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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXX XXXXXXXX,
XXXXXX XXXXXX,
XXXX XXXXXXXX,
XXXXX XXXXX,
XXXXXXXX LIMITED,
DORMERA LIMITED,
BALMEDIE LIMITED,
LARLANE LIMITED,
AND
EAGLE GEOPHYSICAL, INC.
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Dated as of June 2, 1997
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TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Certain Additional Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Closing; Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Representations and Warranties of the Sellers and the Guarantors . . . . . . . . . . . . . 5
(a) Due Organization, Good Standing and Power of Sellers . . . . . . . . . . . . . 5
(b) Due Organization, Good Standing and Power of the Company and the
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Validity of Agreement; Capitalization . . . . . . . . . . . . . . . . . . . . 5
(d) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . 7
(f) Financial Information and Absence of Certain Changes . . . . . . . . . . . . . 7
(g) Title to Properties; Absence of Liens and Encumbrances . . . . . . . . . . . . 9
(h) Contracts, Permits and Other Data . . . . . . . . . . . . . . . . . . . . . . 9
(i) Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(l) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(m) Conduct of Business in Compliance with Regulatory and Contractual
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(n) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(o) Environmental, Health and Safety Compliance . . . . . . . . . . . . . . . . . 11
(p) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(q) Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(r) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(s) Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(t) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(u) Employee Benefit Plans and Arrangements . . . . . . . . . . . . . . . . . . . 13
(v) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 15
(w) U.S. Assets and Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(x) Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(y) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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4.2 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . 17
(b) Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . 17
(c) No Conflict with Instruments . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Authorized Capital; Buyer Stock . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(f) Financial Information and Absence of Certain Changes . . . . . . . . . . . . . 18
(g) Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(i) Current Ownership of Company Shares . . . . . . . . . . . . . . . . . . . . . 20
4.3 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 20
5. Agreements and Covenants of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Conduct of Operations Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Conduct of Operations of Buyer Pending Closing . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Restrictions on Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. Conditions to Closing, Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Buyer's Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) Third Party Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . 24
(f) Absence of Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(g) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Sellers' and Guarantors' Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . 24
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) Cancellation of Seitel Warrant . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Absence of Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(g) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7. Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Mutual Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Employment Agreement Amendments . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Termination of Shareholders Agreement . . . . . . . . . . . . . . . . . . . . 26
7.2 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Deliveries by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Indemnification by the Sellers and the Guarantors . . . . . . . . . . . . . . . . . . . . . 27
8.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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8.3 Limits on Indemnification Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Time Limits on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Appointment of Seller Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9. Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Xxxxxxxx Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Xxxxxx Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Xxxxxxxx Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 Xxxxx Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Payment of Certain Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.6 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.7 Section Headings; Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.10 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.11 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.12 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Good Faith Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Consent to Jurisdiction; Venue . . . . . . . . . . . . . . . . . . . . . . . . 34
10.13 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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LIST OF EXHIBITS TO AGREEMENT
Exhibit 1 - Allocation of Purchase Price
Exhibit 2 - Warrant Cancellation Agreement
Exhibit 3 - Employment Agreement Amendments
Exhibit 4 - Xxxxx Employment Agreement
Exhibit 5 - Termination of Shareholders Agreement
Exhibit 6 - Opinion of Counsel to Buyer
Exhibit 7 - Opinions of Counsel to Sellers, Guarantors
and Company
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of June 2, 1997 by and among Xxxxxxxx Limited, an Isle of Man
corporation ("Xxxxxxxx"), Dormera Limited, an Isle of Man corporation
("Dormera"), Balmedie Limited, an Isle of Man corporation ("Balmedie"), Larlane
Limited, an Isle of Man corporation ("Larlane, and collectively with Xxxxxxxx,
Dormera and Balmedie, the "Sellers," or individually, a "Seller"), Xxxxxx
Xxxxxxxx ("Xxxxxxxx"), Xxxxxx Xxxxxx ("Xxxxxx"), Xxxx Xxxxxxxx ("Xxxxxxxx") and
Xxxxx Xxxxx ("Xxxxx," and collectively with Xxxxxxxx, Xxxxxx and Xxxxxxxx, the
"Guarantors" and individually, a "Guarantor") and Eagle Geophysical, Inc., an
Delaware corporation ("Buyer").
RECITALS:
1. The Sellers own 81% of the issued and outstanding ordinary
shares of US$0.001 (the "Shares") of Energy Research International, a Cayman
Islands corporation (the "Company"), which is engaged in the offshore seismic
data acquisition business (the "Business"), and Buyer, or its ultimate parent
corporation, owns the other 19% of the issued and outstanding Shares of the
Company; and
2. Xxxxxxxx desires to sell to Buyer 15,667 Shares, Dormera
desires to sell to Buyer 15,666 Shares, Balmedie desires to sell to Buyer
15,667 Shares, Larlane desires to sell to Buyer 3,000 Shares, and Buyer desires
to acquire from the Sellers such 50,000 Shares (the "Purchased Shares"), so
that Buyer will own all of the issued and outstanding Shares of the Company, in
consideration of the payment by Buyer of the purchase price provided for
herein, all upon the terms and subject to the conditions hereinafter set forth;
3. The sale and purchase of the Purchased Shares contemplated
herein will occur simultaneously with the consummation of an initial public
offering of shares of common stock by Buyer, and the sale and purchase
contemplated hereby is conditioned upon the consummation of such public
offering as set forth herein; and
4. Xxxxxxxx is the owner of all of the issued and outstanding
shares of Oliveira, Purdie is the owner of all of the issued and outstanding
shares of Dormera, Xxxxxxxx is the owner of all of the issued and outstanding
shares of Balmedie, and Xxxxx is the owner of all of the issued and outstanding
shares of Larlane. The Guarantors join in the execution of this Agreement for
the purpose of guaranteeing the obligations of the Sellers hereunder and for
the purpose of making certain representations and warranties to and covenants
and agreements with Buyer.
AGREEMENT
In consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions of the
parties contained herein, it is hereby agreed as follows:
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1. Definitions.
1.1 Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"affiliate" means, with respect to any person, any other
person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such person.
"Applicable Law" means any statute, law, rule or regulation or
any judgment, order, writ, injunction or decree of any Governmental
Entity to which a specified person or property is subject.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect on the Closing Date.
"Employee Warrants" means the warrants to purchase 5,555
Shares each granted to Xxxxxxxx, Xxxxxx and Xxxxxxxx evidenced by
Warrant Certificates Nos. W-002, W-003 and W-004 dated July 3, 1996.
"Encumbrances" means liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition or otherwise),
easements, licenses, sublicenses and other encumbrances of every type
and description, whether imposed by law, agreement, understanding or
otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental or
regulatory body, agency, department, commission, board, bureau or
other authority or instrumentality (domestic or foreign).
"Horizon Pension Plan" means the pension plan dated April 1,
1994 of Horizon Exploration Limited, a copy of which has been provided
by Sellers to Buyer.
"Intellectual Property" means patents, trademarks, service
marks, trade names, copyrights, trade secrets, know-how, inventions,
and similar rights, and all registrations, applications, licenses and
rights with respect to any of the foregoing.
"Permits" means licenses, permits, franchises, consents,
approvals and other authorizations of or from any Governmental Entity.
"Permitted Liens" means (i) liens for ad valorem Taxes not yet
due and payable or (ii) materialman's, mechanic's, repairman's,
employee's, contractor's, operator's or other similar liens,
encumbrances or charges arising in the ordinary course of business
incidental to construction, maintenance or operation of the Company's
or Subsidiary's assets, securing obligations not yet due.
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"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or
Governmental Entity.
"reasonable best efforts" means a party's best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation more than 30 percent of
whose outstanding voting securities, or any partnership, joint
venture, or other entity more than 30 percent of whose total equity
interests is owned, directly or indirectly, by the Company.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise or other tax
imposed by any United States federal, state or local, or any foreign
or provincial, taxing authority, including any interest, penalties or
additions attributable thereto.
"Tax Return" means any return or report, including any related
or supporting information, with respect to Taxes.
"United Kingdom Accounting Standards" means generally accepted
accounting principles in the United Kingdom as in effect on the date
of this Agreement.
"U.S. GAAP" means generally accepted accounting principles in
the United States as in effect on the date of this Agreement.
1.2 Certain Additional Defined Terms. In addition to such terms
as are defined in Section 1.1, the following terms are used in this Agreement
as defined in the Sections of this Agreement referenced opposite such terms:
Defined Terms Reference
------------- ---------
Agreement Preamble
Audited Financial Statements Section 4.1(f)
Business Recital 1
Xxxxx Employment Agreement Section 7.1(a)
Buyer Preamble
Buyer Stock Section 3.2
Buyer's Audited Financial Statements Section 4.2(f)
Buyer's Financial Statements Section 4.2(f)
Buyer's Latest Balance Sheet Section 4.2(f)
Buyer's Representatives Section 5.1(a)
Buyer's Unaudited Financial Statements Section 4.2(f)
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Claim Section 8.4(a)
Closing Section 3.1
Closing Date Section 3.1
Company Recital 1
Damages Section 8.1
Dispose of Section 5.5
Dispute Section 10.12
Disputing Parties Section 10.12
EHL Section 7.1(a)
Employment Agreement Amendments Section 7.1(a)
Environmental Laws Section 4.1(o)
Financial Statements Section 4.1(f)
Guarantors Preamble
Hazardous Material Section 4.1(o)
Indemnified Party Section 8.4(a)
Indemnifying Party Section 8.4(a)
Latest Balance Sheet Section 4.1(f)
Pledged Stock Section 8.7
Public Offering Section 6.1(d)
Purchase Price Section 3.2
Purchased Shares Recital 2
Restricted Stock Section 5.5
Security Agreement - Pledge Section 7.1(d)
Sellers Preamble
Seller Stock Section 5.5
Sellers' Representatives Section 5.1(b)
Seitel Section 6.2(e)
Seitel Warrants Section 6.2(e)
Shareholders Agreement Section 7.1(b)
Shares Recital 1
Termination of Registration Rights Agreement Section 7.1(c)
Termination of Shareholders Agreement Section 7.1(b)
Unaudited Financial Statements Section 4.1(f)
Warrant Cancellation Agreement Section 6.2(e)
2. Purchase and Sale. Subject to the terms and conditions of this
Agreement, Sellers shall sell and deliver to Buyer and Buyer shall purchase
from Sellers all of the Purchased Shares, free and clear of all Encumbrances.
3. Closing; Purchase Price.
3.1 Closing Date. The closing of the transactions provided for in
this Agreement (the "Closing") shall take place at the offices of Xxxxx & Xxxx,
LLP, One World Trade Center, New York, New York, contemporaneously with the
closing of the Public Offering. The date on which the Closing takes place is
herein referred to as the "Closing Date".
3.2 Purchase Price. The aggregate purchase price (the "Purchase
Price") for the Purchased Shares shall consist of six hundred thousand
(600,000) shares of common stock, $0.01
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par value, of Buyer (the "Buyer Stock"), which shall be issued to Sellers at
the Closing and one hundred U.S. dollars (U.S.$100.00). The number of shares
of Buyer Stock issuable to each Seller and the amount of cash payable to each
Seller are set forth beside such Seller's name on Exhibit 1. At the Closing,
Buyer shall deliver share certificates representing the appropriate number of
shares of Buyer Stock to each Seller and a check in the appropriate amount
payable to each Seller. Sellers acknowledge and agree that the allocation of
the Purchase Price among them as set forth on Exhibit 1 is the sole
responsibility of the Sellers, and Buyer shall have no obligation or other
responsibility with respect to such allocation.
4. Representations and Warranties.
4.1 Representations and Warranties of the Sellers and the
Guarantors. The Sellers and the Guarantors, jointly and severally, represent
and warrant to Buyer, as of the date hereof and as of the Closing Date, as
follows:
(a) Due Organization, Good Standing and Power of Sellers.
Each Seller is a corporation duly organized, validly existing and in
good standing under the laws of the Isle of Man. Each Seller has the
corporate power and authority to own, lease and operate its assets and
to conduct its business as now conducted. Each Seller is duly
authorized, qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which its
right, title or interest in or to its assets, or the conduct of its
business, requires such authorization, qualification or licensing,
except where the failure to so qualify or to be in good standing in
such other jurisdictions would not have a material adverse effect on
any of the assets, the business or the results of operations of such
Seller. No actions or Proceedings to dissolve any Seller are pending.
(b) Due Organization, Good Standing and Power of the Company
and the Subsidiaries. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Cayman
Islands. Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Subsidiaries has the
corporate power and authority to own, lease and operate its assets and
to conduct its business as now conducted. Each of the Company and its
Subsidiaries is duly authorized, qualified or licensed to do business
as a foreign corporation and is in good standing in each jurisdiction
in which its right, title or interest in or to its assets, or the
conduct of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify or to be in good
standing in such other jurisdictions would not have a material adverse
effect on any of the assets, the business or the results of operations
of the Company or such Subsidiary. No actions or Proceedings to
dissolve the Company or any Subsidiary are pending. The Company has
delivered to Buyer true and complete copies of the minute books and
stock transfer books of the Company and each Subsidiary.
(c) Validity of Agreement; Capitalization. This Agreement
has been duly executed and delivered by the Sellers and the Guarantors
and constitutes a legal, valid and binding obligation of each of them,
enforceable against them in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or other similar laws
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affecting creditors' rights generally and by general equity
principles. The Company's authorized capital consists of
U.S.$900,000.00 divided into 900,000,000 ordinary shares of U.S.$0.001
each, of which 61,728 shares are issued and outstanding. The
Purchased Shares have been duly authorized and validly issued, are
fully paid and nonassessable, have not been issued in violation of any
preemptive or similar rights, and have been issued in compliance with
all Applicable Laws. The Purchased Shares, together with the Shares
already owned of record by Buyer or its ultimate parent corporation,
constitute all shares of the outstanding capital stock of the Company.
There are (and as of the Closing Date there will be) outstanding (i)
no shares of capital stock or other voting securities of the Company
other than the 11,728 ordinary shares already owned of record by Buyer
or its ultimate parent corporation and the ordinary shares set forth
on Schedule 4.1(c), (ii) no securities of the Company convertible into
or exchangeable for shares of the capital stock or other voting
securities of the Company, (iii) no options or other rights to acquire
from the Company, and no obligation of the Company to issue or sell,
any shares of its capital stock or other voting securities (other than
the Seitel Warrants and the Employee Warrants, which are to be
cancelled upon consummation of the transactions contemplated herein),
or any securities of the Company convertible into or exchangeable for
such capital stock or voting securities, (iv) no equity equivalents,
interest in the ownership or earnings, or other similar rights of or
with respect to the Company, and (v) no shares of any entity other
than the Subsidiaries owned by the Company. There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire
any shares, securities, options, equity equivalents, interests or
rights. Each Seller is the record and beneficial owner of good, valid
and marketable title to the number of Shares set forth opposite the
name of such Seller on Schedule 4.1(c), free and clear of all
Encumbrances. Upon consummation of the transactions contemplated
hereby, Buyer will acquire good, valid and marketable title to, the
Purchased Shares, free and clear of all Encumbrances, other than (i)
those that may arise by virtue of any actions taken by or on behalf of
Buyer or its affiliates, or (ii) restrictions on transfer that may be
imposed by Applicable Law.
(d) Subsidiaries.
(i) The Company does not own, directly or
indirectly, any capital stock or other equity securities of
any corporation or have any direct or indirect equity or
ownership interest in any other person, other than the
Subsidiaries. Schedule 4.1(d) lists each Subsidiary, the
jurisdiction of incorporation or formation of each Subsidiary
and the authorized (in the case of capital stock) and
outstanding capital stock or other equity interests of each
Subsidiary.
(ii) Except as otherwise indicated on Schedule
4.1(d), all the outstanding capital stock or other equity
interests of each Subsidiary are owned directly or indirectly
by the Company, free and clear of all Encumbrances. All of
the issued and outstanding shares of each Subsidiary have been
duly authorized and validly issued, are fully paid and
nonassessable, have not been issued in violation of any
preemptive or similar rights, and have been issued in
compliance with all Applicable Laws.
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(iii) Except as set forth on Schedule 4.1(d), there
are (and as of the Closing Date there will be) outstanding (A)
no shares of capital stock or other voting securities of any
Subsidiary, (B) no securities of the Company or any Subsidiary
convertible into or exchangeable for shares of capital stock
or other voting securities of any Subsidiary, (C) no options
or other rights to acquire from the Company or any Subsidiary,
and no obligation of the Company or any Subsidiary to issue or
sell, any shares of capital stock or other voting securities
of any Subsidiary or any securities convertible into or
exchangeable for such capital stock or voting securities, and
(D) no equity equivalents, interests in the ownership or
earnings, or other similar rights of or with respect to any
Subsidiary. As of the Closing Date there will be (and, except
as disclosed on Schedule 4.1(d), there are) no outstanding
obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any of the foregoing shares,
securities, options, equity equivalents, interests or rights.
(e) No Approvals or Notices Required; No Conflict with
Instruments. Except as described in Schedule 4.1(e) hereto, the
execution, delivery and performance of this Agreement by the Sellers
and the Guarantors and the consummation by them of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or the lapse of time or both) or require any consent,
approval, filing or notice under, any provision of any Applicable Law,
and (ii) will not result in the creation of any Encumbrance on the
Shares under, conflict with, or result in the breach or termination of
any provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of the Sellers, the
Guarantors, or the Company under, or result in the creation of an
Encumbrance upon any portion of the assets of the Company or any
Subsidiary pursuant to, the Certificate of Incorporation, Articles of
Association, or other charter documents of the Company or any
Subsidiary, or any indenture, mortgage, deed of trust, lease,
licensing agreement, contract, instrument or other agreement to which
the Sellers, the Guarantors, the Company, or any Subsidiaries are a
party or by which any of them or any of their assets is bound or
affected other than violations of and defaults under the agreements
governing the existing indebtedness of the Company and/or its
Subsidiaries owed to The Bank of N.T. Xxxxxxxxxxx & Son Ltd. that will
arise from or be caused by the transactions contemplated hereby (which
indebtedness is intended to be repaid with proceeds from the Public
Offering). Except as set forth in the Shareholders Agreement (which
will be terminated at the Closing), the Purchased Shares are
transferable and assignable to Buyer as contemplated by this Agreement
without the waiver of any right of first refusal or the consent of any
other party being obtained, and there exists no preferential right of
purchase in favor of any person with respect to any of the Shares or
the Business or any stock of any of the Subsidiaries or any of the
assets of the Company or any Subsidiary.
(f) Financial Information and Absence of Certain Changes.
The Company has delivered to Buyer accurate and complete copies of (i)
the audited balance sheets of the Company, as of December 31, 1996,
December 31, 1995, and December 31, 1994 and the related audited
statements of profit and loss and cash flows for each of the years
then ended, and the notes and schedules thereto, prepared in
conformity with U.S. GAAP, together with the unqualified reports
thereon of KPMG, independent public accountants (the "Audited
Financial Statements") and (ii) the unaudited balance sheet of the
Company
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as of March 31, 1997 (the "Latest Balance Sheet"), and the related
unaudited statements of profit and loss and cash flows for the three
month period then ended (together with the Latest Balance Sheet, the
"Unaudited Financial Statements," and the Unaudited Financial
Statements together with the Audited Financial Statements being
referred to herein collectively as the "Financial Statements"). The
Financial Statements (i) represent actual bona fide transactions, (ii)
have been prepared from the books and records of the Company and its
Subsidiaries in conformity with U.S. GAAP, applied on a basis
consistent with preceding years throughout the periods involved,
except that the Unaudited Financial Statements are not accompanied by
notes or other textual disclosure required by U.S. GAAP, and (iii)
accurately, completely and fairly present the financial position of
the Company and its Subsidiaries as of the respective dates thereof
and their results of operations and cash flows for the periods then
ended, except that the Unaudited Financial Statements are subject to
normal year-end adjustments consistent with past practice, which will
not be material in the aggregate. Neither the Company nor any
Subsidiary has any liability or obligation, whether accrued, absolute,
contingent, or otherwise, except for trade payables incurred in the
ordinary course of business since the date of the Latest Balance Sheet
or as set forth on the Latest Balance Sheet or on Schedule 4.1(f).
Except as disclosed on Schedule 4.1(f), since the date of the Latest
Balance Sheet, there has not been nor will there be any change in the
assets, liabilities, financial condition, or operations of the Company
and its Subsidiaries from that reflected in the Financial Statements,
other than changes in the ordinary course of business, none of which
individually or in the aggregate have had or will have a material
adverse effect on such assets, liabilities, financial condition, or
operations. Without limiting any of the foregoing, since December 31,
1996, except as disclosed on Schedule 4.1(f) or as expressly
contemplated herein, neither the Company nor any Subsidiary has:
(i) incurred or become subject to, or agreed to
incur or become subject to, any obligation or liability,
absolute or contingent, except current liabilities incurred in
the ordinary course of business;
(ii) mortgaged, pledged, or subjected to any
Encumbrance (or agreed to do so with respect to) any of its
assets, or discharged or satisfied any Encumbrance, or paid or
satisfied any obligation or liability other than in the
ordinary course of business and consistent with past practice;
(iii) sold or transferred, or agreed to sell or
transfer, any of its assets, or cancelled or agreed to cancel,
any debts due it or claims therefor, except, in each case, for
full consideration and in the ordinary course of business;
(iv) engaged in any transactions adversely affecting
the Business or its assets or suffered any extraordinary
losses or waived any rights of substantial value not in the
ordinary course of business;
(v) purchased or agreed to purchase any securities,
bonds, or any other capital stock or assets of any other
entity with cash or liquid assets, or used cash or liquid
assets to incur debts, for matters not within the ordinary
course of business or not for appropriate corporate purposes;
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(vi) increased any salaries or granted or agreed to
grant, or paid, or agreed to pay, any bonus, loan, incentive
payment or other item of value or made any other similar
agreement, to or with any of its directors, officers or agents
except as compensation in the ordinary course of business for
appropriate services performed;
(vii) declared or paid any dividend or made any
other distribution to its shareholders (other than
distributions by the Subsidiaries to the Company);
(viii) made or authorized any capital expenditures of
more than $50,000 in the aggregate;
(ix) made or agreed to make any changes in its
Memorandum and Articles of Association, bylaws, or similar
corporate documents, or its capital structure;
(x) entered into any representative,
distributorship, service, installation, support and
maintenance, agency or other similar agreement;
(xi) incurred or suffered any damage, destruction,
or loss, whether or not covered by insurance, materially
affecting the Business or any of its assets;
(xii) made or applied to make any change in
accounting methods or practices, including for Tax purposes;
or
(xiii) entered into any agreement, commitment or
understanding, whether or not in writing, with respect to any
of the foregoing.
(g) Title to Properties; Absence of Liens and Encumbrances.
Each of the Company and the Subsidiaries owns (except as described in
Schedule 4.1(g) hereto) good, marketable and indefeasible title to all
of its assets, free and clear of all Encumbrances, and other
restrictions of any kind and nature, other than (i) the Encumbrances
specifically set forth on Schedule 4.1(g) hereto, or (ii) Permitted
Liens.
(h) Contracts, Permits and Other Data.
(i) Schedule 4.1(h) hereto contains a complete and
correct list of all material contracts, maintenance and
service agreements, purchase commitments for materials and
other services, leases under which the Company or any
Subsidiary is a lessor or lessee and other agreements
pertaining to the Business to which the Company or any
Subsidiary is a party, the benefits of which are enjoyed in
the Business or to which any of the assets of the Company or
any Subsidiary is subject; and
(ii) Schedule 4.1(h) hereto contains a complete and
correct list of all Permits (other than sales and use Tax
Permits and franchise Tax registrations) held by the Company
or any of the Subsidiaries.
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True and complete copies of all documents (including all amendments
thereto) referred to in Schedule 4.1(h) hereto have been delivered to
or made available for inspection by Buyer. All rights, licenses,
leases, registrations, applications, contracts, commitments, Permits
and other arrangements by the Company or any Subsidiary referred to in
Schedule 4.1(h) are in full force and effect and are valid and
enforceable in accordance with their respective terms, except where
the failure to be in full force and effect and valid and enforceable
would not in the aggregate have a material adverse effect on the
assets of the Company or the applicable Subsidiary, or on its results
of operations. The Company and the Subsidiaries are not in breach or
default in the performance of any material obligation thereunder and
to the best knowledge of the Sellers and the Guarantors, no event has
occurred or has failed to occur whereby any of the other parties
thereto have been or will be released therefrom or will be entitled to
refuse to perform thereunder. Except as set forth in Schedule 4.1(h)
hereto, there are no contracts, agreements, licenses, Permits,
franchises or rights to which the Company or any of the Subsidiaries
is a party which are material to the ownership of any of the Company's
or Subsidiaries' assets or to the conduct of the Business as conducted
by the Company or a Subsidiary. Except as described on Schedule
4.1(h) hereto, each of the Company and the Subsidiaries has and will
have following the Closing, all licenses, Permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Entities required for the conduct of the Business as presently
conducted. There are no outstanding powers of attorney relating to or
affecting the Company or any Subsidiary. Except as described on
Schedule 4.1(h) hereto, neither the Company nor any Subsidiary is a
guarantor or is otherwise liable for any liability or obligation
(including indebtedness) of any other person.
(i) Defects. Except as set forth on Schedule 4.1(i) hereto,
all of the equipment, fixtures and other real property improvements
owned or leased by the Company and the Subsidiaries are in good
operating condition and repair, ordinary wear and tear excepted, and
have been maintained by the Company and the Subsidiaries in accordance
with normal industry practices.
(j) Legal Proceedings. Except as described in Schedule
4.1(j) hereto, (i) there is no litigation, Proceeding, claim or
governmental investigation pending or, to the knowledge of any of the
Sellers or any of the Guarantors, threatened, seeking relief or
damages which, if granted, would adversely affect the Company or any
Subsidiary, any of their assets, or the ability of the Company or any
Subsidiary to use and operate their assets and (ii) neither the
Sellers, the Guarantors, the Company nor any Subsidiary has been
charged with any violation of or, to the knowledge of the Sellers or
the Guarantors, threatened with a charge or violation of, nor are any
of the Sellers or any of the Guarantors aware of any facts or
circumstances that, if discovered by third parties, could give rise to
a charge or a violation of, any provision of Applicable Law or
regulation which charge or violation, if determined adversely to the
Sellers, the Guarantors, the Company, or any Subsidiary, would
adversely affect the Business or the results of operations of the
Company or any Subsidiary or might reasonably be expected to affect
the right of Buyer to own the Purchased Shares or operate the Business
after the Closing Date in substantially the manner in which it is
currently operated. To the best knowledge of the Sellers and the
Guarantors, none of the Company, any Subsidiary, or any director,
officer, employee or agent of the Company or any Subsidiary has,
directly or indirectly,
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paid or delivered any fee, commission or other sum of money or item of
property however characterized to any broker, finder, agent,
government official or other person, in the United States or any other
country, in any matter related to the Business of the Company or any
Subsidiary, which the Company, any such Subsidiary, or any such
director, officer, employee or agent knows or has reason to believe to
have been illegal under any Applicable Law.
(k) Insurance. Schedule 4.1(k) hereto sets forth a list and
brief description of the insurance policies relating to the insurable
properties of the Company and the Subsidiaries and the conduct of the
Business of the Company and the Subsidiaries. All premiums due and
arising thereon have been paid and such policies are in full force and
effect.
(l) Intellectual Property. Except as described on Schedule
4.1(l) hereto, the Company and the Subsidiaries own and possess all of
the Intellectual Property needed for the conduct of the Business as
presently conducted. Except as described on Schedule 4.1(l) hereto,
to the best knowledge of the Sellers and the Guarantors, there is no
basis for the assertion by any person of any claim against Buyer, the
Company, or any Subsidiary with respect to the use by the Company or
any Subsidiary of any of the Intellectual Property. Except as
described on Schedule 4.1(l) hereto, none of the Sellers, any
Subsidiary, or the Company is infringing or violating, and to the best
knowledge of the Sellers and the Guarantors, none of the Sellers, any
Subsidiary, or the Company have infringed or violated, any rights of
any person with respect to any of the Intellectual Property, and the
Intellectual Property is not subject to any order, injunction or
agreement respecting its use.
(m) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 4.1(m)
hereto, the Company and the Subsidiaries have conducted the Business
so as to comply with all Applicable Laws, rights of concession,
licenses, know-how or other proprietary rights of others, the failure
to comply with which would individually or in the aggregate have a
material adverse effect on the Business or the results of operations
of the Company or any Subsidiary.
(n) Certain Fees. None of the Company, any Subsidiary, or
their officers, directors or employees, the Guarantors, or the
Sellers, on behalf of the Company, any Subsidiary, or themselves, has
employed any broker or finder or incurred any other liability for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
(o) Environmental, Health and Safety Compliance. Except as
described on Schedule 4.1(o) hereto,
(i) the Company and the Subsidiaries are, and have
continuously been, in compliance with all Environmental Laws;
(ii) all material notices, Permits, licenses or
similar authorizations, if any, required to be obtained or
filed under any Environmental Law in connection with the
operation of the Business have been obtained or filed; and
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(iii) there are no past, pending or, to the
knowledge of the Sellers or the Guarantors, threatened
investigations, Proceedings or claims against the Company or
any Subsidiary relating to the presence, release or
remediation of any Hazardous Material or for non-compliance
with any Environmental Law.
For purposes of this Agreement, the term "Environmental Laws" shall
mean, as to any given asset or operation of the Company or a
Subsidiary, all applicable laws, statutes, ordinances, rules and
regulations of any Governmental Entity pertaining to protection of the
environment in effect as of the Closing Date. For purposes of this
Agreement, the term "Hazardous Material" shall mean any substance
which is listed or defined as a hazardous substance, hazardous
constituent or solid waste pursuant to any Environmental Law.
(p) Inventories. The inventories and work in progress
reflected on the Latest Balance Sheet and those items of inventory
constructed or acquired by the Company or any Subsidiary and the work
performed by the Company or any Subsidiary after the date of the
Latest Balance Sheet, except to the extent disposed of or billed since
such date in the ordinary conduct of the Business by the Company or
such Subsidiary, are, in the case of such inventory, in good,
merchantable and usable condition and, in the case of such work in
progress, represent work completed in accordance with the requirements
of any applicable contract, and in each case, have been reflected on
the books of the Company and the applicable Subsidiary in accordance
with U.S. GAAP. Except as set forth on Schedule 4.1(g) hereto, all
such inventories and work in progress are owned by the Company or a
Subsidiary free and clear of any liens or Encumbrances.
(q) Books and Records. All of the books and records of the
Company and each Subsidiary have been prepared and maintained in
accordance with good business practices and, where applicable, in
conformity with United Kingdom Accounting Standards and, to the best
of the Guarantors' and the Sellers' knowledge, in compliance with all
Applicable Laws and other requirements.
(r) Taxes. The Company, the Subsidiaries, and the Sellers
have caused to be timely filed with appropriate federal, state, local
and other Governmental Entities all tax returns required to be filed
with respect to the Company, the Subsidiaries, or the conduct of the
Business, and have paid, caused to be paid, or adequately reserved in
the Financial Statements all Taxes due or claimed to be due from or
with respect to such tax returns. Except as set forth on Schedule
4.1(r), no extension of time has been requested or granted with
respect to the filing of any Tax Return or payment of any Taxes, and
no issue has been raised or adjustment proposed by the Internal
Revenue Service or any other taxing authority in connection with any
of the Company's or the Subsidiaries' tax returns which has not yet
been resolved or paid, and there are no outstanding agreements or
waivers that extend any statutory period of limitations applicable to
any federal, state or local tax returns that include or reflect the
use and operation of the Company or any Subsidiary or the conduct of
the Business. Except as set forth on Schedule 4.1(r), neither the
Sellers, the Guarantors, any Subsidiary, nor the Company has received
any notice of deficiency, assessment, audit, investigation, or
proposed deficiency, assessment or audit with respect to the Company
or any Subsidiary or the conduct of the Business from any taxing
authority, and neither the Sellers nor the Guarantors have any
knowledge
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of any such deficiency, assessment, audit, investigation or proposed
deficiency, assessment or audit. Neither the Company nor any
Subsidiary has taken any action which is not in accordance with past
practice that could defer any liability for Taxes from any taxable
period ending on or before the Closing Date to any taxable period
ending after such date. Neither the Company nor any Subsidiary has
consented to the application of Section 341(f) of the Code.
(s) Additional Information. Schedule 4.1(s) hereto contains
accurate lists and summary descriptions of the following:
(i) the name and address of every bank and other
financial institution at which the Company or any of the
Subsidiaries maintains an account (whether checking, savings
or otherwise), lock box or safe deposit box for the Business,
and the account numbers and names of persons having signing
authority or other access thereto;
(ii) the names and titles of and current hourly
rates or salaries for all employees of the Company and each
Subsidiary, together with the vacation and severance benefits
to which each such person is entitled; and
(iii) all names under which the Company and each
Subsidiary has conducted any business or, which it has
otherwise used.
(t) Labor Matters. Neither the Company nor any Subsidiary
has suffered any strike, slowdown, picketing or work stoppage by any
union or other group of employees. Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement; no such
agreement determines the terms and conditions of employment of any
employee of the Company or any Subsidiary; no collective bargaining
agent has been certified as a representative of any of the employees
of the Company or any Subsidiary; and no representation campaign or
election is now in progress with respect to any of the employees of
the Company or any Subsidiary. None of the Sellers, the Guarantors,
any Subsidiary, or the Company has taken or failed to take any action
that would cause the Company or any Subsidiary to incur any liability
in the event the Company or any Subsidiary chooses to dismiss from its
employment any of the its employees following the Closing (other than
pursuant to the terms of the Employment Agreement Amendments). The
Company and each Subsidiary have complied in all material respects
with all laws relating to the employment of labor in the conduct of
the Business, including provisions thereof relating to wages, hours,
equal opportunity and the payment of pension contributions, social
security and other Taxes.
(u) Employee Benefit Plans and Arrangements.
(i) Schedule 4.1(u) hereto lists all employee
benefit plans and collective bargaining, labor and employment
agreements and severance agreements or other similar
arrangements, whether or not in writing (together with all
documents or instruments establishing or constituting any
related trust, annuity contract or other funding instrument)
to which the Company or any Subsidiary is (or ever has been) a
party or by which the Company or any Subsidiary is (or ever
has been)
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bound, including, without limitation, a) any profit-sharing,
deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, or
incentive compensation plan, agreement or arrangement, b) any
welfare benefit plan, agreement or arrangement or any plan,
agreement or arrangement providing for "fringe benefits" or
perquisites to employees, officers, directors or agents,
including but not limited to benefits relating to automobiles,
clubs, vacation, child care, parenting or maternity leave,
sabbaticals, sick leave, medical expenses, dental expenses,
disability, accidental death or dismemberment,
hospitalization, life insurance and other types of insurance,
c) any employment agreement, or d) any other "employee benefit
plan" (within the meaning of Section 3(3) of ERISA).
(ii) The Company and the Subsidiaries have delivered
to Buyer true, correct and complete copies of all plan
documents and/or contracts (including, where applicable, any
documents and/or instruments establishing or constituting any
related trust, annuity contract or funding instrument) and
summary plan descriptions with respect to the plans,
agreements and arrangements listed in Schedule 4.1(u) hereto,
or summary descriptions of any such plans, agreements or
arrangements not otherwise in writing. The Company and the
Subsidiaries have provided Buyer with true, correct and
complete copies of all filings made with any Governmental
Entity with respect to each plan identified in Schedule 4.1(u)
hereto that was required to make such filings for the plan
year immediately preceding the Closing Date. Each of such
filings is accurate and complete as of the dates specified
therein. In addition, the Company and the Subsidiaries have
provided Buyer with a) true, correct and complete copies of
any and all written communications notices or claims that the
Sellers, the Guarantors, any Subsidiary, or the Company has
received from any Governmental Entity concerning any plan,
arrangement or agreements identified in Schedule 4.1(u) hereto
that give notice of possible imposition of a fine, penalty or
liability with respect to such plan, arrangement or agreement
and b) true, correct and complete copies of any complaints,
petitions, claims or other notices of liability relating to
any such plan, arrangement or agreement that have been filed
by any other party.
(iii) For each of the plans, agreements and
arrangements identified in Schedule 4.1(u) hereto, there are
no negotiations, demands or proposals that are pending or have
been made since the dates of the respective items furnished
pursuant to Section 4.1(u)(ii) hereto which concern matters
now covered, or that would be covered, by plans, agreements or
arrangements of the type described in this Section, except as
expressly contemplated in this Agreement.
(iv) The Company and each of the plans, agreements
and arrangements identified in Schedule 4.1(u) hereto are and
have at all times been operated in compliance in all material
respects with all Applicable Laws. There has been no act or
omission by the Company, any Subsidiary, any Guarantor, or any
Seller or any ERISA affiliate in connection with any of the
plans, agreements and arrangements identified in Schedule
4.1(u) hereto that has given rise to or may give rise to
fines, penalties, Taxes, or related charges under any
Applicable Law. The Company and the Subsidiaries have
performed all of their respective
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obligations under all such plans, agreements and arrangements
including, but not limited to, the full payment when due of
all amounts required to be made as contributions thereto or
otherwise, and no transaction has occurred which could give
rise to a material liability under any Applicable Law. There
are no actions, suits or claims (other than routine claims for
benefits) pending or, to the knowledge of the Sellers or the
Guarantors, threatened against such plans or their assets, or
arising out of such plans, agreements or arrangements, and, to
the best knowledge of the Sellers and the Guarantors, no facts
exist which could give rise to any such actions, suits or
claims that might have a material adverse effect on such
plans, agreements or arrangements.
(v) Except to the extent required by Applicable Law
or pursuant to the Horizon Pension Plan, neither the Company
nor any Subsidiary provides health or welfare benefits
(through the purchase of insurance or otherwise) for any
retired or former employees.
(vi) Except as specifically identified in Schedule
4.1(u) hereto, a) neither the Company nor any Subsidiary has
or has at any time previously maintained, a stock bonus,
pension or profit-sharing plan which is or was intended to
meet the requirements of Section 401(a) of the Code; b)
neither the Company nor any Subsidiary has or has at any time
previously maintained, a plan subject to Title IV of ERISA;
and c) no such plan is or ever has been a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA).
(v) Transactions with Affiliates. None of the Sellers or the
Guarantors nor any associate of any such Seller or Guarantor is
currently, directly or indirectly, a party to any transaction with the
Company or any Subsidiary, including any agreement, arrangement or
understanding, written or oral, providing for the employment of,
furnishing of services by, rental of real or personal property from,
or otherwise requiring payment to any such Seller, Guarantor or
associate, except for the Employment Agreement Amendments, the Xxxxx
Employment Agreement and the employment agreements amended thereby or
as disclosed on Schedule 4.1(v). None of the Sellers or the
Guarantors nor any associate of any such Seller or Guarantor owns,
directly or indirectly, any interest in, or serves as a director,
officer, or employee of, any customer, supplier or competitor of the
Company or any Subsidiary. For the purposes of this Section 4.1(v)
only, an "associate" of any Seller or Guarantor means a member of the
immediate family of such Seller or Guarantor or any corporation,
partnership, trust or other entity in which such Seller or Guarantor
has a substantial ownership or beneficial interest or is a director,
officer, partner or trustee, or person holding a similar position,
excluding Buyer.
(w) U.S. Assets and Revenues. The aggregate book value as of
December 31, 1996 of all assets located in the United States held by
the Company and its Subsidiaries was less than $15 million, and the
aggregate amount of sales in or into the United States by the Company
and its Subsidiaries for the fiscal year ended December 31, 1996 was
less than $25 million, as such asset value and sales amounts are
required to be calculated pursuant to Rule Section 802.50 and the
other applicable provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
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(x) Investment Representations.
(i) Each Seller, and, to the extent that a Guarantor
may be deemed to beneficially own the Buyer Stock being
acquired by a Seller, such Guarantor, is acquiring the Buyer
Stock for its own account for investment and not with a view
to, or for sale or other disposition in connection with, any
distribution of all or any part thereof, except pursuant to an
applicable exemption under the Securities Act or in an
offering covered by an effective registration statement under
the Securities Act relating to the Buyer Stock. In acquiring
the Buyer Stock, each Seller and Guarantor is not offering or
selling, and will not offer or sell, for Buyer in connection
with any distribution of the Buyer Stock, and no Seller or
Guarantor has a participation or will participate in any such
undertaking or in any underwriting of such an undertaking,
except in compliance with applicable federal and state
securities laws.
(ii) Each Seller and Guarantor acknowledges that it
or its representatives have been furnished with substantially
the same kind of information regarding Buyer and its business,
assets, results of operations and financial condition as would
be contained in a registration statement prepared in
connection with a public sale of the Buyer Stock. Each Seller
and Guarantor further represents that it has had an
opportunity to ask questions of and receive answers from Buyer
regarding Buyer and its business, assets, results of
operations and financial condition and the terms and
conditions of the issuance of the Buyer Stock. The foregoing,
however, shall not limit or modify the representations and
warranties of Buyer in Section 4.2, and shall not limit the
disclosure requirements of applicable federal and state
securities laws.
(iii) Each Seller and Guarantor acknowledges that it
is able to fend for itself, can bear the economic risk of its
investment in the Buyer Stock, and has such knowledge and
experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in
the Buyer Stock.
(iv) Each Seller and Guarantor understands that the
Buyer Stock, when issued to each Seller, will not have been
registered pursuant to the Securities Act or any applicable
state securities laws (except insofar as the Sellers or
Guarantors constitute selling stockholders upon exercise of
the over- allotment options granted to the underwriters in
connection with the Public Offering), that the Buyer Stock
will be characterized as "restricted securities" under federal
securities laws, and that under such laws and applicable
regulations the Buyer Stock cannot be sold or otherwise
disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, each Seller and
Guarantor represents that it is familiar with Rule 144
promulgated under the Securities Act, as currently in effect,
and understands the resale limitations imposed thereby and by
the Securities Act. Stop transfer instructions may be issued
accordingly to the transfer agent for the Buyer Stock.
(v) It is agreed and understood by each Seller and
Guarantor that the certificates representing the Buyer Stock
shall each conspicuously set forth on the
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face or back thereof, in addition to any legends required by
Applicable Law or other agreement, a legend in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SUCH
SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT, OR (ii) IN ACCORDANCE WITH
RULE 144 UNDER SUCH ACT, UNLESS THE CORPORATION
RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH OPINION
AND COUNSEL ARE SATISFACTORY TO THE CORPORATION, TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
(y) Disclosure. No representation or warranty in this
Section 4.1 or in any Schedule or Exhibit to this Agreement, or in any
written statement, certificate or other document furnished to Buyer
contains or will contain any untrue statement of a material fact or
omits or will omit a material fact necessary to make the statements
therein not misleading. Except for facts generally affecting
companies engaged in the seismic data acquisition business, there is
no fact known to the Sellers or the Guarantors that has, or in the
future may have, a material adverse effect on the Business or the
results of operations of the Company or any Subsidiary, which fact has
not been set forth in this Agreement or in the Schedules hereto.
4.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Sellers, as of the date hereof and as of the Closing Date, as
follows:
(a) Due Organization; Good Standing and Power. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of Delaware. Buyer has all requisite corporate power
and authority to enter into this Agreement and each other agreement
expressly provided for herein, to perform its respective obligations
hereunder and thereunder and to own, lease and operate its assets and
to conduct its business as now conducted.
(b) Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby has been
duly authorized by all requisite corporate action on its part. No
other corporate action is necessary for the authorization, execution,
delivery and performance by Buyer of this Agreement and the
consummation by Buyer of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general equity
principles.
(c) No Conflict with Instruments. The execution, delivery
and performance of this Agreement by Buyer and the consummation by it
of the transactions contemplated hereby (i) will not violate (with or
without the giving of notice or the lapse of time or
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both), or require any consent, approval, filing or notice under any
provision of any law, rule or regulation, court order, judgment or
decree applicable to Buyer, and (ii) will not result in the creation
of any Encumbrance on the Buyer Stock under, conflict with, or result
in the breach or termination of any provision of, or constitute a
default under, or result in the acceleration of the performance of the
obligations of Buyer, under, the Certificate of Incorporation or
bylaws of Buyer or any indenture, mortgage, deed of trust, lease,
licensing agreement, contract, instrument or other agreement to which
Buyer is a party or by which Buyer or any of its assets or properties
is bound.
(d) Authorized Capital; Buyer Stock. Buyer's authorized
capital consists of 25,000,000 shares of Common Stock, par value $0.01
per share, 3,400,000 of which are issued and outstanding as of the
date hereof, and 5,000,000 shares of Preferred Stock, par value $0.01
per share, none of which are currently issued and outstanding as of
the date hereof. As of the Closing Date, no shares of Preferred Stock
will be issued and outstanding, and a total of between 8,000,000 and
8,025,000 shares of Common Stock will be issued and outstanding,
comprised of the 3,400,000 shares issued and outstanding as of the
date hereof, the 600,000 shares of Buyer Stock to be issued to Sellers
hereunder, 4,000,000 shares to be issued in the Public Offering, and
up to 25,000 shares to be issued to Xxx Xxxxxxxxx at the Public
Offering price. There are (and as of the Closing Date there will be)
outstanding (i) no securities of Buyer convertible into or
exchangeable for shares of the capital stock or other voting
securities of the Company, (ii) no options or other rights to acquire
from Buyer, and no obligation of Buyer to issue or sell, any shares of
its capital stock or other voting securities (other than the options
and warrants to purchase Common Stock of Buyer disclosed or to be
disclosed in the registration statement filed with the Securities and
Exchange Commission in connection with the Public Offering, including
both over-allotment options and options granted to officers,
directors, and key employees), or any securities of Buyer convertible
into or exchangeable for such capital stock or voting securities, and
(iii) no equity equivalents, interest in the ownership or earnings, or
other similar rights of or with respect to Buyer. There are no
outstanding obligations of Buyer to repurchase, redeem or otherwise
acquire any shares, securities, options, equity equivalents, interests
or rights. The Buyer Stock has been duly authorized for issuance and,
if and when issued and delivered by the Buyer in accordance with the
provisions of this Agreement, will be validly issued, fully paid, and
nonassessable. The Buyer has applied for quotation of the Buyer Stock
on the Nasdaq National Market System. The issuance of the Buyer Stock
under this Agreement is not subject to any preemptive or similar
rights. Upon consummation of the transactions contemplated hereby,
each Seller will acquire good, valid and marketable title to the
shares of Buyer Stock issued to such Seller hereunder, free and clear
of all Encumbrances, other than (i) those that may arise by virtue of
any actions taken by or on behalf of any Seller or its affiliates, or
(ii) restrictions on transfer that may be imposed by Applicable Law.
(e) Certain Fees. Neither Buyer nor any of its respective
officers, directors or employees, on behalf of it, has employed any
broker or finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
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(f) Financial Information and Absence of Certain Changes.
The Buyer has delivered to Sellers accurate and complete copies of (i)
the audited balance sheets of the Buyer as of December 31, 1996,
December 31, 1995, and December 31, 1994, and the related audited
statements of profit and loss and cash flows for each of the years
then ended, and the notes and schedules thereto, prepared in
conformity with U.S. GAAP, together with the unqualified reports
thereon of Xxxxxx Xxxxxxxx LLP, independent public accountants (the
"Buyer's Audited Financial Statements") and (ii) the unaudited balance
sheet of the Buyer as of March 31, 1997 (the "Buyer's Latest Balance
Sheet"), and the related unaudited statements of profit and loss and
cash flows for the three month period then ended (together with the
Buyer's Latest Balance Sheet, the "Buyer's Unaudited Financial
Statements," and the Buyer's Unaudited Financial Statements together
with the Buyer's Audited Financial Statements being referred to herein
collectively as the "Buyer's Financial Statements"). The Buyer's
Financial Statements (i) represent actual bona fide transactions, (ii)
have been prepared from the books and records of the Buyer and its
subsidiaries in conformity with U.S. GAAP, applied on a basis
consistent with preceding years throughout the periods involved,
except that the Buyer's Unaudited Financial Statements are not
accompanied by notes or other textual disclosure required by U.S.
GAAP, and (iii) accurately, completely and fairly present the
financial position of the Buyer and its subsidiaries as of the
respective dates thereof and their results of operations and cash
flows for the periods then ended, except that the Buyer's Unaudited
Financial Statements are subject to normal year-end adjustments
consistent with past practice, which will not be material in the
aggregate. Neither the Buyer nor any of its current subsidiaries has
any material liability or obligation, whether accrued, absolute,
contingent, or otherwise, except for trade payables incurred in the
ordinary course of business since the date of the Buyer's Latest
Balance Sheet or as set forth on the Buyer's Latest Balance Sheet or
as contemplated herein or in connection with the Public Offering.
Since the date of the Buyer's Latest Balance Sheet, there has not been
nor will there be any material change in the assets, liabilities,
financial condition, or operations of the Buyer and its subsidiaries
from that reflected in the Financial Statements, other than (i)
changes in the ordinary course of business, none of which individually
or in the aggregate have had or will have a material adverse effect on
such assets, liabilities, financial condition, or operations, or (ii)
as contemplated herein or in connection with the Public Offering.
(g) Legal Proceedings. There is no litigation, Proceeding,
claim or governmental investigation pending or, to the knowledge of
the Buyer or any of its subsidiaries, threatened, seeking relief or
damages which, if granted, would materially adversely affect the Buyer
or any of its subsidiaries, any of their assets, or the ability of the
Buyer or any of its subsidiaries to use and operate their assets.
Neither the Buyer nor any of its subsidiaries has been charged with
any violation of or, to the knowledge of the Buyer or its
subsidiaries, threatened with a charge or violation of, nor is the
Buyer or any of its subsidiaries aware of any facts or circumstances
that, if discovered by third parties, could give rise to a charge or a
violation of, any provision of Applicable Law or regulation which
charge or violation, if determined adversely to the Buyer or its
subsidiaries, would materially adversely affect their business or
results of operations.
(h) Disclosure. No representation or warranty in this
Section 4.2 or in any Schedule or Exhibit to this Agreement, or in any
written statement, certificate or other
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document furnished to Sellers contains or will contain any untrue
statement of a material fact or omits or will omit a material fact
necessary to make the statements therein not misleading. Except for
facts generally affecting companies engaged in the seismic data
acquisition business, there is no fact known to the Buyer that has, or
in the future may have, a material adverse effect on the business or
the results of operations of the Buyer, which fact has not been or
will not be set forth in the registration statement filed with the
Securities and Exchange Commission in connection with the Public
Offering.
(i) Current Ownership of Company Shares. Buyer, or its
ultimate parent corporation, is the record owner of 11,728 ordinary
shares of the Company.
4.3 Survival of Representations and Warranties. Subject to
Section 8.5, the respective representations and warranties of the parties
contained herein shall survive the Closing.
5. Agreements and Covenants of the Parties.
5.1 Access to Information.
(a) Until the Closing, Sellers and Guarantors shall, and
shall cause the Company to:
(i) furnish to Buyer and their employees, officers,
accountants, attorneys, agents, and other authorized
representatives ("Buyer's Representatives") all financial,
operating and other data and information concerning the
Company and its Subsidiaries as Buyer or Buyer's
Representatives shall from time to time reasonably request;
(ii) afford Buyer and Buyer's Representatives
reasonable access to the Company's offices, properties, books,
records, contracts, and documents (including tax returns filed
and those in preparation) during ordinary business hours; and
(iii) give Buyer and Buyer's Representatives the
opportunity to ask questions of, and receive answers from
authorized representatives of Sellers, Guarantors and the
Company.
No investigations by Buyer or Buyer's Representatives shall reduce or
otherwise affect the obligations or liabilities of Sellers or
Guarantors with respect to any representations, warranties, covenants,
or agreements made herein or in any other document executed and
delivered in connection with the transactions contemplated hereby.
Sellers and Guarantors will cooperate with Buyer and Buyer's
Representatives in the preparation of any documents or other materials
that may be required by any governmental or regulatory agency.
(b) Until the Closing, Buyer shall:
(i) furnish to Sellers and their accountants,
attorneys, agents, and other authorized representatives
("Sellers' Representatives") all financial, operating and
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other data and information concerning Buyer as Seller or
Sellers' Representatives shall from time to time reasonably
request;
(ii) afford Sellers and Sellers' Representatives
access to Buyer's offices, properties, books, records,
contracts, and documents; and
(iii) give Sellers and Sellers' Representatives the
opportunity to ask questions of, and receive answers from
authorized representatives of Buyer.
No investigations by Sellers or Sellers' Representatives shall reduce
or otherwise affect the obligations or liabilities of Buyer with
respect to any representations, warranties, covenants, or agreements
made herein or in any other document executed and delivered in
connection with the transactions contemplated hereby. Buyer and
Buyer's Representatives will cooperate with Sellers and Guarantors in
the preparation of any documents or other materials that may be
required by any governmental or regulatory agency.
5.2 Conduct of Operations Pending Closing. From the date hereof
until the Closing, except as otherwise permitted or contemplated by this
Agreement, Sellers and Guarantors will cause the Company and its Subsidiaries
to:
(a) conduct their operations only in the usual, regular and
ordinary manner and use their reasonable best efforts to maintain and
preserve their present business organization intact and to keep
available the services of their present officers and employees and
preserve their present relationships with suppliers, customers and
other Persons having business relations with them;
(b) maintain their books, accounts, and records on a basis
consistent with past practices and in a businesslike manner in
accordance with sound commercial practice, and will not institute or
introduce any new methods of purchase, sale, lease, management,
accounting, billing, or operation that are not consistent with their
past practices;
(c) not increase the compensation payable or to become
payable to any officer, employee, or agent except as specifically
contemplated hereby, or change any insurance, pension, or other
employee benefit plan, or pay any commission or bonus to any of such
officers, employees, or agents, other than normal increases or
payments consistent with past business practices or as contemplated by
the Employment Agreement Amendments or the Xxxxx Employment Agreement;
(d) not incur or agree to incur any obligation or liability
(whether absolute, accrued, contingent or otherwise), other than
obligations and liabilities incurred in the ordinary course of
business consistent with past business practices;
(e) not assume, guarantee, endorse, or otherwise become
responsible for the liabilities or obligations of any other Person;
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(f) not create, assume or permit to exist any Lien upon any
of their Assets other than Permitted Liens and the Liens described in
Schedule 4.1(g);
(g) not sell, assign, lease, or otherwise transfer or dispose
of any of their Assets, except in the ordinary course of business
consistent with past business practices;
(h) not incur any capital expenditures other than normal
items in the ordinary course of business consistent with past business
practices;
(i) not enter into any other contract or commitment or engage
in any other transaction not in the usual and ordinary course of its
business consistent with past business practices;
(j) maintain all their tangible property in good operating
order, condition and repair, ordinary wear and tear excepted;
(k) maintain in full force and effect insurance coverage
substantially equivalent to the coverage provided by the policies of
insurance described in Schedule 4.1(k);
(l) not declare a dividend or distribution of any monies,
properties or assets of the Company to its shareholders;
(m) comply in all material respects with all Applicable Laws;
(n) not make any loans or advances to or enter into any
agreements with any Affiliates other than as specifically contemplated
herein; and
(o) not take any other action that would cause or permit the
representations and warranties of the Sellers and the Guarantors made
in Section 4.1 hereof to be inaccurate at the time of Closing or
preclude the Sellers and the Guarantors from making such
representations and warranties at and as of the time of the Closing.
Notwithstanding the foregoing, Buyer acknowledges and agrees that, prior to
Closing, the Company may pay any indebtedness for borrowed money incurred prior
to the date hereof in the ordinary course of business or on or after the date
hereof in accordance with this Section 5.2 in accordance with its scheduled
amortization.
5.3 Conduct of Operations of Buyer Pending Closing. From the date
hereof until the Closing, except as otherwise permitted or contemplated by this
Agreement, as disclosed or to be disclosed in the registration statement filed
with the Securities and Exchange Commission in connection with the Public
Offering, or otherwise in connection with the Public Offering, Buyer will:
(a) conduct its operations only in the usual, regular and
ordinary manner;
(b) not enter into any material contract or commitment with
its affiliates;
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(c) not declare, make or pay any dividend or distribution of
monies, properties, or other assets of Buyer to its stockholders; and
(d) not take any action that would cause or permit the
representations and warranties of Buyer made in Section 4.2 hereof to
be inaccurate at the time of Closing or preclude the Buyer from making
such representations and warranties at and as of the time of the
Closing.
5.4 Consents. Sellers shall use all reasonable efforts to obtain,
when required, the agreement or consent of all third parties to their
consummation of the transactions contemplated herein required by the terms of
any contracts or agreements to which the Company or any of the Subsidiaries are
party or by which their assets are bound.
5.5 Restrictions on Transfer of Stock. Each Seller hereby
covenants and agrees that it will not, directly or indirectly, offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose of (collectively, "Dispose of") (i) any shares of the
Buyer Stock other than shares of the Buyer Stock sold to the Underwriters in
connection with the over-allotment options granted in connection with the
Offering (the "Restricted Stock") prior to the first anniversary of the Closing
Date or (ii) more than 50% of the Restricted Stock during the period beginning
on the first anniversary of the Closing Date and ending on the second
anniversary of the Closing Date; provided, however, that the Sellers may pledge
the Restricted Stock in connection with a bona fide lending transaction. Each
Guarantor hereby covenants and agrees that it will not, directly or indirectly,
Dispose of (i) any shares of the capital stock of the applicable Seller (the
"Seller Stock") prior to the first anniversary of the Closing Date or (ii) more
than 50% of the Seller Stock during the period beginning on the first
anniversary of the Closing Date and ending on the second anniversary of the
Closing Date; provided, however, that the Guarantors may pledge the Seller
Stock in connection with a bona fide lending transaction. Notwithstanding the
foregoing, any Seller may transfer the Restricted Stock to the Guarantor who
owns all of the issued and outstanding shares of such Seller, provided that
such Guarantor may not Dispose of (i) any such Restricted Stock prior to the
first anniversary of the Closing Date or (ii) more than 50% of the Restricted
Stock during the period beginning on the first anniversary of the Closing and
ending on the second anniversary of the Closing; provided, however, that the
Guarantors may pledge the Restricted Stock in connection with a bona fide
lending transaction.
6. Conditions to Closing, Termination.
6.1 Buyer's Conditions to Closing. The obligations of Buyer to
purchase the Purchased Stock from Sellers and of Buyer to perform its
obligations under this Agreement are, at the option of the Buyer, subject to
the satisfaction on or before the Closing Date of the conditions set forth
below, any of which may be waived by Buyer in writing; provided, however,
Buyer's election to proceed with the Closing of the transactions contemplated
hereby shall not be deemed a waiver of any breach of any representation,
warranty or covenant herein, whether or not known to Buyer or existing on the
Closing Date, and such action shall not prejudice Buyer's right to recover
damages for such breach.
(a) Representations and Warranties. The representations and
warranties of Sellers and Guarantors contained in this Agreement shall
be true and correct (if the same
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is already qualified by a materiality standard) or shall be true and
correct in all material respects (if the same is not already qualified
by a materiality standard) on the date hereof, and shall be true and
correct (if the same is already qualified by a materiality standard)
or true and correct in all material respects on the Closing Date (if
the same is already qualified by a materiality standard) with the same
force and effect as if they had been made on and as of the Closing
Date.
(b) Covenants. The agreements and covenants of Sellers and
Guarantors to be performed or complied with on or before the Closing
Date pursuant to this Agreement shall have been performed or complied
with by them in all material respects.
(c) Material Adverse Change. No change having or reasonably
expected to have a Material Adverse Effect on the assets, Business,
condition (financial or otherwise) or operations of the Company and
its Subsidiaries shall have occurred since March 31, 1997.
(d) Public Offering. Contemporaneously with the Closing,
there shall occur the consummation of a registered public offering of
approximately 4,000,000 shares of the Buyer's common stock (the
"Public Offering").
(e) Third Party Consents and Approvals. The consents and
approvals of all third parties necessary to transfer the Purchased
Shares to Buyer shall have been obtained (other than the consent or
approval of the Bank of N. T. Xxxxxxxxxxx and Son Ltd.).
(f) Absence of Restraint. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the
transactions in connection herewith shall have been entered and, on
the Closing Date, there shall not be any pending or threatened
litigation in any court, or any proceeding by or before any
governmental commission, board or agency, with a view to seeking to
restrain or prohibit consummation of the transactions contemplated
hereby or in which divestiture, recision or significant damages are
sought in connection with the transactions contemplated hereby and no
investigation by any governmental agency shall be pending or
threatened that might result in any such litigation or other
proceeding.
(g) Certificates. Sellers and Guarantors shall have
delivered to Buyer one or more certificates dated as of the Closing
Date executed by Sellers and Guarantors (i) certifying to the effect
set forth in Sections 6.1(a) and (b) hereof and (ii) certifying to all
corporate action taken by Sellers authorizing the transactions
contemplated hereby, copies of which shall be attached to such
certificate.
6.2 Sellers' and Guarantors' Conditions to Closing. The
obligations of Sellers to transfer the Purchased Stock and of Sellers and
Guarantors to perform their obligations under this Agreement are, at the option
of the Sellers and Guarantors, subject to the satisfaction on or before the
Closing Date of the conditions set forth below, any of which may be waived by
Sellers and Guarantors in writing; provided, however, Sellers' and Guarantors'
election to proceed with the Closing of the transactions contemplated hereby
shall not be deemed a waiver of any breach of any representation, warranty or
covenant herein, whether or not known to
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Sellers or Guarantors or existing on the Closing Date, and such action shall
not prejudice Sellers' or Guarantors' right to recover damages for such breach.
(a) Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and
correct (if the same is already qualified by a materiality standard)
or shall be true and correct in all material respects (if the same is
not already qualified by a materiality standard) on the date hereof,
and shall be true and correct (if the same is already qualified by a
materiality standard) or true and correct in all material respects on
the Closing Date (if the same is already qualified by a materiality
standard) with the same force and effect as if they had been made on
and as of the Closing Date.
(b) Covenants. The agreements and covenants of Buyer to be
performed or complied with on or before the Closing Date pursuant to
this Agreement shall have been performed or complied with in all
material respects.
(c) Material Adverse Change. No material adverse change
shall have occurred since March 31, 1997 in the condition (financial
or otherwise), business or operations of Buyer.
(d) Public Offering. Contemporaneously with the Closing,
there shall occur the consummation of the Public Offering.
(e) Cancellation of Seitel Warrant. Seitel, Inc. ("Seitel"),
the ultimate parent corporation of Buyer, shall have entered into an
agreement canceling the warrants to purchase 16,665 Shares (the
"Seitel Warrants") represented by Warrant Certificate No. W-001 dated
July 3, 1996 granted by the Company to Seitel (the "Warrant
Cancellation Agreement") in the form attached as Exhibit 2.
(f) Absence of Restraint. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the
transactions in connection herewith shall have been entered and, on
the Closing Date, there shall not be any pending or threatened
litigation in any court, or any proceeding by or before any
governmental commission, board or agency, with a view to seeking to
restrain or prohibit consummation of the transactions contemplated
hereby or in which divestiture, recision or significant damages are
sought in connection with the transactions contemplated hereby and no
investigation by any governmental agency shall be pending or
threatened that might result in any such litigation or other
proceeding.
(g) Certificates. Buyer shall deliver to Sellers and
Guarantors one or more certificates dated as of the Closing Date
executed by Buyer (i) certifying to the effect set forth in Sections
6.2(a) and (b) hereof and (ii) certifying to all corporate action
taken by Buyer authorizing the transactions contemplated hereby,
copies of which shall be attached to such certificate.
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6.3 Termination.
(a) General. This Agreement may be terminated and the
transactions contemplated herein may be abandoned (a) by mutual
consent of Buyer and the Sellers or (b) by any party by notice to the
other parties in the event that the Closing Date shall not have
occurred on or before December 31, 1997.
(b) No Liabilities in Event of Termination. In the event of
any termination of this Agreement as provided in this Section 6.3,
this Agreement shall forthwith become wholly void and of no further
force or effect and there shall be no liability on the part of Buyer,
any Seller, any Guarantor or their respective officers, directors, or
agents, except that the provisions of Section 10.1, 10.10 and 10.12
hereof shall remain in full force and effect, and provided that
nothing contained herein shall release any party from liability for
any failure to comply with any provision, covenant or agreement
contained herein.
7. Deliveries at Closing.
7.1 Mutual Deliveries. At the Closing:
(a) Employment Agreement Amendments. Exploration Holdings
Limited, an English corporation and subsidiary of the Company ("EHL"),
and Xxxxxxxx, Xxxxxx and Xxxxxxxx shall enter into amendments in the
form attached as Exhibit 3 (the "Employment Agreement Amendments") to
the current employment agreements between EHL and Xxxxxxxx, Xxxxxx and
Xxxxxxxx, and Eagle Geophysical Offshore, Inc., a Texas corporation
and indirect subsidiary of the Company, and Xxxxx shall enter into an
Employment Agreement in the form attached as Exhibit 4 (the "Xxxxx
Employment Agreement").
(b) Termination of Shareholders Agreement. Each Seller, each
Guarantor, Buyer (as assignee of Seitel, Inc.) and the Company shall
enter into an agreement (the "Termination of Shareholders Agreement")
terminating the Shareholders Agreement among such parties dated July
3, 1996, as amended (the "Shareholders Agreement") in the form
attached as Exhibit 5.
7.2 Deliveries by Buyer. At the Closing the Buyer shall deliver
to the Sellers:
(a) Share certificates representing the Buyer Stock.
(b) A written legal opinion of Gardere Xxxxx Xxxxxx & Xxxxx,
L.L.P., counsel to Buyer, in the form attached as Exhibit 6.
7.3 Deliveries by Sellers. At the Closing the Sellers shall
deliver to the Buyer:
(a) Original share certificates representing the Purchased
Shares and duly executed share transfer certificates effecting the
transfer of the Purchased Shares to the Buyer.
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(b) Written legal opinions of Xxxxxx & Xxxxxxxx, P.C., U.S.
counsel to Sellers, Guarantors, the Company, and certain Subsidiaries,
X. X. Xxxxxx & Co., Cayman Island counsel to the Company, Xxxxxx &
Xxxxxxx, U.K. counsel to certain Subsidiaries, and Cains Advocates and
Notaries, Isle of Man counsel to the Sellers, addressing the matters
set forth in the form attached as Exhibit 7.
8. Indemnification.
8.1 Indemnification by the Sellers and the Guarantors. Subject to
the provisions of this Section 8, the Sellers and Guarantors, jointly and
severally, shall protect, indemnify and hold harmless Buyer, each officer,
director and agent of Buyer and each person who controls Buyer in respect of
any losses, claims, damages, liabilities, deficiencies, delinquencies,
defaults, assessments, fees, penalties or related costs or expenses, including,
but not limited to, court costs, attorneys' and accountants' fees and
disbursements, and any federal, state or local income or franchise Taxes
payable in respect of the receipt of cash or money in discharge of the
foregoing, but reduced by any net amount paid to Buyer on account of such loss
by any insurance policies (collectively referred to herein as "Damages") to
which Buyer (or such related parties) may become subject if such Damages arise
out of or are based upon the breach of any of the representations, warranties,
covenants or agreements made by the Sellers or the Guarantors in this
Agreement, including the Exhibits and Schedules hereto, or in any certificate
or instrument delivered by or on behalf of the Sellers, the Guarantors or the
Company pursuant to this Agreement.
8.2 Indemnification by Buyer. Subject to the provisions of this
Section 8, Buyer shall protect, indemnify and hold harmless the Sellers, each
officer, director and agent of Sellers and each person who controls Sellers, in
respect of any Damages to which the Sellers (or such related parties) may
become subject if such Damages arise out of or are based upon the breach of any
of the representations, warranties, covenants or agreements made by Buyer in
this Agreement, including the Exhibits and Schedules hereto, or in any
certificate delivered by or on behalf of Buyer pursuant to this Agreement.
8.3 Limits on Indemnification Liability. Notwithstanding any
other provisions to the contrary in this Agreement:
(a) The liabilities of each Seller and such Seller's
respective Guarantor under Section 8.1 shall be limited to the amount
determined by multiplying the number of shares of Buyer Stock to be
received by such Seller hereunder by the initial public offering price
of a share of Buyer Stock pursuant to the Public Offering, and the
aggregate liabilities of all Sellers and Guarantors under Section 8.1
shall be limited to the amount determined by multiplying the total
number of shares of Buyer Stock to be received by all Sellers
hereunder by the initial public offering price of a share of Buyer
Stock pursuant to the Public Offering.
(b) The liabilities of Buyer under Section 8.2 to each Seller
shall be limited to the amount determined by multiplying the number of
shares of Buyer Stock to be received by such Seller hereunder by the
initial public offering price of a share of Buyer Stock pursuant to
the Public Offering, and the aggregate liabilities of Buyer to all
Sellers under Section 8.2 shall be limited to the amount determined by
multiplying the total
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number of shares of Buyer Stock to be received by all Sellers
hereunder by the initial public offering price of a share of Buyer
Stock pursuant to the Public Offering.
(c) Neither the Sellers and Guarantors, under Section 8.2,
nor the Buyer, under Section 8.1, shall be entitled to seek
indemnification from the other until such time as the aggregate amount
of Damages for which the other party would otherwise be liable under
such sections exceeds $50,000; provided, however, that in the event
the aggregate amount of Damages exceeds $50,000, the Sellers and the
Guarantors or the Buyer, as applicable, shall be liable under Section
8.1 or 8.2, as applicable, only for the amount of Damages exceeding
$25,000; and
(d) The indemnification obligations of Buyer, the Sellers,
and the Guarantors set forth in this Agreement shall be limited to
indemnification for actual damages, and shall not include incidental,
consequential, or punitive damages. Buyer acknowledges that it is
purchasing only 81% of the outstanding shares of the Company
hereunder, and that any damages it may be entitled to hereunder shall
be with regard to such shares being purchased and not with regard to
the 19% of the outstanding shares of the Company that it already owns.
8.4 Indemnification Procedures. The obligations and liabilities
of each indemnifying party hereunder with respect to claims resulting from the
assertion of liability by the other party or third parties shall be subject to
the following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification (a "Claim") against Buyer or the Sellers
and the Guarantors (the "Indemnifying Party") under this Section 8,
then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Damages the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by, the Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Claim and fulfill its indemnification
obligations hereunder, (iii) the Claim involves only money damages and
does not seek an injunction or other equitable relief, (iv) settlement
of, or an adverse judgment with respect to, the Claim is not, in the
good faith judgment of the Indemnifying Party, likely to establish a
precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Claim actively and diligently and in
good faith.
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(c) So long as the Indemnifying Party is conducting the
defense of the Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to
the Claim without the prior written consent of the Indemnified Party
(not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), and (ii) the Indemnifying Party will remain
responsible for any damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by, the
Claim to the fullest extent provided in this Section 8.
8.5 Time Limits on Liability. Anything contained in this
Agreement to the contrary notwithstanding, the indemnity liability of any
party, other than the liability of any Buyer for claims arising under or in
connection with Section 5.5 hereof, shall only extend to matters for which a
bona fide claim has been asserted by written notice of such claim delivered to
the Indemnifying Party on or before the first anniversary of the Closing Date.
8.6 Appointment of Seller Representative. The Sellers and
Guarantors hereby appoint Xxxxxx Xxxxxxxx as their representative, who shall
have full power and authority to make all decisions relating to the defense
and/or settlement of any claims for which the Sellers or Guarantors may be
required to indemnify Buyer (and vice versa) and to take such other actions
(and any other actions reasonably related or ancillary thereto) provided to be
taken after the Closing by the Sellers or the Guarantors. Decisions and
actions by Xxxxxx Xxxxxxxx, including, without limitation, any agreement
between Xxxxxx Xxxxxxxx and Buyer relating to the defense or settlement of any
claims for which the Sellers or Guarantors may be required to indemnify Buyer,
shall be binding upon all of the Sellers and Guarantors, and no Seller or
Guarantor shall have the right to object, dissent, protest or otherwise contest
the same. If Xxxxxx Xxxxxxxx shall die or become incapacitated then the other
Sellers and Guarantors (acting by a majority vote) shall select another
representative from among the Sellers and Guarantors (or their heirs,
executors, administrators or personal representatives) to replace Xxxxxx
Xxxxxxxx, which representative shall have the same rights and authorities as
Xxxxxx Xxxxxxxx hereunder. By their execution of this Agreement, the Sellers
and Guarantors shall be deemed to have agreed that (a) the provisions of this
Section 8.6 are independent and separable, irrevocable and coupled with an
interest and shall be enforceable notwithstanding any rights or remedies that
any Seller or Guarantor may have in connection with the transactions
contemplated by this Agreement, (b) the remedy at law for any breach of the
provisions of this Section 8.6 would be inadequate, (c) Buyer shall be entitled
to temporary and permanent injunctive relief without the necessity of proving
damages if it brings an action to enforce the provisions of this Section 8.6,
(d) the provisions of this Section 8.6 shall be binding upon the heirs,
executors, administrators, personal representatives and successors of each
Seller and Guarantor, and (e) any reference in this
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35
Agreement to a Seller or Guarantor shall mean and include the successors to the
Seller's or Guarantor's rights hereunder, whether pursuant to a testamentary
disposition, the laws of descent and distribution, or otherwise.
9. Guarantees.
9.1 Xxxxxxxx Guarantee. Xxxxxxxx irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by Xxxxxxxx of
the agreements and obligations of Xxxxxxxx, and the completeness and accuracy
of the representations and warranties made by Xxxxxxxx, under this Agreement
and all agreements and instruments to be executed by Xxxxxxxx hereunder,
including without limitation, Section 8, Indemnification. This guaranty shall
survive the Closing and the liquidation of Xxxxxxxx.
9.2 Xxxxxx Guarantee. Xxxxxx irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by Dormera of
the agreements and obligations of Dormera, and the completeness and accuracy of
the representations and warranties made by Dormera, under this Agreement and
all agreements and instruments to be executed by Dormera hereunder, including
without limitation, Section 8, Indemnification. This guaranty shall survive
the Closing and the liquidation of Dormera.
9.3 Xxxxxxxx Guarantee. Xxxxxxxx irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by Balmedie of
the agreements and obligations of Balmedie, and the completeness and accuracy
of the representations and warranties made by Balmedie, under this Agreement
and all agreements and instruments to be executed by Balmedie hereunder,
including without limitation, Section 8, Indemnification. This guaranty shall
survive the Closing and the liquidation of Balmedie.
9.4 Xxxxx Guarantee. Xxxxx irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by Larlane of
the agreements and obligations of Larlane, and the completeness and accuracy of
the representations and warranties made by Larlane, under this Agreement and
all agreements and instruments to be executed by Larlane hereunder, including
without limitation, Section 8, Indemnification. This guaranty shall survive
the Closing and the liquidation of Larlane.
10. Miscellaneous.
10.1 Payment of Certain Fees and Expenses. Each of the parties
hereto shall pay the fees and expenses incurred by it in connection with the
negotiation, preparation, execution and performance of this Agreement,
including, without limitation, brokers' fees, attorneys' fees and accountants'
fees.
10.2 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or by courier, or mailed by first class mail, postage prepaid, return receipt
requested, or sent by facsimile, as follows:
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36
(a) If to Sellers or Guarantors:
Xx. Xxxxxx Xxxxxxxx and Xxxxxxxx
00 Xxx Xxxxxxxxx
Xxxxxxxxx
Xxxx, XX00 0XX
Xxxxxx Xxxxxxx
Facsimile 011-44-1732-742-746
Xx. Xxxxxx Xxxxxx and Dormera
Merlins Brook
Park Road
Xxxxxxxxx
Xxxx Xxxxxxx
Xxxx XX00 0XX
Xxxxxx Xxxxxxx
Facsimile 011-44-1732-742-746
Mr. Xxxx Xxxxxxxx and Balmedie
0 Xx. Xxxxx Xxxx
Xxxxxxx
Xxxx XX0 0XX
Xxxxxx Xxxxxxx
Facsimile 011-44-1732-742-746
Mr. Xxxxx Xxxxx and Larlane
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxxx, P.C.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Facsimile (000) 000-0000
(b) If to Buyer:
Mr. Xxx Xxxxxxxxx, President
Eagle Geophysical, Inc.
00 Xxxxx Xxxxxx Xxxx, 0xx Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
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with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III, Esq.
Facsimile (000) 000-0000
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
10.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof.
10.4 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted heirs, personal representatives, successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, personal representatives,
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
10.5 Assignability. This Agreement shall not be assignable by the
Sellers without the prior written consent of Buyer or by Buyer without the
prior written consent of the Sellers; provided, however, that Buyer shall be
entitled to assign this Agreement to an affiliate without the consent of
Sellers.
10.6 Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by the
parties hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and executed by the party
so waiving or his or her personal representative under Section 8.6. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered pursuant to
this Agreement and in connection with the Closing hereunder. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
10.7 Section Headings; Index. The section headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
10.8 Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
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10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.10 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
10.11 References. All references in this Agreement to Sections,
paragraphs and other subdivisions refer to the Sections, paragraphs and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "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. Whenever the words "include",
"includes" and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference herein
to a Schedule, Exhibit or Annex refers to the item identified separately in
writing by the parties hereto as the described Schedule, Exhibit or Annex to
this Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
10.12 Dispute Resolution. Any dispute, difference or question
("Dispute") between Buyer on one hand and the Sellers and Guarantors on the
other ("Disputing Parties"), arising with respect to this Agreement shall be
resolved in accordance with the following dispute resolution procedures:
(a) Good Faith Negotiations. The Disputing Parties shall
endeavor, in good faith, to resolve the Dispute through negotiations.
If the Disputing Parties fail to resolve the Dispute within a
reasonable time, Buyer shall nominate a senior officer or officers of
its management to meet with the Seller Representative appointed
pursuant to Section 8.6 hereof at any mutually agreed location to
resolve the Dispute.
(b) Mediation. In the event that the negotiations do not
result in a mutually acceptable resolution, either Disputing Party may
require that the Dispute shall be referred to mediation in Houston,
Texas. One mediator shall be appointed by the agreement of the
Parties. The mediator shall be suitably qualified person having no
direct or personal interest in the outcome of the Dispute. Mediation
shall be held within thirty (30) days of referral to mediation. In
the event the Disputing Parties are unable to agree to a mediator, the
Parties agree to the appointment of a mediator pursuant to the
Commercial Mediation Rules of the American Arbitration Association.
(c) Arbitration. In the event the Parties are unsuccessful
in their mediation of the Dispute, either Disputing Party may request
that the Dispute will be settled by arbitration by an arbitrator
mutually acceptable to the Disputing Parties in an arbitration
Proceeding conducted in Houston, Texas in accordance with the rules
existing at the date hereof of the American Arbitration Association.
If the Disputing Parties hereto cannot agree on an arbitrator within
ten (10) business days of the initiation of the arbitration
Proceeding, an arbitrator shall be selected for the Disputing Parties
by the American Arbitration Association. The Disputing Parties shall
use their reasonable best efforts to have the arbitral Proceeding
concluded and a judgment rendered by the arbitrator within forty (40)
business days of the initiation of the arbitration Proceeding. The
decision of
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39
such arbitrator shall be final, and judgment upon the award rendered
by the arbitration may be entered in any court having jurisdiction
thereof, and the costs (including, without limitation, reasonable fees
and expenses of counsel and experts for the Disputing Parties) of such
arbitration (including the costs to enforce or preserve the rights
awarded in the arbitration) shall be borne by the Disputing Party whom
the decision of the arbitrator is against. If the decision of the
arbitrator is not clearly against one of the disputing Parties or the
decisions of the arbitrator is against more than one Disputing Party
on one or more issues, the costs of such arbitration shall be borne
equally by the Disputing Parties. Notwithstanding the foregoing,
Buyer may apply to any court of competent jurisdiction for injunctive
relief under Section 8.6 without breach of this arbitration provision.
(d) Consent to Jurisdiction; Venue. The parties hereto agree
that all actions relating to Section 8.6 or to the enforcement of this
Section 10.12 or any award rendered hereunder, and over which the
United States federal courts have subject matter jurisdiction, shall
be litigated, if at all, exclusively in the United States District
Court for the Southern District of Texas, Houston Division, and, if
necessary, the corresponding appellate courts. The parties further
agree that all actions relating to Section 8.6 or to the enforcement
of this Section 10.12 or any award rendered hereunder, and over which
the United States federal courts do not have subject matter
jurisdiction, shall be litigated, if at all, exclusively in the Courts
of the State of Texas, in Xxxxxx County, and, if necessary, the
corresponding appellate courts. Each party hereto hereby submits
itself to the personal jurisdiction of, and consents to venue in, any
such court, and hereby waives any claim it may otherwise have that
such court lacks personal jurisdiction over it, or that such court is
an inconvenient forum, with respect to any such matter or proceeding.
Each party hereto further agrees to voluntarily appear and to enter a
general appearance in any such proceeding which is brought in any such
court. Each party hereto other than Buyer hereby appoints Xxxxxxx
Xxxxxxxx and/or Xxxxxx & Xxxxxxxx, P.C. of Houston, Texas as its agent
for service of process in any such matter or proceeding.
10.13 Public Announcements. Except as may be required by Applicable
Law, neither Buyer, on the one hand, nor Sellers, Guarantors, the Company, or
any Subsidiary, on the other, shall issue any press release or otherwise make
any public statements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party.
[THE NEXT PAGE IS THE SIGNATURE PAGE TO THIS AGREEMENT]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
SELLERS:
XXXXXXXX LIMITED
BY: s/Xxxxxx Xxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxx, Attorney-in-Fact
DORMERA LIMITED
BY: s/Xxxxxx Xxxxxx
----------------------------------------
Xxxxxx Xxxxxx, Attorney-in-Fact
BALMEDIE LIMITED
BY: s/Xxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx, Attorney-in-Fact
LARLANE LIMITED
BY: s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx, Attorney-in-Fact
GUARANTORS:
s/Xxxxxx Xxxxxxxx
-------------------------------------------
XXXXXX XXXXXXXX
s/Xxxxxx Xxxxxx
-------------------------------------------
XXXXXX XXXXXX
s/Xxxx Xxxxxxxx
-------------------------------------------
XXXX XXXXXXXX
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s/Xxxxx Xxxxx
-------------------------------------------
XXXXX XXXXX
BUYER:
EAGLE GEOPHYSICAL, INC.
BY: s/Xxx X. Xxxxxxxxx
----------------------------------------
XXX X. XXXXXXXXX, President
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EXHIBIT 1
ALLOCATION OF PURCHASE PRICE
NUMBER OF PURCHASED
SHARES TRANSFERRED AMOUNT OF NUMBER OF SHARES
SELLER TO BUYER CASH OF BUYER STOCK
------ -------- ---- ----------------
Xxxxxxxx Limited 15,667 $31.34 188,000
Dormera Limited 15,666 $31.33 188,000
Balmedie Limited 15,667 $31.33 188,000
Larlane Limited 3,000 $ 6.00 36,000
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EXHIBIT 2
WARRANT CANCELLATION AGREEMENT
This Warrant Cancellation Agreement (this "Agreement") is entered into
as of __________, 1997 (the "Effective Date") by and between Energy Research
International, a Cayman Islands corporation (the "Company"), and Seitel, Inc.,
a Delaware corporation ("Holder").
RECITALS:
1. Holder is the registered holder of 16,665 Ordinary Share
Purchase Warrants (the "Warrants") to purchase Ordinary Shares of $0.001 of the
Company (the "Ordinary Shares"), pursuant to that certain Warrant Certificate
No. W-001 (the "Certificate") dated July 3, 1996.
2. In connection with the consummation of the transactions
contemplated under that certain Stock Purchase Agreement dated May __, 1997 by
and among Eagle Geophysical, Inc., a Delaware corporation and wholly-owned,
indirect subsidiary of Holder, the Company and others, Holder and the Company
desire to terminate the Warrants and cancel the Certificate.
AGREEMENT
1. The Certificate is hereby terminated and the Warrants hereby
cancelled effective as of the Effective Date.
2. Effective as of the Effective Date, Holder and the Company
agree that Holder shall have no further rights to acquire the Ordinary Shares
pursuant to the Warrants, and the Company shall be under no further obligation
to issue the ordinary shares in connection with the Warrants. Holder shall
surrender the Certificate to the Company contemporaneously with the execution
hereof.
3. This Agreement constitutes the final and complete agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes any prior agreements, whether oral or written, between the parties
with respect to the subject matter hereof. This Agreement shall be governed by
the laws of the State of Texas, without giving effect to any conflict of law
rules or provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement, which
may executed in multiple counterparts, through their duly authorized
representatives.
ENERGY RESEARCH INTERNATIONAL
By:
---------------------------------
Name:
----------------------
Title:
---------------------
44
SEITEL, INC.
By:
---------------------------------
Name:
----------------------
Title:
---------------------
45
EXHIBIT 3
EMPLOYMENT AGREEMENT AMENDMENT
This Employment Agreement Amendment ("Amendment") is entered into this
____ day of ____________, 1997, by and between Exploration Holdings Limited
(the "Company") and __________________ ("Executive").
Recitals
WHEREAS, the Company and Executive have previously entered into a
Service Agreement for Senior Directors relating to the employment of Executive
by the Company, which has been amended by an Employment Agreement Amendment
dated July 3, 1996 (as so amended, the "Agreement");
WHEREAS, Executive and the Company have agreed to enter into this
Amendment and hereby amend certain terms of the Agreement as set forth herein;
Agreement
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, the parties hereby agree as follows:
1. Executive and the Company hereby agree that the warrants to
purchase up to 5,555 ordinary shares of US$0.001 of Energy Research
International, a Cayman Islands corporation and the parent corporation of the
Company, at a price of US$300.03 per ordinary share, granted to the Executive
on July 3, 1996 pursuant to the Agreement are hereby cancelled.
2. Executive is hereby granted stock options to purchase up to
75,000 shares of Common Stock, $0.01 par value per share, of Eagle Geophysical,
Inc., a Delaware corporation and the ultimate parent corporation of the Company
("Eagle"), pursuant to Eagle's stock option plan at a price per share equal to
the initial public offering price of such stock pursuant to Eagle's initial
public offering being consummated on or about the date hereof. Such stock
options shall vest in cumulative installments of one-third of the total shares
subject thereto on each of the first, second and third anniversaries of the
date hereof and will expire ten years from the date of grant or such earlier
date as may be specified pursuant to Eagle's stock option plan. In addition,
any such options that are not vested as of any date on which the Company
terminates the Executive's employment not in accordance with this Agreement
shall become fully vested on the date of such termination.
3. The annual review date set forth in paragraph 7 of the Terms
and Conditions of Employment, Particulars, is hereby amended to be each
subsequent anniversary of the date hereof.
4. Subsection 1.4.2 of the Agreement is hereby amended to read in
its entirety as follows:
46
"1.4.2 the relocation shall be within England or the United
States of America; provided, however, any such
relocation to the United States shall be only with
the consent of Executive, which consent may not be
unreasonably withheld by the Executive."
5. Subsection 5.2 of the Agreement is hereby amended to read in
its entirety as follows:
"5.2 Any change in salary will be made at the Company's absolute
discretion; provided, however in no event may the salary be
reduced below the Salary reflected as item 6 of the Terms &
Conditions of Employment attached as a part of the Agreement."
6. The Company Executive Incentive Scheme contemplated in
paragraph 13.1 of the Agreement is hereby amended for the calendar year ending
December 31, 1997 to provide that the Executive shall be entitled to receive an
amount equal to 50% of his base salary for such year under the Scheme if and
only if the Operating Profit Margin (as defined in Paragraph 13.2 of the
Agreement) of the Marine Business (as defined in Paragraph 13.2 of the
Agreement) for such year equal or exceed 24% of revenues from the Marine
Business.
7. Section 13 of the Agreement is hereby amended by adding a new
paragraph 13.2 thereto as follows:
13.2 Additional Incentive Bonus
13.2.1 Additional Incentive Bonus. The Executive shall
receive additional incentive bonuses, if earned,with
respect to the fiscal years ending during the Term
pursuant to Subsection 13.2.3 and/or 13.2.4 (each an
"Additional Incentive Bonus"); provided, however,
that no Additional Incentive Bonus for a fiscal year
shall be payable if the Net After-Tax Profits (as
hereinafter defined) for such fiscal year do not
exceed Base Profits (as hereinafter defined).
13.2.2 Definitions.
"Base Profits" shall mean 5% of gross revenues from
the Marine Business.
"Chief Financial Officer" means the chief financial
officer of Eagle Geophysical.
"Eagle Geophysical" means Eagle Geophysical, Inc., a
Delaware corporation and the indirect parent
corporation of the Company.
"Operating Profit Margin" means the amount of revenue
less cost of sales of the Marine Business calculated
47
by the Chief Financial Officer applying U.S. GAAP and
such other accounting principles and assumptions as
may be reasonable.
"Marine Business" means the marine seismic data
acquisition business of the Company and its wholly
owned subsidiaries and of any other company that is a
direct or indirect wholly owned subsidiary of Eagle
Geophysical.
"Net After-Tax Profits" shall, for the purposes
hereof, mean the amount of net profits of the Marine
Business calculated by the Chief Financial Officer
applying U.S. GAAP and such other accounting
principles and assumptions as may be reasonable and
taking into account expenses attributable to
allocable overhead (based on revenues) from all other
companies controlled by or under common control with
the Company engaged in the Marine Business and of
such companies' parent corporation(s), and
subtracting therefrom all income tax liabilities
attributable to the Marine Business.
13.2.3 Applicable Percentage Bonus. If Net After-Tax
Profits for a fiscal year exceed Base Profits for
such fiscal year, the Executive shall receive an
Additional Incentive Bonus (in addition to any
Additional Incentive Bonus pursuant to Subsection
13.2.4) equal to the Applicable Percentage set forth
in the table below multiplied by the difference
between actual Net After- Tax Profits and Base
Profits.
Net After-Tax Profits
(percent of gross revenues) Applicable Percentage
--------------------------- ---------------------
greater than 5%, but less than 2.0%
or equal to 6%
greater than 6%, but less than 2.5%
or equal to 7%
greater than 7% 3.0%
13.2.4 Significant Increase in Revenues Bonus. If Net
After-Tax Profits for a fiscal year after 1997 exceed
Base Profits for such fiscal year, and if gross
revenues of the Marine Business for such fiscal year
increase by an amount of 20% or more as compared to
the gross revenues of the Marine Business for the
previous fiscal year, the Executive shall receive an
Additional Incentive Bonus equal to 3% multiplied by
the excess, if any, of the Net After-Tax Profits for
such fiscal year over the greater of (i) the Net
After-Tax Profits for the prior fiscal year or (ii)
Base Profits for the prior fiscal year.
13.2.5 Payment of Additional Incentive Bonus. The Chief
Financial Officer shall calculate the Net After-Tax
Profits, and any
48
Additional Incentive Bonus payable to the Executive
in connection therewith, shall certify such
calculations and shall deliver such calculations to
the Executive as soon as reasonably practicable after
the end of each fiscal year, but in any event within
seventy-five (75) days following the end of such
fiscal year. Any Additional Incentive Bonus payable
hereunder shall be paid by the Company to the
Executive within seven (7) days of delivery of such
calculations by the Chief Financial Officer and in
any event within eighty-two (82) days following the
end of the applicable fiscal year.
8. Section 28 of the Agreement is hereby amended to read in its
entirety as follows:
"28. DISPUTES
28.1 Arbitration. Any dispute, difference or question ("Dispute")
between Executive and the Company ("Disputing Parties"),
arising with respect to the Agreement or Executive's
employment under the Agreement that is not resolved promptly
by the Disputing Parties shall be resolved by binding
arbitration as follows. In the event the Parties are unable
to resolve the Dispute within 14 days following written notice
from one Disputing Party to the other setting forth the basis
of the Dispute, then either Disputing Party may request that
the Dispute be settled by binding arbitration by an arbitrator
mutually acceptable to the Disputing Parties in an arbitration
proceeding conducted in Houston, Texas in accordance with the
rules existing at the date hereof of the American Arbitration
Association. If the Disputing Parties hereto cannot agree on
an arbitrator within ten (10) business days of the initiation
of the arbitration proceeding, an arbitrator shall be selected
for the Disputing Parties by the American Arbitration
Association. The Disputing Parties shall use their reasonable
best efforts to have the arbitration proceeding concluded and
a judgment rendered by the arbitrator within forty (40)
business days of the initiation of the arbitration proceeding.
The decision of such arbitrator shall be final, and judgment
upon the award rendered by the arbitration may be entered in
any court having jurisdiction thereof, and the costs
(including, without limitation, reasonable fees and expenses
of counsel and experts for the Disputing Parties) of such
arbitration (including the costs to enforce or preserve the
rights awarded in the arbitration) shall be borne by the
Disputing Party whom the decision of the arbitrator is
against. If the decision of the arbitrator is not clearly
against one of the Disputing Parties or the decisions of the
arbitrator is against more than one Disputing Party on one or
more issues, the costs of such arbitration shall be borne
equally by the Disputing Parties.
28.2 Consent to Jurisdiction; Venue. The parties hereto agree that
all actions relating to the enforcement of this Section or any
award rendered hereunder, and over which the United States
federal courts have subject matter jurisdiction, shall be
litigated, if at all, exclusively in the United States
District Court for the Southern District of Texas, Houston
Division, and, if necessary, the corresponding appellate
courts. The parties further agree that all actions relating
to the enforcement of this Section or any award rendered
hereunder, and over which the
49
United States federal courts do not have subject matter
jurisdiction, shall be litigated, if at all, exclusively in
the Courts of the State of Texas, in Xxxxxx County, and, if
necessary, the corresponding appellate courts. Each party
hereto hereby submits itself to the personal jurisdiction of,
and consents to venue in, any such court, and hereby waives
any claim it may otherwise have that such court lacks personal
jurisdiction over it, or that such court is an inconvenient
forum, with respect to any such matter or proceeding. Each
party hereto further agrees to voluntarily appear and to enter
a general appearance in any such proceeding which is brought
in any such court. Executive hereby appoints Xxxxxxx Xxxxxxxx
and/or Xxxxxx & Xxxxxxxx, P.C. of Houston, Texas as its agent
for service of process in any such matter or proceeding."
28.3 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the United
Kingdom, without regard to the conflicts of laws provisions
thereunder.
9. Except as specifically amended hereby, the terms and
provisions of the Agreement shall continue in full force and effect.
SIGNED as a Deed )
by the Company )
acting by its ) -------------------------------------
--------- ----------------------
SIGNED as a Deed )
by the Executive )
-------------------------------------
50
EXHIBIT 4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is entered into as of
___________, 1997 (the "Effective Date"), by and between EAGLE GEOPHYSICAL
OFFSHORE, INC., a Texas corporation (the "Company"), and XXXXX XXXXX (the
"Executive").
The Company desires to employ the Executive and the Executive desires
to accept employment with the Company, on the terms and conditions of this
Agreement.
Accordingly, the parties agree as follows:
1. Employment Duties and Acceptance.
1.1 Employment by the Company; Duties. The Company
hereby agrees to employ the Executive for a term commencing on the Effective
Date, and expiring at the end of the day twenty-four (24) months from the
Effective Date (such date, or later date to which this Agreement is extended in
accordance with the terms hereof, the "Termination Date"), unless earlier
terminated as provided in Section 4 or unless extended as provided herein (the
"Term"). The Term shall be automatically extended commencing on the second
anniversary of the Effective Date and on each anniversary of the Effective Date
thereafter (such date and each anniversary of such date being a "Renewal
Date"), so as to terminate twelve (12) months from such Renewal Date, unless
and until at least six (6) months prior to a Renewal Date either party hereto
gives written notice to the other that the Term should not be extended beyond
the next Renewal Date, in which event the Termination Date shall be the Renewal
Date following such notice. During the Term, the Executive shall serve in the
capacity of Vice President - U.S. Offshore Operations of the Company and shall
also serve in those offices and directorships of subsidiary and parent
corporations or entities of the Company to which he may from time to time be
appointed or elected. During the Term, the Executive shall devote all
reasonable efforts and all of his business time and services to the Company,
subject to the direction of the Board of Directors of the Company (the
"Board"). The Executive shall not engage in any other business activities
except for passive investments in corporations or partnerships not engaged in
the Company Business (as hereinafter defined) pursuant to Section 3 hereof.
1.2 Acceptance of Employment by the Executive. The
Executive hereby accepts such employment and shall render the services and
perform the duties described above.
2. Compensation and Other Benefits.
2.1 Annual Salary. The Company shall pay to the
Executive an annual salary at a rate of not less than one hundred forty
thousand dollars ($140,000) per year (the "Annual Salary"), subject to increase
at the sole discretion of the Board. The Annual Salary shall be payable in
accordance with the payroll policies of the Company as from time to time in
effect,
51
but in no event less frequently than once each month, less such deductions as
shall be required to be withheld by applicable law and regulations.
2.2 Incentive Bonus.
Executive Incentive Scheme. The Executive shall be
entitled to participate in a Company Executive Incentive Scheme (the "Incentive
Scheme") which, subject to the conditions below, shall give the Executive the
potential to receive additional remuneration of up to 50% of salary each year.
2.2.1 The Company shall define the Incentive Scheme
annually on or before February 28th in each year for the Calendar year to which
it relates.
2.2.2 The Incentive Scheme may take the form of a
single Company goal, for example profit performance or several individual
targets such as productivity, etc., and may be varied each year.
2.2.3 Any remuneration earned under the Incentive
Scheme for a particular year shall be paid on or before 1st June of the
following calendar year.
2.2.4 The Executive shall receive remuneration
under the Incentive Scheme for 1997 equal to 50% of his base salary if and only
if the Operating Profit Margin (as defined in Section 2.3 of this Agreement) of
the Marine Business (as defined in Section 2.3 of this Agreement) for such year
equal or exceed 24% of revenues from the Marine Business.
2.3 Additional Incentive Bonus.
2.3.1 Grant of Additional Incentive Bonus. The
Executive shall receive an additional incentive bonus, if earned, with respect
to the fiscal years ending during the Term (the "Additional Incentive Bonus");
provided, however, that an Additional Incentive Bonus for a fiscal year shall
only be payable if the Net After-Tax Profits (as hereinafter defined) for such
fiscal year exceed Base Profits (as hereinafter defined).
2.3.2 Definitions.
"Base Profits" shall mean 5% of gross revenues from
the Marine Business.
"Chief Financial Officer" means the chief financial
officer of Eagle.
"Eagle" shall mean Eagle Geophysical, Inc., a
Delaware corporation.
"Operating Profit Margin" means the amount of revenue
less cost of sales of the Marine Business calculated by the Chief Financial
Officer applying U.S. generally accepted accounting principles and such other
accounting principles and assumptions as may be reasonable.
52
"Marine Business" means the marine seismic data
acquisition business of the Company and its wholly owned subsidiaries and of
any other company that is a direct or indirect wholly owned subsidiary of
Eagle.
"Net After-Tax Profits" means the amount of net
profits of the Marine Business calculated by the Chief Financial Officer
applying U.S. generally accepted accounting principles and such other
accounting principles and assumptions as may be reasonable and taking into
account expenses attributable to allocable overhead (based on revenues) from
all other companies controlled by or under common control with the Company
engaged in the Marine Business and of such companies' parent corporation(s),
and subtracting therefrom all income tax liabilities attributable to the Marine
Business.
2.3.3 Calculation of Bonus. If Net After-Tax
Profits for a fiscal year exceed Base Profits for such fiscal year, the
Executive shall receive an Additional Incentive Bonus equal to the Applicable
Percentage set forth in the table below multiplied by the difference between
actual Net After-Tax Profits and Base Profits.
Net After-Tax Profits
(percent of gross revenues) Applicable Percentage
--------------------------- ---------------------
greater than 5%, but less than 1.0%
or equal to 6%
greater than 6%, but less than 1.5%
or equal to 7%
greater than 7% 2.0%
2.3.4 Applicable Percentage if Significant Increase
in Revenues. Notwithstanding the determination of Applicable Percentage in the
table set forth in Subsection 2.3.3 above, if gross revenues for a fiscal year
of the Marine Business increase by an amount of 20% or more as compared to
gross revenues for the previous fiscal year of the Marine Business, then the
Applicable Percentage for such fiscal year will be 2.0% so long as Net After
Tax Profits for such fiscal year exceed Base Profits for such fiscal year.
2.3.5 Payment of Additional Incentive Bonus. The
Chief Financial Officer shall calculate the Net After-Tax Profits, and any
Additional Incentive Bonus payable to the Executive in connection therewith,
shall certify such calculations and shall deliver such calculations to the
Executive as soon as reasonably practicable after the end of each fiscal year,
but in any event within seventy-five (75) days following the end of such fiscal
year. Any Additional Incentive Bonus payable hereunder shall be paid by the
Company to the Executive within seven (7) days of delivery of such calculations
by the Chief Financial Officer and in any event within eighty-two (82) days
following the end of the applicable fiscal year. The additional remuneration
payable pursuant to Section 2.2 hereof and the Additional Incentive Bonus
payable pursuant to this Section 2.3 are hereinafter collectively referred as
the "Bonuses."
2.4 Grant of Option. The Company agrees to grant the
Executive, pursuant to the terms of Eagle's Option Plan created in connection
with the initial public offering (the "IPO") of Eagle's common stock, options
to acquire seventy-five thousand (75,000) shares of
53
Eagle's common stock, at an exercise price equal to the IPO issue price. Such
stock options shall vest over a period of three years, with stock options to
acquire 25,000 shares vesting on each of the first three anniversaries of the
Effective Date, subject to the terms of the Company's Option Plan. The Company
agrees to use all reasonable efforts, consistent with the foregoing, to ensure
that such stock options meet all requirements for treatment as Incentive Stock
Options under the Internal Revenue Code of 1986, as amended, and that such
stock option plan meets the requirements of Rule 16b-3, promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Act").
2.5 Vacation Policy. The Executive shall be entitled to
a paid vacation of five weeks during each year of the Term.
2.6 Participation in Employee Benefit Plans. The Company
agrees to permit the Executive during the Term, if and to the extent eligible,
to participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, similar benefit plan or other so-called "fringe
benefits" of the Company (collectively, "Benefits") which may be available to
other executives of the Company on terms no less favorable to the Executive
than the terms offered to such other executives. The Company agrees to use its
best efforts to obtain immediate coverage for the Executive upon the
commencement of the Term under its existing or newly adopted medical expense
and hospitalization plan for employees without premium surcharge and without
exclusions for disclosed preexisting conditions. The Executive shall cooperate
with the Company in applying for such coverage, including submitting to a
physical exam and providing all relevant health and personal data.
2.7 General Business Expenses. The Company shall pay or
reimburse the Executive for all expenses reasonably and necessarily incurred by
the Executive during the Term in the performance of the Executive's services
under this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.
2.8 Company Car and Cellular Telephone. The Company
shall pay the Executive a car allowance of five hundred and no/100 dollars
($500.00) per month, which the Executive may apply, in his discretion, to the
cost associated with purchasing or leasing, insuring, operating and maintaining
an automobile of the Executive's choice. The Executive may use the automobile
for personal as well as business purposes. The Company shall also furnish the
Executive with a cellular telephone of his choice and the Company shall pay all
charges in connection with the use thereof, other than charges for calls not
related to the Executive's duties hereunder.
3. Non-Competition, Confidentiality and Company Property.
3.1 Covenants Against Competition. The Executive
acknowledges that (i) the Company is currently engaged in the business of
owning, managing and operating seismic data acquisition equipment and hiring
and managing crews to operate such equipment, which equipment and crews are
contracted or hired for the purpose of performing geological surveys onshore
and offshore (the "Company Business"); (ii) his work for the Company will give
him access to trade secrets of and confidential information concerning the
Company; and (iii) the
54
agreements and covenants contained in this Agreement are essential to protect
the business and goodwill of the Company. Accordingly, the Executive covenants
and agrees as follows:
3.1.1 Non-Compete. As an independent covenant, and
in order to enforce the provisions of Sections 3.1.3 and 3.1.5 hereof and the
other provisions of this Agreement, the Executive agrees that he shall not
during the Restricted Period (as hereinafter defined) within a one hundred
(100) mile radius of any office of the Company or any of its affiliates,
including, without limitation, the locations specified from time to time
pursuant to Section 7.2 hereof and any field offices, directly or indirectly
(except in the Executive's capacity as an officer of the Company), (i) engage
or participate in the Company Business; (ii) enter the employ of, or render any
other services to, any person engaged in the Company Business except as
permitted hereunder; or (iii) become interested in any such person in any
capacity, including, without limitation, as an individual, partner,
shareholder, lender, officer, director, principal, agent or trustee except as
permitted hereunder; provided, however, that the Executive may own, directly or
indirectly, solely as an investment, securities of any person traded on any
national securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member of a group which controls, such person and
the Executive does not, directly or indirectly, own 5% or more of any class of
equity securities, or securities convertible into or exercisable or
exchangeable for 5% or more of any class of equity securities, of such person.
As used herein, the "Restricted Period" shall mean a period commencing on the
date hereof and terminating upon the first to occur of (a) the date on which
the Company terminates or is deemed to terminate the Executive's employment
without Cause (as hereinafter defined), (b) the date the Executive terminates
or is deemed to terminate his employment pursuant to Section 4.6 hereof or (c)
the date of termination of this Agreement; provided, however, that if the
Company shall have terminated the Executive's employment for Cause and such
Cause in fact exists or if the Executive shall have terminated his employment
with the Company in breach of the terms of this Agreement, the Restricted
Period shall end one (1) year following the termination of the Executive's
employment hereunder.
3.1.2 Customers. As an independent covenant, the
Executive also agrees to refrain during the Restricted Period, without written
permission from the Company, from diverting, taking, soliciting and/or
accepting on his own behalf or on the behalf of another person, firm, or
company, the business of any past or present customer of the Company, its
divisions, subsidiaries and/or other affiliated entities, or any identified
prospective or potential customer of the Company, its divisions, subsidiaries
and/or affiliated entities, whose identity became known to the Executive
through his employment by the Company.
3.1.3 Confidential Information.
3.1.3.1 The Executive acknowledges that the
Company has a legitimate and continuing proprietary interest in the protection
of its confidential information and that it has invested substantial sums and
will continue to invest substantial sums to develop, maintain and protect
confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive's duties,
including, without limitation, information of a technical and business nature
regarding the Company's past, current or anticipated business that may
encompass financial information, financial figures, trade secrets,
55
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans, Company employee information,
organizational charts, new personnel acquisition plans, technical processes,
designs and design projects, inventions and research projects, ideas,
discoveries, inventions, improvements, trade secrets, design specifications,
writings and other works of authorship. In exchange, as an independent
covenant, the Executive agrees not to make any unauthorized use, publication,
or disclosure, during or subsequent to his employment by the Company, of any
Intellectual Property of a confidential or trade secret nature, generated or
acquired by him during the course of his employment, except to the extent that
the disclosure of Intellectual Property Information is necessary to fulfill his
responsibilities as an employee of the Company. The Executive understands that
confidential matters and trade secrets include information not generally known
by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom
the Company, its divisions, subsidiaries, and related affiliates, may have an
obligation to maintain information in confidence, and that authorization for
public disclosure may only be obtained through the Company's written consent.
3.1.3.2 The Executive further agrees not to
disclose to the Company, or induce any personnel of the Company to use, any
confidential information, trade secret, or confidential material belonging to
others.
3.1.3.3 The Executive agrees that the
covenants set forth in Sections 3.1.3.1 and 3.1.3.2 are independent covenants
and indefinite obligations binding upon the Executive both during and after the
termination of the Executive's relationship with the Company.
3.1.4 Property of the Company. All memoranda,
notes, lists, records, engineering drawings, technical specifications and
related documents and other documents or papers (and all copies thereof)
relating to the Company, including such items stored in computer memories,
microfiche or by any other means, made or compiled by or on behalf of the
Executive after the date hereof, or made available to the Executive after the
date hereof relating to the Company, its affiliates or any entity which may
hereafter become an affiliate thereof, shall be the property of the Company,
and shall be delivered to the Company promptly upon the termination of the
Executive's employment with the Company or at any other time upon request;
provided, however, that the Executive's address books, diaries, chronological
correspondence files and rolodex files shall be deemed to be property of the
Executive.
3.1.5 Original Material. The Executive agrees that
any inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to
practice by the Executive alone
56
or jointly with others during the Executive's employment with the Company shall
be the property of and belong exclusively to the Company. The Executive shall
promptly and fully disclose to the Company the origination or development by
the Executive of any such material and shall provide the Company with any
information that it may reasonably request about such material. Either during
the subsequent to the Executive's employment, upon the request and at the
expense of the Company or its nominee, and for no remuneration in addition to
that due the Executive pursuant to his employment by the Company, but at no
expense to him, the Executive agrees to execute, acknowledge, and deliver to
the Company or its attorneys any and all instruments which, in the judgment of
the Company or its attorneys, may be necessary or desirable to secure or
maintain for the benefit of the Company adequate patent, copyright, and other
property rights in the United States and foreign countries with respect to any
such inventions, improvements, ideas, concepts, or original works of authorship
embraced within this Agreement.
3.1.6 Employees of the Company and its Affiliates.
As an independent covenant, the Executive agrees to refrain during his
employment by the Company, and in the event of the termination of his
employment for any reason for a period of one year thereafter, from inducing or
attempting to influence any employee of the Company, its divisions,
subsidiaries and/or affiliated entities to terminate his employment.
3.1.7 Company's Interest. The Executive further
agrees that these covenants are made to protect the legitimate business
interests of the Company, including interests in the Company's property
described in and pursuant to Section 3.1.4 and Section 3.1.5, and not to
restrict his mobility or to prevent him from utilizing his general technical
skills. The Executive understands as a part of these covenants that the
Company intends to exercise whatever legal recourse against him for any breach
of this Agreement and, in particular, for any breach of these covenants.
3.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions contained
in Section 3.1 of this Agreement (the "Restrictive Covenants"), the Company
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available
to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
3.2.2 Accounting. The right and remedy to require
the Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of the
Restrictive Covenants.
3.3 Severability of Covenants. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all
57
other respects. If any court determines that any of the Restrictive Covenants,
or any part thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be given full
effect without regard to the invalid portions.
3.4 Court Review. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
4. Termination.
4.1 Termination Upon Death. If the Executive dies during
the Term, this Agreement shall terminate, provided, however, that in any such
event, the Company shall pay to the Executive, or to his estate, any portion of
the Annual Salary that shall have been earned by the Executive prior to the
termination but not yet paid, any Benefits that have vested in the Executive at
the time of such termination as a result of his participation in any of the
Company's benefit plans shall be paid to the Executive, or to his estate or
designated beneficiary, in accordance with the provisions of such plan; and the
Company shall reimburse the Executive, or his estate, for any expenses with
respect to which the Executive is entitled to reimbursement pursuant to Section
2.7 of this Agreement, and the Executive's right to indemnification, payment or
reimbursement pursuant to Section 6 of this Agreement shall not be affected by
such termination and shall continue in full force and effect, both with respect
to proceedings that are threatened, pending or completed at the date of such
termination and with respect to proceedings that are threatened, pending or
completed after that date.
4.2 Termination With Cause. The Company has the right,
at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive with Cause. If such right is
exercised, the Company's obligation to the Executive shall be limited solely to
the payment of unpaid Annual Salary accrued, together with unpaid Bonuses, if
any, and Benefits vested up to the effective date specified in the Company's
notice of termination. As used in this Agreement, the term "Cause" shall mean
and include (i) chronic alcoholism or controlled substance abuse as determined
by a doctor reasonably selected by the Company, (ii) an act of proven fraud or
dishonesty on the part of the Executive with respect to the Company or its
subsidiaries; (iii)
58
knowing and material failure by the Executive to comply with material
applicable laws and regulations relating to the business of the Company or its
affiliates; (iv) the Executive's continuing failure to satisfactorily perform
his duties hereunder (as reasonably determined by the Board) or a material
breach by the Executive of this Agreement except, in each case, where such
failure or breach is caused by the illness or other similar incapacity or
disability of the Executive; or (v) conviction of a crime involving moral
turpitude or a felony. Prior to the effectiveness of termination for Cause
under subclause (i), (ii), (iii) or (iv) above, the Executive shall be given 30
days' prior notice from the Board specifically identifying the reasons which
are alleged to constitute Cause for any termination hereunder and an
opportunity to be heard by the Board in the event the Executive disputes such
allegations.
4.3 Termination Without Cause. The Company has the
right, at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive without Cause. If the Executive is
terminated during the Term without Cause (including any termination which is
deemed to be a constructive termination without Cause under Section 4.6
hereof), the Company's obligation to the Executive shall be limited solely to
(i) the payment, at the times and upon the terms provided for herein, of (A)
the Executive's Annual Salary and car allowance (as set forth in Section 2.8
hereof) for the months remaining in the Term at the time of such termination,
based on the Annual Salary of the Executive in effect on the date of
termination (or, if the Company has reduced the Executive's Annual Salary in
breach of this Agreement, the Executive's Annual Salary before such reduction),
and (B) all unpaid bonuses and Benefits awarded or accrued up to the date of
termination, and (ii) the vesting of any unvested stock options granted by the
Company pursuant to Section 2.4 hereof. In the event of a termination by the
Company without Cause within 180 days after Change of Control (as hereinafter
defined), including a constructive termination without Cause pursuant to
Section 4.6, the amounts due to the Executive pursuant to this Section 4.3
shall be due and payable in one lump-sum payment within 60 days after such
termination. In all other cases, any amounts due to the Executive pursuant to
this Section 4.3 shall be due and payable as and when they would have become
due and payable absent such termination.
4.4 Termination by the Executive. Any termination of
this Agreement by the Executive during the Term, except such termination as is
deemed to be a constructive termination without Cause by the Company under
Section 4.6 of this Agreement, shall be deemed to be a breach of the terms of
this Agreement for the purposes of Section 3.1.1 hereof and shall entitle the
Company to discontinue payment of all Annual Salary, Bonuses and Benefits
accruing from and after the date of such termination.
4.5 Termination upon Disability. If during the Term the
Executive becomes physically or mentally disabled, whether totally or
partially, as determined by a physician reasonably selected by the Company, so
that the Executive is unable substantially to perform his services hereunder
for (i) a period of four consecutive months, or (ii) for shorter periods
aggregating six months during any twelve-month period, the Company may at any
time after the last day of the four consecutive months of disability or the day
on which the shorter periods of disability equal an aggregate of six months, by
written notice to the Executive, terminate the Executive's employment hereunder
and discontinue payments of the Annual Salary, Bonuses and
59
Benefits accruing from and after the date of such termination. The Executive
shall be entitled to the full compensation payable to him hereunder for periods
of disability shorter than the periods specified in clauses (i) and (ii) of the
previous sentence.
4.6 Constructive Termination Without Cause.
Notwithstanding any other provision of this Agreement, the Executive's
employment under this Agreement may be terminated during the Term by the
Executive, which shall be deemed to be constructive termination by the Company
without Cause, if one of the following events shall occur without the consent
of the Executive: (i) a failure to elect or reelect or to appoint or reappoint
the Executive to the office of Vice President - U.S. Offshore Operations of the
Company or other material change by the Company of the Executive's functions,
duties or responsibilities which change would reduce the ranking or level,
dignity, responsibility, importance or scope of the Executive's position with
the Company from the position and attributes thereof described in Section 1
above; (ii) the liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, other than a
transaction in which a successor corporation with a net worth at least equal to
that of the Company assumes this Agreement and all obligations and undertakings
of the Company hereunder; (iii) a reduction in the Executive's fixed salary;
(iv) the failure of the Company to continue to provide the Executive with
office space, related facilities and secretarial assistance that are
commensurate with the Executive's responsibilities to and position with the
Company; (v) the notification by the Company of the Company's intention not to
observe or perform one or more of the obligations of the Company under this
Agreement; (vi) the failure by the Company to indemnify, pay or reimburse the
Executive at the time and under the circumstances required by Section 6 of this
Agreement; or (vii) the occurrence of any other material breach of this
Agreement by the Company or any of its subsidiaries. Any such termination
shall be made by written notice to the President of the Company, specifying the
event relied upon for such termination and given within 60 days after such
event. Any constructive termination shall be effective 60 days after the date
the President of the Company has been given such written notice setting forth
the grounds for such termination with specificity; provided, however, that the
Executive shall not be entitled to terminate this Agreement in respect of any
of the grounds set forth above if within 60 days after such notice the action
constituting such ground for termination is no longer continuing. A
constructive termination by the Company without Cause shall terminate the
Restrictive Period hereunder.
4.7 For the purposes hereof, a "Change of Control of the
Company" shall be deemed to have occurred if after the effective date and the
IPO (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of at least a majority of the members of the Board
in office immediately prior to such person attaining such percentage interest;
(ii) there occurs a proxy contest or a consent solicitation, or the Company is
a party to a merger, consolidation, sale of assets, plan of liquidation or
other reorganization not approved by at least a majority of the members of the
Board in office, as a consequence of which members of the Board in office
immediately prior to such transaction or event constitute less than a majority
of the Board thereafter; or (iii) during any period of two consecutive years,
other than as a result of an event described in clause (ii) of this Section
4.7, individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination
60
for election by the Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board.
5. Insurance. The Company may, from time to time, apply for and
take out, in its own name and at its own expense, naming itself or one or more
of its affiliates as the designated beneficiary (which it may change from time
to time), policies for life, health, accident, disability or other insurance
upon the Executive in any amount or amounts that it may deem necessary or
appropriate to protect its interest. The Executive agrees to aid the Company
in procuring such insurance by submitting to medical examinations and by
filling out, executing and delivering such applications and other instruments
in writing as may reasonably be required by an insurance company or companies
to which any application or applications for insurance may be made by or for
the Company.
6. Indemnification.
6.1 The Company shall, to the maximum extent not
prohibited by law, indemnify the Executive if he is made, or threatened to be
made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Company to procure a judgment in its favor
(collectively, a "Proceeding"), by reason of the fact that the Executive is or
was a director or officer of the Company, or is or was serving in any capacity
at the request of the Company for any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against judgments,
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees and disbursements) paid or incurred in
connection with any such Proceeding.
6.2 The Company shall, from time to time, reimburse or
advance to the Executive the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding
in advance of the final disposition of such Proceeding; provided, however,
that, if required by the Texas Business Corporation Act, such expenses incurred
by or on behalf of the Executive may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Company of an undertaking,
by or on behalf of the Executive, to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right of appeal that the Executive is not entitled to be indemnified
for such expenses.
6.3 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall not be deemed exclusive of any other rights which the Executive may now
or hereafter have under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
6.4 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall continue as to the Executive after he has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of the Executive.
61
6.5 The Company shall purchase and maintain director and
officer liability insurance on such terms and providing such coverage as the
Board determines is appropriate, and the Executive shall be covered by such
insurance on the same basis as the other directors and executive officers of
the Company.
6.6 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall be enforceable by the Executive in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Company. Neither the failure of
the Company (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that such indemnification or reimbursement or advancement of
expenses is proper in the circumstances nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection
with successfully establishing his right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.
6.7 If the Executive serves (i) another corporation of
which a majority of the shares entitled to vote in the election of its
directors is held by the Company, (ii) another corporation which owns a
majority of the shares entitled to vote in the election of the directors of the
Company (a "Parent Corporation") or of which a majority of the shares entitled
to vote in the election of its directors is held by the Parent Corporation or
(iii) any employee benefit plan of the Company or any corporation referred to
in clause (i) or (ii), in any capacity, then he shall be deemed to be doing so
at the request of the Company.
6.8 The right to indemnification or reimbursement or
advancement of expenses shall be interpreted on the basis of the applicable law
in effect at the time of the occurrence of the event or events giving rise to
the applicable Proceeding.
7. Other Provisions.
7.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(i) "affiliate" with respect to the Company means any
other person controlled by or under common control with the Company
but shall not include any stockholder or director of the Company, as
such.
(ii) "person" means any individual, corporation,
partnership, firm, joint Company, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or
other entity.
(iii) "subsidiary" means any corporation 50% or more
of the voting securities of which are owned directly or indirectly by
the Company.
62
7.2 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:
(i) if to the Company, to:
Eagle Geophysical Offshore, Inc.
00 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxxxx, 0xx Floor
Xxxxxxx, Xxxxx 00000
Attention: President
with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxx III
(ii) if to the Executive, to:
Xxxxx Xxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Any party may change its address for notice hereunder by notice to the other
party hereto.
7.3 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
7.4 Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof. Nor shall any waiver on the part of any
party of any such right, power or privilege hereunder, nor any single or
partial exercise of any right, power or privilege hereunder, preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
7.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (without giving
effect to the choice of law provisions thereof) where the employment of the
Executive shall be deemed, in part, to be performed and enforcement of this
Agreement or any action taken or held with respect to this Agreement shall be
taken in the courts of appropriate jurisdiction in Houston, Texas.
63
7.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by the Executive and may be assigned
by the Company (subject to Section 4.6 (iii) hereof) only to a successor by
merger or purchasers of substantially all of the assets of the Company.
7.7 Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
7.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
7.9 Validity Contest. The Company shall promptly pay any
and all legal fees and expenses incurred by the Executive from time to time as
a direct result of the Company's contesting the due execution, authorization,
validity or enforceability of this Agreement.
7.10 Binding Agreement. This Agreement shall inure to the
benefit of and bit binding upon the Company and its respective successors and
assigns and the Executive and his legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EAGLE GEOPHYSICAL OFFSHORE, INC.
By:
-----------------------------------
Name:
-------------------------
Title:
------------------------
EXECUTIVE
--------------------------------------
Xxxxx Xxxxx
64
EXHIBIT 5
TERMINATION OF SHAREHOLDER'S AGREEMENT
This Agreement (this "Agreement") is dated effective as of _______,
1997 (the "Effective Date"), by and among Energy Research International, a
Cayman Islands corporation (the "Company"), Eagle Geophysical, Inc., a Delaware
corporation (as assignee of Seitel, Inc., a Delaware corporation), Xxxxxxxx
Limited, an Isle of Man corporation, Xxxxxx Xxxxxxxx, Dormera Limited, an Isle
of Man corporation, Xxxxxx Xxxxxx, Balmedie Limited, an Isle of Man
corporation, Xxxx Xxxxxxxx, Larlane Limited, an Isle of Man corporation, and
Xxxxx Xxxxx (hereinafter collectively called the "Shareholders" and
individually called a "Shareholder").
RECITALS:
1. The Shareholders and the Company have entered into that certain
Shareholders Agreement dated as of July 3, 1996, as amended by that certain
Waiver and Amendment to Shareholders Agreement dated as of November 15, 1996
(the "Shareholders Agreement").
2. The Shareholders and the Company desire to terminate the Shareholders
Agreement without further liability or obligation among the parties.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises in the mutual
covenants and agreements contained therein, the parties hereto do hereby agree
as follows:
1. The Shareholders Agreement is hereby terminated effective as
of the Effective Date.
2. Effective as of the Effective Date, each party hereto does
hereby release and forever discharge each other party hereto from any and all
liabilities or obligations such party may have under or in connection with the
Shareholders Agreement.
3. From and after the Effective Date, upon surrender to the
Company by any Shareholder of a stock certificate representing shares of stock
owned in the Company by such Shareholder, the Company will issue a replacement
stock certificate for such shares which deletes the reference to the
Shareholders Agreement.
4. This Agreement constitutes the final and complete agreement
among the parties hereto with respect to the subject matter hereof, and
supersedes any prior agreements, whether oral or written, among the parties
with respect to the subject matter hereof. This Agreement shall be governed by
the laws of the State of Texas, without giving effect to any conflict of law
rules or provisions.
65
IN WITNESS WHEREOF, the parties have executed this Agreement, which
may be executed in multiple counterparts, through their duly authorized
representatives.
ENERGY RESEARCH INTERNATIONAL
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
EAGLE GEOPHYSICAL, INC.
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
XXXXXXXX LIMITED
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
-------------------------------------------
XXXXXX XXXXXXXX
DORMERA LIMITED
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
-------------------------------------------
XXXXXX XXXXXX
66
BALMEDIE LIMITED
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
-------------------------------------------
XXXX XXXXXXXX
LARLANE LIMITED
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
-------------------------------------------
XXXXX XXXXX
67
EXHIBIT 6
OPINION OF COUNSEL TO BUYER
1. Eagle Geophysical, Inc. ("Eagle") is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
Eagle has all necessary corporate power and authority to own and lease
the assets it currently owns and leases and to carry on its business
as such business is currently conducted.
2. Eagle has the corporate power and authority to execute, deliver and
perform the obligations under the Stock Purchase Agreement and all
Related Agreements.
3. The Stock Purchase Agreement and the Related Agreements have been duly
authorized by all necessary corporate action of Eagle and have been
duly executed and delivered by Eagle.
4. The Stock Purchase Agreement and the Related Agreements are
enforceable against Eagle.
5. The execution and delivery by Eagle of the Stock Purchase Agreement
and the Related Agreements, and the performance by Eagle of the
agreements contained therein, will not (i) violate Eagle's Constituent
Documents, (ii) violate applicable provisions of statutory law or
regulation applicable to Eagle, (iii) result in any violation or
breach of, or constitute a default under, any existing obligation of
Eagle under any note, bond, mortgage, loan agreement, indenture or any
other agreement evidencing borrowed money of which we are aware and to
which Eagle is a party or by which Eagle is bound or to which any of
its assets is subject, which conflict, breach, violation or default
could reasonably be expected to have a material adverse effect on
Eagle and its subsidiaries taken as a whole (other than conflicts,
breaches, violations or defaults that have been waived by the other
party thereto or conflicts, breaches, violations or defaults under
agreements governing or otherwise relating to indebtedness of Eagle or
its subsidiaries that Eagle has represented will be repaid at or
promptly after the Closing from the proceeds of the Public Offering),
or (iv) violate any order, writ, injunction or decree of any public
body applicable to Eagle of which we are aware, except where such
breach, default or violation would not have a material adverse effect
on Eagle.
6. To our knowledge, no consent, approval, waiver, order, authorization
of, or registration, declaration of filing with, any Governmental
Entity is required to be obtained or made in connection with the
delivery of the Stock Purchase Agreement or any Related Agreement by
Eagle or the consummation by Eagle of the transactions contemplated
thereby, except where the failure to make any such filing or obtain
such consent, authorization or approval would not have a material
adverse effect on Eagle.
7. The Buyer Stock has been duly authorized for issuance and, if and when
delivered by Eagle to Sellers in accordance with the provisions of the
Stock Purchase Agreement, will be validly issued, fully paid and
nonassessable. The issuance of the Buyer Stock under the Stock
Purchase Agreement is not subject to any preemptive or similar rights.
00
XXXXXXX 0
XXXXXXX XX XXXXXX XXXXXX COUNSEL TO SELLERS
1. Eagle Geophysical Offshore, Inc., a Texas corporation (f/k/a Horizon
Seismic, Inc.) ("EGO"), is a corporation duly incorporated, legally
existing and in good standing under the laws of the State of Texas and
has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as currently
conducted.
2. Exploration Holdings Limited is the record, and to our knowledge the
beneficial, owner of all of the outstanding shares of capital stock of
EGO. All of the issued and outstanding shares of EGO have been duly
authorized and validly issued, and are fully paid and nonassessable,
and have not been issued in violation of any preemptive rights.
3. The Transaction Documents have been duly executed and delivered by
each Seller and each Guarantor, to the extent that each is a party
thereto.
4. The Transaction Documents constitute legal, valid and binding
obligations of each Seller and each Guarantor, to the extent that each
is a party thereto, enforceable against each Seller and each Guarantor
to the extent that each is a party thereto in accordance with their
respective terms except to the extent the enforceability may be
limited by laws and judicial decisions relating to bankruptcy,
insolvency, fraudulent transfer, preferential conveyance,
rearrangement, moratorium, reorganization, liquidation and
conservatorship and other laws and judicial decisions affecting the
enforcement of creditors' rights or the collection of debtors'
obligations generally, or by general principles of equity and
standards of commercial reasonableness (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and
except as rights to indemnity thereunder may be limited by federal or
state securities laws or principles of public policy.
5. The execution, delivery and performance by Sellers and Guarantors of
the Transaction Documents (to the extent that each is a party thereto)
(a) does not and will not breach or constitute a default under any
provision of (i) applicable Texas or federal law, or (ii) to the best
of our knowledge, any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument for the repayment of
borrowed money to which ERI or its subsidiaries are a party or by
which they or their properties may be presently bound or encumbered,
which breach or default could reasonably be expected to have a
material adverse effect on ERI and its subsidiaries taken as a whole
(other than breaches or defaults that have been waived by the other
party thereto or breaches or defaults under agreements governing or
otherwise relating to indebtedness of ERI or its subsidiaries that
Buyer has represented will be repaid at or promptly after the Closing
from the proceeds of the Public Offering).
6. No consents, approvals, orders or authorizations of and no
registrations or filings with any U.S. governmental or regulatory
authority or body on the part of the Sellers or the Guarantors is
required in connection with the execution, delivery and performance of
the Transaction Documents to which they are a party.
69
7. Except as set forth in Schedule __ to the Stock Purchase Agreement,
the best of our knowledge, there is no litigation and there are no
arbitration proceedings or governmental proceedings, suits or
investigations pending, instituted or overtly threatened against any
Seller, any Guarantor, ERI or its subsidiaries and relating to the
Business that could reasonably be expected to have a material adverse
effect on the Business taken as a whole.
8. The submission by each Seller and each Guarantor in connection with
the Transaction Documents to the jurisdiction of federal or state
courts sitting in the State of Texas and the appointment by each
Seller and each Guarantor of the agent for service of process as set
forth in the Transaction Documents should be valid and binding on each
Seller and each Guarantor.
70
EXHIBIT 7
OPINION OF ISLE OF MAN COUNSEL TO SELLERS
1. Each of Balmedie Limited, Dormera Limited, Xxxxxxxx Limited and
Larlane Limited (the "Companies") was incorporated in the Isle of Man
on 9th July, 1993 for an indefinite period as a company limited by
guarantee and not having a share capital and is a separate legal
entity which is subject to suit in its own name;
2. Each of the Companies has the necessary power and authority and all
necessary corporate and other action has been taken to enable them to
execute and deliver the Documents and to perform their obligations
thereunder and the implementation by the Companies of the foregoing
will not cause:
(a) any limit on the Companies or (as the case may be) their
directors (whether imposed by the documents constituting the
Companies or (as the case may be) statute or regulation, or by
agreement or otherwise) to be exceeded;
(b) any law or order to be contravened;
3. (a) Balmedie Limited's authorized capital consists of _______
shares of _____________, of which all shares are issued. The
company registers show and to our knowledge, the beneficial
owner of the shares at the date thereof is set out in the
schedule attached hereto.
(b) Dormera Limited's authorized capital consists of _______
shares of _____________, of which all shares are issued. The
company registers show and to our knowledge, the beneficial
owner of the shares at the date thereof is set out in the
schedule attached hereto.
(c) Xxxxxxxx Limited's authorized capital consists of _______
shares of _____________, of which all shares are issued. The
company registers show and to our knowledge, the beneficial
owner of the shares at the date thereof is set out in the
schedule attached hereto.
(d) Larlane Limited's authorized capital consists of _______
shares of _____________, of which all shares are issued. The
company registers show and to our knowledge, the beneficial
owner of the shares at the date thereof is set out in the
schedule attached hereto.
4. No consents, licenses, approvals and registrations are necessary or
desirable to be obtained from governmental or other regulatory
authorities in the Isle of Man to enable the Companies to enter into
and perform the transactions contemplated by the Documents;
5. It is not necessary or desirable to ensure the priority, validity and
enforceability of the obligations of the Companies under the Documents
that the Documents be filed,
71
registered, recorded or notarized in any public office or elsewhere or
that any other instrument relating thereto be signed, delivered,
filed, registered or recorded, that any tax or duty be paid or that
any other action whatsoever be taken;
6. Except as set forth in Schedule __ to the Stock Purchase Agreement to
the best of our knowledge, information and belief, after making such
searches of public registers in the Isle of Man as we deemed
appropriate the Companies are not in breach of any applicable law in
the Isle of Man and no litigation, arbitration or administrative
proceedings are present, current or pending in the Isle of Man, and no
steps have been, or are being taken to appoint a receiver or
liquidator over, or to wind up, the Companies;
7. The documents have been properly executed by the Companies and the
obligations on the part of the Companies contained therein are valid
and legally binding on and enforceable against the Companies under the
laws of the Isle of Man;
8. The obligations of the Companies under the Documents rank at least
equally and rateably (pari passu) in point of priority and security
with all other unsecured non preferential obligations of the
Companies;
9. The choice of the law of the State of Texas to govern the Documents
will be upheld as a valid choice of law in any action in the Isle of
Man courts;
10. The submission by each of the Companies in the Documents to the
jurisdiction of federal or state courts sitting in the State of Texas
and the appointment by each of the Companies of any agent for service
of process in the Stock Purchase Agreement should be valid and binding
on each of the Companies; and
11. A judgment of a federal or state court sitting in the State of Texas
would be recognized and capable of enforcement in the Isle of Man by
common law action upon the judgment.
72
EXHIBIT 7
OPINION OF CAYMAN ISLANDS COUNSEL TO SELLERS
1. Energy Research International (the "Company") is a company duly
incorporated, validly existing and in good standing under the laws of
the Cayman Islands and has full power and legal right to execute and
deliver the Documents to be executed by it and to perform the
provisions of the Documents to be performed on its part.
2. The Company's authorized capital consists of US$900,000 divided into
900,000,000 Ordinary Shares of US$0.001 each of which 61,728 Ordinary
Shares are issued (the "Outstanding Shares"). All of the Outstanding
Shares have been duly authorized and validly issued as fully paid and
non-assessable and have not been issued in violation of any
pre-emptive rights contained in the Memorandum and Articles of
Association of the Company. The registered owners of the Outstanding
Shares are recorded in the Register of Members of the Company, a copy
of which is attached as Exhibit A.
3. The execution, delivery and performance of the Documents by the
Sellers and the Guarantors, the consummation of the transactions
contemplated thereby and the compliance by the Sellers and the
Guarantors with the terms and provisions thereof do not:
(i) contravene any law or regulation of the Cayman Islands
applicable to the Sellers, the Guarantors or the Company; or
(ii) contravene the Memorandum and Articles of Association of the
Company.
4. Neither the execution, delivery or performance of any of the Documents
to which any of the Sellers and the Guarantors is party nor the
consummation or performance of any of the transactions contemplated
thereby by the Sellers and the Guarantors requires the consent or
approval of, the giving of notice to, or the registration with, or the
taking of any other action in respect of any Cayman Islands
governmental or judicial authority or agency.
5. The law chosen by each of the Documents to govern its interpretation
would be upheld as a valid choice of law in any action on that
document in the courts of the Cayman Islands.
6. There are no stamp duties, income taxes, withholdings, levies,
registration taxes, or other duties or similar taxes or charges now
imposed, or which under the present laws of the Cayman Islands could
in the future become imposed, in connection with the enforcement or
admissibility in evidence of the Documents or on any payment to be
made by any person pursuant to the Documents.
7. None of the parties to the Documents is or will be deemed to be
resident, domiciled or carrying on business in the Cayman Islands by
reason only of the execution, delivery, performance or enforcement of
the Documents to which any of them is party.
73
8. A judgment obtained in a foreign court will be enforced in the courts
of the Cayman Islands without any re- examination of the merits.
9. A judgment of a court in the Cayman Islands may be expressed in a
currency other than Cayman Islands dollars.
00
XXXXXXX 0
XXXXXXX XX XXXXXX XXXXXXX COUNSEL TO SELLERS
1. Exploration Holdings Limited ("EHL") and Horizon Exploration Limited
("HEL") have been duly incorporated and are validly existing as
companies of good standing under the laws of England and have the
necessary power and authority to own, lease and operate their
properties and carry on their business as it is now conducted.
2. (a) EHL's authorized capital consists of 1,000 ordinary shares of
L.1.00 each, of which all shares are issued. The company
registers show and to our knowledge, the beneficial owners of
the shares at the date thereof are set out in the First
Schedule hereto. All shares have been duly authorized and
validly issued and are fully paid and non-assessable and have
not been issued in violation of any pre-emptive rights.
(b) HEL's authorized capital consists of 2,500,000 ordinary shares
of L.1.00 each, of which all shares are issued. The company
registers show and to our knowledge, the beneficial owners of
the shares at the date hereof are set out in the First
Schedule hereto. All shares have been duly authorized and
validly issued and are fully paid and non-assessable and have
not been issued in violation of any pre-emptive rights.
3. EHL and HEL have the necessary power and authority to execute, deliver
and perform the obligations under the agreements to which they are
parties.
4. The agreements to which they are parties have or will be duly
authorized by the Directors of EHL and HEL.
5. The agreements to which they are parties have or will be duly and
validly executed and delivered.
6. The agreements to which they are parties do or will create legal,
valid and binding obligations of EHL and HEL enforceable against them
in accordance with their terms, except that such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar facts or laws now or hereafter in effect relating to
creditors' rights or remedies generally and subject to general legal
and equitable principles regardless of whether enforcement is sought
in a proceeding at law or in equity.
7. The execution and delivery of the agreements to which they are parties
by EHL and HEL do not, and the completion by them of the transactions
contemplated by the agreements to which they are parties will not, (i)
breach any provision of their respective Memorandum and Articles of
Association, (ii) breach applicable provisions of statutory law or
regulation, or (iii) constitute or result in a breach, or a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument advised to us to which EHL and HEL are a party
or by which they or their properties are
75
bound, which breach or default could reasonably be expected to have a
material adverse effect on EHL or HEL (other than breaches or defaults
that have been waived by the other party thereto or conflicts,
breaches, violations or defaults under agreements governing or
otherwise relating to indebtedness of EHL or HEL that Buyer has
represented will be repaid at or promptly after the Closing from the
proceeds of the Public Offering).
8. All consents and approvals on the part of EHL and HEL required as of
the date of this opinion in connection with the execution, delivery
and performance of the agreements to which they are parties have been
obtained and are in effect.
9. Except as may be set forth in Schedule __ to the Stock Purchase
Agreement, to the best of our knowledge, there is no litigation and
there are no arbitration proceedings or governmental proceedings,
suits or investigations pending, instituted or overtly threatened
against EHL and HEL and relating to their Businesses that could
reasonably be expected to have a material adverse effect on their
Businesses taken as a whole.
