaser shall have the right to require Sellers to pay their portion at such time as required pursuant to the terms of the R&W Policy or to deduct such portion from the Closing Cash Consideration as provided in Section 2.3 . Purchaser shall not amend, modify or otherwise change, terminate or waive any such subrogation provision, or any other provision, of the R&W Policy in a manner that would be adverse to any Seller or any Seller Indemnified Party, without the prior written consent of Sellers Representative.
ARTICLE IX     
MISCELLANEOUS
Section 9.1      Sellers Representative .
(a)      The Sellers have agreed that it is desirable to designate Hunter J. Morris as representative to act on behalf of the Sellers for certain limited purposes as specified herein (in such capacity “ Sellers Representative ”). The designation of Hunter J. Morris as Sellers Representative is and shall be coupled with an interest, and, except as set forth in this Section 9.1 , such designation is irrevocable and shall not be affected by the death, incapacity, illness, bankruptcy, dissolution or other inability to act of any Seller.
(b)      Sellers Representative shall have such powers and authority as are necessary to carry out the functions assigned to it under this Agreement; provided, however , that Sellers Representative shall have no obligation to act, except as expressly provided herein. Without limiting

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the generality of the foregoing, Sellers Representative shall have full power, authority and discretion after the Closing to negotiate and enter into amendments to this Agreement for and on behalf of Sellers. Sellers Representative shall have no liability to Purchaser, any Seller or the Company with respect to actions taken or omitted to be taken solely in its capacity as Sellers Representative. Any decision, act, consent or instruction of Sellers Representative (acting in its capacity as Sellers Representative) shall constitute a decision of all Sellers and shall be final, conclusive and binding upon each such Seller, and Purchaser, its Affiliates and their respective Representatives may rely upon any such decision, act, consent or instruction of Sellers Representative as being the decision, act, consent or instruction of each such Seller.
Section 9.2      Taxes .
(a)      Purchaser shall be responsible for, shall timely pay to the appropriate Governmental Bodies and shall indemnify and hold harmless the Sellers against all Transfer Taxes. Purchaser or Sellers (as required by applicable Law) shall file all necessary documents (including all Tax Returns) with respect to all such amounts in a timely manner. Purchaser and Sellers shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.
(b)      For purposes of determining whether and to what extent a Liability for Taxes for a Straddle Period constitutes Company Taxes, the portion of any Tax that is allocable to the taxable period that is deemed to end on the Closing Date will be: (i) in the case of Property Taxes, deemed to be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days of such Straddle Period in the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the entire Straddle Period, and (ii) in the case of all other Taxes, determined as though the taxable year of the Company terminated at the close of business on the Closing Date.
(c)      (d) Sellers Representative shall timely file all Tax Returns of the Company due on or before the Closing Date or that otherwise relate solely to Tax periods ending on or before the Closing Date and that are due after the Closing Date and Sellers shall timely pay any Taxes shown as due and owing on such Tax Returns. Sellers Representative shall deliver to Purchaser for Purchaser’s review and comment a copy of each such Tax Return at least thirty (30) days prior to the due date thereof (taking into account any extensions). Sellers Representative will incorporate all comments received from Purchaser with respect to such Tax Returns unless Sellers Representative disputes any such comments. Sellers Representative and Purchaser will promptly attempt to resolve any disputes with respect to any comments from Purchaser with respect to such Tax Returns; provided , that if they are unable to do so within five (5) days after delivery of such Tax Return by Sellers Representative to Purchaser, the filings will be made as proposed by Sellers Representative, and such disputed items will be further resolved through amendments to the Tax Returns with the amounts determined in the same manner as disputes with respect to the Allocation Statement under Section 2.7 .
(i)      Purchaser shall prepare in a manner consistent with past practice all Tax Returns of the Company for a Straddle Period that are required to be filed after the Closing Date. Purchaser shall deliver to Sellers Representative for Sellers Representative’s

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review and comment a copy of each such Tax Return at least thirty (30) days prior to the due date thereof (taking into account any extensions), Purchaser will incorporate all comments from Sellers Representative with respect to such Tax Returns unless Purchaser disputes any such comments. Purchaser and Sellers Representative will promptly attempt to resolve any disputes with respect to any comments from Sellers Representative with respect to such Tax Returns; provided , that if they are unable to do so within five (5) days after delivery of such Tax Returns by Purchaser to Sellers Representative, the filings will be made as proposed by Purchaser, and such disputed items will be further resolved through amendments to the Tax Returns with the amounts determined in the same manner as disputes with respect to the Allocation Statement under Section 2.7 . Purchaser shall timely file all such Tax Returns and shall timely pay Taxes shown as due and owing thereon.
(iii)    Purchaser shall promptly reimburse Sellers for any Taxes (other than Company Taxes) paid by Sellers pursuant to this Section 9.2(c) . Sellers shall promptly reimburse Purchaser for any Company Taxes paid by Purchaser pursuant to this Section 9.2(c) .
(e)      Purchaser, the Company and their Affiliates, on the one hand, and Sellers and their Affiliates, on the other hand, shall promptly notify each other upon receipt by such Party of written notice of any inquiries, claims, assessments, audits or similar events with respect to Taxes relating to a Pre-Closing Tax Period (any such inquiry, claim, assessment, audit or similar event, a “ Tax Matter ”). Any failure to so notify the other Party of any Tax Matter shall not relieve such other Party of any liability with respect to such Tax Matters except to the extent such Party was actually and materially prejudiced as a result thereof. Sellers Representative shall have sole control of the conduct of all Tax Matters relating exclusively to a Tax period ending on or before the Closing date that, if successful, might reasonably be expected to result in an indemnity payment to Purchaser pursuant to Section 8.2 , including any settlement or compromise thereof; provided, however , that Sellers Representative shall keep Purchaser reasonably informed of the progress of any such Tax Matter and shall not effect any such settlement or compromise without obtaining Purchaser’s prior written consent thereto, which shall not be unreasonably conditioned, withheld or delayed.
(f)      In the case of a Tax Matter relating exclusively to a Straddle Period, Sellers and Purchaser shall jointly control all proceedings taken in connection with any such Tax Matter including any settlement or compromise thereof; provided, however , that neither Sellers on one hand nor Purchaser on the other hand shall effect any such settlement or compromise without obtaining the other's prior written consent thereto, which shall not be unreasonably conditioned, withheld or delayed. Purchaser shall have sole control of the conduct of all Tax Matters that do not relate to a Pre-Closing Tax Period or Straddle Period, including any settlement or compromise thereof.
(g)      Sellers shall be entitled to the amount of any refund or credit of Taxes of the Company with respect to a Pre-Closing Tax Period (to the extent such Taxes were paid by the Company prior to the Closing), which refund or credit is actually recognized by Purchaser or its Affiliates (including the Company) within one year after the Closing Date, except to the extent such refund or credit arises as the result of a carryback of a loss or other tax benefit from a Tax period

74




(or portion thereof) beginning after the Closing Date or such refund or credit was included as an asset in the calculation of the Final Closing Net Working Capital. Purchaser shall pay, or cause to be paid, to Sellers any amount to which Seller is entitled pursuant to the prior sentence, less reasonable out-of-pocket costs incurred in obtaining such refund or credit, within five (5) Business Days of the receipt or recognition of the applicable refund or credit by Purchaser or its Affiliates. To the extent requested by Sellers, Purchaser will reasonably cooperate with Sellers in obtaining such refund or credit, including through the filing of amended Tax Returns for periods ending before or on the Closing Date or refund claims.
(h)      The Parties agree to furnish to each other, upon request, as promptly as practicable, such information and assistance relating to the Company as is reasonably necessary for the filing of all Tax Returns, and making of any election related to Taxes, the preparation for any audit by any Tax Authority and the prosecution or defense of any action, suit or proceeding related to Taxes involving the Company, and each shall execute and deliver such documents as are reasonably necessary to carry out the intent of this Section 9.2 . The Party requesting such information and assistance shall reimburse the other Party for all reasonable expenses incurred in connection with providing such information and assistance.
(i)      For all United States federal income Tax purposes (and state and local Tax purposes where applicable), each Party intends and agrees to report the purchase and sale of the Equity Interests as (i) a sale of partnership interests by Sellers and (ii) a purchase of the assets of the Company by Purchaser, all consistent with Revenue Ruling 99-6, Situation 2. Each Party agrees not to take (and to cause each Affiliate thereof not to take) a United States federal, state, or local or franchise Tax position inconsistent with such treatment.
Section 9.3      Expenses . Except as otherwise provided in this Agreement, each of the Sellers and Purchaser shall bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
Section 9.4      Submission to Jurisdiction; Consent to Service of Process .
(a)      The Parties hereby irrevocably submit to the non‑exclusive jurisdiction of any federal or state court located within Houston, Texas over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each Party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
(b)      Each of the Parties hereby consents to process being served by any Party to this Agreement in any suit, action or proceeding by the delivery of a copy thereof in accordance with the provisions of Section 9.7 .

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Section 9.5      Entire Agreement; Amendments and Waivers . This Agreement (including the Schedules and Exhibits hereto) and the Non-Disclosure Agreement represent the entire understanding and agreement between the Parties with respect to the subject matter hereof. This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such amendment, supplement, modification or waiver is sought, subject to the provisions of Section 9.1 with respect to the authority of the Sellers Representative. No action taken pursuant to this Agreement shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
Section 9.6      Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of Texas applicable to contracts made and performed in such state.
Section 9.7      Notices . All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by facsimile (with written confirmation of transmission), or (iii) one (1) Business Day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses or facsimile numbers (or to such other address or facsimile number as a Party may have specified by notice given to the other Party pursuant to this provision):
If to any Seller, to Sellers Representative:
Hunter J. Morris
914 Mays Drive
Midland, TX 79706
Facsimile: (___) ________
with a copy (which shall not constitute notice) to:
Hartzog Conger Cason & Neville
201 Robert S. Kerr Ave
1600 BOK Plaza
Oklahoma City, OK 73102
Attention: Rick Warren
Facsimile: (405) 996-3403

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If to Purchaser, to:
TETRA Technologies, Inc.
Attn: President
24955 Interstate 45 North
The Woodlands, TX 77380
Facsimile: (281) 364-4398
With a copy (which shall not constitute notice) to:
TETRA Technologies, Inc.
Attn: General Counsel
24955 Interstate 45 North
The Woodlands, TX 77380
Facsimile: (281) 364-4398
Section 9.8      Severability . If any term or other provision of this Agreement is deemed by a Governmental Body of competent jurisdiction to be invalid, illegal, or incapable of being enforced by any Law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 9.9      Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a Party to this Agreement except as provided below. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Sellers or Purchaser, directly or indirectly (by operation of Law or otherwise), without the prior written consent of the other Parties and any attempted assignment without the required consents shall be void; provided, however, that the Sellers may assign all or a portion of their right to receive any future payment of the Earnout Amount without the prior consent of Purchaser. No assignment of any obligations hereunder shall relieve the Parties of any such obligations. Upon any such permitted assignment, the references in this Agreement to a Party shall also apply to any such assignee unless the context otherwise requires.
Section 9.10      Enforcement . The Sellers agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Sellers or Sellers Representative in accordance with their specific terms or were otherwise breached and that any breach of this Agreement would not be adequately compensated by monetary damages. The Sellers acknowledge and agree that, prior to the valid termination of this Agreement, Purchaser shall, in the event of any breach by Sellers or Sellers Representative of any of their respective covenants or agreements set forth in this Agreement, be entitled to equitable relief, including an injunction or injunctions to prevent or restrain breaches of this Agreement, and to specifically enforce the terms

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and provisions of this Agreement to prevent breaches of, or to enforce compliance with, the covenants and agreements of the other under this Agreement. The Purchaser has specifically bargained for the foregoing right to specific performance of the obligations hereunder, in accordance with the terms and conditions of this Section 9.10 .
Section 9.11      Counterparts . This Agreement may be executed in one or more counterparts (including electronic counterparts), each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
[Signature Page Follows]



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IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of each of the Parties as of the day first written above.
SELLERS:
SELLERS:
 
SWIFTWATER MANAGEMENT, LLC
 
 
By:
/s/Hunter Morris
Name:
Hunter Morris
Title:
Chief Executive Officer
 
 
 
 
CONSUL PROPERTIES L.L.C.
 
 
By:
/s/James W. Hatcher
Name:
James W. Hatcher
Title:
Managing Member
 
 
 
 
 
/s/Jack E. Counts, Jr.
 
Jack E. County, Jr., Individually
 
 
 
 
MARK W. FOWLER, INC.
 
 
By:
/s/ Mark W. Fowler
Name:
Mark W. Fowler
Title:
President
 
 
 
 
 
/s/ Hunter J. Morris
 
Hunter J. Morris, Individually
 
 
 
 
ROBERT P. GARIBAY LIVING TRUST
 
 
By:
/s/ Robert P. Garibay
Name:
Robert P. Garibay
Title:
Trustee
 
 

D-1




 
 
GRUBB INVESTMENTS, LLC
 
 
By:
/s/ Matthew K. Grubb
Name:
Matthew K. Grubb
Title:
Manager
 
 
 
 
JFB HOLDINGS, LLC
 
 
By:
/s/ John F. Burns, Jr.
Name:
John F. Burns, Jr.
Title:
Manager
 
 
 
 
 
/s/ John Morris
 
John Morris, Individually
 
 
ROBINSON AVENUE INVESTMENTS, LLC
 
 
By:
/s/ Randy Moore
Name:
Randy Moore
Title:
Manager
 
 
 
 
NATCHRIS LLC
 
 
By:
/s/ Eduardo Sanchez
Name:
Eduardo Sanchez
Title:
Manager
 
 
 
 
CIRCLE W CATTLE COMPANY INC.
 
 
By:
/s/ Brayden Woods
Name:
Brayden Woods
Title:
Chief Executive Officer
 
 
TOMA 318, LLC
 
 
By:
/s/ Mike McCoy
Name:
Mike McCoy
Title:
Manager

D-2




 
 
 
 
TTTIA, LLC
 
 
By:
/s/ Jeremy Ice
Name:
Jeremy Ice
Title:
Member
 
 
 
 
 
 

D-3




PURCHASER:
 
TETRA TECHNOLOGIES, INC.
 
 
By:
/s/ Matthew Sanderson
Name:
Matthew Sanderson
Title:
Senior Vice President
 
 


D-4

Execution Copy



MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT
BY AND AMONG
TETRA APPLIED TECHNOLOGIES, LLC
as Seller,
MARITECH RESOURCES, LLC
as the Company,
TETRA TECHNOLOGIES, INC.,
as TETRA Parent
and
ORINOCO NATURAL RESOURCES, LLC
as Buyer


DATED AS OF FEBRUARY 28, 2018







Execution Copy



TABLE OF CONTENTS
 
 
 
 
 
Page
Article I Definitions and References
1
Section 1.1
Defined Terms
1
Article II the transaction
6
Section 2.1
The Transaction.
6
Section 2.2
Consideration.
6
Section 2.3
Allocation.
7
Article III Representations AND WARRANTIES of THE COMPANY AND SELLER
7
Section 3.1
Representations and Warranties of the Company
7
Section 3.2
Representations of Seller
9
Section 3.3
DISCLAIMERS
10
Section 3.4
Disclosures
11
Article IV Representations of Buyer
11
Section 4.1
Representations of Buyer
11
Article V Closing
 
13
Section 5.1
Closing
13
Section 5.2
Seller’s Closing Obligations
14
Section 5.3
Buyer’s Closing Obligations
14
Article VI covenants
15
Section 6.1
Books and Records
15
Section 6.2
Removal of Name
15
Section 6.3
Conduct of Business Pending Closing
15
Section 6.4
Employees
15
Section 6.5
Bonding Agreement
15
Article VII Assumption and Indemnification
16
Section 7.1
Assumption and Indemnification By Buyer
16
Section 7.2
Indemnification By TETRA Parent
16
Section 7.3
Survival of Provisions
17
Section 7.4
Indemnification Procedures
17
Section 7.5
Limitations
19
Section 7.6
Mitigation
20
Section 7.7
No Duplication
20
Article VIII conditions precedent
20
Section 8.1
Conditions Precedent to Obligations of Buyer
20
Section 8.2
Conditions Precedent to Obligations of Seller and the Company
21
Section 8.3
Frustration of Closing Conditions
22
Section 8.4
Termination of Agreement
22
Section 8.5
Procedure Upon Termination
22




Execution Copy



Section 8.6
Effect of Termination
22
Article IX Notices
 
23
Section 9.1
Notices
23
Article X Tax Matters
23
Section 10.1
Asset Taxes
23
Section 10.2
Transfer Fees and Taxes
24
Section 10.3
Tax Returns
24
Article XI Miscellaneous Matters
24
Section 11.1
Further Assurances
24
Section 11.2
Waiver of Consumer Rights
25
Section 11.3
Parties Bear Own Expenses/No Special Damages
25
Section 11.4
Entire Agreement
25
Section 11.5
Amendments, Waivers
25
Section 11.6
Governing Law
25
Section 11.7
Jurisdiction; Waiver of Jury Trial.
25
Section 11.8
Time of Essence
26
Section 11.9
Assignment
26
Section 11.10
Successors and Assigns
26
Section 11.11
Counterpart Execution, Fax Execution
26
Section 11.12
Specific Performance
26
Section 11.13
References, Titles and Construction
27
Section 11.14
Severability
27
Section 11.15
Confidentiality
27
Section 11.16
Agreement for Parties’ Benefit Only
28
Section 11.17
Waiver of Conflicts Regarding Representation
28
Section 11.18
Attorney-Client Privilege
28

LIST OF SCHEDULES AND EXHIBITS
Exhibits -    A        Form of Assignment and Assumption Agreement
B        Form of Bonding Agreement

Schedules -     1.1        Seller Retained Items
3.1(e)        Litigation – The Company
3.1(f)        Good Faith Disputes
3.2(a)        Liens
6.4        Employees
        









MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT (as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance herewith, this “ Agreement ”) is entered into this 28 th day of February, 2018 (the “ Execution Date ”), by and among TETRA Applied Technologies, LLC, a Delaware limited liability company (“ Seller ”); Maritech Resources, LLC, a Delaware limited liability company (the “ Company ”), TETRA Technologies, Inc., a Delaware corporation, solely for the purposes of Article VII hereof (“ TETRA Parent ”) and Orinoco Natural Resources, LLC, a Virginia limited liability company (“ Buyer ”). Seller, the Company and Buyer may be referred to collectively as the “ Parties ” or individually as a “ Party .”
RECITALS :
A. Seller is the owner of all of the issued and outstanding membership interests of the Company (the “ Interests ”).
B. Seller desires to sell the Interests to Buyer, and Buyer desires to purchase the Interests from Seller, on the terms and conditions set forth herein.
C. The Company desires to join in the execution of this Agreement for the purpose of evidencing its consent to the consummation of the foregoing transaction and for the purpose of making certain representations and warranties to, and covenants and agreements with, Buyer.
D. Immediately prior to the execution and delivery of this Agreement, the Company and Buyer will enter into that certain Asset Purchase and Sale Agreement, dated as of the date hereof (the “ APA ”), providing for the sale by the Company of certain properties, rights and interests held by the Company.
E. Immediately subsequent to the execution and delivery of this Agreement, TETRA Parent, TETRA Production Testing Holding LLC, a Delaware corporation (“ TETRA Holding ” and, together with TETRA Parent, the “ EIPA Sellers ”) and Epic Offshore Specialty, LLC, a Delaware limited liability company (“ Epic ”) will enter into that certain Equity Interest Purchase Agreement, dated as of the date hereof (the “ EIPA ”), providing for the sale by the EIPA Sellers to Epic of all outstanding equity interests of TSB Offshore, Inc., a Delaware corporation (“ TSB ”) and the Seller.
AGREEMENT :
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties hereby agree as follows:
Article I
DEFINITIONS AND REFERENCES
Section 1.1      Defined Terms . When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Section 1.1 or in the section, subsections or other subdivisions referred to below:
Affiliate ” means, when used with respect to a specified Person, another Person that, either directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this Agreement, “control” (and correlative terms, including “controlling” and “controlled”) means the power, whether by contract, equity ownership or otherwise, to direct the policies and management of a Person and any Person that directly or indirectly owns more than 50% of any class of voting equity interests of the Person specified shall be deemed to be an Affiliate of such Person.

Agreement ” has the meaning assigned to such term in the preamble to this Agreement.
Applicable Environmental Laws ” mean all applicable Laws by which the Properties are bound and which are pertaining or relating to (a) the prevention, abatement, control or elimination of pollution or pollution control, (b) the protection of public health, wildlife, natural resources or the environment, and (c) the management, presence, transport, storage, disposal or release of waste materials and/or hazardous substances, including: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“ CERCLA ”); (ii) the Emergency Planning and Community Right-to-Know Act of 1986, as amended; (iii) the Federal Insecticide, Fungicide & Rodenticide Act, as amended; (iv) the Federal Water Pollution Control Act, as amended; (v) the Oil Pollution Act of 1990, as amended; (vi) the Resource Conservation and Recovery Act, as amended; (vii) the Superfund Amendments and Reauthorization Act of 1986, as amended; (viii) the Hazardous Materials Transportation Act, as amended; (ix) the Safe Drinking Water Act, as amended; (x) the Toxic Substances Control Act, as amended; (xi) the Clean Air Act, as amended; (xii) the Endangered Species Act; and, with respect to each of the foregoing clauses (i) through (xii), all similar state Laws, and the rules and regulations promulgated thereunder, all as amended and supplemented.
APA ” has the meaning assigned to such term in the Recitals to this Agreement.
Asset Taxes ” means Property Taxes and all excise, severance, production, sales, use, or similar Taxes (excluding, for the avoidance of doubt, any Income Taxes and Transfer Taxes) based upon or measured by the ownership or operation of the Properties or the production of hydrocarbons therefrom or the receipt of proceeds therefrom.
Assignment ” has the meaning assigned to such term in Section 5.2(a) .
Business Day ” means any day other than a Saturday, a Sunday or other day on which commercial banks in Houston, Texas are authorized or required by Law to close.
Buyer ” has the meaning assigned to such term in the preamble to this Agreement.
Buyer’s Indemnified Claim ” and “ Buyer’s Indemnified Claims ” have the meaning assigned to such terms in Section 7.2 .
“Buyer Indemnified Parties” has the meaning assigned to such term in Section 7.2 .
Cap ” has the meaning assigned to such term in Section 7.5 .
Claim Notice ” has the meaning assigned to such term in Section 7.4(a) .
Closing and “ Closing Date ” have the meanings assigned to such terms in Section 5.1 .
Code ” means the Internal Revenue Code of 1986, as amended.
Common Interest Parties ” has the meanings assigned to such terms in Section 11.17 .
Company ” has the meaning assigned to such term in the preamble to this Agreement.
Company’s Knowledge and any similar phrase means, to the extent referring to periods prior to Closing, the actual knowledge of Lonnie Whitfield.
Condition of the Properties ” has the meaning assigned to such term in Section 7.1(b)(iii) .
Confidentiality Agreement ” means that certain Confidentiality Agreement, dated November 6, 2017, by and between Buyer and Seller.
Contract ” means any lease agreements (including all oil, gas, and/or mineral leases, regardless of whether the same are expired or remain in force and effect), royalty agreements, assignments, gas purchase and sale contracts, oil purchase and sale agreements, transportation and marketing agreements, farmin and farmout agreements, operating agreements, unit agreements, production handling agreements, processing agreements, facilities or equipment leases and other contracts, agreements and rights, all to the extent used, or held for use, with respect to the ownership or operation of the Properties, or with respect to the production or treatment of hydrocarbons from, or attributable to, the Properties, but excluding any such contracts, agreements and rights where transfer of same is prohibited by third party agreement or operation of Law.
Deductible ” has the meaning assigned to such term in Section 7.5 .
Effective Date has the meaning assigned to such term in Section 5.1 .
EIPA ” has the meaning assigned to such term in the Recitals to this Agreement.
EIPA Sellers ” has the meaning assigned to such term in the Recitals to this Agreement.
Election Period ” has the meaning assigned to such term in Section 7.4(b) .
Epic ” has the meaning assigned to such term in the Recitals to this Agreement.
Execution Date ” has the meaning assigned to such term in the preamble to this Agreement.
Governing Documents ” means, when used with respect to an entity, the documents governing the formation and operation of such entity, including: (a) in the instance of a corporation, the articles of incorporation and bylaws of such corporation; (b) in the instance of a partnership, the partnership agreement; (c) in the instance of a limited partnership, the certificate of formation and the limited partnership agreement; and (d) in the instance of a limited liability company, the certificate of formation and limited liability company agreement.
Governmental Entity ” means any tribal, local, municipal, national, federal, foreign, domestic or other governmental or regulatory authority, department, agency, commission, body, court or other body or entity of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, self-regulatory or Taxing Authority or power of any nature, including any arbitrator or arbitral tribunal.
Income Taxes ” means any income, franchise and similar Taxes.
Indemnified Party ” has the meaning assigned to such term in Section 7.4(a) .
Indemnifying Party ” has the meaning assigned to such term in Section 7.4(a) .
Indemnity Claim ” has the meaning assigned to such term in Section 7.4(f) .
Indemnity Notice ” has the meaning assigned to such term in Section 7.4(f) .
Interests ” has the meaning assigned to such term in the Recitals to this Agreement.
Law ” or “ Laws ” means any law (including common and civil law), statute, ordinance, rule, regulation, judgment, writ, treaty, code, order, injunction, ruling, order, decree, arbitration award, agency requirement, license or permit of any Governmental Entity.
Liabilities ” means any liability (whether known or unknown, whether fixed or otherwise, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including all costs and expenses relating thereto.
Lien ” means any claim, lien, mortgage, deed of trust, security interest, pledge, charge, option, right-of-way, easement, or encroachment of any kind.
Losses ” means all losses, costs, charges, expenses (including interest and penalties due and payable with respect thereto and reasonable attorneys’ and other professional fees and expenses in connection with any action whether involving a third-party claim or any claim solely between the parties hereto), obligations, Liabilities, settlement payments, awards, judgments, fines, penalties, damages, demands, claims, assessments or deficiencies.
Party ” or “ Parties ” has the meaning assigned to such term in the preamble to this Agreement.
Person ” means any individual, firm, corporation, company, partnership (general and limited), limited liability company, joint venture, association, trust, estate, unincorporated organization, Governmental Entity or any other entity.
Proceeding ” means any proceeding, action, claim, suit, audit, investigation or inquiry by or before any arbitrator or Governmental Entity.
Properties means the properties and assets of the Company, whether real or personal, tangible or intangible, owned, leased or subleased, and including, without limitation, the Contracts.
Property Taxes ” means all real property Taxes, personal property Taxes and similar ad valorem Taxes.
Purchase Price ” has the meaning assigned to such term in Section 2.2 .
Routine Governmental Approvals ” has the meaning assigned to such term in Section 3.1(c) .
Seller ” has the meaning assigned to such term in the preamble to this Agreement.
Seller’s Indemnified Claim ” and “ Seller’s Indemnified Claims ” have the meanings assigned to such terms in Section 7.1 .
Seller’s Knowledge and any similar phrase shall mean the actual knowledge of Elijio Serrano.
Seller Retained Items ” means (i) all cash, cash equivalents, short-term investments, bank deposits, investment accounts, corporate credit cards and similar items of the Company, (ii) accounts receivable and accounts payable of the Company and (iii) the additional items listed on Schedule 1.1 .
Specified Warranties ” has the meaning assigned to such term in Section 3.3 .
T&K ” has the meaning assigned to such term in Section 11.17 .
Tax ” or “ Taxes ” means taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees imposed by any Taxing Authority, including taxes, levies or other like assessments on income, profits or gains, franchise, privilege, gross receipts, ad valorem, escheat, value added, customs, excise, import or export, real or property, asset, sales, use, license, payroll, transaction, capital, net worth, withholding, estimated, social security, utility, workers’ compensation, severance, production, unemployment compensation, occupation, premium, windfall profits, environmental stamp, documentary, filing, recordation, transfer and gains taxes, levies or otherwise or other governmental taxes imposed or payable to or in any jurisdiction or country in the world, or any state or county, government or subdivision or agency thereof (any such authority a “ Taxing Authority ”), together with any interest, penalties or additions with respect thereto and any interest in respect of such additions or penalties and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, whether disputed or not.
Tax Allocation ” shall have the meaning assigned to such term in Section 2.3 .
Tax Consideration ” means the amount properly treated as consideration for U.S. federal income tax purposes in connection with the transactions contemplated by this Agreement, the APA, and the EIPA.
Tax Return ” means any return, declaration, report, claim for refund, property rendition or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof.
Taxing Authority ” has the meaning assigned to such term in the definition of “ Tax or Taxes ”.
TETRA Holding ” has the meaning assigned to such term in the Recitals to this Agreement.
TETRA Parent ” has the meaning assigned to such term in the preamble to this Agreement.
Third Party Claim ” has the meaning assigned to such term in Error! Reference source not found..
Transfer Taxes ” means any sales, use, value-added, business, goods and services, transfer (including any stamp duty or other similar Tax chargeable in respect of any instrument transferring property), documentary, conveyancing or similar Tax or expense or any recording fee (including any BOEM transfer fee), in each case that is imposed as a result of any transaction contemplated herein, together with any penalty, interest and addition to any such item with respect to such item.
TSB has the meaning assigned to such term in the Recitals to this Agreement.

ARTICLE II     
THE TRANSACTION
Section 2.1      The Transaction . Upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase, assume and acquire from Seller, at the Closing, the Interests. Notwithstanding the foregoing, Seller shall cause the Company to transfer the Seller Retained Items to TETRA Parent in accordance with Section 6.3.
Section 2.2      Consideration . The consideration to be paid (the “ Purchase Price ”) for the Interests under this Agreement, the Properties under the APA and the Purchased Assets under the EIPA shall be:
(i)      the assumption by Buyer of the Assumed Obligations (as such term is defined in the APA) and the indemnity provided by Buyer pursuant to Article IX of the APA, and the full performance of each;
(ii)      the assumption by Buyer of the Assumed Obligations and the indemnity provided by Buyer pursuant to Article VII of this Agreement, and the full performance of each;
(iii)      the assumption by Epic of the Assumed Obligations (as such term is defined in the EIPA) and the indemnity provided by Epic pursuant to the EIPA, and the full performance of each;
(iv)      Buyer’s delivery of, and performance under, the bonds to be delivered pursuant to Section 5.3(c) of this Agreement, and
(v)      the Cash Purchase Price (as such term is defined in the EIPA) and the execution by Epic of the Note (as such term is defined in the EIPA) payable to the EIPA Sellers, and the full performance by Epic thereof as set forth in the EIPA.
Section 2.3      Allocation . Within ninety (90) days after the Closing, Buyer and Seller shall use commercially reasonable efforts to agree to the amount of the Tax Consideration and an allocation of the Tax Consideration among the seven asset classes specified in Section 1.338-6(b) of the U.S. Treasury Regulations (i.e., “Class V assets,” “Class VI assets,” “Class VII assets,” etc.) in a manner consistent with Section 1060 of the Code. If the Parties reach an agreement with respect to such allocation (as agreed, the “ Tax Allocation ”), (i) the Parties shall update the Tax Allocation in a manner consistent with the original Tax Allocation and Section 1060 of the Code following any adjustment to the Tax Consideration pursuant to this Agreement, (ii) the Parties shall, and shall cause their Affiliates to, report consistently with the Tax Allocation on all Tax Returns, (iii) each Party shall promptly inform the other Parties in writing of any challenge by any Taxing Authority to the Tax Allocation and consult and keep one another informed with respect to the status of such challenge and (iv) no Party shall take any position in any Tax Return that is inconsistent with the Tax Allocation unless otherwise required by applicable Law; provided, however, that no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any tax audit, claim or similar proceedings in connection with such Tax Allocation.
ARTICLE III     
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
Section 3.1      Representations and Warranties of the Company . The Company hereby represents and warrants to Buyer as follows:
(a)      Organization and Qualification . The Company is duly organized and legally existing under the Laws of the State of Delaware and has all requisite limited liability company power and authority to carry on its business as now being conducted.
(b)      Due Authorization . The Company has full limited liability company power and authority to execute and deliver this Agreement and each other agreement, instrument or document executed or to be executed by the Company in connection with the transactions contemplated hereby, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company of this Agreement and each other agreement, instrument or document executed or to be executed by the Company in connection with the transactions contemplated hereby, and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized by all necessary limited liability company action of the Company.
(c)      Approvals . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will result in any default under any of the Governing Documents, or of any material Contract to which the Company is a party or by which the Properties are bound, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or to the Properties, except for (i) requirements (if any) that there be obtained consents to assignment (or waivers of preferential rights to purchase) from third parties, (ii) approvals (“ Routine Governmental Approvals ”) required to be obtained from Governmental Entities, and (iii) the requirements of any maintenance of uniform interest provisions contained in any operating or other agreements.
(d)      Valid, Binding and Enforceable . This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except as limited by bankruptcy or other Laws applicable generally to creditor’s rights and as limited by general equitable principles.
(e)      Litigation . Except as set forth on Schedule 3.1(e) , there are no Proceedings pending, or to the Company’s Knowledge, threatened, in which the Company is or may be a party that could be reasonably expected to adversely affect the Properties after the Effective Date (including any actions challenging or pertaining to the Company’s title to any of the Properties or claiming a violation of Applicable Environmental Laws), or to enjoin or prohibit the execution and delivery of this Agreement by the Company or the consummation of the transactions contemplated hereby by the Company.
(f)      Payment of Expenses . To the Company’s Knowledge, all expenses (including all bills for labor, materials and supplies used or furnished for use in connection with the Properties, and all Asset Taxes) relating to the ownership or operation of the Properties, and for which the Company has received a bill, invoice or other written request for payment have been, and are being, paid (timely, and before the same become delinquent) by the Company, except such expenses and Asset Taxes as are disputed in good faith by the Company, such disputes being set forth on Schedule 3.1(f) .
(g)      No Bankruptcy . There are no bankruptcy, insolvency, reorganization or arrangement proceedings pending, being contemplated by, or to the Company’s Knowledge, threatened against the Company.
(h)      Taxes . The Company has filed all material Tax Returns and reports required to be filed by the Company in connection with its ownership and operation of the Properties, and all Taxes due with respect to such Tax Returns have been paid or accrued. There is not currently in force any agreement for extension of time for the assessment or prepayment of any Tax of or with respect to the Company other than extensions obtained in the ordinary course of business.
(i)      Governing Documents . To the Company’s Knowledge, the Company has made available to Buyer accurate and complete copies of the Governing Documents of the Company, as amended through the date hereof. Such Governing Documents accurately reflect the equity ownership of the Company.
(j)      Capital Structure . The authorized equity ownership of the Company consists solely of the Interests which are owned 100% of record and beneficially by Seller. All of the Interests of the Company were issued, and to the extent purchased or transferred, have been so issued, purchased or transferred in compliance with the Governing Documents and all applicable laws, including state and federal security laws, and any preemptive rights and any other statutory or contractual rights of Seller. No membership interests or other equity of the Company are subject to, nor have any been issued in violation of, preemptive or similar rights. Except for the Interests and the rights created by this Agreement, there are outstanding or in existence (i) no membership interests or other equity or debt securities of the Company, (ii) no securities of the Company convertible into or exchangeable for membership interests or other voting securities of the Company, (iii) no options, subscriptions, warrants, calls, commitments, pre-emptive rights or other rights to acquire from the Company, and no obligation of the Company to issue or sell, any membership interests or other voting securities of the Company or any securities of the Company convertible into or exchangeable for such membership interests or voting securities, and (iv) no equity equivalents, interests in the ownership or earnings, or other similar rights of or with respect to the Company. There are no outstanding obligations of the Company to repurchase, redeem, or otherwise acquire any of the foregoing units, securities, options, equity equivalents, interests, or rights.
(k)      Subsidiaries . The Company does not own, directly or indirectly, any capital stock of, or other equity interest in, any corporation or have any direct or indirect equity or ownership interest in any other Person.
(l)      No Violation of Laws . To Seller’s Knowledge, there has been no violation of any applicable Laws with respect to the ownership or operation of the Properties. There are no outstanding suspensions of operations or suspension of production pertaining to the Properties that are awaiting approval by a Governmental Entity. Except as set forth on Schedule 3.1(e) , there are no unresolved incidents of non-compliance issued by any Governmental Entity with respect to any Properties or any other disputes involving regulatory issues with a Governmental Entity.
Section 3.2      Representations of Seller . Seller represents to Buyer that:
(a)      Title to the Interests . Seller is the record and beneficial owner of, and upon consummation of the transactions contemplated hereby, Buyer will acquire good and valid title to, the Interests, other than (i) those that may arise by virtue of any actions taken by or on behalf of Buyer or its Affiliates, (ii) restrictions on transfer that may be imposed by federal or state securities laws, or (iii) restrictions on transfer in the Governing Documents of the Company or that are waived or cancelled as of the Closing. T he Interests are free and clear from any and all Liens and other encumbrances, except for those Liens and encumbrances set forth on Schedule 3.2(a) , which will be released at Closing.
(b)      Organization and Qualification . Seller is duly organized and legally existing under the Laws of the state in which it was formed.
(c)      Due Authorization . Seller has full power and authority to execute and deliver this Agreement and each other agreement, instrument or document executed or to be executed by Seller in connection with the transactions contemplated hereby, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and each other agreement, instrument or document executed or to be executed by Seller in connection with the transactions contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary action on the part of Seller.
(d)      No Conflicts . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will (i) violate any material provision of the Contracts or the Governing Documents of Seller, (ii) result in any default under any of the Contracts or under any material agreement or instrument to which Seller is a party or (iii) violate any Law binding upon Seller, except for (A) requirements (if any) that there be obtained consents to assignment (or waivers of preferential rights to purchase) from third parties, (B)  Routine Governmental Approvals which are customarily obtained post-closing, and (C) the requirements of any maintenance of uniform interest provisions contained in any operating or other agreements.
(e)      Valid, Binding and Enforceable . This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable in accordance with its terms, except as limited by bankruptcy or other Laws applicable generally to creditor’s rights and as limited by general equitable principles.
(f)      Litigation . There are no Proceedings pending or, to Seller’s Knowledge, threatened, in which Seller is or may be a party and which could be reasonably expected to enjoin or prohibit the execution and delivery of this Agreement by Seller or the consummation of the transactions contemplated hereby by Seller.
Section 3.3      DISCLAIMERS . THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER CONTAINED IN SECTION 3.1 AND SECTION 3.2 ABOVE (COLLECTIVELY, THE “SPECIFIED WARRANTIES”) ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE. SELLER AND THE COMPANY EXPRESSLY DISCLAIM ANY AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING AND EXCEPT FOR SPECIFIED WARRANTIES, THE INTERESTS SHALL BE CONVEYED PURSUANT HERETO WITHOUT (a) ANY WARRANTY OR REPRESENTATION, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO (i) TITLE TO THE PROPERTIES OR THE INTERESTS, OR THE CONDITION, QUANTITY, QUALITY OF THE PROPERTIES, (ii) THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT, (iii) PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR POTENTIAL OF THE PROPERTIES TO PRODUCE HYDROCARBONS, (iv) THE ENVIRONMENTAL CONDITION OF THE PROPERTIES, BOTH SURFACE AND SUBSURFACE, (v) THE STATUS OF THE PROPERTIES WITH RESPECT TO COMPLIANCE WITH APPLICABLE ENVIRONMENTAL LAWS, OR (vi) ANY OTHER MATTERS CONTAINED IN ANY MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER, THE COMPANY OR BY THEIR RESPECTIVE AGENTS OR REPRESENTATIVES, OR (b) ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER. BUYER SHALL HAVE INSPECTED, OR WAIVED ITS RIGHT TO INSPECT, THE PROPERTIES FOR ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE OR RELEASE OF HAZARDOUS MATERIAL, INCLUDING HAZARDOUS SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE FIBERS, OR NATURALLY OCCURRING RADIOACTIVE MATERIALS. EXCEPT FOR THE SPECIFIED WARRANTIES, SELLER AND THE COMPANY FURTHER DISCLAIM ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT BUYER SHALL BE DEEMED TO BE OBTAINING THE PROPERTIES AND THE INTERESTS, INCLUDING, WITHOUT LIMITATION, THE EQUIPMENT COMPRISING PART OF THE PROPERTIES, IN THEIR PRESENT STATUS, AND CONDITION, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 3.3 ARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW.
Section 3.4      Disclosures . The matters set forth on the exhibits referred to in Section 3.1 and Section 3.2 are not necessarily matters that Seller or the Company is required to disclose or matters that would constitute a breach of any representation or warranty had such matters not been disclosed.
ARTICLE IV     
REPRESENTATIONS OF BUYER
Section 4.1      Representations of Buyer . Buyer represents to Seller that:
(a)      Organization and Qualification . Buyer is duly organized and legally existing and in good standing under the Laws of the State of Virginia and is qualified to do business and in good standing where the Law requires Buyer to so qualify with respect to the acquisition of the Interests. Buyer is duly qualified or licensed to do business and in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not have a material adverse impact on Buyer’s ability to consummate the transactions contemplated hereby.
(b)      Due Authorization . Buyer has full power and authority to execute and deliver this Agreement and each other agreement, instrument or document executed or to be executed by Buyer in connection with the transactions contemplated hereby, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each other agreement, instrument or document executed or to be executed by Buyer in connection with the transactions contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary action on the part of Buyer.
(c)      Approvals . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will result in any default under any agreement or instrument to which Buyer is a party, conflict with or result in a breach of any provisions of the organizational or other Governing Documents of Buyer, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to Buyer, except for requirements (if any) that there be obtained consents to assignment (or waivers of preferential rights to purchase) from third parties, consents required to be obtained under Routine Governmental Approvals.
(d)      Valid, Binding and Enforceable . This Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except as limited by bankruptcy or other Laws applicable generally to creditor’s rights and as limited by general equitable principles.
(e)      No Litigation . There are no pending suits, actions, or other proceedings in which Buyer is a party (or, to Buyer’s knowledge, which have been threatened to be instituted against Buyer) which affect the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(f)      No Distribution . Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended, and is acquiring the Interests for its own account and not with the intent to make a distribution in violation of the Securities Act of 1933 as amended (and the rules and regulations pertaining thereto) or in violation of any applicable state blue sky Laws or other applicable securities Laws, rules or regulations.
(g)      Knowledge and Experience . Buyer has, and had prior to negotiations regarding the Interests, such knowledge and experience in the ownership and operation of oil and gas properties, investments in securities, and financial and business matters as to be able to evaluate the merits and risks of an investment in the Interests. Buyer is able to bear the risks of an investment in the Interests and understands risks of, and other considerations relating to, a purchase of the Interests.
(h)      Opportunity to Verify Information . As of the Closing, Buyer has, and Buyer’s agents and representatives have, been afforded the opportunity to ask questions of the Seller (or a Person or Persons acting on its behalf) concerning the Properties and the Interests, and Buyer and/or such agents and representatives have been furnished with materials relating to the Properties and the Interests requested by them under this Agreement. Buyer has made its own independent investigation of the Properties and the Interests to the extent necessary to evaluate the Properties and the Interests. At Closing, Buyer shall be deemed to have knowledge of all facts contained in all materials, documents and other information which Buyer has been furnished or to which Buyer has been given access.
(i)      Merits and Risks of an Investment in the Interests . Buyer understands and acknowledges that: (i) an investment in the Interests involves certain risks; (ii) the Interests have not been registered under applicable federal and state securities laws and that the Interests may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of, absent registration under applicable federal and state securities laws or pursuant to an exemption from registration under applicable federal and state securities laws, and (iii) neither the United States Securities and Exchange Commission nor any federal, state or foreign agency has passed upon the Interests or made any finding or determination as to the fairness of an investment in the Interests or the accuracy or adequacy of the disclosures made to Buyer.
(j)      Bankruptcy . There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by, or, to the knowledge of Buyer, threatened against Buyer.
(k)      Brokerage Fees and Commissions . Neither Buyer nor any Affiliate of Buyer has incurred any obligation or entered into any agreement for any investment banking, brokerage or finder’s fee or commission in respect of the transactions contemplated by this Agreement for which Seller or the Company shall incur any liability.
(l)      Knowledge of Breach . The Buyer has no knowledge of any breach by Seller of its representations and warranties contained in this Agreement.
ARTICLE V     
CLOSING
Section 5.1      Closing . Subject to the satisfaction of the conditions set forth in Section 8.1 and Section 8.2 (or waiver thereof by the Party entitled to waive that conditions), the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of the Seller at 24955 I-45 North, The Woodlands, Texas 77380, within two (2) business days after satisfaction or waiver of all of the closing conditions set forth in Article VIII hereof (other than those required to be satisfied at the Closing, but subject to the satisfaction thereof) or on such other date or at such other location as is mutually agreeable to Buyer and Seller (such date being the “ Closing Date ”). The Parties intend that the Closing with respect to this Agreement shall be deemed effective as of 12:02 a.m., Houston, Texas time and immediately following the consummation of the transactions contemplated under the APA and immediately prior to the consummation of the transactions contemplated under the EIPA (the “ Effective Time ”).
Section 5.2      Seller’s Closing Obligations . At the Closing,
(a)      Consents . Seller shall deliver to the Buyer copies of the resolutions of the Seller’s sole member approving the execution of this Agreement and any other documents required for the consummation of the transactions contemplated hereunder.
(b)      Assignment of Interests . Seller shall deliver to the Buyer a duly and validly executed assignment agreement in the form attached hereto as Exhibit A transferring all of the Interests.
(c)      FIRPTA Certificate . Seller (or the Person characterized as the transferor for purposes of Section 1445 of the Code, if the Seller is classified as a disregarded entity) shall provide to Buyer a duly executed certificate of non-foreign status in the form and manner that complies with Section 1445 of the Code and the Treasury Regulations thereunder.
(d)      Resignation of Officers and Directors . Seller shall deliver to the Buyer (a) evidence of the resignations of the respective limited liability company managers, directors and officers of the Company, such resignations to be effective immediately upon consummation of the transactions contemplated by this Agreement and (b) releases whereby the respective limited liability company managers, directors and officers of the Company release the Company from any and all claims of such individuals against the Company, and the Company releases such individuals from any and all claims of the Company against such individuals.
(e)      Release of Liens . Seller shall deliver original, executed and acknowledged releases, in recordable form, of the liens described on Schedule 3.2(a) .
(f)      Officer’s Certificate . Seller shall deliver to Buyer a certificate dated the Closing Date, certifying the statements set forth in Section 8.1(a) , Section 8.1(b) and Section 8.1(c) are true and correct.
Section 5.3      Buyer’s Closing Obligations . At the Closing,
(a)      Consents . Buyer shall cause to be delivered to the Seller copies of the resolutions of the Buyer’s sole member approving the execution of this Agreement and any other documents required for the consummation of the transactions contemplated hereunder.
(b)      Assignment of Interests . Buyer shall deliver to the Seller a duly and validly executed assignment agreement in the form attached hereto as Exhibit A transferring all of the Interests.
(c)      Bonds . Buyer shall deliver to the Seller the bonds as required under the bonding agreement attached hereto as Exhibit B .
(d)      Officer’s Certificate . Buyer shall deliver to Seller a certificate dated the Closing Date, certifying the statements set forth in Section 8.2(a) and Section 8.2(b) are true and correct.
ARTICLE VI     
COVENANTS
Section 6.1      Books and Records .
(a)      At or promptly after the Closing, Seller shall deliver to Buyer all books and records of the Company that are in Seller’s control, including original minute books and other corporate books and records and accounts, all of the Company’s rights of way easements, rights of way option agreements, files, assignments, operating records and agreements, engineering records, financial and accounting records (but not including general financial accounting or tax accounting records), and other similar files and records which directly relate to the Properties. Buyer agrees that Seller may retain copies of all files transferred to Buyer pursuant to this Section 6.1 . Notwithstanding anything in this Agreement to the contrary, Seller may retain, and is under no obligation to transfer to Buyer, any agreements or correspondence between Seller and any third party relating to the transactions contemplated by this Agreement or the APA.
(b)      Unless otherwise consented to in writing by TETRA Parent, Buyer shall not, and shall cause its Affiliates not to, for a period of seven (7) years following the Closing Date, destroy, alter or otherwise dispose of any of the Books and Records without first offering in writing to surrender to TETRA Parent such Books and Records or any portion thereof which Buyer or its Affiliates may intend to destroy or dispose of.
Section 6.2      Removal of Name . As promptly as reasonably possible, but in any case within thirty (30) days after the Closing Date, Buyer shall remove the name of Seller and any variants thereof from the Properties and the Company.
Section 6.3      Conduct of Business Pending Closing . Prior to the Closing, except (i) as required by applicable Law or GAAP, (ii) as otherwise expressly contemplated or required by this Agreement or (iii) with the prior written consent of Buyer, the Sellers shall cause the Company to conduct its business in the ordinary course of business in all material respects; provided that the Seller shall cause the Company to transfer the Seller Retained Items to TETRA Parent.
Section 6.4      Employees . Buyer will give offers of employment (on an “at will” basis) to each employee identified on Schedule 6.4 which offer shall provide for employment with compensation and benefits that are substantially comparable in the aggregate to those in effect immediately prior to the date of this Agreement as previously disclosed to Buyer. Seller agrees to reasonably cooperate with Buyer in connection with its offer to hire such employees listed on Schedule 6.4, and will not take any actions reasonably anticipated to prevent employment of such employees by Buyer.
Section 6.5      Bonding Agreement . Contemporaneously with the execution and delivery of this Agreement, the Company shall deliver to Buyer a counterpart of the Bonding Agreement in the form attached hereto as Exhibit B duly executed by Seller, and Buyer shall execute and deliver to Seller a counterpart of the Bonding Agreement duly executed by Buyer.
    
ARTICLE VII     
ASSUMPTION AND INDEMNIFICATION
Section 7.1      Assumption and Indemnification By Buyer .
(a)      From and after the Closing, Buyer shall assume and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid or discharged) all duties, obligations and liabilities (including with respect to Taxes as set forth in Article X ) of the Company or arising under the Company’s limited liability company agreement or relating to the subject matter thereof, or otherwise under any theory of law, whether arising before, on or after the Closing Date (the “ Assumed Obligations ”). For the avoidance of doubt, the Assumed Obligations shall not include any matter for which the Buyer would be entitled to indemnification under Section 7.2 .
(b)      From and after the Closing, Buyer shall indemnify, defend and hold Seller (and its partners, members, and all their affiliates, including TETRA Parent, and all their respective directors, officers, employees, attorneys, contractors and agents) (collectively, “ Seller Indemnified Parties ”) harmless from and against any and all Losses (individually a “ Seller’s Indemnified Claim ” and collectively “ Seller’s Indemnified Claims ”) arising out of:
(i)      Buyer’s breach of any of Buyer’s covenants or agreements contained in this Agreement;
(ii)      the ownership of the Properties regardless of whether the same accrued or otherwise arose before, on or after the Closing;
(iii)      the condition (“ Condition of the Properties ”) of the Properties on the Closing Date (including all obligations to properly plug and abandon, or re-plug and re-abandon, wells, to remove platforms and pipelines, to restore the surface of the Properties and to comply with, or to bring the Properties into compliance with, Applicable Environmental Laws, including conducting any remediation activities which may be required on or otherwise in connection with activities on the Properties), regardless of whether such condition or the events giving rise to such condition arose or occurred before or after the Closing Date; or
(iv)      the Assumed Obligations.
Section 7.2      Indemnification By TETRA Parent . From and after Closing, TETRA Parent shall indemnify, defend and hold Buyer (and its partners, members, and all their affiliates, and all their respective directors, officers, employees, attorneys, contractors and agents) (collectively, “ Buyer Indemnified Parties ”) harmless from and against any and all Losses (individually a “ Buyer’s Indemnified Claim ” and collectively “ Buyer’s Indemnified Claims ”) arising out of:
(a)      The breach of any of the representations and warranties of the Seller or the Company set forth in Section 3.1 and Section 3.2 ;
(b)      The Proceedings set forth on Schedule 3.1(e) and any personal injury claim brought against the Company after the Closing Date that is attributed to the time period before the Closing Date;
(c)      Liabilities for Taxes of Seller and/or the Company and its business arising from or otherwise related to the ownership, management or operation of the Company prior to the Closing Date;
(d)      The Seller Retained Items; and
(e)      Any incidents of non-compliance issued after the Closing Date by any Governmental Entity with respect to any Properties which incidents of non-compliance are solely attributable to an action or inaction by the Company occurring before the Closing Date (and, for the avoidance of doubt, do not relate to the asset retirement obligations of the Company).
THE FOREGOING ASSUMPTIONS AND INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH DUTIES, OBLIGATIONS OR LIABILITIES, OR SUCH CLAIMS, ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF (i) NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE) OF ANY SELLER INDEMNIFIED PARTY, OR (ii) STRICT LIABILITY.

    




Section 7.3      Survival of Provisions . All representations and warranties other than Section 3.2(a) contained in this Agreement or in any Exhibit or Schedule to this Agreement, or in any certificate, document or other instrument delivered in connection with this Agreement, and the right to commence any claim with respect thereto, shall terminate and cease to be of further force and effect as of the date which is twelve (12) months following the Closing Date. The representations and warranties set forth in Section 3.2(a) shall survive indefinitely. Notwithstanding the foregoing, any covenant, agreement, representation, warranty or other matter in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to this Section 7.3 , if notice of the inaccuracy or breach thereof or other matter giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.
Section 7.4      Indemnification Procedures . The obligations of TETRA Parent to indemnify the Buyer Indemnified Parties under Section 7.2 with respect to Losses incurred the by Buyer Indemnified Parties, and the obligations of Buyer to indemnify the Seller Indemnified Parties under Section 7.1 with respect to Losses incurred by the Seller Indemnified Parties, in either case arising out of or resulting from the assertion of liability or any Legal Proceeding by third parties who are not Affiliated with a Party to this Agreement (each, as the case may be, a “ Third-Party Claim ”), will be subject to the terms and conditions of the following clauses (a) through (e):
(a)      A party claiming indemnification under this Agreement (an “ Indemnified Party ”) shall promptly after receiving written notice of any Third-Party Claim, but in no event later than thirty (30) days thereafter, transmit to the party or parties from whom indemnification is sought under this Agreement (the “ Indemnifying Party ”) a written notice of the Third-Party Claim (a “ Claim Notice ”) describing in reasonable detail the nature of the Third-Party Claim, attaching a copy of all papers served to such Indemnified Party with respect to such Third-Party Claim (if any), setting forth a reasonable estimate of the amount of Losses attributable to the Third-Party Claim to the extent feasible (which estimate shall not be conclusive of the final amount of Losses arising from or relating to such Third-Party Claim), and describing in reasonable detail the basis of the Indemnified Party’s request for indemnification under this Agreement. Any failure or delay to provide such Claim Notice within such specified time period shall not release or relieve the Indemnifying Party from its liability under this Article VII or affect the right of an Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) the Indemnifying Party is prejudiced by such failure or delay.
(b)      Within twenty (20) days after receipt of any Claim Notice (the “ Election Period ”), the Indemnifying Party shall notify the Indemnified Party (i) whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article VII with respect to such Third-Party Claim and (ii) whether the Indemnifying Party desires, at its sole cost and expense and in accordance with Section 7.4(c) , to defend the Indemnified Party against such Third-Party Claim. If the Indemnifying Party does not notify the Indemnified Party within such Election Period that the Indemnifying Party disputes its potential liability with respect to such Third-Party Claim, any liability with respect to such Third-Party Claim shall be deemed a disputed liability of the Indemnifying Party hereunder.
(c)      Subject to Section 7.4(d) , if the Indemnifying Party notifies the Indemnified Party within the Election Period that the Indemnifying Party elects to assume the defense of such Third-Party Claim, then the Indemnifying Party shall have the right to defend, at its sole cost and expense, such Third-Party Claim by all appropriate proceedings with counsel of its choosing (but reasonably satisfactory to the Indemnified Party); provided, that the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense. The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnifying Party shall obtain the prior written consent of the Indemnified Party before entering into any compromise or settlement of such Third-Party Claim, which consent shall not be unreasonably withheld; provided further, that no such consent shall be required for any such compromise or settlement that: (A) is exclusively monetary and will be paid in full by the Indemnifying Party (rather than the Indemnified Party); (B) does not contain an admission of liability on the part of any Indemnified Party; and (C) unconditionally and fully releases the Indemnified Party with respect to such Third Party Claim. If reasonably requested by the Indemnifying Party, the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in contesting any Third-Party Claim that the Indemnifying Party elects to contest in good faith pursuant to this Section 7.4(c), including by providing the Indemnifying Party with reasonable access during normal business hours of the Indemnified Party to books, records and personnel of the Indemnified Party (but only to the extent relevant to such Third-Party Claim), and in making any related counterclaim against the Person asserting the Third-Party Claim or any cross-complaint against any Person. Except as otherwise provided herein, the Indemnified Party may participate in, but not control, any defense or settlement of any Third-Party Claim controlled by the Indemnifying Party pursuant to this Section 7.4(c), and to retain counsel of the Indemnified Party’s own choice in connection with such participation, and the Indemnified Party shall bear its own costs and expenses with respect to such participation.
(d)      If within the Election Period the Indemnifying Party has delivered a written notice to the Indemnified Party to the effect that the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article VII with respect to such Third-Party Claim, or by the Indemnifying Party’s failure to respond, the Indemnifying Party is deemed to dispute its potential liability, and if such dispute is finally and conclusively resolved by a court of competent jurisdiction in favor of the Indemnified Party, the Indemnifying Party shall be required to bear the costs and expenses of the Indemnified Party’s defense of such Third-Party Claim pursuant to this Section 7.4(d).
(e)      The non-controlling party in the defense of a Third-Party Claim shall have the right to consult with the party controlling such defense, and the controlling party shall facilitate such consultation, with respect to the conduct, status, developments and results of the defense of such Third-Party Claim and the controlling party’s strategy for addressing the matters that are the basis of such Third-Party Claim.
(f)      In the event any Indemnified Party should have a claim for indemnification hereunder against any Indemnifying Party that does not involve a Third-Party Claim (an “ Indemnity Claim ”), the Indemnified Party shall promptly transmit to the Indemnifying Party a written notice of such Indemnity Claim (an “ Indemnity Notice ”) describing in reasonable detail the nature of the Indemnity Claim, and setting forth a reasonable estimate of the amount of Losses attributable to such Indemnity Claim to the extent feasible (which estimate shall not be conclusive of the final amount of Losses arising from or relating to such Indemnity Claim) and the basis of the Indemnified Party’s request for indemnification under this Agreement. Any failure or delay to provide such Indemnity Notice shall not release or relieve the Indemnifying Party from its liability under this Article VII or affect the right of an Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) the Indemnifying Party is actually prejudiced by such failure or delay.
(g)      Within twenty (20) days after receipt of any Indemnity Notice, the Indemnifying Party shall notify the Indemnified Party whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article VII with respect to such Indemnity Claim. If the Indemnifying Party does not notify the Indemnified Party within twenty (20) days from its receipt of the Indemnity Notice that the Indemnifying Party disputes such Indemnity Claim, any liability with respect to such Indemnity Claim shall be deemed a disputed liability of the Indemnifying Party hereunder.
Section 7.5      Limitations .
(a)      No indemnity shall be payable to the Buyer Indemnified Parties under Section 7.2 with respect to any claim, unless and until the aggregate of all Losses related thereto due from TETRA Parent exceeds $500,000 (the “ Deductible ”), in which event all Losses so due in excess of the Deductible shall be paid in the aggregate by TETRA Parent; provided, that the aggregate amount payable by TETRA Parent for all Losses arising under Section 7.2 with respect to any claim shall not exceed $2,000,000 (the “ Cap ”).
(b)      Notwithstanding anything to the contrary contained in this Agreement, neither the Deductible nor the Cap shall apply to Losses of the Buyer Indemnified Parties arising out of (i) claims for any breach of any representation or warranty in Section 3.2(a) or (ii) the matters described in Section 7.2(b) or Section 7.2(d) .
(c)      If prior to Closing, Buyer has knowledge of any inaccuracy or breach of any of the representations and warranties of Seller set forth herein and nonetheless proceeds with and consummates the Closing, then Buyer shall be deemed to have waived and forever renounced any right to assert a claim for indemnification under this Agreement.
Section 7.6      Mitigation . Each Indemnified Party shall, and is obligated to, take all reasonable steps to mitigate all indemnifiable Losses upon and after becoming aware of any event which could reasonably be expected to give rise to any Losses hereunder.
Section 7.7      No Duplication . Any Losses giving rise to liability for indemnification hereunder shall be determined without duplication of recovery by reason of the same set of facts giving rise to such Losses constituting a breach of more than one representation, warranty, covenant or agreement. For purposes of this Agreement, Losses shall be calculated after giving effect to any amounts actually recovered from third parties, including amounts actually recovered under insurance policies with respect to such Losses, net of any costs to recover such amounts, including any deductibles, co-payments or other reasonable and documented costs and expenses (including attorneys’ fees and other costs of collection) resulting from the related claims under applicable insurance policies. Any Indemnified Party having a claim under these indemnification provisions shall make a good-faith effort to recover all losses, costs, damages and expenses from insurers of such Indemnified Party under applicable insurance policies so as to reduce the amount of any Losses hereunder; provided, that actual recovery of any insurance shall not be a condition to the Indemnifying Party’s obligation to make indemnification payments to the Indemnified Party in accordance with the terms of this Agreement. If the Indemnifying Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for a Loss, after an indemnification payment by the Indemnifying Party has been made for such Loss, then the Indemnified Party shall promptly reimburse the Indemnifying Party for such indemnification payment up to the amount so received or realized by the Indemnified Party, net of any costs to recover such amounts, including any deductibles, co-payments or other reasonable and documented costs and expenses (including attorneys’ fees and other costs of collection) resulting from the related claims under applicable insurance policies.
  
ARTICLE VIII     
CONDITIONS PRECEDENT
Section 8.1      Conditions Precedent to Obligations of Buyer . The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Buyer in whole or in part to the extent permitted by applicable Law):
(a) (i) the representations and warranties of the Company set forth in Section 3.1(a) (Organization and Qualification), Section 3.1(b) (Due Authorization) and Section 3.1(j) (Capitalization) shall be true and correct in all respects, (ii) the representations and warranties of Company set forth in this Agreement (other than Section 3.1(a) , Section 3.1(b) and Section 3.1(j) ) that are qualified by materiality (whether by reference to the terms “material” or any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of the Company that are not so qualified by materiality (other than Section 3.1(a) , Section 3.1(b) and Section 3.1(j) ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(b) (i) the representations and warranties of the Seller set forth in Section 3.2(a) (Title to the Interests), Section 3.2(b) (Organization and Qualification) and Section 3.2(c) (Due Authorization) shall be true and correct in all respects, (ii) the representations and warranties of Company set forth in this Agreement (other than Section 3.2(a) , Section 3.2(b) and Section 3.2(c) ) that are qualified by materiality (whether by reference to the terms “material” or any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of the Company that are not so qualified by materiality (other than Section 3.2(a) , Section 3.2(b) and Section 3.2(c) ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(c) Company and Seller shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Seller and Company, respectively, prior to the Closing Date;
(d) Seller shall have obtained a consent to the transactions contemplated by this Agreement and a release of the Liens set forth on Schedule 3.2(a) ; and
(e) the transactions contemplated by the APA shall have been consummated.
Section 8.2      Conditions Precedent to Obligations of Seller and the Company . The obligation of each of the Seller and the Company to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Seller and the Company in whole or in part to the extent permitted by applicable Law):
(a) (i) the representations and warranties of Buyer set forth in Section 4.1(a) (Organization and Qualification) and Section 4.1(b) (Due Authorization) shall be true and correct in all respects, (ii) the representations and warranties of Buyer set forth in this Agreement (other than Section 4.1(a) and Section 4.1(b) ) that are qualified by materiality (whether by reference to the terms “material” or any threshold amount or otherwise) shall be true and correct in all respects, and (iii) the representations and warranties of Buyer that are not so qualified by materiality (other than Section 4.1(a) and Section 4.1(b) ) shall be true and correct in all material respects, in each case, as of the date of this Agreement and at and as of the Closing Date (except for representations and warranties that by their terms are made as of a specified date or period, which shall be true and correct only as of such specified date or period);
(b) Buyer shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by Buyer prior to the Closing Date;
(c) the delivery by Buyer of the bonds in accordance with Section 5.3(c) ; and
(d) the transactions contemplated by the APA shall have been consummated.
Section 8.3      Frustration of Closing Conditions . Neither Seller nor Buyer may rely on the failure of any condition set forth in Section 8.1 or Section 8.2 , as the case may be, if such failure was caused by such Party’s failure to comply with any provision of this Agreement.
Section 8.4      Termination of Agreement . This Agreement may be terminated prior to the Closing as follows:
(a) At the election of Seller or Buyer on or after March 30, 2018 (the “ Termination Date ”), if the Closing shall not have occurred by the close of business on such date; provided, however , that the terminating Party is not in material default of any of its obligations hereunder;
(b) by mutual written consent of Seller and Buyer; or
(c) by Seller or Buyer if there shall be in effect a final nonappealable order of a Governmental Entity of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.
Section 8.5      Procedure Upon Termination . In the event of termination and abandonment of the transactions contemplated hereby by Buyer or Sellers, or both, pursuant to Section 8.4 , written notice thereof shall forthwith be given to the other Party, and this Agreement shall terminate, and the purchase of the Interests hereunder shall be abandoned, without further action by any Party.
Section 8.6      Effect of Termination .
(a)      In the event that this Agreement is terminated in accordance with Section 8.4 , then each of the Parties shall be relieved of their respective duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Buyer or Sellers; provided, that (i) no such termination shall relieve any Party from liability for any breach of this Agreement and (ii) the obligations of the Parties set forth in Article X hereof shall survive any such termination and shall be enforceable hereunder.
(b)      Nothing in this Section 8.6 shall relieve Buyer or Sellers of any liability for a breach of this Agreement prior to the date of termination and the non breaching Party’s right to pursue all legal and equitable remedies will survive such termination. The damages recoverable by the non breaching Party shall include all attorneys’ fees reasonably incurred by such Party in connection with the transactions contemplated hereby. Nothing in this Section 8.6 shall be deemed to limit the rights of the Parties contained in Section 11.12 .
ARTICLE IX     
NOTICES
Section 9.1      Notices . All notices and other communications required under this Agreement shall (unless otherwise specifically provided herein) be in writing and be delivered personally, by recognized commercial courier or delivery service which provides a receipt mail (with receipt acknowledged), or by registered or certified mail (postage prepaid), at the following addresses:
If to Buyer:
 
Orinoco Natural Resources, LLC
192 Summerfield Court, Suite 203
Roanoke, VA 24019
Attention: Thomas M. Clarke
Telephone: (540) 595-3908
If to Seller:

TETRA Technologies, Inc.
24955 I-45 North
The Woodlands, Texas 77478
Attention: Bass C. Wallace
Telephone: (281) 364-2241

 
or such other post office address within the continental limits of the United States as a Party may designate for itself by giving notice to the other Party, in the manner provided in this Section, at least ten (10) days prior to the effective date of such change of address. All notices given by personal delivery or mail shall be effective on the date of actual receipt at the appropriate address as provided above. Notices given by facsimile or electronic mail, if receipt is confirmed by the transmitting device, shall be effective upon actual receipt of received during recipient’s normal business hours or at the beginning of the next Business Day after receipt if received after recipient’s normal business hours.
ARTICLE X     
TAX MATTERS
Section 10.1      Asset Taxes . Seller shall cause the Company to file with the appropriate Governmental Entities all applicable Tax Returns for Asset Taxes related to the Properties or otherwise with respect to the business of the Company which are required to be filed by Seller on or before the Closing Date and shall pay any Taxes reflected thereon as due and owing. Buyer shall file all other Tax Returns for the Company and shall timely pay any Taxes reflected thereon as due and owing and indemnify and hold Seller harmless with respect to same. Each Party shall be responsible for its own Income Taxes; provided that Buyer shall indemnify Seller for any Income Taxes imposed on Seller arising in connection with Buyer’s breach of the covenants set forth in Section 2.3 .
Section 10.2      Transfer Fees and Taxes . All required documentary, filing and recording fees and expenses in connection with the filing and recording of the assignments, conveyances or other instruments required to convey title to the Properties to Buyer shall be borne by Buyer. Any and all Transfer Taxes shall be borne by Buyer, provided that Seller shall pay or cause to be paid to the applicable Governmental Entities any Transfer Taxes that it is required by Law to collect and remit. Buyer shall indemnify and hold Seller harmless from and against such Transfer Taxes within thirty (30) days of Seller's written demand therefor. If Seller (not Buyer) is required by applicable Law to appeal or protest the assessment of Transfer Taxes, the appeal or protest of such proposed assessment shall be treated as an item for which Seller is entitled to indemnification and if Buyer provides a written request and instructs Seller to do so, Seller shall prosecute the protest or appeal; in such event Buyer shall pay all out-of-pocket expenses of Seller (including attorneys’ fees) incurred by Seller in connection with such appeal or protest. Seller and Buyer shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.
Section 10.3      Tax Returns .
(a)      Without limiting anything in Section 2.3 to the contrary, the Parties shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns and any audit, litigation, or other proceeding with respect to Taxes relating to the Properties or the business of the Company. Such cooperation shall include the retention and (upon another Party’s request) the provision of records and information that are relevant to any such Tax Return or audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided under this Agreement. The Parties agree to retain all books and records with respect to Tax matters pertinent to the Properties and the business of the Company relating to any Tax period beginning before the Closing Date until the expiration of the statute of limitations of the respective Tax periods and to abide by all record retention agreements entered into with any Governmental Entity.
(b)      Seller shall have the right to, and Buyer shall take all actions necessary or advisable to allow and permit Seller to, control the conduct, defense, and settlement of any Tax proceeding related to Taxes that are allocated to the Seller under this Agreement. If Seller elects not to control the conduct or defense of such Tax proceeding, Buyer shall control the conduct and defense of such proceeding, provided that Buyer shall not settle or compromise any such proceeding without Seller’s prior written consent.
ARTICLE XI     
MISCELLANEOUS MATTERS
Section 11.1      Further Assurances . After the Closing, Seller and Buyer shall execute and deliver, and shall otherwise cause to be executed and delivered, from time to time, such further instruments, notices, division orders, transfer orders and other documents, and do such other and further acts and things, as may be reasonably necessary to more fully and effectively grant, convey and assign the Interests to Buyer and to otherwise satisfy the intent of this Agreement.
Section 11.2      Waiver of Consumer Rights . Buyer hereby waives its rights under the Texas Deceptive Trade Practices - Consumer Protection Act, Section 17.41 et seq., Business and Commerce Code, a Law that gives consumers special rights and protections, and any similar Law in any other state to the extent such Act or similar Law would otherwise apply. After consultation with an attorney of Buyer’s own selection, Buyer voluntarily consents to this waiver. To evidence Buyer’s ability to grant such waiver, Buyer represents to Seller that it (a) is in the business of seeking or acquiring, by purchase or lease, goods or services for commercial or business use, (b) has knowledge and experience in financial and business matters that enable it to evaluate the merits and risks of the transactions contemplated hereby, (c) is not in a significantly disparate bargaining position, and (d) has consulted with, and is represented by, an attorney of Buyer’s own selection in connection with this transaction, and such attorney was not directly or indirectly identified, suggested, or selected by Seller or an agent of Seller.
Section 11.3      Parties Bear Own Expenses/No Special Damages . Each Party shall bear and pay all expenses (including, without limitation, legal fees) incurred by it in connection with the negotiation and execution of this Agreement and the transactions contemplated by this Agreement. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY BE ENTITLED TO RECEIVE FROM THE OTHER ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, PROVIDED THAT ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES RECOVERED BY A THIRD PARTY (EXCEPT AN AFFILIATE OF THE INDEMNIFIED PARTY) SHALL BE RECOVERABLE BY A PARTY TO THE EXTENT THAT SUCH PARTY IS ENTITLED TO INDEMNIFICATION FOR THE MATTER IN WHICH SUCH DAMAGES ARE RECOVERED .
Section 11.4      Entire Agreement . This Agreement, the EIPA, and the APA, as well as all documents and instruments required to be delivered hereunder and thereunder, contain the entire understanding of the Parties with respect to the subject matter hereof and thereof and collectively supersede all prior written and oral agreements, understandings, negotiations, and discussions among the Parties with respect to such subject matter.
Section 11.5      Amendments, Waivers . This Agreement may be amended, modified, supplemented, restated or discharged (and provisions hereof may be waived) only by an instrument in writing signed by the Party against whom enforcement of the amendment, modification, supplement, restatement or discharge (or waiver) is sought.
Section 11.6      Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION.
Section 11.7      Jurisdiction; Waiver of Jury Trial.
(a)      EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY TEXAS STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION. THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT FINAL AND UNAPPEALABLE JUDGMENT AGAINST ANY OF THEM IN ANY ACTION CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT, A CERTIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH JUDGMENT.
(b)      EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR INSTRUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN THIS SECTION 11.7 .
Section 11.8      Time of Essence . Time is of the essence in this Agreement.
Section 11.9      Assignment . Neither the Buyer or the Seller shall have the right to assign this Agreement without the prior written consent of the other Party. Notwithstanding anything in the preceding sentence to the contrary, Buyer shall have the right to assign this Agreement to its designated Affiliate upon identification to Seller of such designee.
Section 11.10      Successors and Assigns . Subject to the limitation on assignment contained in Section 11.9 above, this Agreement shall be binding on and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
Section 11.11      Counterpart Execution, Fax Execution . This instrument may be executed in a number of identical counterparts, each of which for all purposes is to be deemed an original, and all of which constitute collectively, one instrument. It is not necessary that each Party hereto execute the same counterpart so long as identical counterparts are executed by each such Party hereto. This instrument may be validly executed and delivered by facsimile or other electronic transmission.
Section 11.12      Specific Performance . Each Party acknowledges and agrees that if any of the provisions of this Agreement were not performed in accordance with their specific terms, it would cause irreparable damage to the other Party hereto for which no adequate remedy at Law would exist. Therefore, the obligations of each Party under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith, including to prevent breaches of this Agreement, and this right shall include the right of the Parties to cause the transactions contemplated hereby to be consummated in each case without posting a bond or undertaking. Each Party hereto waives the defense in any action for specific performance, that a remedy at Law would be adequate. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise.
Section 11.13      References, Titles and Construction .
(a)      All references in this Agreement to articles, sections, subsections and other subdivisions refer to corresponding articles, sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise.
(b)      Titles appearing at the beginning of any of such subdivisions are for convenience only and shall not constitute part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions.
(c)      The words “this Agreement”, “this instrument”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited.
(d)      Words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender.
(e)      Examples shall not be construed to limit, expressly or by implication, the matter they illustrate.
(f)      Unless the context otherwise requires or unless otherwise provided herein, the terms defined in this Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments, or restatements of such agreement, instrument or document, provided that nothing contained in this subsection shall be construed to authorize such renewal, extension, modification, amendment or restatement.
(g)      The word “or” is not intended to be exclusive and the word “includes” and its derivatives means “includes, but is not limited to” and corresponding derivative expressions.
Section 11.14      Severability . The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of any other provision.
Section 11.15      Confidentiality . From and after the Closing, Buyer shall keep all information and data not relating to the Properties or the Interests that Buyer may have obtained during its due diligence in strict confidence and shall not disclose such information to any Person except to their attorneys, and to the extent such disclosure is required by applicable law (including legal process, such as subpoenas) or regulations or the applicable rules of any stock exchange. The obligations set forth in this Section 11.15 shall not apply to any information that (a) is already known to or in the possession of the Buyer or its representatives as of the date of disclosure, (b) is already in possession of the public or becomes available to the public other than through the act or omission of the Buyer or its representatives, (c) is acquired independently from a third party that represents, after reasonable inquiry, that is has the right to disseminate such information at the time it is acquired by the Buyer or its representatives, or (d) is ordered to be produced to a court or pursuant to a court order.
Section 11.16      Agreement for Parties’ Benefit Only . This Agreement is not intended to confer upon any Person not a Party hereto any rights or remedies hereunder except as expressly provided in Article VII , and no Person other than the Parties hereto is entitled to rely on any representation, covenant, or agreement contained herein.
Section 11.17      Waiver of Conflicts Regarding Representation Recognizing that Thompson & Knight LLP (“ T&K ”) has acted as legal counsel to Seller, Company and certain of their Affiliates prior to the Closing, and that T&K may act as legal counsel to Seller and certain of its Affiliates after the Closing, the Buyer, on behalf of itself and the Company, hereby expressly waive any current or future conflicts that may arise in connection with T&K representing Seller or any of its Affiliates after the Closing with respect to the transactions contemplated by this Agreement.
Section 11.18      Attorney-Client Privilege . Each of the Parties also agrees that Seller has a reasonable expectation of privacy and privilege with respect to its communications (in all forms) with T&K prior to the Closing to the extent such communications concern this Agreement, the APA, and/or the EIPA, and the agreements and documents delivered hereunder and thereunder and the transactions contemplated hereby and thereby. Each of the Parties likewise agrees that third parties and their counsel with a common legal interest with Seller also have a reasonable expectation of privacy and privilege with respect to their communications prior to the Closing (“ Common Interest Parties ”). At and after the Closing, the attorney-client privilege of the Company with T&K with respect to such matters, and the Common Interest Parties with their counsel shall be deemed to be the right of Seller or the Common Interest Party respectively, and not that of the Company, and may be waived only by Seller or Common Interest Party as to their respective communications. Absent the consent of Seller, the Common Interest Party, or except as required to comply with any Law or other regulatory requirement applicable to Buyer or its Affiliates, neither Buyer nor the Company shall have a right to access attorney-client privileged material of the Company with respect to this Agreement and the other documents contemplated herein and the transactions contemplated hereby and thereby following the Closing. Notwithstanding the foregoing, (a) nothing herein shall be construed as a waiver by the Company of the attorney-client privilege or the obligations of confidentiality owed by T&K to the Company with respect to matters not regarding this Agreement and the other agreements and documents delivered hereunder and the transactions contemplated hereby and thereby, (b) in the event that a dispute arises between Buyer or the Company and a third Person other than a Party to this Agreement after the Closing, (i) the Company may assert the attorney-client privilege to prevent disclosure of confidential communications by T&K to such third Person and (ii) to the extent any such privilege or client confidence is required to be waived or otherwise required to be released by any Governmental Entity, under law or pursuant to any orders, decrees, writs, injunctions, judgments, stipulations, determinations or awards entered by or with any Governmental Entity, none of the Company, Buyer or their Affiliates shall be in breach or violation of any provision of this Agreement or any document or agreement delivered hereunder for providing information, documents, communications or client confidences to any Governmental Entity in response to, and subject to the requirement limitation in, the foregoing.

[ Remainder of page intentionally left blank; signature page follows. ]


    




IN WITNESS WHEREOF, this Agreement is executed by the Parties hereto on the date set forth above.
THE COMPANY:
 
MARITECH RESOURCES, LLC
 
 
By:
/s/ Stuart M. Brightman
Name:
Stuart M. Brightman
Title:
President
 
 
 
 
SELLER:
 
TETRA APPLIED TECHNOLOGIES, LLC
 
 
By:
/s/ Peter J. Pintar
Name:
Peter J. Pintar
Title:
President
 
 
 
 
TETRA PARENT:
 
TETRA TECHNOLOGIES, INC., solely for the
purposes of Article VII hereof
 
 
By:
/s/ Stuart M. Brightman
Name:
Stuart M. Brightman
Title:
Chief Executive Officer
 
 
 
 
BUYER:
 
ORINOCO NATURAL RESOURCES, LLC
 
 
By:
/s/ Thomas M. Clarke
Name:
Thomas M. Clarke
Title:
Authorized Signatory



        

[Signature Page to Membership Interest Purchase and Sale Agreement]

    


Execution Version

BONDING AGREEMENT

This Bonding Agreement (“ Bonding Agreement ”), dated February 28, 2018, is entered into by and between TETRA Technologies, Inc., a Delaware corporation (“ TETRA ”), and Orinoco Natural Resources, LLC, a Delaware limited liability company (“ Orinoco ”), and Epic Offshore Specialty, LLC, a Delaware limited liability company (“ Epic” ), solely for purposes of Section II.1 herein. TETRA and Orinoco are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party .”

RECITALS:

A. Reference is made to the following agreements: (i) that certain Asset Purchase and Sale Agreement of even date herewith (as amended from time to time, the “ APA ”), by and between Maritech Resources, LLC, formerly Maritech Resources, Inc. (“ Maritech ”), as Seller, TETRA, and Orinoco, as Buyer, pursuant to which Maritech’s active oil, gas and mineral leases and other properties more fully described in the APA were conveyed by Maritech to Orinoco; (ii) that certain Membership Interest Purchase and Sale Agreement of even date herewith (as amended from time to time, the “ MIPSA ”), by and among TETRA Applied Technologies, LLC (“ TETRA Applied ”), as Seller, Maritech, as the Company, TETRA, and Orinoco, as Buyer, pursuant to which TETRA Applied sold to Orinoco all of the outstanding membership interests of Maritech, a wholly owned subsidiary of TETRA; and (iii) that certain Equity Interest Purchase Agreement of even date herewith (as amended from time to time, the “ EIPA ”), by and among TETRA and TETRA Production Testing Holding LLC, as Sellers, and Epic Offshore Specialty, LLC, as Buyer.

B. This Bonding Agreement is being executed simultaneously with the execution of, and is an integral part of the consideration for, the APA , the MIPSA, and the EIPA.

C. TETRA and Orinoco desire to enter into this Bonding Agreement to set forth the terms and conditions of the financial assurance required pursuant to the APA and the MIPSA.

W I T N E S S E T H:

In consideration of the substantial direct and indirect benefits derived by the Parties from the transactions under the APA, the MIPSA and the EIPA, the Parties hereby agree as follows:

I. INITIAL BONDS

2. At the time of the APA closing, Orinoco, as the Principal, shall deliver to TETRA, as the Obligee, forty two (42) non-revocable performance bonds issued by Indemnity National Insurance Company (“ INI ”) (each an “ Initial Bond ” and collectively the “ Initial Bonds ”), in the amounts identified on Exhibit A hereto (“ Individual ARO Estimates ”, and each an “ Initial Bond Penal Sum ”) and in the form identified on Exhibit B hereto, to cover the full and faithful performance by Orinoco and Maritech of the Abandonment Obligations, defined below, for the individual offshore well(s), pipeline(s), platform(s) and/or surface restoration obligations identified on Exhibit “A” hereto (“ Individual AROs ”), for an aggregate original penal sum of forty six million seven hundred fifty-six thousand ninety-eight dollars and 37/100 ($46,756,098.37) (“ INI Original Penal Sum ”);





3. Abandonment Obligations ” shall mean the asset retirement obligations performed in full and faithful compliance with the terms of the applicable lease and the rules, regulations, notices and orders now or hereafter existing of the Bureau of Safety and Environmental Enforcement, the Bureau of Ocean Energy Management (“ BOEM ”), any successor agency, or any other agency, authority or body having jurisdiction or authority over any operations conducted on property located in the Outer Continental Shelf.

4. If TETRA is required to satisfy Abandonment Obligations for an Individual ARO, TETRA shall be entitled to call the Initial Bond covering such Individual ARO by giving written notice by certified mail to Orinoco and to INI at their last known address. Any amount so called shall be paid directly to TETRA, and TETRA shall utilize the proceeds exclusively to pay for the performance of such Individual ARO. The amount paid to TETRA by INI shall automatically reduce the INI Original Penal Sum, on a dollar for dollar basis (as so reduced, the “ INI Current Penal Sum ”). References in this Section I to “ Penal Sum ” shall mean the Initial Bond Penal Sum or the INI Current Penal Sum, as applicable. Any proceeds received by TETRA in excess of the amount so utilized shall be maintained by TETRA in escrow and such funds shall be used exclusively to pay for the performance of the Abandonment Obligations, and shall be treated as replacement security for a portion of the Initial Bonds as provided in Section III.7.

5. Except as provided in Section I.3 above, each Initial Bond shall remain in full force and effect at its Initial Bond Penal Sum until it is released by TETRA, even in the event that Orinoco or Maritech assigns or otherwise transfers its ownership interest in the lease(s) on which the corresponding Individual AROs exist.

6. In the event that TETRA has called one or more Initial Bonds and the proceeds of such Initial Bond(s) are not sufficient to cover TETRA’s costs of satisfying the Abandonment Obligations for the Individual AROs associated with such called bonds, within ten (10) days after receipt of written demand Orinoco shall make a cash payment to TETRA for the deficiency.

II. ADDITIONAL SECURITY

1. Concurrently with the APA closing, TETRA shall receive additional security in the form of the following (“Additional Security”):

(i)      By joining this agreement, Epic covenants not to make any distributions or loans to its equity holders. In addition, all excess funds shall be retained by Epic.

(ii)      A forty-seven million dollar and no/100 ($47,000,000.00) Personal Guarantee from Thomas M. Clarke and Ana M. Clarke in the form attached as Exhibit B hereto (the “ Clarke Guarantee ”).

2. The Additional Security is provided to guarantee the performance by Orinoco of its obligations under the Bonding Agreement.
3.
3. Once TETRA has received the Stage 2 Permanent Bonds, as defined in Section IV.1 below, the Clarke Guarantee shall be released and Epic shall be permitted to make cash distributions and loans to its equity holders and distribute excess funds.






III.
PERMANENT BONDS – STAGE 1

1. Orinoco shall, within ninety (90) days after the APA closing, replace all outstanding Initial Bonds with a maximum of forty-seven (47) non-revocable performance bonds (the “ Stage 1 Permanent Bond(s) ”), issued by a surety or sureties (“ Surety ”) acceptable to TETRA, with at least a Standard & Poor’s “A” rating or A.M. Best “A” Rating and a Treasury listing in excess of the penal sum of the largest performance bond issued to TETRA by such Surety (as so qualified, an “ Acceptable Surety ”), for an aggregate original penal sum of forty seven million and no/00 dollars ($47,000,000.00) (“ Original Stage 1 Permanent Bond Penal Sum ”). Each Stage 1 Permanent Bond shall be in a form substantially similar to the form of each Initial Bond, with such changes as are necessary to conform it to the provisions of this Article III.

2. Notwithstanding anything to the contrary in Section III.1 above, in the event the INI Original Penal Sum was reduced pursuant to Section I.3 above, then the Original Stage 1 Permanent Bond Penal Sum shall equal forty seven million dollars and no/100 ($47,000,000.00) less the amount by which the INI Original Penal Sum exceeds the INI Current Penal Sum.

3. Each Stage 1 Permanent Bond shall guarantee the full and faithful performance by Orinoco and/or Maritech of the Abandonment Obligations relating to one or more individual offshore well(s), pipeline(s), platform(s) and/or surface restoration obligations on the leases for which Maritech currently has an outstanding Abandonment Obligation (“ Stage 1 Permanent Bond ARO(s) ”). A schedule of the Stage 1 Permanent Bond ARO(s), with cost estimates (“ Stage 1 ARO Estimates ”), shall be prepared by TETRA with input from Orinoco and Maritech, and shall become a part of this Bonding Agreement as Exhibit B-1.

4. TETRA shall, within fifteen (15) days after receipt of the Stage 1 Permanent Bonds, release all outstanding Initial Bonds.

5. The Original Stage 1 Permanent Bond Penal Sum shall be reduced as described in Section below, and such reduced sum shall be the “ Current Stage 1 Permanent Bond Penal Sum .” References in this Article III to “ Penal Sum ” shall mean the Original Stage 1 Permanent Bond Penal Sum or the Current Stage 1 Permanent Bond Penal Sum, as appropriate.

6. If TETRA is required to satisfy Abandonment Obligations for any Stage 1 Permanent Bond ARO(s), TETRA shall be entitled to call the Stage 1 Permanent Bond covering such Stage 1 Permanent Bond ARO(s) by giving written notice by certified mail to Orinoco and the Surety at their last known address. Any amount so called shall be paid directly to TETRA and TETRA shall utilize the proceeds exclusively to pay for the performance of such Stage 1 Permanent Bond ARO. The amount paid to TETRA by the Surety shall automatically reduce the Stage 1 Permanent Bond Penal Sum, on a dollar for dollar basis (as so reduced, the “ Stage 2 Current Penal Sum ”). Any proceeds received by TETRA in excess of the amount so utilized shall be maintained by TETRA in escrow and such funds shall be used exclusively to pay for the performance of the Abandonment Obligations, and shall be treated as replacement security for a portion of the Stage 1 Permanent Bonds as provided in Section III.7 below.

7. In the event that TETRA has called one or more Stage 1 Permanent Bonds and the proceeds of such Stage 1 Permanent Bond(s) are not sufficient to cover TETRA’s estimated costs of satisfying the Abandonment Obligations for the Stage 1 Permanent Bond AROs associated with such called




bonds, within ten (10) days after receipt of written demand Orinoco shall make a cash payment to TETRA for the deficiency.

8. In the event that Orinoco does not timely provide the Stage 1 Permanent Bonds, Orinoco shall immediately commence payments to TETRA (“ Escrow Payments ”) of two million and no/100 dollars ($2,000,000.00) per month. Escrow Payments received by TETRA shall be used exclusively to pay for the performance of the Abandonment Obligations. Each Escrow Payment shall be treated as replacement security for a portion of the Initial Bonds on a dollar for dollar basis. Within fifteen (15) days after receipt of the first Escrow Payment, TETRA shall release, in full, one or more outstanding Initial Bonds, if any, with an aggregate INI Current Penal Sum not to exceed the Escrow Payment. Within fifteen (15) days after receipt of each subsequent payment, TETRA shall release, in full, one or more outstanding Initial Bonds, if any, with an aggregate INI Current Penal Sum not to exceed the sum of the current Escrow Payment plus any Penal Sums remaining to be released as a result of prior Escrow Payments.







IV.
PERMANENT BONDS - STAGE 2

1. Orinoco shall, within one hundred eighty (180) days after the APA closing, replace all outstanding Initial Bonds and Stage 1 Permanent Bonds, as applicable (“ Existing Bonds ”), with a maximum of three (3) non-revocable performance bonds (the “ Stage 2 Permanent Bond(s) ”, each issued by an Acceptable Surety for an aggregate original penal sum of forty seven million and no/00 dollars ($47,000,000.00) (“ Original Stage 2 Permanent Bond Penal Sum ”). Each Stage 2 Permanent Bond shall be in a form substantially similar to the form of each Initial Bond, with such changes as are necessary to conform it to the provisions of this Article III.

2. Notwithstanding anything to the contrary in Section III.1 above, in the event the Original Stage 1 Permanent Bond Penal Sum was reduced pursuant to Section III.6 above, then the Original Stage 2 Permanent Bond Penal Sum shall equal forty seven million dollars and no/100 ($47,000,000.00) less the amount by which the Original Stage 1 Permanent Bond Penal Sum exceeds the Current Stage 1 Permanent Bond Penal Sum.

3. Each Stage 2 Permanent Bond shall guarantee, up to the penal sum of such bond, the full and faithful performance by Orinoco and/or Maritech of the Abandonment Obligations for the leases for which Maritech, at that time, has an outstanding Abandonment Obligation (“ Stage 2 Permanent Bond ARO(s) ”) and shall not include ARO cost estimates for any leases or individual wells, pipelines and platforms/surface restoration. The list of leases shall be prepared by TETRA with input from Orinoco and Maritech and become a part of this Bonding Agreement as Exhibit B-2 and as a part of the Stage 2 Permanent Bond(s).
4. TETRA shall, within fifteen (15) days after receipt of the Stage 2 Permanent Bonds, release all outstanding Initial Bonds or Stage 1 Permanent Bonds, as appropriate.

5. The Original Stage 2 Permanent Bond Penal Sum shall be reduced only as described in Section 6 below, and such reduced sum shall be the “ Current Stage 2 Permanent Bond Penal Sum .” References in this Article IV to “ Stage 2 Permanent Bond Penal Sum ” shall mean the Original Stage 1 Permanent Bond Penal Sum or the Current Stage 1 Permanent Bond Penal Sum, as appropriate.

6. In the event that TETRA is required to satisfy an Abandonment Obligation for any Stage 2 Permanent Bond AROs, TETRA shall be entitled to call any or all of the Stage 2 Permanent Bonds in an amount equal to TETRA’s reasonable estimate of the cost to perform such Abandonment Obligation. Any amount so called shall be paid directly to TETRA and it shall utilize the proceeds exclusively to pay for the performance of such Abandonment Obligations. The amount paid to TETRA by the Surety shall automatically reduce, on a dollar for dollar basis, the Stage 2 Permanent Bond Penal Sum. Any proceeds received by TETRA in excess of the amount so utilized shall be maintained by TETRA in escrow and such funds shall be used exclusively to pay for the performance of a Stage 2 Permanent Bond ARO. Once all Abandonment Obligations for the Stage 2 Permanent Bond AROs are complete, TETRA shall, within fifteen (15) days after receive of a written request from Orinoco, return to Orinoco any and all sums remaining in such escrow.





7. In the event that Orinoco does not timely provide the Stage 2 Permanent Bonds, Orinoco shall immediately commence Escrow Payments to TETRA of one million and no/100 dollars ($1,000,000.00) per month. Escrow Payments received by TETRA shall be used exclusively to pay for the performance of the Abandonment Obligations. Each Escrow Payment shall be treated as replacement security, on a dollar for dollar basis, for a portion of an Existing Bond. Within fifteen (15) days after receipt of the first Escrow Payment, TETRA shall release, in full, one or more Existing Bonds, if any, with an aggregate Stage 2 Permanent Bond Penal Sum not to exceed the Escrow Payment. Within fifteen (15) days after receipt of each subsequent Escrow Payment, TETRA shall release, in full, one or more Existing Bonds, if any, with an aggregate Stage 2 Permanent Bond Penal Sum not to exceed the sum of the current Escrow Payment plus any Penal Sums remaining to be released as a result of prior Escrow Payments.







V.
ARO REVISIONS AND RELEASE OF BONDS

1. Either TETRA or Orinoco may call for a meeting (not more than once per calendar year, unless mutually agreed to in writing) (the “ Meeting ”) to discuss bonding for the Abandonment Obligations of Orinoco and Maritech pursuant to the APA and the MIPSA.

2. TETRA may, in advance of a Meeting, request information, reports and documents from Orinoco and/or Maritech related to the Abandonment Obligations, including the status of Completed Abandonment Obligation. Orinoco shall provide, and shall ensure that Maritech provides, all information, reports and documents reasonably requested within thirty (30) days after the request.

3. On or before ninety (90) days prior to the Meeting, Orinoco may request a release of one or more outstanding Initial Bonds, Stage 1 Permanent Bonds, or Stage 2 Permanent Bonds, as applicable (a “ Bond(s) ”). Such request shall be in writing and shall include (a) a list of all Abandonment Obligations completed by Orinoco and/or Maritech (“ Completed AROs ”) representing aggregate scheduled estimates (for Initial Bonds and Stage 1 Permanent Bonds) or aggregate actual costs (for Stage 2 Permanent Bonds) totaling at least five million dollars and no/100 ($5,000,000.00), and (b) evidence (which may include a report from the proper regulatory agency) of the full, final and complete performance of, and compliance with, such Abandonment Obligation(s). Upon receipt of such request, TETRA shall have the right (1) to request and receive additional information from Orinoco and/or Maritech with regard to such completed Abandonment Obligation(s), including operations reports for the abandonment operations, and (2) to conduct its own inspection of the wells, pipelines, platforms and surface related to such completed Abandonment Obligation(s), or cause such inspection to be performed on its behalf. All information reasonably requested by TETRA shall be provided within thirty
(30) days. The request for release shall be discussed at the Meeting. If TETRA determines, within ten (10) business days after the Meeting, in its reasonable discretion, that Orinoco or Maritech has fully, finally and completely performed each Abandonment Obligation identified in the request for release (“ Completed Abandonment Obligations ”), then TETRA shall release all or a portion of the Bond for the Completed AROs, subject to Sections V.3(i), V.3(ii) and V.3(iii) below;

(i)      The first two million and no/100 dollars ($2,000,000.00) of Completed Abandonment Obligations shall not reduce the penal sum of the Bonds.

(ii)      Once this deductible amount has been met, (1) all reductions to the penal sum of an Initial Bond shall equal one-half (1/2) of the Individual ARO Estimates attributable to those Completed Abandonment Obligations identified in the request for release, subject to any upward revision to an Individual ARO Estimate by TETRA as set forth in Section 4 below, (2) all reductions to the penal sum of a Stage 1 Permanent Bond shall equal one-half (1/2) of the Stage 1 ARO Estimates attributable to those Completed Abandonment Obligations identified in the request for relief, subject to any upward revision to any Stage 1 ARO Estimate, as set forth in Section 4 below, and (3) all reductions to the penal sum of a Stage 2 Permanent Bond shall equal one-half (1/2) of the actual cost of the Completed Abandonment Obligations





(iii)      In no event will an Initial Bond be released when the outstanding Individual ARO Estimates are at or above the Penal Sum. In no event will a Stage 1 Permanent Bond be released when the outstanding Stage 1 ARO Estimates are at or above the Penal Sum. In no event will a Stage 2 Permanent Bond be released when the reasonable estimate of any outstanding Stage 2 Permanent Bond ARO is at or above the Penal Sum.

4. Notwithstanding anything in this Bonding Agreement to the contrary, the INI Individual ARO Estimates and the Stage 1 ARO Estimates are not fixed; however, no revisions to the INI Individual ARO Estimates shall increase or decrease the INI Current Penal Sum, and no revisions to the Stage 1 ARO Estimates shall increase or decrease or the Current Stage 1 Permanent Bond Penal Sum. In the event that TETRA determines, in its reasonable judgment,that any Individual ARO Estimate or Stage 1 ARO Estimate, as applicable, is lower than what it would reasonably cost to satisfy the related Abandonment Obligation, based on current information, including information independently obtained, then TETRA may demand a reallocation of the aggregate of the outstanding ARO estimates, and Orinoco shall, within thirty (30) days after receipt of a reallocation schedule, deliver to TETRA replacement Bonds in the amount(s) of the reallocated ARO estimates. In no event will Orinoco be required to provide replacement bonds that would cause the outstanding Penal Sum to increase.





VI.
BOEM BONDING

In the event, and at any time, that BOEM requires security for any or all of the Abandonment Obligations, Orinoco or Maritech, as appropriate, shall use their best efforts to seek the approval of BOEM to provide a Dual Obligee Performance Bond for such security, with TETRA as the co-obligee (“ Dual Obligee Bond ”). Within fifteen (15) days after receipt of notice by BOEM that a Dual Obligee Bond has been accepted, TETRA shall release all, or that that portion, of the Initial Bond, Stage 1 Permanent Bond or Stage 2 Permanent Bond, as applicable, equal to the penal sum of the Dual Obligee Bond.






VII. GENERAL TERMS

1. Assignment . Unless expressly terminated, cancelled, or modified by TETRA in writing, the Surety’s obligations shall remain in full force and effect even if Orinoco or Maritech, as applicable, assigns or otherwise transfers its interest in the APA or the MIPSA or its ownership interest in a lease.

2. Delays . No delay, neglect, or failure of the Obligee to proceed promptly to enforce the Bonding Agreement or to proceed promptly in the premises in case of any default on the part of the Principal shall in any degree relieve the Principal and the Surety or either of them of their obligations under the Permanent Bond.

3. Representations and Warranties by the Parties . Each Party represents and warrants to the other that: (a) such Party has taken all necessary action to authorize the execution, delivery and performance of this Bonding Agreement in accordance with its terms; (b) this Bonding Agreement constitutes a legally valid and binding obligation of such Party enforceable in accordance with its terms; and (c) the execution, delivery and performance of this Bonding Agreement by such Party will not violate any provision of any law or regulation or other document which is binding on such Party.

4. Indemnity Obligations of Orinoco . Orinoco, together with its successors and assigns, shall indemnify, defend, and hold harmless TETRA, its officers, members, managers, directors, shareholders, employees, representatives, agents, successors, and assigns, harmless from and against any and all claims, lawsuits, or demands (including legal and expert fees), whether accrued or unaccrued, arising out of, related to, or attributable to any misrepresentation or breach of any representation, warranty, covenant, or agreement of Orinoco contained in this Agreement. ORINOCO’S INDEMNIFICATION OBLIGATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SUCH CLAIMS, COSTS, EXPENSES, LIABILITIES AROSE FROM THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF TETRA OR ANY OTHER INDEMNIFIED PARTY AND REGARDLESS OF WHO MAY BE AT FAULT OR OTHERWISE RESPONSIBLE UNDER ANY OTHER CONTRACT, STATUTE, RULE OR THEORY OF LAW, INCLUDING, BUT NOT LIMITED TO, THEORIES OF STRICT LIABILITY. TETRA AND ORINOCO ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

5. Costs and Expenses . Orinoco agrees to pay or reimburse TETRA on demand for the costs, charges and expenses of enforcing the terms and conditions of this Bonding Agreement, including all reasonable attorneys’ fees and legal costs that are actually paid or payable by TETRA to its legal representatives.

6. Assignment of Bonding Agreement . This Bonding Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns; provided , however , that Orinoco may not, without the prior written consent of TETRA, assign any of its rights, powers or obligations hereunder. Any attempted assignment in violation of this section shall be null and void.





7. Notices . All notices and other communications required under this Agreement shall (unless otherwise specifically provided herein) be in writing and be delivered personally, by recognized commercial courier or delivery service which provides a receipt, or by registered or certified mail (postage prepaid), at the following addresses:
If to Buyer:
Orinoco Natural Resources, LLC 192 Summerfield Court, Suite 203
Roanoke, VA 24019
Attention: Thomas M. Clarke

With a copy
(which shall not constitute notice) to:

If to Seller:
TETRA Technologies, Inc. 24955 I-45 North
The Woodlands, Texas 77478
Attention: General Counsel

With a copy
(which shall not constitute notice) to:
Thompson & Knight LLP 811 Main Street, Suite 2500
Houston, Texas 77002
Attn: Barry Davis

or such other post office address within the continental limits of the United States as a Party may designate for itself by giving notice to the other Party, in the manner provided in this Section, at least ten (10) days prior to the effective date of such change of address. All notices given by personal delivery or mail shall be effective on the date of actual receipt at the appropriate address as provided above.

8. Governing Law; Service of Process; Jurisdiction . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ANY CHOICE OF LAW DOCTRINE. EACH PARTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION III.6 AND AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW. EACH GUARANTOR IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY TEXAS OR FEDERAL COURT SITTING IN HARRIS COUNTY, TEXAS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY.

9. Waiver of Jury Trial . EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OBLIGATIONS HEREUNDER.





10. Cumulative Rights . Each right, remedy and power hereby granted to TETRA or allowed it by applicable law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by TETRA at any time or from time to time.

11. Severability . If any provision of this Agreement is to any extent determined by final decision of a court of competent jurisdiction to be unenforceable, the remainder of this Agreement shall not be affected thereby, and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

12. Entire Agreement . This Bonding Agreement, the APA, the MIPSA and the EIPA, including the exhibits thereto, constitute the sole, final and entire agreement of TETRA and Orinoco with respect to the subject matter hereof and thereof and collectively supersede all previous or contemporaneous agreements or understandings, oral or written, with respect thereto.

13. Amendment . No amendment or waiver of any provision of this Agreement shall be valid and binding unless it is in writing and signed, in the case of an amendment, by the Parties, or in the case of a waiver, by the Party against which the waiver is to be effective.

14. Headings . Section headings are for convenience of reference only and shall not define, modify, expand or limit any of the terms of this Agreement.

15. Counterparts . Delivery of executed counterparts to this Agreement by facsimile or in electronic (i.e., pdf or tif) format shall be effective as delivery of a manually executed original counterpart of this Agreement.

[Remainder of the page intentionally blank; signature page follows]






IN WITNESS WHEREOF, the undersigned have duly executed this Bonding Agreement as of the day and year first written above.
        

TETRA TECHNOLOGIES, INC.
 
By:
/s/ Bass C. Wallace, Jr.
Name:
Bass C. Wallace, Jr.
Title:
General Counsel and Senior Vice President
 
 
 
 
ORINOCO NATURAL RESOURCES, LLC
 
By:
/s/ Thomas M. Clarke
Name:
Thomas M. Clark
Title:
Chief Executive Officer
 
 
 
 
EPIC OFFSHORE SPECIALTY, LLC,
solely for purposes of Section II.1 herein
 
 
By:
/s/ Thomas M. Clarke
Name:
Thomas M. Clarke
Title:
Authorized Signatory
 
 

















Signature Page to Bonding Agreement




EXHIBIT A


Bond Count


Property


Property No


WI


Abandonment Obligation
1
EC 328 OCS‐G 10638 Well No. A‐1
5100001
100.00
%
(297,466.640)
2
EC 328 OCS‐G 10638 Well No. A‐2
5100002
100.00
%
(5,079,180.880)
3
EC 328 OCS‐G 10638 Well No. A‐4
5100003
100.00
%
(297,466.640)
4
EC 328 OCS‐G 10638 Well No. A‐11 (A‐5)
5100018
50.00
%
(148,947.040)
5
EC 328 OCS‐G 10638 Well No. A‐6 ST 2
5100012
50.00
%
(148,947.130)
6
EC 328 OCS‐G 10638 Well No. A‐7
5100005
100.00
%
(7,079,216.490)
7
EC 328 OCS‐G 10638 Well No. A‐8 ST No. 3
5100016
50.00
%
(148,768.250)
8
EC 328 OCS‐G 10638 Well No. A‐9 ST 2
5100014
50.00
%
(576,548.480)
9
EC 328 OCS‐G 10638 Well No. A‐10
5100017
50.00
%
(576,391.220)
10
EC 328 OCS‐G 10638 Platform A Removal
5100500
100.00
%
(7,853,817.510)
11
EC 328 OCS‐G 10638 Platform A Site Clearance
5100500
100.00
%
(341,995.000)
12
HI A317 OCS‐G 02412 Well No. A‐7 D
4500007
92.22
%
(5,620,252.030)
13
HI A317 OCS‐G 02412 Well No. A‐18
4500018
92.22
%
(6,056,974.780)
14
HI A317 OCS‐G 02412 Well No. A‐22 D
4500022
92.22
%
(5,542,816.330)
15
SS 219 OCS‐00829 Platform C ‐ Site Clearance
7400507
100.00
%
(1,907,361.740)
16
HI 30L TX SL M‐63547 Well No. 2 U
8455202
1.11
%
(2,985.490)
17
HI 30L TX SL M‐63547 Platform
8455500
1.11
%
(554,807.290)
18
SS 28 OCS‐00346 Well No. 030
3600004
37.27
%
(10,000.000)
19
SS 28 OCS‐00346 Well No. 033
3600005
37.27
%
(477,269.290)
20
SS 28 OCS‐00346 Well No. 034
3600006
37.27
%
(10,000.000)
21
SS 28 OCS‐00346 Well No. 039 (Producing)
3600008
37.27
%
(174,549.860)
22
SS 28 OCS‐00346 Caisson 1‐33 Removal
3600515
37.27
%
(154,086.370)
23
SS 28 OCS‐00346 Platform 1D Removal
3600519
37.27
%
(714,936.330)
24
SS 28 OCS‐00346 Platform 2D Removal
3600520
37.27
%
(705,548.880)
25
SS 28 OCS‐00346 Platform 3D‐CMP Removal
3600521
37.27
%
(713,157.620)
26
SS 28 OCS‐00346 Caisson No. 39 Removal
3600518
37.27
%
(204,614.790)
27
SS 28 OCS‐00346 Caisson No. E1
3600523
37.27
%
(3,445.370)
28
SS 28 OCS‐00346 Pipeline Segment 9113
3610524
37.27
%
(15,238.740)
29
SS 28 OCS‐00346 Pipeline Segment 12563
3610514
37.27
%
(45,884.150)
30
SS 27 OCS‐00347 Well No. 002
3600012
32.50
%
(54,303.970)





31
SS 27 OCS‐00347 Cassion 2 Removal
3600512
32.50
%
(122,111.320)
32
SS 27 OCS‐00347 Caisson 6 Removal
3600513
32.50
%
(135,025.680)
33
SS 27 OCS‐00347 Pipeline Segment 9897
3610521
32.50
%
(23,723.580)
34
SS 27 OCS‐00347 Pipeline Segment 9898
3610512
32.50
%
(766.960)
35
SS 27 OCS‐00347 Pipeline Segment 12216
3610513
32.50
%
(44,113.550)
36
SS 14 OCS‐G 01359 Well No. 002 (Producing)
3600001
29.72
%
(138,973.130)
37
SS 14 OCS‐G 01359 Well No A‐001
3600002
29.72
%
(139,002.550)
38
SS 14 OCS‐G 01359 Caisson No. 2 Removal
3600510
29.72
%
(161,742.250)
39
SS 14 OCS‐G 01359 Caisson No. A Removal
3600511
29.72
%
(169,139.640)
40
SS 14 OCS‐G 01359 Pipeline Segment 7452
3610510
29.72
%
(31,013.790)
41
SS 14 OCS‐G 01359 Pipeline Segment 12218
3610511
29.72
%
(39,140.690)
42
SS 15 OCS‐G 12932 Well No. 006
3600003
32.50
%
(234,366.920)
 
 
 
 
 
Total
 
 
 
(46,756,098.370)









EXHIBIT B

BOND NO.     

PENAL SUM $     

PERFORMANCE BOND


KNOW ALL MEN BY THESE PRESENTS:

That we, Orinoco Natural Resources , LLC, a Virginia limited liability company, with its principal office at 192 Summerfield Court, Suite 203, Roanoke, Virginia 24019 (the “ Principal "), and Indemnity National Insurance Company, with an office at 725 Cool Springs Blvd., Suite 600, Franklin, Tennessee 37067 (the “ Surety ") are held and firmly bound unto TETRA Technologies, Inc., with its principal office at 24955 Interstate Hwy 45, The Woodlands, Texas 77380 (the "Obligee"), in the sum of      and xx/100 Dollars ($      ) lawful money of the United States of America (the “ Original Penal Sum ”) for the payment of which sum the Principal and the Surety bind themselves, their successors, and assigns, jointly, severally, and in solido, firmly by these presents.

WHEREAS, the Principal and Maritech Resources, LLC (“ Maritech ”), have entered into that certain Asset Purchase and Sale Agreement, dated February 28, 2018 (the " APA "), which agreement is by this reference made a part hereof and which provides for the sale and assignment, from Maritech to Principal, of its full right, title and interest in certain federal offshore oil, gas and mineral leases; and

WHEREAS, the Principal and Obligee have entered into that certain Membership Interest Purchase and Sale Agreement, dated February 28, 2018 (the " MIPSA ", and together with the APA, the “ PSAs ”), which agreement is by this reference made a part hereof and which provides for the sale and assignment, from Obligee to Principal, of the interests of Obligee in Maritech, including certain asset retirement obligations relating to federal offshore oil and gas leases; and

WHEREAS, the Principal and Obligee have entered into that certain Bonding Agreement, dated February 28, 2018 (the " Bonding Agreement "), in the form attached to the APA as Exhibit D and attached to the MIPSA as Exhibit C.

WHEREAS, the Principal has promised in the PSAs and the Bonding Agreement to deliver to the Obligee this performance bond (“ Bond ”) as part of the closing for the MIPSA and the APA; and

WHEREAS, the Surety represents that it is duly authorized by the proper public authorities to transact the business of indemnity and suretyship in the state where it executed this Bond, and represents that it is qualified to be surety and guarantor on bonds and undertakings, which certificate has not been revoked; and

WHEREAS, the Surety represents that it has duly executed a power of attorney, appointing the representative named on the signature page as its duly authorized deputy, as the true and









lawful attorney-in-fact of Surety, upon whom may be served all lawful process in any action or proceeding against Surety in any court or before any officer, arising out of or founded upon this Bond or any liability hereunder; and Surety does hereby agree and consent that such service, when so made, shall be valid service upon it, and that such appointment shall continue in full force and effect and be irrevocable so long as any liability against Surety remains outstanding hereunder.

NOW, THEREFORE, the Principal and the Surety agree as follows:

1.
The Surety hereby guarantees (a) the full and faithful performance by the Principal and Maritech of their obligations to perform all asset retirement obligations relating to the well(s), pipeline(s), platform(s) and/or surface restoration identified on Exhibit “A” hereto (“ Abandonment Obligations ”), and (b) with respect to the Abandonment Obligations, compliance by the Principal and Maritech with the terms of the applicable lease and the rules, regulations, notices and orders now or hereafter existing of the Bureau of Safety and Environmental Enforcement (“ BSEE ”), Bureau of Ocean Energy Management (“ BOEM ”), any successor agency, or any other agency, authority or body having jurisdiction or authority over any operations conducted on property located in the Outer Continental Shelf.

2.
Whenever Obligee is required to satisfy any, all or a portion of the Abandonment Obligations, Obligee shall be entitled to call any, all or a portion of the Bond by giving written notice by certified mail to the Principal and to the Surety at their last known address. The Surety shall, within twenty (20) days of such written notice (or a lesser time period consistent with that contained in any notice to commence operations by BOEM, BSEE, or any successor agency or other governmental agency), pay to the Obligee the amount so called. Any amount received by Obligee in excess of the sum so utilized shall be returned to the Surety and the Surety shall issue a new bond, in the amount of the returned sum, as directed by Obligee.

3.
Except as provided in Section 2 above, this Bond shall remain in full force and effect at the Original Penal Sum until it is released in writing by Obligee, even in the event Principal or Maritech assigns or otherwise transfers its ownership interest in the lease(s) on which the Abandonment Obligations exist.

4.
Except as provided in Section 8 below, in no event shall the Surety be obligated to pay, in the aggregate, for all claims hereunder, an amount exceeding the Original Penal Sum.

5.
No amendment of, or supplement to, the terms or provisions of the PSAs or the Bonding Agreement, or the exhibits attached to them, shall release the Principal and the Surety or either of them from their liability under this Bond, notice to the Surety of any such amendment or supplement being hereby waived.

6.
No assignment of the PSAs, and no delay, neglect, or failure of the Obligee to proceed promptly to enforce the Bonding Agreement or to proceed promptly in the premises in





case of any default on the part of the Principal shall in any degree relieve the Principal and the Surety or either of them of their obligations under the Bond.

7.
No neglect or failure by the Principal to make any deposit, escrow payment, insurance premium or other payment of any kind, to or for the benefit of Surety, shall relieve the Principal and the Surety of any of their obligations under this Bond.

8.
In the event that the Obligee files a lawsuit against the Surety to enforce the Surety’s obligations under the Bond (or any part thereof) and if the Surety is ordered by the court to pay any penal sum of the Bond to the Obligee, then Obligee shall be entitled to recover from the Surety all reasonable attorneys’ fees, court costs and other expenses of litigation. This recovery shall be in addition to any penal sum of the Bond ordered by the court to be paid by the Surety to Obligee.

9.
Surety consents to be sued in any court in the State of Texas, hereby irrevocably submitting itself to the jurisdiction of said court.

10.
No right or action shall accrue on the Bond to or for the use of any person or corporation other than the Obligee, and its successors and assigns.




[Remainder of the page intentionally blank; signature page follows]





IN WITNESS WHEREOF, the above bound parties have executed this Bond under their several seals this      day of February, 2018, the corporation seal of each party being hereto affixed, and those presents duly signed by its undersigned representative pursuant to authority of its governing body.


Attest:




Witness
Printed Name:     




Witness
Printed Name:     

PRINCIPAL
Orinoco Natural Resources, LLC



By:      Name: [TYPED]
Title:    [TYPED]



(Affix Corporate Seal)

Attest:




Witness
Printed Name:     




Witness
Printed Name:     

SURETY
Indemnity National Insurance Company







By:      Name: [TYPED]
Title:    Attorney-in-Fact



(Affix Corporate Seal)

Attest:




Witness
Printed Name:     




Witness
Printed Name:     

OBLIGEE
TETRA Technologies, Inc.



By:      Name: [TYPED]
Title:    [TYPED]



(Affix Corporate Seal)





EXHIBIT A

ABANDONMENT OBLIGATIONS BOND NO.     







[Attach Power of Attorney]




Exhibit 31.1
Certification Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Exchange Act
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
 
I, Stuart M. Brightman, certify that:
 
1.
I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2018 , of TETRA Technologies, Inc.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
 
Date:
May 10, 2018
/s/Stuart M. Brightman
 
 
Stuart M. Brightman
 
 
Chief Executive Officer





Exhibit 31.2
Certification Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Exchange Act
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
 
I, Elijio V. Serrano, certify that:
 
1.
I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2018 , of TETRA Technologies, Inc.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
 
Date:  
May 10, 2018
/s/Elijio V. Serrano  
 
 
Elijio V. Serrano
 
 
Senior   Vice President and
 
 
Chief Financial Officer





Exhibit 32.1
 
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 
In connection with the Quarterly Report of TETRA Technologies, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stuart M. Brightman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated:
May 10, 2018
/s/Stuart M. Brightman
 
 
Stuart M. Brightman
 
 
Chief Executive Officer
 
 
TETRA Technologies, Inc.
 
 
 
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.





Exhibit 32.2
 
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 
In connection with the Quarterly Report of TETRA Technologies, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elijio V. Serrano, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated:
May 10, 2018
/s/Elijio V. Serrano
 
 
Elijio V. Serrano
 
 
Senior Vice President and
 
 
Chief Financial Officer
 
 
TETRA Technologies, Inc.
 
 
 
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.