1
EXHIBIT 10.22
MASTER SEPARATION AGREEMENT
THIS MASTER SEPARATION AGREEMENT (this "Separation Agreement") is
entered into as of _______________, 1997, by and between SEITEL, INC., a
Delaware corporation ("Seitel"), and EAGLE GEOPHYSICAL, INC., a Delaware
corporation ("Eagle").
RECITALS
X. Xxxxxx, a public company whose common shares are traded on the
New York Stock Exchange, owns indirectly 100% of the common stock of Eagle.
B. The Board of Directors of Seitel (the "Seitel Board") has
determined, subject to its further consideration and the satisfaction of
certain conditions, to separate the ownership of a majority of its equity
ownership of Eagle and its subsidiaries from Seitel and the Seitel Group (as
hereinafter defined), by means of an initial public offering by Eagle and
Seitel of 5,880,000 shares of Eagle common stock (the "IPO") pursuant to a
Registration Statement (the "IPO Registration Statement") filed by Eagle with
the SEC on June 2, 1997, as amended.
C. Subsequent to the execution of this Separation Agreement but
prior to or contemporaneously with the IPO, Eagle, which currently owns 19% of
the common stock of Energy Research International, a Cayman Islands corporation
("ERI"), will acquire the remaining 81% of the common stock of ERI (at which
time ERI shall become a wholly-owned subsidiary of Eagle), in exchange for the
current holders of such 81% of the common stock of ERI receiving 600,000 newly
issued shares of common stock in Eagle.
D. The parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions determined by
Seitel and Eagle to be appropriate to effect the IPO and to set forth other
agreements and undertakings by and between Seitel and Eagle that will govern
certain other matters following the IPO.
ARTICLE I
DEFINITIONS
1.01 General. As used in this Separation Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
Administrative Services Agreement means the separate Administrative
Services Agreement, of even date herewith, between Seitel and Eagle.
Affiliate means an Eagle Affiliate or a Seitel Affiliate, as the case
may be.
Business Day means any day other than a Saturday, a Sunday or a day on
which banking institutions located in the State of Texas are authorized or
obligated by law or executive order to close.
2
Closing Date means the date on which the shares of Eagle Common Stock
offered in the IPO are paid for by and delivered to the underwriters of the
IPO.
Code means the Internal Revenue Code of 1986, as amended.
Confidential Information means as to the Seitel Group, information
concerning a member of the Eagle Group which was obtained by a member of the
Seitel Group prior to the Closing Date or furnished to it by a member of the
Eagle Group pursuant to this Separation Agreement or the Operative Agreements
and as to the Eagle Group, information concerning a member of the Seitel Group
which was obtained by a member of the Eagle Group prior to the Closing Date or
furnished to it by a member of the Seitel Group pursuant to this Separation
Agreement or the Operative Agreements.
Control means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
Eagle means Eagle Geophysical, Inc., a Delaware corporation.
Eagle Affiliate means a Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by Eagle, provided,
however, that for purposes of this Separation Agreement none of the following
Persons shall be considered Eagle Affiliates: (i) Seitel or any Seitel
Affiliate, and (ii) any corporation less than 51% of whose voting stock is
directly or indirectly owned by Eagle, any partnership less than 51% of whose
interests in profits and losses is directly or indirectly owned by Eagle, and
any corporation (regardless of the percentage of its ownership) where the
ownership by Eagle and its Subsidiaries was made as a venture capital or a
portfolio (as opposed to operational) investment or where the equity ownership
resulted from a default on a loan to such corporation.
Eagle Business means the onshore seismic data acquisition business
conducted by Seitel Geophysical, Inc., a wholly owned subsidiary of Seitel
prior to December 31, 1996, the onshore seismic data acquisition business
conducted by Eagle from January 1, 1997 and the offshore seismic data
acquisition business conducted by Horizon Seismic, Inc. and Horizon
Exploration, Ltd. and any affiliates thereof before and after the Closing Date.
Eagle Common Stock means the common stock, par value $.01 per share, of
Eagle.
Eagle Group means collectively, Eagle and the Eagle Affiliates, or any
one or more of such companies.
Effective Date means the date on which the IPO Registration Statement
is declared effective by the SEC.
Employee Benefits Allocation Agreement means the separate Employee
Benefits Allocation Agreement, of even date herewith, between Seitel and Eagle.
ERI shall have the meaning given in the recitals to this Separation
Agreement.
2
3
Exchange Act means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
Group means the Seitel Group or the Eagle Group.
Indemnifiable Losses means all losses, Liabilities, damages, claims,
demands, judgments or settlements of any nature or kind, known or unknown,
fixed, accrued, absolute or contingent, liquidated or unliquidated, including,
without limitation, all reasonable costs and expenses (including, without
limitation, attorneys' fees, and defense and accounting costs) as such costs
are incurred relating thereto, suffered by an Indemnitee.
Indemnifying Party means a Person who or which is obligated under this
Separation Agreement to provide indemnification.
Indemnitee means a Person who or which is entitled to indemnification
under this Separation Agreement.
Indemnity Payment means an amount that an Indemnifying Party is
required to pay to an Indemnitee pursuant to Article III.
Insurance Proceeds means those monies received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, in
either case, to the extent mutually agreed upon by Eagle and Seitel, net of any
applicable premium adjustment.
IPO shall have the meaning given in the recitals to this Separation
Agreement.
IPO Registration Statement shall have the meaning given in the recitals
to this Separation Agreement.
Liabilities means all debts, liabilities and obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, and whether or not
the same would properly be reflected on a balance sheet, including all costs
and expenses relating thereto.
Master Agreement means the Master Agreement for Geophysical Services
and applicable Job Supplements thereto entered into from time to time between
Eagle and any member of the Seitel Group pursuant to which Eagle agrees to
conduct geophysical surveys for the benefit of such member of the Seitel Group.
Nasdaq National Market means the Nasdaq Stock Market's National
Market.
Offering Documents means collectively, (A) the IPO Registration
Statement, (B) any Prospectus subject to completion or any Prospectus filed
with the SEC under Rule 424 of the Securities Act used, in each case, in
connection with the offering of the Eagle Common Stock under the IPO
Registration Statement, (C) any other filing made with the SEC by a member of
the Eagle Group or (D) any amendment or supplement to any of the documents
described in clauses (A) through (C) above.
3
4
Operative Agreements means collectively the Administrative Services
Agreement, the Employee Benefits Allocation Agreement, the Registration Rights
Agreement, the Sublease, the Tax Indemnity Agreement and any other agreements
between a member of the Seitel Group and a member of the Eagle Group relating
to the separation of the Groups.
Person means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.
Prospectus means the prospectus forming a part of the IPO Registration
Statement.
Representative means with respect to any Person, any of such Person's
directors, officers, employees, agents, consultants, advisors, accountants and
attorneys.
SEC means the Securities and Exchange Commission.
Seitel Affiliate means a Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by Seitel; provided,
however, that for purposes of this Separation Agreement none of the following
Persons shall be considered Seitel Affiliates: (i) Eagle, and any Eagle
Affiliate, and (ii) any corporation less than 51% of whose voting stock is
directly or indirectly owned by Seitel, (iii) any partnership less than 51% of
whose interests in profits and losses is directly; or indirectly owned by
Seitel, and (iv) any corporation (regardless of the percentage of its
ownership) where the ownership by Seitel and its Subsidiaries was made as a
venture, capital or a portfolio (as opposed to operational) investment or where
the equity ownership resulted from a default on a loan to such corporation.
Seitel Board shall have the meaning given in the recitals to this
Separation Agreement.
Seitel Business means any businesses conducted by any member of the
Seitel Group in the past, at the date hereof or in the future.
Seitel Group means collectively, Seitel and the Seitel Affiliates, or
any one or more of such companies.
Securities Act means the Securities Act of 1933, as amended, together
with the rules - and regulations promulgated thereunder.
Sublease means the separate Sublease Agreement, of even date herewith,
between Seitel and Eagle.
Subsidiary means with respect to any specified Person, any corporation
or other legal entity of which such Person or any of its subsidiaries Controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body; provided, however, that for purposes of this
Separation Agreement, Eagle and the Eagle Subsidiaries shall not be deemed to
be Subsidiaries of Seitel or any of the Seitel Subsidiaries.
Tax means as defined in the Tax Indemnity Agreement.
4
5
Tax Indemnity Agreement means the separate Tax Indemnity Agreement,
between Seitel and Eagle.
Third-party Claim means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person who is not a member of the Seitel Group or the Eagle
Group.
1.02 References to Time. All references in this Separation
Agreement to times of the day shall be to local time in Houston, Texas.
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO AND IN CONNECTION WITH THE IPO
2.01 Declaration of Dividend. Prior to the Effective Date, Eagle
shall declare a dividend to be paid at the close of business on the business
day immediately preceding the Closing Date (the Dividend Payment Date). The
dividend will be a dividend of all receivables of Eagle as of the Dividend
Payment Date from all members of the Seitel Group for profits of Eagle
attributable to work performed by Eagle for such members of the Seitel Group to
and including the Dividend Payment Date, less taxes and allocable overhead
attributable to such intercompany work. Such receivables shall include amounts
attributable to contracts then being performed, based on percent completion.
Eagle shall set the record date for determining shareholders entitled to
payment of such dividend to be a date (1) not less than ten nor more than 60
days prior to the Dividend Payment Date, and (2) as of which the only
stockholder of record shall be EHI Holdings, Inc.
2.02 The Eagle Board. Except as Eagle and Seitel may otherwise
agree, as of the Effective Date, the current members of Eagle's board of
directors will be: (i) Xxxxxxx X. Xxxxx, Chairman; (ii) Xxxx X. Frame; (iii)
Xxx X. Xxxxxxxxx; (iv) Xxxxxx X. Xxxxxxxx and (v) Xxxxxx Xxxxxx. Seitel and
Eagle shall take all appropriate actions to cause such individuals to be
elected to such positions.
2.03 IPO.
(a) Eagle, after consultation with Seitel, shall file
such amendments to the IPO Registration Statement as may be necessary in order
to cause the same to become and remain effective.
(b) Seitel and Eagle shall consult with each other
regarding the timing, pricing and other material matters with respect to the
IPO.
(c) Eagle shall prepare, and Eagle shall file and seek to
make effective, an application for listing of the Eagle Common Stock on the
Nasdaq National Market, subject to official notice of issuance.
5
6
(d) Seitel shall cooperate in the preparation of the
Prospectus and the IPO Registration Statement and in Eagle's performance of its
other obligations under this Section 2.03.
(e) Eagle shall pay its own direct expenses relating to
the IPO (including the fees of its advisors and counsel), all of the fees and
reimbursable expenses of the underwriters relating to the IPO (except for the
underwriters' discount on shares of Eagle sold by Seitel as a selling
stockholder under the IPO Registration Statement), as well as all of the costs
of producing, printing, mailing and otherwise distributing the Prospectus.
2.04 Financial Matters.
(a) Repayment of Intercompany Advances. Within five (5)
business days after the Closing Date, Eagle shall repay Seitel all amounts
advanced by Seitel on behalf of Eagle prior to the Closing Date with respect to
third-party work, plus accrued interest on the outstanding balance thereof at
an interest rate equal to Seitel's cost of funds.
(b) Repayment of Other Debt Owed to Seitel. Within five
(5) business days after the Closing Date, Eagle shall repay Seitel all other
amounts owed by any member of the Eagle Group to any member of the Seitel
Group, including all outstanding principal and accrued interest under the
Amended and Restated Promissory Note made by ERI payable to Seitel in the
original principal amount of $2,000,000 dated July 3, 1996 and all outstanding
principal and accrued interest under the Promissory Note made by ERI payable to
Seitel in the original principal amount of $2,679,040 dated November 15, 1996.
(c) Repayment of Third Party Debt Guaranteed by Seitel.
Within five (5) business days after the Closing Date, Eagle shall repay all
amounts owed by any member of the Eagle Group to any third party that is
guaranteed by any member of the Seitel Group or with respect to which any
member of the Seitel Group has any liability, including the approximately $13.4
million owed to NationsBanc Leasing of North Carolina, the approximately $1.1
million owed to Compass Bank, the approximately $264,000 owed to MetLife
Capital Corporation, the approximately $1.7 million owed to MetLife Capital,
Limited Partnership, and the approximately $268,000 owed to GE Capital Fleet
Services, all as set forth in the IPO Registration Statement. In lieu of
repaying any such debt, Eagle may, within five (5) business days after the
Closing Date, obtain written confirmation from the lender of such debt of such
lender's intent to release all obligated members of the Seitel Group from any
and all liabilities with respect to such debt, so long as Eagle either obtains
such release within 30 days after the Closing Date or repays such debt within
such 30 day period.
(d) Other Obligations. Prior to the Closing Date, Seitel
shall advise Eagle as to all other outstanding guarantees, letter of credit
obligations, performance or surety bonds, comfort letters and other similar
obligations of any member of the Seitel Group relating to the Eagle Business.
Eagle shall, within 30 days after the Closing Date, obtain the release of all
members of the Seitel Group from all such obligations or liabilities, unless
otherwise agreed in writing by Eagle and Seitel.
6
7
2.05 Execution and Delivery of Operative Agreements.
Contemporaneously with the execution and delivery of this Separation Agreement,
Eagle and the appropriate member(s) of the Seitel Group shall execute and
deliver each of the Operative Agreements.
ARTICLE III
SURVIVAL, ASSUMPTION AND INDEMNIFICATION
3.01 Survival of Agreements. All covenants and agreements of the
parties, hereto contained in this Separation Agreement shall survive the
Closing Date.
3.02 Assumption and Indemnification.
(a) Subject to Section 3.02(c), from and after the
Closing Date, Seitel shall assume, and shall indemnify, defend and hold
harmless each member of the Eagle Group, each of their Representatives and each
of the heirs, executors, successors and assigns of any of the foregoing from
and against:
(i) all Liabilities of the Seitel Group under
this Separation Agreement or any of the Operative Agreements;
(ii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to,
directly or indirectly, the Seitel Business, any individual
employed by any member of the Seitel Group on the Closing Date
or the Seitel Group's Representatives, whether relating to or
arising out of occurrences prior to, on or after the Closing
Date;
(iii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or the omission or
alleged omission to state in any of the Offering Documents a
material fact required to be stated therein or necessary to
make the statements therein not misleading, but only insofar
as any such statement or omission was made with respect to (A)
a matter of historical fact relating to a member of the Seitel
Group or (B) a matter of historical fact relating to a member
of the Eagle Group (other than ERI, its subsidiaries,
shareholders, officers, directors, employees, assets or
business) relating to periods prior to the Closing Date or (C)
the present or future intentions of Seitel or any member of
the Seitel Group, which information is or was furnished by
Seitel or its Representatives specifically for use in
connection with the preparation of the Offering Documents; and
(iv) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Exchange Act report by Seitel or the
omission or alleged omission to state in any such report a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that
Seitel will not be liable in any such case to the extent that
any such
7
8
Indemnifiable Losses arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or
alleged omission made in any such report in reliance upon and
in conformity with information furnished to Seitel by or on
behalf of Eagle or its Representatives specifically for use in
connection with the preparation of the report.
(b) Subject to Section 3.02(c), from and after the
Closing Date, Eagle shall assume, and shall indemnify, defend and hold harmless
each member of the Seitel Group, each of their Representatives and each of the
heirs, executors, successors and assigns of any of the foregoing from and
against:
(i) all Liabilities of the Eagle Group under this
Separation Agreement or any of the Operative Agreements;
(ii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to,
directly or indirectly, the Eagle Business, any individual
employed by any member of the Eagle Group on the Closing Date
or the Eagle Group's Representatives, whether relating to or
arising out of occurrences prior to, on or after the Closing
Date;
(iii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or the omission or
alleged omission to state in any of the Offering Documents a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that
Eagle will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made with respect to
(A) a matter of historical fact relating to a member of the
Seitel Group or (B) a matter of historical fact relating to a
member of the Eagle Group (other than ERI, its subsidiaries,
shareholders, officers, directors, employees, assets or
business) relating to periods prior to the Closing Date or (C)
the present or future intentions of Seitel or any member of
the Seitel Group, which information is or was furnished by
Seitel or its Representatives specifically for use in
connection with the preparation of the Offering Documents; and
(iv) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Exchange Act report by Seitel or the
omission or alleged omission to state in any such report a
material fact required to be stated therein or necessary to
make the statements therein not misleading, but only insofar
as any such statement or omission was made in reliance upon
and in conformity with information furnished to Seitel by or
on behalf of Eagle or its Representatives specifically for use
in connection with the preparation of the report.
8
9
(c) This Section 3.02 shall not be applicable to any
Indemnifiable Losses or Liabilities related to matters that are specifically
governed by the indemnification provisions of any Operative Document (which
matters shall be governed by the specific indemnification provisions of the
applicable Operative Document) or to any Indemnifiable Losses or Liabilities
related to Eagle Business performed for the Seitel Group after the date hereof
which is otherwise governed by any Master Agreement. In the event any person
is an employee or Representative of both the Eagle Group and the Seitel Group,
then for purposes of Sections 3.2(a)(ii) and 3.2(b)(ii), the Group for whom
such person is acting when the action or omission or other event giving rise to
the Indemnifiable Loss occurs shall be the Indemnifying Party.
(d) If an Indemnitee realizes a Tax benefit or detriment
by reason of having incurred an Indemnifiable Loss for which such Indemnitee
receives an Indemnity Payment from an Indemnifying Party or by reason of
receiving an Indemnity Payment, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to the Tax benefit, or such Indemnifying
Party shall pay to such Indemnitee an additional amount equal to the Tax
detriment (taking into account any Tax detriment resulting from the receipt of
such additional amounts), as the case may be. If, in the opinion of counsel to
an Indemnifying Party reasonably satisfactory in form and substance to the
affected Indemnitee, there is a substantial likelihood that the Indemnitee will
be entitled to a Tax benefit by reason of an Indemnifiable Loss, the
Indemnifying Party promptly shall notify the Indemnitee and the Indemnitee
promptly shall take any steps (including the filing of such returns, amended
returns or claims for refunds consistent with the claiming of such Tax benefit)
that, in the reasonable judgment of the Indemnifying Party, are necessary and
appropriate to obtain any such Tax benefit. If, in the opinion of counsel to
an Indemnitee reasonably satisfactory in form and substance to the affected
Indemnifying Party, there is a substantial likelihood that the Indemnitee will
be subjected to a Tax detriment by reason of an Indemnification Payment, the
Indemnitee promptly shall notify the Indemnifying Party and the Indemnitee
promptly shall take any steps (including the filing of such returns or amended
returns or the payment of Tax underpayments consistent with the settlement of
any Liability for Taxes arising from such Tax detriment) that, in the
reasonable judgment of the Indemnitee, are necessary and appropriate to settle
any Liabilities for Taxes arising from such Tax detriment. If, following a
payment by an Indemnitee or an Indemnifying Party pursuant to this Section
3.02(d) in respect of a Tax benefit or detriment, there is an adjustment to the
amount of such Tax benefit or detriment, then each of Seitel and Eagle shall
make appropriate payments to the other, including the payment of interest
thereon at the federal statutory rate then in effect, to reflect such
adjustment.
(e) The amount which an Indemnifying Party is required to
pay to any Indemnitee pursuant to this Section 3.02 shall be reduced (including
retroactively) by any Insurance Proceeds and other amounts actually recovered
by such Indemnitee in reduction of the related Indemnifiable Loss, it being
understood and agreed that each of Seitel and Eagle shall use its best efforts
to collect any such proceeds or other amounts to which it or any of its
Subsidiaries is entitled, without regard to whether it is the Indemnifying
Party hereunder. If an Indemnitee receives an Indemnity Payment in respect of
an Indemnifiable Loss and subsequently receives Insurance Proceeds or other
amounts in respect of such Indemnifiable Loss, then such Indemnitee shall pay
to such Indemnifying Party an amount equal to the difference between (i) the
sum of the amount of such Indemnity Payment and the amount of such Insurance
Proceeds or other amounts actually received and (ii) the amount of such
Indemnifiable Loss, adjusted (at such time as appropriate adjustment can be
determined) in each case to reflect any premium adjustment attributable to such
claim.
9
10
3.03 Procedure for Indemnification.
(a) If any Indemnitee receives notice of the assertion of
any Third-party Claim with respect to which an Indemnifying Party is obligated
under this Separation Agreement to provide indemnification, such Indemnitee
shall give such Indemnifying Party notice thereof promptly after becoming aware
of such Third-party Claim; provided, however, that the failure of any
Indemnitee to give notice as provided in this Section 3.03 shall not relieve
any Indemnifying Party of its obligations under this Article III, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice. Such notice shall describe such Third-party Claim in reasonable
detail.
(b) An Indemnifying Party, at such Indemnifying Party's
own expense and through counsel chosen by such Indemnifying Party (which
counsel shall be reasonably satisfactory to the Indemnitee), may elect to
defend any Third-party Claim. If an Indemnifying Party elects to defend a
Third-party Claim, then, within ten Business Days after receiving notice of
such Third-party Claim (or sooner, if the nature of such Third-party Claim so
requires), such Indemnifying Party shall notify the Indemnitee of its intent to
do so, and such Indemnitee shall cooperate in the defense of such Third-party
Claim. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third-party Claim, such Indemnifying Party
shall not be liable to such Indemnitee under this Article III for any legal or
other expenses subsequently incurred by such Indemnitee in connection with the
defense thereof; provided, however, that such Indemnitee shall have the right
to employ one law firm as counsel to represent such Indemnitee (which firm
shall be reasonably acceptable to the Indemnifying Party) if, in such
Indemnitee's reasonable judgment, either a conflict of interest between such
Indemnitee and such Indemnifying Party exists in respect of such claim or there
may be defenses available to such Indemnitee which are different from or in
addition to those available to such Indemnifying Party, and in that event (i)
the reasonable fees and expenses of such separate counsel shall be paid by such
Indemnifying Party (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel with
respect to any Third-party Claim (even if against multiple Indemnitees)) and
(ii) each of such Indemnifying Party and such Indemnitee shall have the right
to conduct its own defense in respect of such claim. If an Indemnifying Party
elects not to defend against a Third-party Claim, or fails to notify an
Indemnitee of its election as provided in this Section 3.03 within the period
of ten Business Days described above, such Indemnitee may defend, compromise
and settle such Third-party Claim; provided, however, that no such Indemnitee
may compromise or settle any such Third-party Claim without the prior written
consent of the Indemnifying Party, which consent shall not be withheld
unreasonably. Notwithstanding the foregoing, the Indemnifying Party shall not,
without the prior written consent of the Indemnitee, (i) settle or compromise
any Third-party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnitee of a written release from all Liability in respect
of such Third-party Claim or (ii) settle or compromise any Third-party Claim in
any manner that may adversely affect the Indemnitee.
10
11
3.04 Remedies Cumulative. The remedies provided in this Article
III shall be cumulative and shall not preclude assertion by any Indemnitee of
any other rights or the seeking of any other remedies against any Indemnifying
Party.
3.05 Effect on Underwriting Documents. Notwithstanding anything to
the contrary that may be contained in the underwriting agreements relating to
the IPO or this Separation Agreement: (i) the provisions of Section 3.02(a) and
(b) shall govern and control the indemnification arrangements, and any claims
or losses arising hereunder, between the Seitel Group on the one hand and the
Eagle Group on the other with respect to liabilities arising under the IPO
Registration Statement; and (ii) the provisions of such underwriting agreements
shall govern and control the indemnification arrangements, and any claims or
losses arising thereunder, between the Eagle Group and the Seitel Group on the
one hand and the underwriters under the IPO Registration Statement on the
other.
ARTICLE IV
CERTAIN ADDITIONAL COVENANTS
4.01 Continuing Contractual Agreements. Except as may be otherwise
provided in this Separation Agreement, to the extent that any member of either
Group is now providing or selling, or in the future may provide or sell, to any
member of the other Group any services, benefits or products pursuant to any
written or oral agreement or understanding whatsoever, such agreement or
understanding shall not be deemed altered, amended or terminated as a result of
this Separation Agreement or the consummation of the transactions contemplated
hereby; and without limiting the generality of the foregoing, such agreements
and understandings, already in existence, shall remain in full force and effect
without modification or amendment of any kind by virtue of this Separation
Agreement.
4.02 Solicitation of Employees. For a period of one (1) year from
the date of this Separation Agreement, no member of either Group shall
knowingly solicit for proposed employment any Person who at the time is known
by such member to be currently an employee of the other Group, without the
consent of the President of that employee's employer.
4.03 Software. Any computer software shall remain the property of
the Group that purchased, licensed or developed it, subject to the further
provisions of this Section 4.03. To the extent either Group has used or
enhanced such software, such Group shall have the right to continue to use such
software in its business operations. If any software purchased or licensed
from a third party has been used or is in the future usable by either Group,
the parties shall work together in good faith to obtain any required consent of
the licenser to permit use of such software by any Group that wishes to use it,
and the cost of obtaining such consent shall be allocated between the Groups in
proportion to the benefit to each Group from the use of such software, taking
into account both past use and expected future use. If such consent cannot be
promptly and reasonably obtained, any Group may continue to use such software
provided such Group furnishes the other Group (i) the written opinion of
experienced outside legal counsel to the effect that such continued use does
not constitute a clear violation of the terms of the license agreement and (ii)
an indemnification in form reasonably satisfactory to the other Group for any
Liabilities caused by such use. If either or both Groups wish to add a new
module or other
11
12
enhancement to any software being used by both Groups, the parties will, in
good faith, agree to an allocation of the cost thereof in proportion to the
expected use of such module or enhancement, provided that enhancements made by
a Group on internally developed software shall be the property of the Group
that paid for the major portion of development costs. Except as provided in
the preceding sentences, neither Group shall be obligated to pay anything to
the other Group for the use of any software. If the parties cannot reach
agreement after a reasonable time and effort on the allocation of costs as
provided herein, the parties shall promptly submit the issue to an experienced,
independent, mutually acceptable software consultant, whose determination of
such allocation shall be final and binding on both parties; the fees and
expenses of such consultant shall be borne equally by the parties. The parties
shall work together in good faith to develop an inventory of software that may
be affected by Section 4.03 as promptly as practicable; provided that it is
understood that this Section 4.03 shall not apply to any software that is
purchased, licensed or originally developed after the Closing Date. The terms
of this Section 4.03 are intended to allocate costs between the parties hereto,
and nothing contained in this Section 4.03 shall be construed to modify any of
the terms of the agreements between a software licensor and the Eagle Group or
the Seitel Group.
4.04 Further Assurances. In addition to the actions specifically
provided for elsewhere in this Separation Agreement and in the Tax Indemnity
Agreement, each of the parties hereto shall use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations
and agreements to consummate and make effective the transactions contemplated
by this Separation Agreement. Without limiting the foregoing, each party
hereto shall cooperate with the other parties, and execute and deliver, or use
its best efforts to cause to be executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority or any other Person under any permit,
license, agreement, indenture or other instrument, and take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Separation
Agreement, in order to effectuate the provisions and purposes of this
Separation Agreement.
4.05 Publicity. Seitel shall take all necessary action to ensure
that the members of the Seitel Group, and Eagle shall take all necessary action
to ensure that the members of the Eagle Group, shall take all reasonably
diligent action to discontinue the use of any existing printed material
implicitly or explicitly showing any parent-subsidiary relationship between
Seitel and Eagle or any members of their respective Groups as promptly after
the Closing Date as practicable and in any event no later than six months after
the Closing Date, except as otherwise provided in any Operative Agreement.
After the Closing Date, neither party hereto shall permit any member of its
respective Group to otherwise represent to third parties that it has a
parent-subsidiary relationship with the other Group.
ARTICLE V
ACCESS TO INFORMATION
5.01 Provision of Corporate Records. Prior to or as promptly as
practicable after the Closing Date, Seitel shall use reasonable efforts to
accommodate Eagle with respect to the
12
13
delivery to Eagle of all corporate books and records of the Eagle Group and
copies of all corporate books and records of the Seitel Group directly relating
to the Eagle Assets, the Eagle Business or the Liabilities of the Eagle Group,
including in each case copies of all active agreements, active litigation files
and government filings. From and after the Closing Date, all books, records
and copies so delivered shall be the property of Eagle.
5.02 Access to Information. From and after the Closing Date, each
of Seitel and Eagle shall afford to the other, and shall cause the members of
their respective Groups to so afford, reasonable access and duplicating rights
during normal business hours to all information within such party's possession
relating to such other party's businesses, Assets or Liabilities, insofar as
such access is reasonably required by such other party. Without limiting the
foregoing, information may be requested under this Section 5.02 for audit,
accounting, claims, litigation and Tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations, as Eagle may reasonably
request and which are directly related to the Eagle Business.
5.03 Production of Witnesses. After the Closing Date, each of
Seitel and Eagle shall use reasonable efforts, and shall cause the members of
their respective Groups to use reasonable efforts, to make available to the
other, upon written request, its directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required (giving
consideration to business demands of such Persons) in connection with any
legal, administrative or other proceedings in which the requesting party may
from time to time be involved.
5.04 Reimbursement. Each Group providing information or witnesses
under Sections 5.01, 5.02 or 5.03 to the other Group shall be entitled to
receive from the recipient, upon the presentation of invoices therefor, payment
for all out-of-pocket costs and expenses (including reasonable attorneys and
accountants fees and expenses) as may be reasonably incurred in providing such
information or witnesses.
5.05 Retention of Records. Except as otherwise required by law or
agreed in writing, or as otherwise provided in the Tax Indemnity Agreement,
each of Seitel and Eagle shall use reasonable efforts to accommodate the other
with respect to retention and provision of copies of any significant
information in such party's possession or under its control relating to the
business, assets or Liabilities of the other party.
5.06 Confidentiality. From and after the Closing Date, each of
Seitel and Eagle shall hold, and shall cause its Affiliates and Representatives
to hold, the Confidential Information in strict confidence and shall not
release or disclose such Confidential Information to any other Person, except
its Representatives, who shall be bound by the provisions of this Section 5.06;
provided, however, that Seitel and Eagle and their Affiliates may disclose such
Confidential Information to the extent that (a) disclosure is required by
judicial or administrative process or, in the opinion of such party's counsel,
by other requirements of law or any regulatory body, or (b) such party can show
that such Confidential Information is or was (i) available to such party from a
third party and the recipient party was not aware that such third party was
obligated to not disclose such Confidential Information, (ii) available to such
party on a nonconfidential basis prior to its disclosure by the other party,
(iii) in the public domain other than by the breach of this Agreement or (iv)
lawfully acquired on a nonconfidential basis or independently developed by, or
on behalf of, such party. If either party to this Agreement or its Affiliate
or Representative
13
14
becomes legally required to disclose any Confidential Information subject to
this Section, such party will promptly notify the other party and use
reasonable efforts to cooperate with the other party so that it may seek a
protective order or other appropriate remedy and/or waive compliance with this
Section. In the event that such protective order or other remedy is not
obtained, or that the other party waives compliance with this Section, such
party or its Affiliate or Representative will furnish only that portion of the
Confidential Information which it is advised by counsel is legally required and
will exercise its reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such Confidential Information.
ARTICLE VI
MISCELLANEOUS
6.01 Termination. Notwithstanding any other provision hereof, this
Separation Agreement may be terminated if the IPO is abandoned, which decision
can be made at any time by and in the sole discretion of the Board of Directors
of Seitel without the approval of Eagle.
6.02 Complete Agreement. This Separation Agreement, the Exhibits
and Schedules hereto and the agreements (including the Operative Agreements)
and other documents referred to herein and therein shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter.
6.03 Authority. Each of the parties hereto represents to the other
that (i) it has the power and authority to execute, deliver and perform this
Separation Agreement, (ii) the execution, delivery and performance of this
Separation Agreement by it has been duly authorized by all necessary corporate
action, (iii) it has duly and validly executed the Agreement, (iv) this
Separation Agreement is a valid and binding obligation, enforceable against it
in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equity principles.
6.04 Expenses. Except as otherwise provided in this Separation
Agreement and the Operative Agreements, all costs and expenses of any party
hereto in connection with the preparation, execution, delivery and
implementation of this Separation Agreement and in connection with the
consummation of the transactions contemplated by this Separation Agreement
shall be paid by the party for whose benefit such costs and expenses are
incurred, with any costs and expenses that cannot be allocated on the foregoing
basis to be divided equally between the parties hereto.
6.05 Governing Law. This Separation Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (other than the
laws regarding choice of laws and conflicts of laws) as to all matters,
including matters of validity, construction, effect, performance and remedies.
6.06 Notices. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telegram, telex, telecopy
14
15
or other standard form of telecommunications, or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to Seitel:
Seitel, Inc.
00 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxxxx, 0xx Floor
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Frame, President
If to Eagle:
Eagle Geophysical, Inc.
00 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxxxx, 0xx Floor
Xxxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxxxxx, President
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 6.06.
6.07 Amendment and Modification. This Separation Agreement may be
amended or modified in any material respect only by a written agreement signed
by both of the parties hereto.
6.08 Successors and Assigns; No Third-Party Beneficiaries. This
Separation Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns, and the members of their respective Groups, but neither this
Separation Agreement nor any of the rights, interests and obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party (which consent shall not be unreasonably withheld). Except for
the provisions of Sections 3.02 and 3.03 relating to Indemnities, which are
also for the benefit of the Indemnitees, this Separation Agreement is solely
for the benefit of the parties hereto and their Subsidiaries and Affiliates and
is not intended to confer upon any other Persons any rights or remedies
hereunder.
6.09 Counterparts. This Separation Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
6.10 No Waiver. No failure by either party to take any action or
assert any right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving rise to
such right, unless expressly waived in writing by the party against whom the
existence of such waiver is asserted.
15
16
6.11 Interpretation. The Article and Section headings contained in
this Separation Agreement are solely for the purpose of reference, are not part
of the agreement of the parties hereto and shall not in any way affect the
meaning or interpretation of this Separation Agreement.
6.12 Legal Enforceability. Any provision of this Separation
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Each party
acknowledges that money damages would be an inadequate remedy for any breach of
the provisions of this Separation Agreement and agrees that the obligations of
the parties hereunder shall be specifically enforceable.
SEITEL, INC.
By: ______________________________
Xxxx X. Frame, President
EAGLE GEOPHYSICAL, INC.
By: _______________________________
Xxx X. Xxxxxxxxx, President
16
