Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
among
XXXXXX GEOPHYSICAL COMPANY,
6446 ACQUISITION CORP.
and
TGC INDUSTRIES, INC.
Dated as of March 20, 2011
TABLE OF CONTENTS
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ARTICLE I. THE MERGER |
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2 |
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Section 1.1 |
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The Merger |
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2 |
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Section 1.2 |
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The Closing |
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2 |
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Section 1.3 |
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Effective Time |
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2 |
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ARTICLE II. GOVERNING DOCUMENTS |
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2 |
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Section 2.1 |
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Articles of Incorporation of the Surviving Entity |
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2 |
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Section 2.2 |
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Bylaws of the Surviving Entity |
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2 |
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ARTICLE III. DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY |
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3 |
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Section 3.1 |
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Board of Directors of Surviving Entity |
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3 |
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Section 3.2 |
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Officers of Surviving Entity |
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3 |
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Section 3.3 |
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Governance Matters |
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3 |
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ARTICLE IV. CONVERSION OF COMPANY COMMON STOCK |
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3 |
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Section 4.1 |
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Conversion of Capital Stock of the Company and Merger Sub |
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3 |
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Section 4.2 |
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Exchange of Certificates Representing Company Common Stock |
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7 |
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Section 4.3 |
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Adjustment of Exchange Ratio |
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10 |
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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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10 |
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Section 5.1 |
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Existence; Good Standing; Corporate Authority |
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11 |
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Section 5.2 |
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Authorization, Validity, Enforceability and Fairness |
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11 |
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Section 5.3 |
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Capitalization |
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12 |
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Section 5.4 |
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Subsidiaries |
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13 |
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Section 5.5 |
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No Conflict |
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13 |
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Section 5.6 |
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SEC Documents; Financial Statements |
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14 |
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Section 5.7 |
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Internal Controls and Procedures |
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15 |
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Section 5.8 |
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Compliance with Laws; Permits |
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16 |
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Section 5.9 |
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Litigation |
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17 |
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Section 5.10 |
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Absence of Certain Changes |
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17 |
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Section 5.11 |
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Taxes |
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19 |
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Section 5.12 |
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Employee Benefit Plans |
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20 |
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Section 5.13 |
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Labor and Employee Matters |
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23 |
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Section 5.14 |
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Environmental Matters |
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25 |
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Section 5.15 |
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Properties |
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26 |
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Section 5.16 |
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Intellectual Property |
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27 |
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Section 5.17 |
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Insurance |
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27 |
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Section 5.18 |
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Certain Contracts |
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28 |
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Section 5.19 |
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Government Contracts |
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29 |
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Section 5.20 |
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No Brokers |
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29 |
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Section 5.21 |
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Parent Stock Ownership |
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30 |
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Section 5.22 |
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Vote Required |
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30 |
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Section 5.23 |
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Improper Payments |
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30 |
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Section 5.24 |
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Takeover Statutes; Rights Agreement |
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31 |
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Section 5.25 |
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Interested Party Transactions |
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31 |
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ARTICLE VI. REPRESENTATIONS AND WARRANTIES |
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31 |
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OF PARENT AND MERGER SUB |
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31 |
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Section 6.1 |
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Existence; Good Standing; Corporate Authority |
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32 |
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Section 6.2 |
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Authorization, Validity, Enforceability and Fairness |
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32 |
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Section 6.3 |
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Capitalization |
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33 |
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Section 6.4 |
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Subsidiaries |
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34 |
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Section 6.5 |
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No Conflict |
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34 |
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Section 6.6 |
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SEC Documents; Financial Statements |
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35 |
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Section 6.7 |
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Disclosure and Internal Controls and Procedures |
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36 |
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Section 6.8 |
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Compliance with Laws; Permits |
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37 |
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Section 6.9 |
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Litigation |
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37 |
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Section 6.10 |
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Absence of Certain Changes |
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38 |
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Section 6.11 |
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Taxes |
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39 |
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Section 6.12 |
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Employee Benefit Plans |
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41 |
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Section 6.13 |
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Labor and Employee Matters |
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43 |
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Section 6.14 |
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Environmental Matters |
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44 |
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Section 6.15 |
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Properties |
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45 |
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Section 6.16 |
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Intellectual Property |
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46 |
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Section 6.17 |
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Insurance |
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47 |
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Section 6.18 |
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Certain Contracts |
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47 |
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Section 6.19 |
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Government Contract |
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48 |
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Section 6.20 |
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No Brokers |
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48 |
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Section 6.21 |
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Company Stock Ownership |
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49 |
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Section 6.22 |
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Vote Required |
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49 |
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Section 6.23 |
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Improper Payments |
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49 |
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Section 6.24 |
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Affiliate Transactions |
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50 |
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ARTICLE VII. COVENANTS |
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50 |
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Section 7.1 |
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Conduct of Business by the Company |
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50 |
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Section 7.2 |
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Conduct of Business by Parent |
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53 |
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Section 7.3 |
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No Solicitation |
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56 |
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Section 7.4 |
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Preparation of Proxy Statement; Meetings of Shareholders |
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60 |
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Section 7.5 |
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Filings; Reasonable Best Efforts |
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62 |
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Section 7.6 |
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Inspection |
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64 |
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Section 7.7 |
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Publicity |
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64 |
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Section 7.8 |
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Listing Application |
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64 |
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Section 7.9 |
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Section 16 Matters |
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64 |
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Section 7.10 |
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Expenses |
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65 |
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Section 7.11 |
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Indemnification and Insurance |
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65 |
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Section 7.12 |
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Antitakeover Statutes |
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65 |
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Section 7.13 |
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Notification |
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66 |
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Section 7.14 |
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Employee Matters |
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66 |
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Section 7.15 |
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Other Pre-Closing Matters |
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67 |
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Section 7.16 |
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Shareholder Litigation |
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68 |
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Section 7.17 |
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Tax Treatment |
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68 |
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ii
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ARTICLE VIII. CONDITIONS |
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68 |
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Section 8.1 |
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Conditions to Each Party’s Obligation to Effect the Merger |
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68 |
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Section 8.2 |
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Conditions to Obligation of the Company to Effect the Merger |
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69 |
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Section 8.3 |
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Conditions to Obligation of Parent and Merger Sub to Effect the Merger |
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70 |
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Section 8.4 |
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Frustration of Conditions |
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71 |
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ARTICLE IX. TERMINATION |
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71 |
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Section 9.1 |
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Termination by Mutual Consent |
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71 |
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Section 9.2 |
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Termination by Parent or the Company |
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71 |
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Section 9.3 |
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Termination by the Company |
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72 |
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Section 9.4 |
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Termination by Parent |
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72 |
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Section 9.5 |
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Effect of Termination |
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73 |
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Section 9.6 |
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Extension; Waiver |
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76 |
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ARTICLE X. GENERAL PROVISIONS |
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76 |
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Section 10.1 |
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Nonsurvival of Representations, Warranties and Agreements |
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76 |
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Section 10.2 |
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Notices |
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77 |
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Section 10.3 |
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Assignment; Binding Effect; Benefit |
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77 |
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Section 10.4 |
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Entire Agreement |
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78 |
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Section 10.5 |
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Amendments |
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78 |
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Section 10.6 |
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Governing Law |
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78 |
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Section 10.7 |
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Headings |
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78 |
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Section 10.8 |
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Definitions and Interpretation |
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78 |
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Section 10.9 |
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Severability |
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82 |
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Section 10.10 |
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Enforcement of Agreement |
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82 |
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Section 10.11 |
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Consent to Jurisdiction and Venue; Appointment of Agent for Service of Process |
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82 |
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Section 10.12 |
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No Recourse |
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82 |
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Section 10.13 |
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Counterparts |
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83 |
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Exhibits
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Exhibit A
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Restated Certificate of Formation of Surviving Entity |
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Exhibit B
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Bylaws of Surviving Entity |
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Exhibit C
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Form of Company Shareholder Voting Agreement |
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Exhibit D
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Form of Parent Shareholder Voting Agreement |
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Exhibit E
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Form of Employment Agreement |
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Exhibit F
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Form of Indemnification Agreement |
iii
GLOSSARY OF DEFINED TERMS
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Defined Terms |
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Where Defined |
Acquisition Proposal
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Section 7.3(f)(i) |
Affected Participants
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Section 7.14(a) |
Affiliate
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Section 10.8(b) |
Agreement
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Preamble |
Antitrust Laws
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Section 10.8(c) |
Applicable Law
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Section 10.8(d) |
Average Price
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Section 4.1(b) |
Book Entry Share
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Section 4.1(a) |
Certificate
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Section 4.1(a) |
Certificate of Merger
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Section 1.3 |
Change/Intent to Terminate Notice
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Section 7.3(b) |
Closing
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Section 1.2 |
Closing Date
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Section 1.2 |
Code
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Recitals |
Company
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Preamble |
Company Adverse Recommendation Change
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Section 7.3(b) |
Company Affiliate Transaction
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Section 5.25 |
Company Articles of Incorporation
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Section 5.1 |
Company Benefit Plans
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Section 5.12(a) |
Company Board
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Section 3.3 |
Company Bylaws
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Section 5.1 |
Company Common Stock
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Recitals |
Company Disclosure Letter
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Article V |
Company Equity Awards
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Section 4.1(f)(i) |
Company Financial Advisor
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Section 5.2(e) |
Company IP
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Section 10.8(e) |
Company Material Adverse Effect
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Section 10.8(f) |
Company Material Contract
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Section 5.18(a)(viii) |
Company Options
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Section 5.3(c) |
Company Permits
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Section 5.8(b) |
Company Preferred Stock
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Section 5.3(a) |
Company Qualified Plans
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Section 7.14(e) |
Company Recommendation
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Section 5.2(d) |
Company Registered IP
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Section 5.16(a) |
Company Reports
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Section 5.6(a) |
Company Restricted Stock Award
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Section 4.1(f)(ii) |
Company Stock Option Award
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Section 4.1(f)(iii) |
Company Stock Plans
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Section 4.1(f)(i) |
Company Shareholder Approval
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Section 5.22 |
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Recitals |
Company Shareholders Meeting
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Section 7.4(e) |
Company Voting Shareholders
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Recitals |
Confidentiality Agreement
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Section 7.3(a) |
Contract
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Section 10.8(g) |
iv
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Defined Terms |
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Where Defined |
Continuing Employees
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Section 7.14(a) |
Debt
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Section 10.8(h) |
Designated Director
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Section 3.3 |
Effective Time
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Section 1.3 |
Environmental Laws
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Section 5.14(a) |
Equity Award Restrictive Covenants
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Section 4.1(f)(vii) |
ERISA
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Section 5.12(a) |
ERISA Affiliate
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Section 5.12(a) |
Exchange Act
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Section 5.5(b) |
Exchange Agent
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Section 4.2(a) |
Exchange Fund
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Section 4.2(a) |
Exchange Ratio
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Section 4.1(a) |
Existing Indemnification Agreements
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Section 7.11(c) |
Fairness Opinion
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Section 5.2(e) |
Foreign Corrupt Practices Act
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Section 5.23(a) |
Foreign Government Official
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Section 5.23(a) |
Form S-4
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Section 7.4(a) |
GAAP
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Section 10.8(i) |
Governmental Authority
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Section 10.8(j) |
Government Contract
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Section 5.19 |
Hazardous Materials
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Sections 5.14(a) |
HSR Act
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Section 5.5(b) |
Intellectual Property
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Section 10.8(k) |
Letter of Transmittal
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Section 4.2(b) |
Lien
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Section 5.4(a) |
Material Adverse Effect
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Section 10.8(l) |
Merger
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Recitals |
Merger Consideration
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Section 4.1(a) |
Merger Sub
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Preamble |
NASDAQ
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Section 5.5(b) |
No-Shop Party
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Section 7.3(a) |
Other Party
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Section 7.3(a) |
Parent
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Preamble |
Parent Adverse Recommendation Change
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Section 7.3(b) |
Parent Affiliate Transaction
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Section 6.23 |
Parent Articles of Incorporation
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Section 6.1 |
Parent Board
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Section 3.3 |
Parent Common Stock
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Recitals |
Parent Disclosure Letter
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Article VI |
Parent Equity Awards
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Section 6.3(a) |
Parent Financial Advisor
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Section 6.2(e) |
Parent IP
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Section 10.8(m) |
Parent Material Adverse Effect
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Section 10.8(n) |
Parent Material Contract
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Section 6.18(a)(viii) |
Parent Options
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Section 6.3(c) |
Parent Permits
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Section 6.8(b) |
v
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Defined Terms |
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Where Defined |
Parent Recommendation
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Section 6.2(d) |
Parent Registered IP
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Section 6.16(a) |
Parent Reports
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Section 6.6(a) |
Parent Stock Plan
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Section 6.3(a) |
Parent Shareholder Approval
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Section 6.22 |
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Recitals |
Parent Shareholders Meeting
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Section 7.4(f) |
Parent Voting Shareholders
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Recitals |
Permitted Liens
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Section 10.8(o) |
Post-Closing Plan
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Section 7.14(e) |
Person
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Section 10.8(p) |
Price Determination Date
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Section 4.1(b) |
Proceeding
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Section 10.8(q) |
Proxy Statement/Prospectus
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Section 7.4(a) |
Reconfirmation Opinion
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Section 7.15(b) |
Regulatory Filings
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Section 5.5(b) |
Related Persons
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Section 9.5(g) |
Representatives
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Section 10.8(r) |
Returns
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Section 5.11(a) |
Rollover Awards
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Section 4.1(f)(iii) |
Xxxxxxxx-Xxxxx Act
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Section 5.7(a) |
SEC
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Section 4.1(f)(vi) |
Securities Act
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Section 5.5(b) |
Special Valuation Proposal
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Section 7.3(f)(ii) |
Subsidiary
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Section 10.8(s) |
Superior Acquisition Proposal Termination
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Section 7.3(b) |
Superior Proposal
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Section 7.3(f)(iii) |
Surviving Entity
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Section 1.1 |
Tax or Taxes
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Section 10.8(t) |
TBOC
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Section 1.1 |
Termination Date
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Section 9.2(a) |
Treasury Regulations
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Recitals |
Ultimate Price Event
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Section 4.1(b) |
VEBA
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Section 5.12(a) |
vi
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “
Agreement”) dated as of March 20, 2011, is by and
among Xxxxxx Geophysical Company, a
Texas corporation (“
Parent”), 6446 Acquisition Corp., a
Texas
corporation and a direct wholly-owned subsidiary of Parent (“
Merger Sub”), and TGC Industries,
Inc., a
Texas corporation (the “
Company”).
RECITALS
A. The Merger. The respective Boards of Directors of Parent, Merger Sub and the Company deem
it advisable and in the best interests of their respective corporations and shareholders that a
transaction be effected pursuant to which (i) Merger Sub will merge with and into the Company, with
the Company continuing as the surviving entity (the “Merger”), and (ii) each issued and outstanding
share of common stock, par value $0.01 per share, of the Company (“Company Common Stock”) (other
than any Company Common Stock owned by Parent, Merger Sub or the Company or any wholly-owned
Subsidiary of the Company), shall be converted into the right to receive the shares of common
stock, par value $0.33-1/3 per share, of Parent (“Parent Common Stock”), upon the terms and subject
to the conditions set forth herein.
B. Intended U.S. Tax Consequences. The parties to this Agreement intend that, for federal
income tax purposes, (i) the Merger qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations
promulgated thereunder (the “Treasury Regulations”), and (ii) this Agreement be treated as a plan
of reorganization within the meaning of Section 368 of the Code and such Treasury Regulations.
C.
Voting Agreements. Concurrently with the execution of this Agreement, or as soon as
practicable after the date hereof, and as a condition and inducement to Parent’s willingness to
enter into this Agreement, certain officers and directors of the Company (the “
Company Voting
Shareholders”), who beneficially own, in the aggregate, 28.73% of the outstanding shares of Company
Common Stock as of the date hereof, have each executed and delivered to Parent a
voting agreement
in the form attached hereto as
Exhibit C (each, a “
Company Shareholder Voting Agreement”),
obligating each such signatory to, among other things, vote in favor of the approval of this
Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions
set forth therein. Concurrently with the execution of this Agreement, and as a condition and
inducement to the Company’s willingness to enter into this Agreement, certain officers and
directors of Parent (the “
Parent Voting Shareholders”), who beneficially own, in the aggregate,
3.82% of the outstanding shares of Parent Common Stock as of the date hereof, have each executed
and delivered to the Company a
voting agreement in the form attached hereto as
Exhibit D
(the “
Parent Shareholder Voting Agreement”), obligating each such signatory to, among other things,
vote in favor of the approval of the issuance at the Effective Time of Parent Common Stock to the
shareholders of the Company, upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the premises and the representations, warranties and
agreements contained herein, the benefits to be derived by each party hereunder and
1
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.1
The Merger. Upon the terms and subject to the conditions set forth in this Agreement,
at the Effective Time, Merger Sub shall be merged with and into the Company in accordance with this
Agreement, and the separate corporate existence of Merger Sub shall thereupon cease. The Company
shall be the surviving entity in the Merger (sometimes referred to herein as the “
Surviving
Entity”). The Merger shall have the effects specified herein and in the
Texas Business
Organizations Code (the “
TBOC”). As a result of the Merger, the Surviving Entity shall be a
wholly-owned subsidiary of Parent.
Section 1.2 The Closing. Upon the terms and subject to the conditions set forth in this Agreement,
the closing of the Merger (the “Closing”) shall take place at the offices of Xxxxx Xxxxx L.L.P.,
0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, at 9:00 a.m., local time, on a date to be specified by the
parties hereto, which date shall be no later than the third business day after satisfaction or
waiver of the conditions set forth in Article VIII (other than any such conditions which by their
nature cannot be satisfied until the Closing Date, which shall be so satisfied or waived by the
party entitled to the benefit of those conditions on the Closing Date). The date on which the
Closing occurs is hereinafter referred to as the “Closing Date.”
Section 1.3
Effective Time. On the Closing Date, Parent, the Company and Merger Sub shall cause a
certificate of merger (the “
Certificate of Merger”) meeting the requirements of the relevant
provisions of the TBOC to be properly executed and filed in accordance with such provisions. The
Merger shall become effective at the time of filing of the Certificate of Merger with the Secretary
of State of the State of
Texas in accordance with the TBOC or at such later time that Parent and
the Company shall have agreed upon and designated in such filing as the effective time of the
Merger (the “
Effective Time”).
ARTICLE II.
GOVERNING DOCUMENTS
Section 2.1 Articles of Incorporation of the Surviving Entity. As of the Effective Time, the
certificate of formation of the Company shall be amended to read in its entirety as set forth in
Exhibit A hereto and, as so amended, shall be the certificate of formation of the Surviving
Entity, until duly amended in accordance with Applicable Law.
Section 2.2 Bylaws of the Surviving Entity. As of the Effective Time, the bylaws of the Company
shall be amended to read in their entirety as set forth in Exhibit B hereto and, as so
amended, shall be the bylaws of the Surviving Entity, until duly amended in accordance with
Applicable Law.
2
ARTICLE III.
DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY
Section 3.1 Board of Directors of Surviving Entity. The parties shall take all necessary action to
cause, as of the Effective Time, the directors of the Surviving Entity to be as set forth on
Section 3.1 of the Parent Disclosure Letter, until their successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal in accordance with
the governing documents of the Surviving Entity.
Section 3.2 Officers of Surviving Entity. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Entity, until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or removal in
accordance with the governing documents of the Surviving Entity.
Section 3.3 Governance Matters. Parent shall take all necessary actions to cause, as of the
Effective Time, the board of directors of Parent (the “Parent Board”) to include as directors of
Parent the two current directors of the board of directors of the Company (the “Company Board”) set
forth on Section 3.3 of the Parent Disclosure Letter (each a “Designated Director”). If
prior to the Effective Time, any Designated Director is unwilling or unable to serve as a director
of Parent for any reason, then, any replacement for such person shall be selected by mutual
agreement of Parent and the Company, and such replacement will be a Designated Director. Subject
to compliance with Applicable Law, the NASDAQ rules and the nominating and governance policies and
procedures of the Parent Board (or any committee thereof), Parent shall cause each Designated
Director to be nominated to the Parent Board at any Parent shareholder meeting at which directors
are to be elected that is held from the Effective Time until (a) the third anniversary of the
Effective Time or (b) in the case of any Designated Director who as of the Effective Time also
serves as an officer of Parent or the Surviving Entity, until such time that the Designated
Director no longer serves as an officer of Parent or the Surviving Entity.
ARTICLE IV.
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Conversion of Capital Stock of the Company and Merger Sub.
(a) Merger Consideration. At the Effective Time, subject to the other
provisions of this Agreement, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (including any Company restricted stock, but
excluding any Company Common Stock to be canceled without payment of any consideration
pursuant to Section 4.1(d)), shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted automatically into the right to receive, a
fraction of a validly issued, fully paid and nonassessable share of Parent Common Stock in
the ratio provided in Section 4.1(b) below (the “Exchange Ratio”) (together with any
cash in lieu of fractional shares of Parent Common Stock to be paid pursuant to Section
4.2(e), the “Merger Consideration”), upon surrender, in the manner provided in
Section 4.2, of a certificate that immediately prior to the Effective Time
represented such Company Common
3
Stock (a “Certificate”) or a non-certificated share of Company Common Stock represented
by book entry (a “Book Entry Share”).
(b) Determination of Exchange Ratio. If the Average Price of Parent Common
Stock is, as of the date that is two business days prior to the earliest of the Parent
Shareholders Meeting or Company Shareholders Meeting contemplated by Section 7.4
hereof (the “Price Determination Date”), equal to or greater than $32.54 but less than or
equal to $52.54, the Exchange Ratio shall be 0.188; provided, however, that if the Average
Price of Parent Common Stock is, as of the Price Determination Date, less than $32.54 or
greater than $52.54 (in either case, an “Ultimate Price Event”), then Parent and the Company
shall seek, in good faith, to negotiate an Exchange Ratio that is acceptable to both
parties, and if such parties fail to reach agreement within two business days of the Price
Determination Date, either Parent or Company shall have the right to terminate this
Agreement pursuant to Section 9.2(e).
For purposes of this Section 4.1(b), “Average Price” means the average of the volume
weighted average of the trading price of Parent Common Stock, as such price is reported on
NASDAQ as reported in the National Edition of The Wall Street Journal or, if not reported
thereby, such other source as the parties shall agree in writing, for the 10 consecutive
trading days ending on the Price Determination Date.
(c) Cancellation of Shares of Company Common Stock. As a result of the Merger
and without any action on the part of the holders thereof, at the Effective Time, each such
share of Company Common Stock (other than Company Common Stock to be canceled without
payment of any consideration pursuant to Section 4.1(d)) shall cease to be
outstanding and shall be canceled and shall cease to exist, and each Certificate and Book
Entry Share shall thereafter cease to have any rights with respect to such share of Company
Common Stock and shall thereafter represent only the right to receive, without interest, the
Merger Consideration and any unpaid dividends or other distributions to which the holders
thereof are entitled pursuant to Section 4.2(c).
(d) Cancellation of Remaining Shares of Company Common Stock. Each share of
Company Common Stock issued and held in the Company’s treasury and each share of Company
Common Stock owned by any wholly-owned Subsidiary of the Company or by Parent or Merger Sub,
shall, at the Effective Time and by virtue of the Merger, cease to be outstanding and shall
be canceled and shall cease to exist without payment of any consideration therefor, and no
shares of Parent Common Stock or other consideration shall be delivered in exchange
therefor.
(e) Conversion of Merger Sub Common Stock. At the Effective Time, each share
of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder thereof, be
converted into and become one validly issued, fully paid and nonassessable share of common
stock, par value $0.01, of the Surviving Entity.
4
(f) Treatment of Company Equity Awards.
(i) All options to acquire shares of Company Common Stock and other awards
(collectively, “Company Equity Awards”) made under the Company’s stock plans
(collectively, the “Company Stock Plans”) prior to the Effective Time, which are
outstanding immediately prior to the Effective Time, are identified in Section
4.1(f) of the Company Disclosure Letter.
(ii) In the event a Company Equity Award constitutes a grant of restricted stock
and to the extent such award is outstanding immediately prior to the Effective Time
(“Company Restricted Stock Award”), such Company Restricted Stock Award shall be
deemed to be fully vested as of the Effective Time, and the holder of such Company
Restricted Stock Award shall receive the number of shares of Company Common Stock
subject to such Company Restricted Stock Award in accordance with the terms and
conditions of the applicable Company Stock Plan, including any terms and conditions
regarding any Taxes required by Applicable Law to be withheld, if any, with respect
to the vesting of such Company Restricted Stock Award.
(iii) In the event a Company Equity Award constitutes a stock option grant and
to the extent such award is outstanding during the 30-day period that ends
immediately prior to the Effective Time (“Company Stock Option Award”), (A) such
Company Stock Option Award shall be deemed to be fully vested and exercisable during
such period, and (B) to the extent such Company Stock Option Award is exercised
during such period, the holder of such Company Stock Option Award shall receive the
number of shares of Company Common Stock subject to such Company Stock Option Award
(to the extent exercised) in accordance with the terms and conditions of the
applicable Company Stock Plan, including any terms and conditions regarding the
payment of the exercise price and any Taxes required by Applicable Law to be
withheld, if any, with respect to the exercise of such Company Stock Option Award.
To the extent any Company Stock Option Awards remain outstanding and unexercised as
of the close of the 30-day period that ends immediately prior to the Effective Time,
such Company Stock Option Awards (A) shall be deemed to be fully vested and
exercisable and (B) shall be continued and assumed by Parent as of the Effective Time
pursuant to their terms (such awards are referred to herein as the “Rollover
Awards”); provided, however, that Parent Common Stock shall replace the shares of
Company Common Stock subject to such awards pursuant to this Agreement and the
exercise price, if any, for such awards, if any, shall be adjusted as provided
pursuant to this Agreement.
(iv) The assumption of Rollover Awards shall be made pursuant to this
Section 4.1(f), so that at the Effective Time, the applicable Company Stock
Plans shall be assumed by Parent (with such adjustments thereto as may be required to
reflect the Merger, including the substitution of Parent Common Stock for Company
Common Stock thereunder) and the Rollover Awards shall be assumed and adjusted by
Parent, subject to the same terms and conditions as set forth in the applicable
Company Stock Plans and the applicable award agreements entered into
5
pursuant thereto; provided, however, that for periods beginning immediately
following the Effective Time, (A) each Rollover Award shall be exercisable only for
that whole number of shares of Parent Common Stock equal to the product (rounded down
to the nearest whole share) of the number of shares of Company Common Stock subject
to such Rollover Award immediately prior to the Effective Time multiplied by the
Exchange Ratio, and (B) the exercise price per share of Parent Common Stock shall be
an amount equal to the exercise price per share of Company Common Stock subject to
such Rollover Award in effect immediately prior to the Effective Time divided by the
Exchange Ratio (the price per share, as so determined, being rounded up to the
nearest whole cent); provided, that in no event shall the exercise price per share be
less than the par value of Parent Common Stock. For the avoidance of doubt, any
exercise of a Rollover Award shall be made in accordance with the terms and
conditions of the applicable Company Stock Plan, including any terms and conditions
regarding the payment of the exercise price and any Taxes required by Applicable Law
to be withheld, if any, with respect to the exercise of such Rollover Award. The
adjustments provided in this paragraph with respect to any Rollover Awards shall be
and are intended to be effective in a manner which is consistent with Section 424(a)
of the Code and the Treasury Regulations thereunder, and, to the extent applicable,
Section 409A of the Code and the Treasury Regulations thereunder.
(v) Except as otherwise provided
herein or as set forth in Section 4.1(f)(v) of the Company
Disclosure Letter,
from and after the period that begins
as of the date of this Agreement, the Company and its Subsidiaries shall take no
action to provide for the extension of the term or exercise period with respect to
any Company Equity Award (unless such extension is required under such Company Equity
Awards or any applicable employment or change in control agreement pursuant any terms
thereunder that are in effect as of the date of this Agreement). To the extent such
extension is required under the terms of such Company Equity Awards (or any
applicable employment or change in control agreement)
or as set forth in Section 4.1(f)(v) of the Company
Disclosure Letter, the Company shall, prior to
the Effective Time, take all actions (if any) as may be required to cause
such
extension
to occur at the Effective Time and immediately prior to any assumption of the Company
Stock Plan by Parent (to the extent permitted under the terms of such Company Stock
Plan as of the date of this Agreement).
(vi) Promptly following the Closing Date, Parent shall file with the Securities
and Exchange Commission (the “SEC”) a Registration Statement on Form S-8 (or any
successor form) covering the shares of Parent Common Stock issuable upon exercise or
vesting of the Company Equity Awards, and shall cause such registration statement to
remain effective for as long as there are outstanding any such Company Equity Awards.
Except as otherwise specifically provided by this Section 4.1(f), the terms
of the Company Equity Awards and the relevant Company Stock Plans, as in effect on
the Effective Time, shall remain in full force and effect with respect to the Company
Equity Awards after giving effect to the Merger and the assumptions by Parent as set
forth above. As soon as practicable following the Effective Time, Parent shall
deliver to the holders of Rollover Awards appropriate notices stating that such
Rollover Awards and such agreements shall have been assumed by Parent and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 4.1(f)).
6
(vii) Nothing in this Section 4.1(f) is intended to release any employee
or service provider to the Company from any provisions relating to any
non-competition, non-solicitation, or confidentiality provisions (or similar
provisions) of any Company Equity Award and any associated damages or forfeitures
(the “Equity Award Restrictive Covenants”), which shall survive the Effective Time.
The Company shall take such action as may be necessary to ensure the survival of the
Equity Award Restrictive Covenants and the succession of Parent to the benefits of
the Equity Award Restrictive Covenants.
Section 4.2 Exchange of Certificates Representing Company Common Stock.
(a) Exchange Fund. As of the Effective Time, Parent shall appoint a commercial
bank or trust company reasonably satisfactory to the Company to act as exchange agent
hereunder for the purpose of exchanging Certificates and Book Entry Shares (the “Exchange
Agent”). Parent shall deposit, or cause to be deposited, with the Exchange Agent, in trust
for the benefit of the holders of shares of Company Common Stock, the number of shares of
Parent Common Stock for exchange in accordance with this Article IV, plus the additional
cash amounts sufficient to make payments in lieu of fractional shares of Parent Common Stock
in accordance with Section 4.2(e) (such cash and shares of Parent Common Stock,
together with any dividends or distributions with respect thereto in accordance with
Section 4.2(c), being hereinafter referred to as the “Exchange Fund”). Parent shall
deposit such shares of Parent Common Stock with the Exchange Agent by delivering to the
Exchange Agent certificates representing, or providing to the Exchange Agent an
uncertificated book-entry for, such shares.
(b) Exchange Procedures. Promptly after the Effective Time, Parent shall cause
the Exchange Agent to mail to each holder of record of one or more shares of Company Common
Stock as of the Effective Time: (i) a letter of transmittal (the “Letter of Transmittal”),
which shall specify that delivery shall be effected, and risk of loss and title to the
shares of Company Common Stock shall pass, only upon delivery of the corresponding
Certificates to the Exchange Agent or receipt by the Exchange Agent of an “agent’s message”
with respect to Book Entry Shares and shall be in such form and have such other provisions
as Parent may reasonably specify, and (ii) instructions for use in effecting the surrender
of such Certificates or Book Entry Shares in exchange for the Merger Consideration and any
unpaid dividends and distributions on shares of Parent Common Stock in accordance with
Section 4.2(c). Upon surrender of a Certificate or Book Entry Shares for
cancellation to the Exchange Agent together with such Letter of Transmittal, duly executed
and completed in accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate or Book Entry
Shares shall be entitled to receive in exchange therefor (x) one or more shares of Parent
Common Stock which shall be in uncertificated book-entry form unless a physical certificate
is requested (in accordance with Section 4.2(i)) and which shall represent, in the
aggregate, that number of whole shares of Parent Common Stock that such holder has the right
to receive pursuant to Section 4.1(a) and (y) a check representing cash in lieu of
fractional shares, if any, pursuant to Section 4.2(e) and unpaid dividends and
distributions, if any, which such holder has the right to receive pursuant to the provisions
of this Article IV, after giving effect to any required withholding Tax, and any Certificate
or Book Entry Shares so surrendered shall forthwith be canceled. No interest
7
will be paid or will accrue on the cash in lieu of fractional shares and unpaid
dividends and distributions, if any, payable to holders of Company Common Stock. In the
event of a transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, one or more shares of Parent Common Stock which shall be in
uncertificated book-entry form unless a physical certificate is requested (in accordance
with Section 4.2(i)) and which shall represent, in the aggregate, the proper number
of shares of Parent Common Stock, together with a check for cash in lieu of fractional
shares, if any and unpaid dividends and distributions, if any, which such holder has the
right to receive pursuant to the provisions of this Article IV, may be issued to such a
transferee if the Certificate representing such Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer Taxes have been paid.
(c) Distributions with Respect to Unexchanged Shares. All shares of Parent
Common Stock to be issued pursuant to the Merger shall be deemed issued and outstanding as
of the Effective Time. Notwithstanding any other provisions of this Agreement, no dividends
or other distributions declared or made after the Effective Time with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to the holder
of any shares of Company Common Stock until the holder of such shares shall surrender such
shares in accordance with this Article IV. Subject to Applicable Law, following surrender
of any such shares, there shall be paid to the record holder thereof, without interest, (i)
promptly after such surrender, the amount of dividends or other distributions with respect
to the number of whole shares of Parent Common Stock that such holder has the right to
receive pursuant to Section 4.1, with a record date after the Effective Time but
prior to surrender and with a payment date on or prior to the date of such surrender and not
previously paid, less the amount of any withholding Taxes, and (ii) at the appropriate
payment date, the amount of dividends or other distributions payable with respect to such
whole shares of Parent Common Stock that such holder receives with a record date after the
Effective Time but on or prior to the date of such surrender and with a payment date
subsequent to such surrender, less the amount of any withholding Taxes.
(d) No Further Ownership Rights in Company Common Stock; Closing of Transfer
Books. All shares of Parent Common Stock issued, and any cash paid, upon the surrender
for exchange of shares of Company Common Stock in accordance with the terms of this Article
IV shall be deemed to have been issued or paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock previously represented by Certificates or Book Entry
Shares. The stock transfer books of the Company shall be closed immediately upon the
Effective Time and there shall be no further registration of transfers of shares of Company
Common Stock thereafter on the records of the Company. At or after the Effective Time, any
Certificates or Book Entry Shares presented to the Exchange Agent or Parent for any reason
shall represent the right to receive the Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby (including any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled to pursuant to
Section 4.2(e)) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 4.2(c).
8
(e) No Fractional Shares.
(i) No certificates of Parent Common Stock representing fractional shares of
Parent Common Stock or book-entry credit of the same shall be issued pursuant hereto,
and such fractional share interests will not entitle the owner thereof to vote or to
have any rights of a shareholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fractional share of Parent Common Stock (after taking
into account all Certificates and/or Book Entry Shares held by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount equal to the product
of (x) such fractional part of a share of Parent Common Stock, multiplied by (y) the
closing price for a share of Parent Common Stock as such price is reported on the
NASDAQ and published in The Wall Street Journal on the business day immediately
preceding the Closing Date.
(iii) As promptly as practicable after the determination of the amount of cash,
if any, to be paid to holders of fractional interests, the Exchange Agent shall so
notify Parent, and Parent shall deposit or cause the Surviving Entity to deposit such
amount with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holders of fractional interests subject to and in accordance with the terms
hereof.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund (including
the proceeds of any investments thereof and any certificates representing shares of Parent
Common Stock or book-entry credit of the same) that remains undistributed to the former
shareholders of the Company as of the date six months after the Effective Time shall be
delivered to Parent. Any former shareholders of the Company who have not theretofore
complied with this Article IV shall thereafter look only to Parent for delivery of the
Merger Consideration and any unpaid dividends and distributions on the shares of Parent
Common Stock deliverable to such former shareholder pursuant to this Agreement.
(g) No Liability. None of Parent, Merger Sub, the Company, the Surviving
Entity, any Affiliate of any of the foregoing, the Exchange Agent or any other Person shall
be liable to any Person for any portion of the Exchange Fund delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(h) Lost Certificates. In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by Parent, the
posting by such Person of a bond in such reasonable amount as Parent may direct as indemnity
against any claim that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the applicable
Merger Consideration and any unpaid dividends and distributions with respect to shares of
Parent Common Stock, as provided in Section 4.2(c), deliverable in respect thereof
pursuant to this Agreement.
9
(i) Parent Book Entry Shares. Notwithstanding anything to the contrary
contained in this Agreement, the parties intend that Parent may, at its sole option, be
permitted to utilize a direct registration system in accordance with the NASDAQ rules and
Applicable Law for the shares of Parent Common Stock to be delivered under this Agreement,
so that, if Parent so elects, all or any portion of the shares of Parent Common Stock issued
in connection with this Agreement may be in uncertificated book entry form unless a physical
certificate is requested in writing by a holder of one or more Certificates.
(j) Investment of the Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund as directed by Parent on a daily basis; provided, that no such
gain or loss thereon shall affect the amounts payable to the shareholders of the Company
pursuant to this Article IV. Any interest and other income resulting from such investments
shall be paid promptly to Parent.
(k) Further Assurances. After the Effective Time, the officers and directors
of the Surviving Entity will be authorized to execute and deliver, in the name and on behalf
of the Company, any deeds, bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Entity any and all right, title and interest
in, to and under any of the rights, properties or assets acquired or to be acquired by the
Surviving Entity as a result of, or in connection with, the Merger.
Section 4.3 Adjustment of Exchange Ratio. In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding Parent Common Stock or Company Common
Stock shall have been changed as a result of a stock split, reverse stock split, stock dividend,
combination, reclassification, recapitalization or other similar transaction or event, the Exchange
Ratio, the Merger Consideration and other items dependent thereon shall be appropriately adjusted
to provide to the holders of Company Common Stock the same economic effect as contemplated by this
Agreement prior to such event.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in (a) the disclosure letter delivered to Parent by the Company at or
prior to the execution of this Agreement (the “Company Disclosure Letter”) and making reference to
the particular subsection of this Agreement to which exception is being taken (provided that
disclosure of any item in any section of the Company Disclosure Letter shall not be deemed to be
disclosed with respect to any other section of this Article V unless the relevance of such item is
reasonably apparent on its face), or (b) the Company Reports filed after December 31, 2010 and
prior to the date hereof; provided that (i) any disclosures in such Company Reports in any risk
factors section, in any section related to forward looking statements and other disclosures that
are predictive, non-specific or forward-looking in nature shall be ignored and (ii) any disclosure
in the Company Reports shall be deemed to qualify any representation or warranty in this Article V
only to the extent that such disclosure is made in such a way as to make its relevance reasonably
apparent on its face (but such Company Reports shall in no event qualify the representations and
warranties set forth in Sections 5.1, 5.2, 5.3, 5.4, 5.6 or
the first sentence of Section 5.10), the Company represents and warrants to Parent and
Merger Sub that:
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Section 5.1
Existence; Good Standing; Corporate Authority. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State of
Texas. The
Company is duly qualified to do business and is in good standing under the laws of any jurisdiction
in which the character of the properties owned or leased by it therein or in which the transaction
of its business makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect. The Company has all requisite corporate power and authority to
own, operate and lease its properties and assets and to carry on its business as now conducted.
The copies of the Restated Articles of Incorporation of the Company (the “
Company Articles of
Incorporation”) and the Amended and Restated By-Laws of the Company (the “
Company Bylaws”)
previously made available to Parent are true and correct, in full force and effect and contain all
amendments thereto.
Section 5.2 Authorization, Validity, Enforceability and Fairness.
(a) The Company has all requisite corporate power and authority to execute and deliver
this Agreement and all other agreements and documents contemplated hereby to which it is a
party, and upon receipt of the Company Shareholder Approval, to consummate the transactions
contemplated hereby and thereby.
(b) The Company’s execution and delivery of this Agreement and the consummation by the
Company of the transactions contemplated by this Agreement (including, without limitation,
the Merger) have been duly authorized by all requisite corporate action on the part of the
Company, other than the Company Shareholder Approval and the filing of the Certificate of
Merger.
(c) This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery hereof by each of Parent and Merger Sub,
constitutes the valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights
and general principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(d) The Company Board, at a meeting duly called and held on or prior to the date
hereof, has (i) determined that this Agreement and the transactions contemplated hereby
(including, without limitation, the Merger) are advisable and in the best interests of the
shareholders of the Company, (ii) approved this Agreement, (iii) resolved to recommend the
approval of this Agreement by the shareholders of the Company (the “Company
Recommendation”), subject to Section 7.3, and (iv) directed that this Agreement be
submitted to the shareholders of the Company for approval, subject to Sections 7.3
and 7.4.
(e) The Company Board has received the opinion of its financial advisor, Southwest
Securities, Inc. (the “Company Financial Advisor”), to the effect that, subject to the
assumptions, qualifications and limitations relating to such opinion, as of the date of this
Agreement, the Exchange Ratio is fair, from a financial point of view, to the holders of
Company Common Stock (the “Fairness Opinion”). A true, complete and correct
11
copy of such opinion will be delivered to Parent promptly after the date of this
Agreement for informational purposes only.
Section 5.3 Capitalization.
(a)
The authorized capital stock of the Company consists of 25,000,000 shares of
Company Common Stock and 4,000,000 shares of preferred stock, $1.00 par value (“Company
Preferred Stock”). As of March 18, 2011, there were (i) 19,212,708 outstanding shares of
Company Common Stock (including outstanding restricted shares of Company Common Stock) and
37,803 shares of Company Common Stock issued and held in the treasury of the Company, (ii) 761,959
shares of Company Common Stock reserved for issuance upon exercise or vesting of outstanding
Company Equity Awards, (iii) 2,177,527 shares of Company Common Stock reserved for issuance under
the Company Equity Plans and (iv) no issued or outstanding shares of Company Preferred
Stock. All such issued and outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, and all shares of
Company Common Stock reserved for issuance upon exercise or vesting of outstanding Company
Equity Awards will be, upon issuance, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
(b) Except as set forth in Section 5.3(a) hereof or Section 5.3(b) of
the Company Disclosure Letter, there are not issued, reserved for issuance or outstanding,
and there are not any obligations of the Company or any of it Subsidiaries to issue, sell,
deliver or cause to be issued, sold or delivered (i) any shares of capital stock or other
voting securities of, or other equity interests in, the Company, other than outstanding
Company Common Stock to be issued pursuant to Company Equity Awards in accordance with their
terms, (ii) any options, warrants, calls or other rights to acquire from the Company or any
of its Subsidiaries any capital stock, voting securities of, or other ownership interests
in, or any securities convertible into or exchangeable for capital stock, voting securities
of, or ownership interests in, the Company or any of its Subsidiaries, (iii) any
subscriptions, preemptive rights or similar rights, agreements, arrangements, claims or
commitments of any character, relating to the capital stock of the Company or any of its
Subsidiaries, or securities convertible into or exchangeable for such stock, securities or
equity interests, (iv) any contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any capital stock or other voting securities of,
or other equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such stock, securities or equity interests or (v) any
shareholder agreements, voting trusts, registration rights agreements or similar agreements
to which the Company or any of its Subsidiaries is a party with respect to the voting or
registration of any capital stock or other voting securities of or other equity interests in
the Company or any of its Subsidiaries, or securities convertible into or exchangeable for
such stock, securities or equity interests.
(c) The Company has delivered or made available to Parent an accurate and complete copy
of each of the Company Stock Plans and the forms of Company Equity Awards. There have been
no repricings of any Company Equity Awards that are stock options (“Company Options”)
through amendments, cancellation and reissuance or other means since January 1, 2008. No
grants of Company Equity Awards are otherwise subject to Section 409A of the Code. All
grants of Company Equity Awards were validly made and
12
properly approved by the Company Board (or a duly authorized committee or subcommittee
thereof) in compliance with Applicable Law and properly recorded on the consolidated
financial statements of the Company in accordance with GAAP, and, where applicable, no such
grants involved any “back dating,” “forward dating” or similar practices with respect to
grants of Company Options.
Section 5.4 Subsidiaries.
(a) Section 5.4 of the Company Disclosure Letter sets forth a true and complete
list of all of the Subsidiaries of the Company, the jurisdiction of incorporation or
formation of each such Subsidiary and, as of the date hereof, the jurisdictions in which
each such Subsidiary is qualified or licensed to do business. Each of the Company’s
Subsidiaries is a corporation duly organized, validly existing and is in good standing under
the Applicable Law of its jurisdiction of incorporation or organization, has the corporate
or other entity power and authority to own, operate and lease its properties and assets and
to carry on its business as now conducted, and is duly qualified to do business and is in
good standing under the laws of any jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business makes such
qualification necessary, except for jurisdictions in which such failure to be so qualified
or in good standing, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect. All of the outstanding shares of
capital stock of, or other ownership interests in, each of the Company’s Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights
(except as such nonassessability may be affected by Applicable Law), and are owned, directly
or indirectly, by the Company free and clear of any mortgage, deed of trust, lien, security
interest, pledge, lease, conditional sale contract, charge, privilege, easement, right of
way, reservation, option, right of first refusal and other encumbrance (each, a “Lien”).
(b) Except for the capital stock or other voting securities or ownership interests in
any Subsidiary of the Company, neither the Company nor any of its Subsidiaries owns,
directly or indirectly, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Person.
(c) No Subsidiary of the Company owns any shares of Company Common Stock.
Section 5.5 No Conflict.
(a) The execution and delivery by the Company of this Agreement and the consummation by
the Company of the Merger and the other transactions contemplated by this Agreement in
accordance with the terms hereof will not (i) subject to the receipt of the Company
Shareholder Approval, conflict with or result in a violation of any provisions of the
Company Articles of Incorporation or Company Bylaws or the comparable organizational
documents of any of the Company’s Subsidiaries; (ii) violate, or conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or a termination or acceleration under,
or result in the
13
creation of any Lien upon any of the properties or assets of the Company or its
Subsidiaries under, any of the provisions of any loan or credit agreement, note, bond,
mortgage, indenture, deed of trust, license, concession, franchise, permit, lease, contract,
agreement, joint venture or other instrument or obligation to which the Company or any of
its Subsidiaries is a party, or by which the Company or any of its Subsidiaries or any of
their respective properties is bound; or (iii) subject to the filings and other matters
referred to in Section 5.5(b), contravene or conflict with or constitute a violation
of any provision of any Applicable Law, except for such matters described in clause (ii) or
(iii) as would not have, or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) The execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Merger and the other transactions contemplated hereby in
accordance with the terms hereof will not require any consent, approval, qualification or
authorization of, or filing or registration with, any Governmental Authority, other than
those under or in relation to (i) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the “
HSR Act”), (ii) the Securities Act of 1933, as amended (together with the
rules and regulations promulgated thereunder, the “
Securities Act”), the Securities Exchange
Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the
“
Exchange Act”), or applicable state securities and “Blue Sky” laws, (iii) the rules and
regulations of the NASDAQ Stock Market( “
NASDAQ”), (iv) the filing of the Certificate of
Merger with the Secretary of State of the State of
Texas and the filing or recordation of
other appropriate documents as required by Applicable Law of other states in which the
Company is qualified to do business and (v) the Investment Canada Act, except for any
consent, approval, qualification or authorization the failure of which to obtain, and for
any filing or registration the failure of which to make, individually or in the aggregate,
would not have, or would not reasonably be expected to have, a Company Material Adverse
Effect.
Section 5.6 SEC Documents; Financial Statements.
(a) The Company has timely filed or furnished with the SEC all registration statements,
prospectuses, reports, schedules, forms, statements and other documents (including exhibits
and any amendments thereto) required to be so filed by it since January 1, 2008
(collectively, the “Company Reports”), and has made available to Parent each document it has
so filed or furnished, each in the form (including exhibits and any amendments thereto)
filed with or furnished to the SEC. The Company has made available to Parent copies of all
material comment letters from the SEC and the Company’s responses thereto since January 1,
2008 through the date hereof. As of the date of this Agreement, there are no outstanding or
unresolved comments received from the SEC staff with respect to the Company Reports. No
Subsidiary of the Company is, or since January 1, 2008 has been, subject to any requirement
to file any form, report or other document with the SEC under Section 13(a) or 15(d) of the
Exchange Act. As of its respective date (or, if amended, as of the date of such amendment),
each Company Report (i) complied in all material respects with the applicable requirements
of the Exchange Act, the Securities Act and the rules and regulations thereunder and (ii)
did not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading.
14
(b) Each of the consolidated financial statements included in or incorporated by
reference into the Company Reports (including related notes and schedules) complied at the
time it was filed as to form, in all material respects, with the applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto, was
prepared in accordance with GAAP consistently applied during the periods involved and fairly
presents, in all material respects, the consolidated financial position of the Company and
its Subsidiaries as of the respective dates thereof and the consolidated results of
operations, cash flows or changes in shareholders’ equity, as the case may be, of the
Company and its Subsidiaries for the respective periods set forth therein (subject, in the
case of unaudited statements, to (i) such exceptions as may be permitted by Form 10-Q of the
SEC and (ii) normal, recurring year-end audit adjustments which have not been and are not
expected to be material in the aggregate).
(c) There are no liabilities or obligations of the Company or any of its Subsidiaries
(whether accrued, absolute, contingent or otherwise and whether or not required to be
disclosed), other than liabilities or obligations to the extent (i) reflected or reserved
against on the Company’s consolidated balance sheet at December 31, 2010, (ii) such
liabilities or obligations were incurred in the ordinary course of business consistent with
past practice since December 31, 2010 or (iii) such liabilities or obligations that,
individually or in the aggregate, have not had and would not reasonably be expected to have,
a Company Material Adverse Effect.
Section 5.7 Internal Controls and Procedures.
(a) Since the enactment of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”),
the Company has been and is in compliance in all material respects with (i) the applicable
provisions of the Xxxxxxxx-Xxxxx Act and (ii) the applicable listing and corporate
governance rules and regulations of NASDAQ.
(b) The books, records and accounts of the Company and each of its Subsidiaries, all of
which have been made available to Parent, are complete and correct in all material respects
and represent actual, bona fide transactions and have been maintained in accordance with
sound business practices.
(c) Each of the chief executive officer and chief financial officer of the Company (or
each former chief executive officer and former chief financial officer of the Company, as
applicable) has made all certifications (without qualification or exceptions to the matters
certified) required under Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and the related
rules and regulations promulgated by the SEC or NASDAQ with respect to the Company Reports,
and the statements contained in such certifications are complete and correct. Neither the
Company nor any of its officers has received notice from any Governmental Authority
questioning or challenging the accuracy, completeness, form or manner of filing or
submission of such certification.
(d) The Company has (i) established and maintains “disclosure controls and procedures”
(as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as required by Rule
13a-15 under the Exchange Act, and (ii) has disclosed to its auditors
15
and the audit committee of the Company Board (A) any “significant deficiencies” or
“material weaknesses” (as such terms are defined in the Public Accounting Oversight Board’s
Auditing Standard No. 5) in the design or operation of internal controls over financial
reporting which could adversely affect its ability to record, process, summarize and report
financial data and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in its internal control over financial reporting.
(e) The Company has designed and maintains a system of “internal control over financial
reporting” (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). The
Company’s management, with the participation of the Company’s chief executive and financial
officers, has completed an assessment of the effectiveness of the Company’s internal
controls over financial reporting in compliance with the requirements of Section 404 of the
Xxxxxxxx-Xxxxx Act for the fiscal year ended December 31, 2010, and such assessment
concluded that such internal controls were effective using the framework specified in the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2010. To the
knowledge of the Company, there is no reason to believe that its auditors and its chief
executive officer and chief financial officer will not be able to give the certifications
and attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Xxxxxxxx-Xxxxx Act, without qualification, when next due.
(f) Neither the Company nor any of its Subsidiaries has, since the enactment of the
Xxxxxxxx-Xxxxx Act, extended or maintained credit, arranged for the extension of credit, or
renewed an extension of credit (within the meaning of Section 13(k) of the Exchange Act), to
or for any director or executive officer (or equivalent thereof) of the Company or any of
its Subsidiaries.
Section 5.8 Compliance with Laws; Permits.
(a) Neither the Company nor any of its Subsidiaries or the conduct of their respective
businesses is, and since January 1, 2008, none has been, in violation in any material
respect of any Applicable Law. Since such date, neither the Company nor any of its
Subsidiaries has received any written notice, claim or assertion or, to the Company’s
knowledge, other communication from any Governmental Authority regarding any actual or
possible violation of, or failure to comply with, any Applicable Law in any material
respect. No condition exists which does or would reasonably be expected to constitute a
violation of or deficiency in any material respect under any Applicable Law by the Company
or any of its Subsidiaries.
(b) The Company and each of its Subsidiaries hold all material permits, licenses,
certifications, grants, easements, permissions, qualifications, registrations, variances,
exemptions, consents, orders, franchises, approvals or other authorizations (the “Company
Permits”) of all Governmental Authorities or other Persons necessary for the ownership,
leasing and operation of their respective assets and the lawful conduct of their respective
businesses. All Company Permits are in full force and effect and there exists no default
thereunder or breach thereof in any material respect. Neither the Company nor any of its
Subsidiaries has received written notice that any such material Company Permit will be
terminated or modified or cannot be renewed in the ordinary course of business (either
before
16
or after the Effective Time), and the Company has no knowledge of any reasonable basis
for any such termination, modification or nonrenewal.
Section 5.9 Litigation.
(a) Except as set forth in Section 5.9(a) of the Company Disclosure Letter,
there are no material (i) Proceedings pending or, to the Company’s knowledge, threatened
against the Company or any of its Subsidiaries or their respective assets, or any director,
officer or employee of the Company or any of its Subsidiaries, in respect of which the
Company or any of its Subsidiaries may be liable, at law or in equity, or (ii) Proceedings
pending or, to the Company’s knowledge, threatened against the Company or any of its
Subsidiaries or their respective assets, or any director, officer or employee of the Company
or any of its Subsidiaries, in respect of which the Company or any of its Subsidiaries may
be liable, before any Governmental Authority or arbitration.
(b) No material order, writ, fine, injunction, decree, judgment, award or determination
of any Governmental Authority has been issued or entered against the Company or any of its
Subsidiaries or any of their respective officers or directors that continues to be in effect
that affects the ownership or operation of any of their respective assets. Since January 1,
2008, no criminal order, writ, fine, injunction, decree, judgment or determination of any
court or Governmental Authority has been issued against the Company or any Subsidiary of the
Company.
Section 5.10 Absence of Certain Changes. Since December 31, 2010, there has not been any event,
change, occurrence, effect, or development of circumstances or facts that, individually or in the
aggregate, would reasonably be expected to have a Company Material Adverse Effect. From December
31, 2010 to the date of this Agreement, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and consistent with past practice in all material
respects, and during such period there has not occurred:
(a) any recapitalization of the Company or any merger or consolidation of the Company
or any of its Subsidiaries with any other Person;
(b) any acquisition of any business from any other Person;
(c) any creation or incurrence of any Liens, except for Permitted Liens, on any assets
used in the businesses of the Company and its Subsidiaries having an aggregate value in
excess of $100,000;
(d) any making of any loan, advance or capital contribution to, or investment in, any
Person other than loans, advances or capital contributions to, or investments in,
wholly-owned Subsidiaries of the Company;
(e) any material change by the Company or any of its Subsidiaries in any of its
material accounting methods, policies, principles, procedures or practices, except for any
change required by changes in GAAP or by Applicable Law;
17
(f) any declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock, property or any combination thereof) in respect of any capital stock of the
Company or any of its Subsidiaries (other than dividends or distributions by any Subsidiary
to the Company or another wholly-owned Subsidiary) or any redemption, purchase, repurchase
or other acquisition by the Company or any of its Subsidiaries, directly or indirectly, of
any outstanding shares of capital stock or other securities of, or other ownership interests
in, the Company or any of its Subsidiaries;
(g) any issuance of shares of Company Common Stock or other equity securities of the
Company except pursuant to the Company Stock Plans;
(h) any split, combination or reclassification of any capital stock of the Company or
any of its Subsidiaries or any issuance or the authorization of any issuance of shares of
Company Common Stock or any other securities in respect of, in lieu of or in substitution
for shares of that capital stock except pursuant to the Company Stock Plans;
(i) any sale, transfer, lease, license, mortgage, pledge or other disposition or
encumbrance of any assets of the Company or its Subsidiaries, except for (i) surplus or
obsolete equipment, (ii) sales, transfers, leases, licenses, mortgages, pledges or other
dispositions or encumbrances of assets for a purchase price not in excess of, or with a fair
market value not in excess of, $100,000 in any single transaction or series of related
transactions, or (iii) sales, leases, licenses or other transfers between the Company and
its wholly-owned Subsidiaries or between those Subsidiaries;
(j) any material damage to or any material destruction or loss of physical properties
the Company or any of its Subsidiaries owns or uses, whether or not covered by insurance;
(k) except to the extent required under any Company Benefit Plan as in effect on the
date of this Agreement or as set forth in Section 5.10(k) of the Company Disclosure
Letter, any (i) increase in the compensation (including bonus opportunities) or fringe
benefits of any of its directors, executive officers or employees (except in the ordinary
course of business consistent with past practice with respect to employees who are not
parties to an employment or change in control agreement), (ii) grant of any severance or
termination pay, other than nominal severance to terminated employees in the ordinary course
of business consistent with past practice, (iii) grant of equity awards to any director,
officer, employee or contractor, (iv) entry into or amendment of any employment, consulting,
change in control or severance agreement or arrangement with any of its present, former or
future directors, officers, employees or contractors, or (v) except as required to comply
with Applicable Law, establishment, adoption, entry into, or amendment in any material
respect or termination of any Company Benefit Plan or any action to accelerate entitlement
to compensation or benefits under any Company Benefit Plan or otherwise for the benefit of
any present, former or future director, officer, employee or contractor, in each such case,
except as otherwise permitted pursuant to clauses (i) or (ii) of this paragraph; or
(l) any agreement to do any of the foregoing.
18
Section 5.11 Taxes.
(a) All material Tax returns, statements, reports, declarations, estimates and forms
(“Returns”) required to be filed by or with respect to the Company or any of its
Subsidiaries (including any Return required to be filed by an affiliated, consolidated,
combined, unitary or similar group that included the Company or any of its Subsidiaries)
have been properly filed on a timely basis with the appropriate Governmental Authorities,
and all material Taxes that have become due (regardless of whether reflected on any Return)
have been duly paid or deposited in full on a timely basis or adequately reserved for in
accordance with GAAP. All material Taxes required by law to have been withheld or collected
by the Company or any of its Subsidiaries (including, but not limited to, Taxes required to
have been withheld with respect to amounts paid or owing to any officer, employee, creditor,
shareholder, independent contractor or other individual) have been withheld and collected
and, to the extent required by law, have been timely paid, remitted or deposited to or with
the relevant Governmental Authority.
(b) There is no Proceeding now pending or (to the knowledge of the Company) threatened
in respect of any material Tax liability of the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries have received written notice from any
Governmental Authority of its intent to examine or audit any Returns of the Company or any
of its Subsidiaries, and no Governmental Authority is now asserting in writing any
deficiency or claim for Taxes or any adjustment to Taxes with respect to which the Company
or any of its Subsidiaries may be liable. Neither the Company nor any of its Subsidiaries
has any liability for any Tax under Treas. Reg. § 1.1502-6 or any similar provision of any
other Tax law, except for Taxes of the affiliated group of which the Company is the common
parent, within the meaning of Section 1504(a)(1) of the Code or any similar provision of any
other Tax law. Neither the Company nor any of its Subsidiaries has granted any material
request, agreement, consent or waiver to extend any period of limitations applicable to the
assessment of any Tax upon the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is a party to any closing agreement described in Section 7121 of the
Code or to any agreement under any similar provision of any state, local or foreign law, and
no agreement has otherwise been entered into with any Governmental Authority by or with
respect to the Company or any of its Subsidiaries which require the Company or any of its
Subsidiaries to adjust any Tax items of the Company or any of its Subsidiaries in any Return
due after the date hereof. Neither the Company nor any of its Subsidiaries is a party to,
is bound by or has any obligation under any Tax sharing, allocation or indemnity agreement
or any similar agreement or arrangement (other than such an agreement or arrangement
exclusively between or among any of the Company and its Subsidiaries and other than
customary Tax indemnifications contained in credit or similar agreements). Since January 1,
2007, the Company has not rescinded any material election relating to Taxes or settled or
compromised any Proceeding or audit relating to any material Taxes, or except as may be
required by Applicable Law, made any material change to any of its methods of reporting
income or deductions for federal income tax purposes. As of the date of this Agreement,
there are no requests for rulings, outstanding subpoenas or unsatisfied written requests
from any Governmental Authority for information with respect to Taxes of the Company or any
of its Subsidiaries. The Company has not been a United States real
19
property holding corporation within the meaning of Section 897(c)(2) of the Code at any
time within the past five years.
(c) No Return filed by the Company or any of its Subsidiaries with respect to any
Taxable period ending on or after January 1, 2008 contains a disclosure statement under
Section 6662 of the Code or any predecessor provision or comparable provision of state,
local or foreign law, and no Return has been filed by the Company or any of its Subsidiaries
with respect to which the preparer of such Return advised consideration of inclusion of such
a disclosure statement, which disclosure statement was not included. Neither the Company
nor any of its Subsidiaries has at any time participated in a “reportable transaction”
within the meaning of Treasury Regulations Section 1.6011-4(b)(1) that was or is required to
be disclosed under Treasury Regulations Section 1.6011-4 or participated in a transaction
that has been disclosed pursuant to IRS Announcement 2002-2, 2002-2 I.R.B. 304.
(d) Neither the Company nor any of its Subsidiaries has, for any tax year for which the
statute of limitations is still open for income tax purposes, been a “distributing” or
“controlled” corporation within the meaning of Section 355 of the Code in any transaction
intended to qualify under such section or any corresponding provision of foreign or state
law.
(e) To the extent required, the Company and each of its Subsidiaries have properly and
in a timely manner documented their transfer pricing methodologies in compliance with
Section 6662(e) (and any related sections) of the Code, the Treasury Regulations promulgated
thereunder and any comparable provisions of state, local, domestic or foreign Tax law.
(f) Neither the Company nor any of its Subsidiaries owns any interest in a controlled
foreign corporation (as defined in Section 957 of the Code) or passive foreign investment
company (as defined in Section 1297 of the Code).
(g) Except as set forth in Section 5.11(g) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries is currently, or has been during the five
year period preceding the date hereof, subject to any type of Tax in any country other than
the United States. Except for claims that were resolved more than five years prior to the
date hereof, no claim has been made by any Governmental Authority in any foreign country
where the Company and its Subsidiaries have not filed Returns and have not paid Taxes that
the Company or any of its Subsidiaries is subject to Tax by that jurisdiction.
(h) Neither the Company nor any of its Subsidiaries knows of any fact or has taken or
failed to take any action that would reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 5.12 Employee Benefit Plans.
(a) Section 5.12(a) of the Company Disclosure Letter contains a list of all
Company Benefit Plans, as well as all outstanding Company Equity Awards and their respective
holders, along with their respective exercise prices, if applicable, and vesting schedules.
The term “Company Benefit Plans” means all employee benefit plans and other
20
benefit arrangements, including all “employee benefit plans” as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974 (“ERISA”), whether or not U.S.-based
plans, and all other material employee benefit, pension, bonus, incentive, deferred
compensation, stock option (or other equity-based, including all Company Stock Plans),
severance, employment, consulting, change in control, welfare (including post-retirement
medical and life insurance), cafeteria, voluntary employee beneficiary association (“VEBA”),
vacation or other paid time off and fringe benefit plans, practices or agreements, whether
or not subject to ERISA or U.S.-based and whether written or oral, sponsored, maintained or
contributed to or required to be contributed to by the Company or any of its Subsidiaries or
any trade or business (whether or not incorporated) which is or was during the six year
period preceding the Effective Time under common control, or treated as a single employer,
with the Company or any of its Subsidiaries under Section 414(b), (c), (m) or (o) of the
Code (an “ERISA Affiliate”), to which the Company or any of its Subsidiaries or ERISA
Affiliates is a party or is required to provide benefits under any Applicable Law or in
which any Person who is currently, has been or, prior to the Effective Time, is expected to
become an employee of the Company or any of its Subsidiaries or ERISA Affiliates is a
participant.
(b) The Company has made available to Parent true and complete copies of (i) the
Company Benefit Plans (including amendments) and, if applicable, the most recent trust
agreements and amendments (including but not limited to any tax-exempt trust, secular trust,
VEBA and rabbi trust documents), (ii) associated contracts and amendments thereto
(including, but not limited to, insurance contracts, HMO/PPO/POS agreements, recordkeeping
agreements, third party administrator agreements and stop loss insurance contracts),
Forms 5500 or any analogous reports filed with respect to non-U.S. based Company Benefit
Plans, including all schedules and attachments for the past three years, (iii) summary plan
descriptions, summaries of material modifications including any analogous communications
provided with respect to non-U.S. based Company Benefit Plans, (iv) funding statements,
annual trust reports and actuarial reports for the past three years, (v) Internal Revenue
Service determination or opinion letters for each such plan that is intended to be qualified
within the meaning of Section 401(a) of the Code, Internal Revenue Service exemption rulings
for any VEBA or other trust intended to be tax-exempt under Section 501(a) of the Code and
any analogous letters or rulings for any non-U.S. based Company Benefit Plan or funding
arrangement intended to qualify for favorable tax treatment under foreign law.
(c) All applicable reporting and disclosure requirements have been met in all material
respects with respect to the Company Benefit Plans. The Company Benefit Plans comply in all
material respects with the requirements of ERISA, the Code and the regulations issued
thereunder or with the statues and regulations of any applicable jurisdiction (including but
not limited to non-U.S. jurisdictions with respect to any non-U.S. based Company Benefit
Plan).
(d) Each Company Benefit Plan intended to be qualified under Section 401(a) of the Code
has been timely amended to comply with the applicable qualification requirements, or may be
retroactively amended to satisfy such requirements within the applicable remedial amendment
period under Section 401(b) of the Code and has received, or has currently pending or will
timely submit an application for, a favorable
21
determination letter from the Internal Revenue Service that considers the qualification
requirements enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA) and related legislation (or is entitled to rely upon a favorable opinion letter
issued by the Internal Revenue Service with respect to such requirements). Each such
Company Benefit Plan has been maintained and operated in all material respects in accordance
with its terms (or if applicable, such terms as will be adopted pursuant to a retroactive
amendment under Section 401(b) of the Code), and has not, since receipt of the most recent
favorable determination letter or opinion letter, been amended in a manner that would
adversely affect such qualified status.
(e) Each Company Benefit Plan that is a “nonqualified deferred compensation plan” (as
defined in Section 409A(d)(1) of the Code) has been operated in good faith compliance with
Section 409A of the Code, Internal Revenue Service Notice 2005-1 and the proposed or final
Treasury regulations issued pursuant to Section 409A of the Code, as applicable, and, since
January 1, 2009, has complied with the written document and operational requirements of
Section 409A of the Code.
(f) To the Company’s knowledge, (i) there are no breaches of fiduciary duty in
connection with the Company Benefit Plans that would subject the Company, its Subsidiaries
or Employees or any trustee, administrator or other fiduciary to any material liability for
breach of fiduciary duty under ERISA or any other Applicable Law and (ii) no prohibited
transaction under Section 4975 of the Code or Section 406 of ERISA with respect to which an
individual, class or statutory exemption is not available has occurred that involves the
assets of any Company Benefit Plan that could subject the Company, its Subsidiaries or
Employees, or any trustee, administrator or other fiduciary to material taxes or penalties
under Section 4975 of the Code or Section 409 or 502 of ERISA.
(g) There are no pending or, to the Company’s knowledge, threatened Proceedings against
or otherwise involving any Company Benefit Plan, and no suit, action or other litigation
(excluding routine claims for benefits incurred in the ordinary course of Company Benefit
Plan activities) has been brought against or with respect to any such Company Benefit Plan.
There is no matter pending (other than routine qualification determination filings) with
respect to any Company Benefit Plan before the Internal Revenue Service, Department of
Labor, Pension Benefit Guaranty Corporation or other Governmental Authority.
(h) All contributions required to be made as of the date of this Agreement to the
Company Benefit Plans have been timely made or provided for. All accruals (including where
appropriate, proportional accruals for partial periods) under any Company Benefit Plan for
periods prior to the Effective Time have been made.
(i) No Company Benefit Plan (including for such purpose, any employee benefit plan
described in Section 3(3) of ERISA which the Company or any of its Subsidiaries or ERISA
Affiliates established, maintained, sponsored or contributed to within the six-year period
preceding the Effective Time) is (i) a “multiemployer plan” (as defined in Section
4001(a)(3) of ERISA), (ii) a “multiple employer plan” (within the meaning of Section 413(c)
of the Code), (iii) a “defined benefit plan” (as defined in section 3(35) of ERISA) or
22
(iv) subject to Title IV or Section 302 or 303 of ERISA or Section 412, 430 or 436 of
the Code.
(j) Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby (either alone or upon the occurrence of any additional or subsequent
events) shall (i) cause any payments or benefits to any employee, officer or director of the
Company or any of its Subsidiaries to be either subject to an excise tax or non-deductible
to the Company under Sections 4999 and 280G of the Code (or similar non-U.S. law),
respectively, whether or not some other subsequent action or event would be required to
cause such payment or benefit to be triggered, or (ii) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan (in connection therewith) that
will or may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or obligations to
fund benefits with respect to any employee of the Company or any Subsidiary thereof.
(k) To the Company’s knowledge, each Company Benefit Plan, which is an employee benefit
plan within the meaning of Section 3(3) of ERISA, regardless of whether subject to ERISA,
may be unilaterally amended or terminated in its entirety without material liability except
as to benefits vested and accrued thereunder prior to such amendment or termination. No
Company Benefit Plan provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees of the Company or any Subsidiary
of the Company for periods extending beyond their retirement or other termination of service
other than (i) coverage mandated by Section 4980B of the Code, as amended, and Sections 601
through 609 of ERISA, or similar state law (COBRA) or non-U.S. law, as applicable, (ii)
death benefits under any pension plan or (iii) benefits the full cost of which is borne by
the current or former employee (or his or her beneficiary).
(l) With respect to any non-U.S. based Company Benefit Plan, (i) if intended to qualify
for special tax treatment, each such non-U.S. plan meets the requirements for such treatment
in all material respects; (ii) if intended to be book reserved, any such non-U.S. plan is
fully book reserved based upon reasonable GAAP actuarial assumptions and methodology and
fully reflects the financial effects of all prior transactions in relation to any such book
reserved plan; and (iii) if intended to be funded, any such non-U.S. plan is either fully
funded or any shortfall is fully recognized as a book reserve, based upon reasonable GAAP
actuarial assumptions and methodology and fully reflects the financial effects of all prior
transactions in relation to such funded plan.
Section 5.13 Labor and Employee Matters.
(a) Neither the Company nor any of its Subsidiaries is a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental Authority relating to
employees or employment practices, including worker health and safety. Except as set forth
in Section 5.13(a) of the Company Disclosure Letter, since January 1, 2008, (i)
neither the Company nor any of its Subsidiaries has been a party to any Proceeding in which
the Company was, or is, alleged to have violated any Contract or Applicable Law relating to
employment, equal employment opportunity, discrimination, harassment or retaliation,
wrongful termination, immigration, the payment or calculation of wages or other
23
compensation, hours, benefits, collective bargaining, the payment of social security
and similar taxes, occupational safety and health, and/or privacy rights of employees; and
(ii) neither the Company nor any of its Subsidiaries has received any written notice of
intent by any Governmental Authority responsible for the enforcement of any Applicable Law
regarding labor or employment to conduct an investigation or inquiry relating to the
Company, and no such investigation or inquiry is in progress.
(b) Neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreements, or any other labor union contracts. No labor organization or group
of employees of the Company or any of its Subsidiaries has made, or to the knowledge of the
Company threatened to make, a demand against the Company or any of its Subsidiaries for
recognition or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or, to the knowledge of
the Company, threatened to be brought or filed with the National Labor Relations Board or
any other labor relations tribunal or authority involving any employees of the Company or
any of its Subsidiaries. There are no ongoing, or to the Company’s Knowledge, threatened,
organizing activities, strikes, work stoppages, slowdowns, lockouts, or other material labor
disputes pending or, to the knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries.
(c) The Company and its Subsidiaries are in material compliance with (i) the
documentary and other requirements of the Immigration Reform and Control Act of 1986 and the
regulations promulgated thereunder (IRCA) and similar foreign Applicable Law and (ii) the
wages and hours requirements under the Fair Labor Standards Act and the regulations
promulgated thereunder and any similar state, local or foreign Applicable Law. Neither the
Company nor any of its Subsidiaries has misclassified any person as (i) an independent
contractor rather than as an employee under any Applicable Law or (ii) an employee exempt
from Applicable Law regarding minimum wage or overtime compensation.
(d) Except for such matters that have not had and would not be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect (i) the Company and its
Subsidiaries have complied with all Applicable Laws respecting the employment of labor, (ii)
neither the Company nor any Subsidiary of the Company has received any complaint of any
unfair labor practice, violation of worker health and safety or other unlawful employment
practice or any notice of any material violation of any federal, state or local statutes,
laws, ordinances, rules, regulations, orders or directives with respect to the employment of
individuals by, or the employment practices of, the Company or any Subsidiary of the Company
or the work conditions or the terms and conditions of employment and wages and hours of
their respective businesses and (iii) there are no unfair labor practice charges, worker
health and safety or other employee-related complaints against the Company or any Subsidiary
of the Company pending or, to the knowledge of the Company, threatened, before any
Governmental Authority by or concerning the employees working in their respective
businesses.
24
Section 5.14 Environmental Matters.
(a) The Company and each Subsidiary of the Company is and since January 1, 2008, has
been in compliance in all material respects with Environmental Laws (other than common law).
There are no past or present facts, conditions or circumstances relating to or arising
under any Environmental Laws that interfere in any material respect with the conduct of any
of their respective businesses in the manner now conducted. “Environmental Laws” means any
orders of, writs, judgments, decrees or injunctions issued by, and agreements with any
Governmental Authority related to Hazardous Materials, or any Applicable Law related to
Hazardous Materials, worker health and safety, or the protection of natural resources or the
environment. “Hazardous Materials” means any “hazardous substance,” “hazardous materials,”
“hazardous wastes,” “pollutant,” “contaminant,” or “petroleum” (or any fraction thereof) and
“natural gas liquids,” as those terms are defined or used in Section 101 of the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601
et. seq., and includes petroleum, petroleum products and petroleum by-products.
(b) Each of the Company and its Subsidiaries has, and is in compliance in all material
respects with, all material permits and other authorizations and approvals required under
applicable Environmental Laws for its operations, such permits, authorizations and approvals
are in full force and effect, and all applications, notices or other documents have been
timely filed as required to effect timely renewal, issuance or reissuance of such permits,
authorizations and approvals.
(c) No judicial or administrative Proceedings or governmental investigations are
pending or, to the knowledge of the Company, threatened against the Company or its
Subsidiaries that allege the violation of or seek to impose liability, injunctive relief or
remedial obligations pursuant to any Environmental Law, and except as would not reasonably
be expected to result in a material violation of or liability under Environmental Law or
would not be reasonably expected to have a Company Material Adverse Effect, there has been
no release or spill of or any other incident, condition or circumstance involving any
Hazardous Materials (i) at, on, or from any property currently owned or operated by the
Company or its Subsidiaries or, during the time of the Company’s or any of its Subsidiaries’
ownership or operation, formerly owned or operated by the Company or its Subsidiaries, (ii)
for which the Company or any Subsidiary of the Company has assumed responsibility, or (iii)
associated with the off-site disposal of Hazardous Materials by the Company or any
Subsidiary of the Company.
(d) Neither the Company nor any of its Subsidiaries has (i) received any written notice
of noncompliance with, violation of, deficiency, or liability or potential liability under
any Environmental Law, (ii) received any written third-party claim asserting liability of
the Company or its Subsidiaries for matters arising under Environmental Laws or under
contracts pursuant to which the Company or its Subsidiaries assumed environmental
obligations with respect to those environmental obligations, or (iii) entered into any
consent decree or order or is subject to any order of any court or Governmental Authority in
each case either under any Environmental Law or relating to the cleanup of any Hazardous
Materials and in each case, since January 1, 2008 or that remains unresolved or outstanding.
25
(e) The Company has delivered to or otherwise made available for inspection by Parent
true, complete and correct copies and results of any material reports, studies, analyses,
cost estimates, tests or monitoring possessed or initiated by the Company pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently or formerly owned,
operated or leased by the Company or any of its Subsidiaries or for which the Company or any
of its Subsidiaries has assumed contractual liability for environmental conditions, or
regarding the Company’s or its Subsidiaries’ compliance with applicable Environmental Laws.
(f) The representations and warranties made pursuant to this Section 5.14 and
Section 5.6 are the exclusive representations and warranties by the Company
regarding compliance with or liability under Environmental Laws or Hazardous Materials.
Section 5.15 Properties.
(a) Each of the Company and its Subsidiaries has good and marketable title to, or valid
leasehold interests in, all properties and assets purported to be owned or leased by it,
respectively, in the Company’s annual report on Form 10-K for the year ended December 31,
2010, except for such properties and assets as are no longer used or useful in the conduct
of its businesses or as have been disposed of in the ordinary course of business, and except
for defects in title, easements, restrictive covenants and similar encumbrances or
impediments that, individually or in the aggregate, do not and will not materially interfere
with its ability to conduct its business as currently conducted. All such assets and
properties are free and clear of all Liens, other than Permitted Liens.
(b) Each of the Company and its Subsidiaries has complied, in all material respects,
with the terms of all leases, subleases, easements, licenses and other occupancy agreements
to which it is a party and under which it is in occupancy, and all such agreements are in
full force and effect. Each of the Company and its Subsidiaries enjoys peaceful and
undisturbed possession under all such agreements.
(c) The assets, properties and rights owned or leased by the Company and its
Subsidiaries comprise all the assets, properties and rights utilized by the Company or any
of its Subsidiaries in the operation of their respective businesses as presently conducted,
and, in the aggregate, are sufficient to permit the Company and its Subsidiaries to operate
their respective businesses as presently conducted.
(d) All items of operating equipment owned or leased by the Company and its
Subsidiaries are in a state of repair so as to be adequate, in all material respects, for
operations in the areas in which they are operated.
(e) Section 5.15(e) of the Company Disclosure Letter sets forth a true and
complete list of all real property, facilities, office space and similar property owned by
the Company or any of its Subsidiaries, together with the physical address of and primary
use for each such property.
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Section 5.16 Intellectual Property.
(a) Section 5.16(a) of the Company Disclosure Letter (i) lists all U.S. and
foreign patents, published patent applications, trademark and service xxxx applications and
registrations, copyright registrations and domain names that are owned by the Company or any
of its Subsidiaries (the “Company Registered IP”), (ii) indicates for each item of Company
Registered IP the applicable jurisdiction, title, registration number (or application
number), the owner and all current applicants, (iii) lists all agreements (excluding shrink
wrap or other similar licenses with respect to off-the-shelf-software) whereby the Company
or any of its Subsidiaries has been granted the legal right to use any Company IP that the
Company or any of its Subsidiaries does not own, (iv) lists all agreements whereby the
Company or any of its Subsidiaries grants to any Person the right to use any Company IP,
other than such agreements which grant such rights, without payment of a royalty, for use
with a specific project or with equipment purchased from the Company or any of its
Subsidiaries and (v) lists all agreements entered into since January 1, 2008 whereby the
Company or any of its Subsidiaries grants to any Person an indemnity with respect to the
Intellectual Property of any Person.
(b) The Company Registered IP is currently in compliance with all formal legal
requirements (including the payment of all filing, examination and annuity and maintenance
fees and proof of working or use) and none of the registrations of such Company Registered
IP has lapsed or expired or been cancelled, abandoned or deemed abandoned, other than at the
election of the Company or at the end of the full available term for such rights.
(c) The Company or its Subsidiaries owns or has the legal right to use, free and clear
of all Liens other than Permitted Liens, all the Company IP. The Company IP is sufficient,
in all material respects, to enable Parent, the Surviving Entity and any of their
Subsidiaries, following the Merger, to operate the business of the Company as currently
conducted and as currently proposed to be conducted in the future.
(d) (i) No Proceeding against the Company or any of its Subsidiaries regarding any
Company IP is pending or, to the knowledge of the Company, threatened, (ii) to the knowledge
of the Company, no Person is infringing or misappropriating Company IP that is material to
the business or operations of the Company or any of its Subsidiaries, (iii) neither the
Company IP nor any product or service of the Company or any of its Subsidiaries currently
offered or provided, or offered or provided since January 1, 2006, infringes or
misappropriates the Intellectual Property of any Person, (v) neither the Company nor any of
its Subsidiaries has received any claim or notice alleging any infringement,
misappropriation or violation by the Company or any of its Subsidiaries of the Intellectual
Property of any Person or alleging that the operation of the business of the Company or any
of its Subsidiaries as currently conducted or as currently proposed to be conducted in the
future requires a license to the Intellectual Property of any Person, and (v) neither the
Company nor any of its Subsidiaries has received any charge, complaint, claim or notice that
any of the Company Registered IP is unenforceable or invalid.
Section 5.17 Insurance. Section 5.17 of the Company Disclosure Letter lists each insurance
policy (including any commercial property and casualty, general liability, workers’
27
compensation, liability, pollution liability, directors and officers and other liability policies)
owned by the Company or any of its Subsidiaries or which names the Company or any of its
Subsidiaries as an insured (or loss payee) currently in effect, and the Company has made available
to Parent a true, complete and correct copy of each such policy or the binder therefor. Each such
policy is in full force and effect, is in such amount and covers such losses and risks as are
consistent with industry practice and is adequate, in the judgment of senior management of the
Company, to protect the properties and businesses of the Company and its Subsidiaries, and all
premiums due under each such policy have been paid. With respect to each such insurance policy,
none of the Company, any of its Subsidiaries or, to the Company’s knowledge, any other party to the
policy is in breach or default in any material respect thereunder (including with respect to the
payment of premiums or the giving of notices), and the Company does not know of any occurrence or
any event which (with notice or the lapse of time or both) would constitute such a breach or
default or permit termination, modification or acceleration under the policy. None of the Company
or any of its Subsidiaries has been refused any insurance with respect to its assets or operations
since January 1, 2008. Section 5.17 of the Company Disclosure Letter describes any
self-insurance arrangements affecting the Company or its Subsidiaries.
Section 5.18 Certain Contracts.
(a) Section 5.18 of the Company Disclosure Letter sets forth a list, as of the
date of this Agreement, of each of the following Contracts by which the Company or any of
its Subsidiaries is a party or bound:
(i) any lease of real or personal property providing for annual rentals of
$100,000 or more;
(ii) any partnership, joint venture or other similar agreement or arrangement;
(iii) any Contract (other than solely among direct or indirect wholly-owned
Subsidiaries of the Company) relating to (A) any outstanding Debt or (B) any
guarantee furnished by or on behalf of the Company or any of its Subsidiaries;
(iv) any Contract made since January 1, 2008 relating to the disposition or
acquisition of material assets not in the ordinary course of business having a value
in excess of $100,000;
(v) any Contract that is a “material contract” (as such term is defined in Item
601(b)(10) of Regulation S-K under the Exchange Act);
(vi) any Contract or covenant that (A) purports to limit the type of business in
which the Company or its Subsidiaries (or, after the Effective Time, Parent or its
Affiliates) may engage or the manner or locations in which any of them may so engage
in any business or (B) could require the disposition of any material assets or line
of business of the Company or its Subsidiaries;
(vii) any Contract under which the Company or any of its Subsidiaries has agreed
to indemnify or reimburse any surety in respect of amounts
28
paid or claimed against any surety bonds, which such surety bonds (bid,
performance or other) were obtained in connection with services being performed by
the Company or any of its Subsidiaries are set forth in Section 5.18(a)(vii)
of the Company Disclosure Letter; and
(viii) any other Contract or group of Contracts with a single counterparty that,
if terminated or subject to a default by any party thereto, would reasonably be
expected to result, individually or in the aggregate, in a Company Material Adverse
Effect (the Contracts described in clauses (i)–(viii), whether or not included as an
exhibit to the Company Reports, and together with all exhibits and schedules to such
Contracts, being referred to herein each as a “Company Material Contract”).
(b) The Company has previously made available to Parent true, complete and correct
copies of each Company Material Contract that is not included as an exhibit to the Company
Reports.
(c) Each Company Material Contract is in full force and effect, and the Company and
each of its Subsidiaries have performed all obligations required to be performed by them, in
all material respects, to date under each Company Material Contract to which they are party.
Neither the Company nor any of its Subsidiaries (i) is in material breach of or violation
or default under any Company Material Contract or (ii) has received written notice of any
such material breach, violation or default or the desire of the other party or parties to
any such Company Material Contract to exercise any rights such party has to cancel,
terminate or repudiate such contract or exercise remedies thereunder. Each Company Material
Contract is enforceable by the Company or a Subsidiary of the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors’ rights and general principles of equity.
Section 5.19 Government Contracts. Section 5.19 of the Company Disclosure Letter sets
forth a true, correct and complete list, of all (a) Government Contracts to which the Company or
any of its Subsidiaries is a party, the period of performance of which has not yet expired or
terminated and for which final payment has not yet been received and (b) outstanding bids and
proposals that have been submitted by the Company or any of its Subsidiaries to any Governmental
Authority, any proposed prime contractor to a Governmental Authority or any proposed higher-tiered
subcontractor. The Government Contracts set forth on Section 5.19(a) of the Company
Disclosure Letter are in full force and effect, and neither the Company nor any of its Subsidiaries
is in material breach or non-compliance thereunder or under any representation or certification in
respect thereof. For purposes of this Agreement, “Government Contract” means any Contract, however
denominated, including any procurement, task order, work order, purchase order, delivery order,
blanket purchase agreement, co-operative agreement or other transaction with the U.S. Government or
any other applicable foreign Governmental Authority at the prime or subcontract level (at any tier)
under a federal prime Contract, entered into by a party hereto or any of its Subsidiaries for the
provision of goods, services or construction.
Section 5.20 No Brokers. The Company has not entered into any contract, arrangement or
understanding with any Person which may result in the obligation of the Company,
29
Parent or their respective Affiliates to pay any finder’s fees, brokerage or other like payments in
connection with the negotiations leading to this Agreement or the consummation of the Merger and
the other transactions contemplated hereby, except that the Company has retained the Company
Financial Advisor. The Company has heretofore furnished to Parent a correct and complete copy of
all agreements (including any amendment, waivers of other charges thereto) between the Company and
the Company Financial Advisor pursuant to which such firm would be entitled to any payment relating
to the transactions contemplated hereby.
Section 5.21 Parent Stock Ownership. Neither the Company nor any of its Subsidiaries owns any
shares of capital stock of Parent or any other securities convertible into or otherwise exercisable
to acquire shares of capital stock of Parent.
Section 5.22 Vote Required. The only vote of the holders of any class or series of the Company
capital stock necessary to adopt and approve this Agreement and the transactions contemplated by
this Agreement (including, without limitation, the Merger) is the affirmative vote in favor of the
adoption and approval of this Agreement, the Merger and the other transactions contemplated hereby,
by the holders of at least 80% of the outstanding shares of Company Common Stock (the “Company
Shareholder Approval”).
Section 5.23 Improper Payments.
(a) The Company and its Affiliates, directors, officers and employees have complied
with the U.S. Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§ 78dd-1 et seq.
(1997 and 2000)) (the “Foreign Corrupt Practices Act”), and any other applicable
anticorruption or antibribery laws. Except for “facilitating payments” (as such term is
defined in the Foreign Corrupt Practices Act and other Applicable Law), neither the Company
nor any of its Affiliates, directors, officers, employees, agents or other Representatives
acting on its behalf have directly or indirectly offered, paid, promised to pay or
authorized the payment of anything of value, including but not limited to cash, checks, wire
transfers, tangible and intangible gifts, favors and services, to a Foreign Government
Official or any other person while knowing or having a reasonable belief that all or some
portion would be used for the purpose of: (i) influencing any act or decision of a Foreign
Government Official, including a decision to fail to perform official functions, (ii)
inducing any Foreign Government Official to do or omit to do any act in violation of the
lawful duty of such official, or (iii) inducing any Foreign Government Official to use
influence with any government, department, agency or instrumentality in order to assist the
Company in obtaining or retaining business with, or directing business to any person or
otherwise securing for any person an improper advantage. For the purposes of this
Agreement, “Foreign Government Official” means (i) any officer or employee of a non-U.S.
Governmental Authority or any public international organization; (ii) any person acting in
an official capacity for or on behalf of a non-U.S. Governmental Authority or any public
international organization; (iii) any candidate for foreign political office; or (iv) any
foreign political party or official thereof.
(b) The Company and its Affiliates have developed and implemented a Foreign Corrupt
Practices Act compliance program which includes corporate
30
policies and procedures designed to ensure compliance with the Foreign Corrupt
Practices Act and any other applicable anticorruption and antibribery laws.
(c) No civil or criminal penalties have been imposed on the Company or any of its
Affiliates with respect to violations of the Foreign Corrupt Practices Act or any other
applicable anticorruption or antibribery laws and, since January 1, 2008, no Governmental
Authority has notified the Company of any actual or alleged violation or breach of the
Foreign Corrupt Practice Act or any other applicable anticorruption or antibribery law.
(d) To the Company’s knowledge, the Company and its Subsidiaries have not been since
January 1, 2008 and are not now under any administrative, civil or criminal investigation or
indictment involving alleged violations of the Foreign Corrupt Practices Act or any other
applicable anticorruption or antibribery laws. Neither the Company nor any of its
Subsidiaries are participating in any investigation by a Governmental Authority relating to
alleged violations by the Company or its Affiliates of the Foreign Corrupt Practices Act or
any other applicable anticorruption or antibribery laws.
Section 5.24 Takeover Statutes; Rights Agreement. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not cause this
Agreement or the Merger to be subject to any takeover or similar provision of the TBOC or any other
similar provision that limits or restricts business combinations or the ability to acquire voting
shares, and neither the execution of this Agreement, the consummation of the Merger or the other
transactions contemplated hereby shall be, or shall be deemed to be, a “affiliated business
combination” within the meaning of Section 21.601-21.610 of the TBOC. The Company has no share
purchase rights plan or similar rights plan limiting any party’s ability to acquire shares in the
Company without the Company Board’s approval.
Section 5.25 Interested Party Transactions. Section 5.25 of the Company Disclosure Letter
sets forth a correct and complete list of the Contracts (other than Company Benefit Plans) or
transactions under which the Company or any of its Subsidiaries has any existing or future
liabilities, in each case between the Company or any of its Subsidiaries, on the one hand, and, on
the other hand, any (a) present executive officer or director of the Company or any individual that
has served as such an executive officer or director within the past two years or any of such
executive officer’s or director’s immediate family members, (b) record or beneficial owner of more
than 5% of the Company Common Stock, or (c) to the knowledge of the Company, any Affiliate of any
such executive officer, director or owner (other than the Company or any of its Subsidiaries) (each
a “Company Affiliate Transaction”). Parent has been provided with true and complete copies of any
such Contracts or arrangements.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in (a) the disclosure letter delivered to the Company by Parent at or
prior to the execution of this Agreement (the “Parent Disclosure Letter”) and making reference to
31
the particular subsection of this Agreement to which exception is being taken (provided that
disclosure of any item in any section of the Parent Disclosure Letter shall not be deemed to be
disclosed with respect to any other section of this Article VI unless the relevance of such item is
reasonably apparent on its face), or (b) the Parent Reports filed after September 30, 2010 and
prior to the date hereof; provided that (i) any disclosures in such Parent Reports in any risk
factors section, in any section related to forward looking statements and other disclosures that
are predictive, non-specific or forward-looking in nature shall be ignored and (ii) any disclosure
in the Parent Reports shall be deemed to qualify any representation or warranty in this Article VI
only to the extent that such disclosure is made in such a way as to make its relevance reasonably
apparent on its face (but such Parent Reports shall in no event qualify the representations and
warranties set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.6 or
the first sentence of 6.10), Parent and Merger Sub, jointly and severally, represent and warrant to
the Company that:
Section 6.1
Existence; Good Standing; Corporate Authority. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the laws of
Texas.
Parent is duly qualified to do business and is in good standing under the laws of any jurisdiction
in which the character of the properties owned or leased by it therein or in which the transaction
of its business makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, has not had and would not reasonably be expected to have a Parent
Material Adverse Effect. Parent has all requisite corporate power and authority to own, operate
and lease its properties and assets and to carry on its business as now conducted. The copies of
the Amended and Restated Articles of Incorporation of Parent (the “
Parent Articles of
Incorporation”) and the bylaws of Parent and the certificate of formation and bylaws of Merger Sub
previously made available to the Company are true and correct and contain all amendments thereto.
Section 6.2 Authorization, Validity, Enforceability and Fairness.
(a) Each of Parent and Merger Sub has all requisite corporate power and authority to
execute and deliver this Agreement and all other agreements and documents contemplated
hereby to which it is a party, and upon receipt of the Parent Shareholder Approval, to
consummate the transactions contemplated hereby and thereby.
(b) Parent’s and Merger Sub’s execution of this Agreement and the consummation by each
of Parent and Merger Sub of the transactions contemplated by this Agreement (including,
without limitation, the Merger) have been duly authorized by all requisite corporate action
on the part of Parent, other than the Parent Shareholder Approval and the filing of the
Certificate of Merger.
(c) This Agreement has been duly executed and delivered by each of Parent and Merger
Sub and, assuming the due authorization, execution and delivery hereof by the Company,
constitutes the valid and legally binding obligation of Parent and Merger Sub, enforceable
against Parent or Merger Sub, as applicable, in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors’ rights and general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
32
(d) The Parent Board, at a meeting duly called and held on or prior to the date hereof,
has (i) determined that this Agreement and the transactions contemplated hereby are
advisable and in the best interests of the shareholders of Parent, (ii) approved this
Agreement, (iii) resolved to recommend the approval of the issuance of Parent Common Stock
to the shareholders of the Company in accordance with this Agreement (the “Parent
Recommendation”), subject to Section 7.3, and (iv) directed that the issuance of
Parent Common Stock to the shareholders of the Company in accordance with this Agreement be
submitted to the shareholders of Parent for approval, subject to Sections 7.3 and
7.4.
(e) The Parent Board has received the opinion of its financial advisor, Xxxxxxx Xxxxx &
Associates, Inc. (the “Parent Financial Advisor”), to the effect that, subject to the
assumptions, qualifications and limitations relating to such opinion, as of the date of this
Agreement, the Exchange Ratio is fair, from a financial point of view, to Parent. A true,
complete and correct copy of such opinion will be delivered to the Company promptly after
the date of this Agreement for informational purposes only.
Section 6.3 Capitalization.
(a) The authorized capital stock of Parent consists of 50,000,000 shares of Parent
Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share of which
500,000 have been designated Series A Junior Participating Preferred Stock and reserved for
issuance upon exercise of preferred share purchase rights distributed to the holders of
Parent Common Stock pursuant to the Rights Agreement, dated as of July 23, 2009, between
Parent and Mellon Investors Services LLC, as rights agent, as amended to date. As of March
15, 2011, there were (i) 7,918,989 outstanding shares of Parent Common Stock (including
outstanding restricted shares of Parent Common Stock), (ii) 135,300 shares of Parent Common
Stock reserved for issuance upon exercise of outstanding options to acquire shares of Parent
Common Stock, (iii) 460,310 shares of Parent Common Stock reserved for issuance pursuant to
awards (“Parent Equity Awards”) under Parent’s 2006 Stock and Performance Incentive Plan and
2004 Incentive Stock Plan, (each such plan, a “Parent Stock Plan”) and (iv) no shares of
preferred stock outstanding. All such issued and outstanding shares of Parent Common Stock
are duly authorized, validly issued, fully paid, nonassessable and free of preemptive
rights, and all shares of Parent Common Stock reserved for issuance upon exercise or vesting
of outstanding Parent Equity Awards will be duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
(b) Except for this Agreement or as set forth in Section 6.3(a), there are not
issued, reserved for issuance or outstanding, and there are not any obligations of Parent to
issue, sell, deliver or cause to be issued, sold or delivered (i) any shares of capital
stock or other voting securities of, or other equity interests in, Parent, other than
outstanding Parent Common Stock issued pursuant to Parent Equity Awards in accordance with
their terms, (ii) any options, warrants, calls or other rights to acquire from Parent any
capital stock, voting securities of, or other ownership interests in, or any securities
convertible into or exchangeable for capital stock, voting securities of, or ownership
interests in, Parent, (iii) any subscriptions, preemptive rights or similar rights,
agreements, arrangements, claims or commitments of any character, relating to the capital
stock of Parent, or securities convertible into or exchangeable for such stock, securities
or equity interests, (iv) any contractual
33
obligations of Parent to repurchase, redeem or otherwise acquire any capital stock or
other voting securities of, or other equity interest in, Parent or securities convertible
into or exchangeable for such stock, securities or equity interests or (v) any shareholder
agreements, voting trusts, registration rights agreements or similar agreements to which
Parent is a party with respect to the voting or registration of any capital stock or other
voting securities of or other equity interests in Parent, or securities convertible into or
exchangeable for such stock, securities or equity interests.
(c) Parent has delivered or made available to the Company an accurate and complete copy
of each Parent Stock Plan and the forms of Parent Equity Awards. There have been no
repricings of any Parent Equity Awards that are stock options (“Parent Options”) through
amendments, cancellation and reissuance or other means since January 1, 2008. No grants of
Parent Equity Awards are otherwise subject to Section 409A of the Code. All grants of
Parent Equity Awards were validly made and properly approved by the Parent Board (or a duly
authorized committee or subcommittee thereof) in compliance with Applicable Law and properly
recorded on the financial statements of Parent in accordance with GAAP, and, where
applicable, no such grants involved any “back dating,” “forward dating” or similar practices
with respect to grants of Parent Options.
Section 6.4 Subsidiaries.
(a) Other than Merger Sub, Parent has no Subsidiaries.
(b) All of the outstanding capital stock of Merger Sub is owned directly by Parent, and
Merger Sub has been formed solely for the purpose of engaging in the transactions
contemplated hereby and, as of the Effective Time, will not have engaged in any activities
other than in connection with the transactions contemplated by this Agreement. Immediately
prior to the Effective Time, Merger Sub will have 100 outstanding shares of its common
stock, par value $0.01 per share.
(c) Except for the capital stock in Merger Sub held by Parent, neither Parent nor
Merger Sub owns, directly or indirectly, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for any capital
stock, voting securities or ownership interests in, any Person.
Section 6.5 No Conflict.
(a) The execution and delivery by Parent and Merger Sub of this Agreement and the
consummation by Parent and Merger Sub of the Merger and the other transactions contemplated
by this Agreement in accordance with the terms hereof will not (i) subject to the receipt of
the Parent Shareholder Approval, conflict with or result in a violation of any provisions of
the Parent Articles of Incorporation or Parent’s bylaws or the Certificate of Formation or
bylaws of the Merger Sub; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) or a termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of Parent or its Subsidiaries
under, any of the provisions of any loan or credit agreement, note, bond, mortgage,
indenture, deed
34
of trust, license, concession, franchise, permit, lease, contract, agreement, joint
venture or other instrument or obligation to which Parent is a party, or by which Parent or
any of its properties is bound; or (iii) subject to the filings and other matters referred
to in Section 6.5(b), contravene or conflict with or constitute a violation of any
provision of any Applicable Law, except for such matters described in clause (ii) or (iii)
as would not have, or would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) The execution, delivery and performance by Parent or Merger Sub of this Agreement
and the consummation by Parent or Merger Sub of the Merger and the other transactions
contemplated hereby in accordance with the terms hereof will not require any consent,
approval, qualification or authorization of, or filing or registration with, any
Governmental Authority, other than (i) the HSR Act, (ii) the Securities Act, the Exchange
Act or applicable state securities and “Blue Sky” laws, (iii) the filing of a listing
application in accordance with
Section 7.8 with, or the rules and regulations of,
NASDAQ, (iv) the filing of the Certificate of Merger with the Secretary of State of the
State of
Texas and the filing or recordation of other appropriate documents as required by
Applicable Law of other states in which Parent is qualified to do business and (v) the
Investment Canada Act, except for any consent, approval, qualification or authorization the
failure of which to obtain, and for any filing or registration the failure of which to make,
individually or in the aggregate, would not have, or would not reasonably be expected to
have a Parent Material Adverse Effect.
Section 6.6 SEC Documents; Financial Statements.
(a) Parent has timely filed or furnished with the SEC all registration statements,
prospectuses, reports, schedules, forms, statements and other documents (including exhibits
and any amendments thereto) required to be so filed by it since January 1, 2008
(collectively, the “Parent Reports”), and has made available to the Company each document it
has so filed or furnished, each in the form (including exhibits and any amendments thereto)
filed with or furnished to the SEC. Parent has made available to the Company copies of all
material comment letters from the SEC and Parent’s responses thereto since January 1, 2008
through the date hereof. As of the date of this Agreement, there are no outstanding or
unresolved comments received from the SEC staff with respect to the Parent Reports. As of
its respective date (or, if amended, as of the date of such amendment), each Parent Report
(i) complied in all material respects with the applicable requirements of the Exchange Act,
the Securities Act and the rules and regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the financial statements included in or incorporated by reference into the
Parent Reports (including related notes and schedules) complied at the time it was filed as
to form, in all material respects, with the applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, was prepared in accordance
with GAAP consistently applied during the periods involved and fairly presents, in all
material respects, the financial position of Parent as of the respective dates thereof and
the results of operations, cash flows or changes in shareholders’ equity, as the case may
be, of
35
Parent for the respective periods set forth therein (subject, in the case of unaudited
statements, to (i) such exceptions as may be permitted by Form 10-Q of the SEC and (ii)
normal, recurring year-end audit adjustments which have not been and are not expected to be
material in the aggregate).
(c) There are no liabilities or obligations of Parent (whether accrued, absolute,
contingent or otherwise and whether or not required to be disclosed), other than liabilities
or obligations to the extent (i) reflected or reserved against on Parent’s balance sheet at
September 30, 2010, (ii) such liabilities or obligations were incurred in the ordinary
course of business consistent with past practice since September 30, 2010 or (iii) such
liabilities or obligations that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Parent Material Adverse Effect.
Section 6.7 Disclosure and Internal Controls and Procedures.
(a) Since the enactment of the Xxxxxxxx-Xxxxx Act, Parent has been and is in compliance
in all material respects with (i) the applicable provisions of the Xxxxxxxx-Xxxxx Act and
(ii) the applicable listing and corporate governance rules and regulations of NASDAQ.
(b) The books, records and accounts of Parent, all of which have been made available to
the Company, are complete and correct in all material respects and represent actual, bona
fide transactions and have been maintained in accordance with sound business practices.
(c) Each of the chief executive officer and chief financial officer of Parent (or each
former chief executive officer and former chief financial officer of Parent, as applicable)
has made all certifications (without qualification or exceptions to the matters certified)
required under Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and the related rules and
regulations promulgated by the SEC or NASDAQ with respect to the Parent Reports, and the
statements contained in such certifications are complete and correct. Neither the Company
nor any of its officers has received notice from any Governmental Authority questioning or
challenging the accuracy, completeness, form or manner of filing or submission of such
certification.
(d) Parent has (i) established and maintains “disclosure controls and procedures” (as
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as required by Rule 13a-15
under the Exchange Act and (ii) has disclosed to its auditors and the audit committee of the
Parent Board (A) any “significant deficiencies” or “material weaknesses” (as such terms are
defined in the Public Accounting Oversight Board’s Auditing Standard No. 5) in the design or
operation of internal controls over financial reporting which could adversely affect its
ability to record, process, summarize and report financial data and (B) any fraud, whether
or not material, that involves management or other employees who have a significant role in
its internal control over financial reporting.
(e) Parent has designed and maintains a system of “internal control over financial
reporting” (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange
36
Act). Parent’s management, with the participation of Parent’s chief executive and
financial officers, has completed an assessment of the effectiveness of Parent’s internal
controls over financial reporting in compliance with the requirements of Section 404 of the
Xxxxxxxx-Xxxxx Act for the year ended September 30, 2010, and such assessment concluded that
such internal controls were effective using the framework specified in Parent’s annual
report on Form 10-K for the fiscal year ended September 30, 2010. To the knowledge of
Parent, there is no reason to believe that its auditors and its chief executive officer and
chief financial officer will not be able to give the certifications and attestations
required pursuant to the rules and regulations adopted pursuant to Section 404 of the
Xxxxxxxx-Xxxxx Act, without qualification, when next due.
(f) Parent, since the enactment of the Xxxxxxxx-Xxxxx Act, has not extended or
maintained credit, arranged for the extension of credit, or renewed an extension of credit
(within the meaning of Section 13(k) of the Exchange Act), to or for any director or
executive officer (or equivalent thereof) of Parent.
Section 6.8 Compliance with Laws; Permits.
(a) Since October 1, 2008, Parent has not been, in violation in any material respect of
any Applicable Law. Since such date, Parent has not received any written notice, claim or
assertion or, to Parent’s knowledge, other communication from any Governmental Authority
regarding any actual or possible violation of, or failure to comply with, any Applicable Law
in any material respect. No condition exists which does or would reasonably be expected to
constitute a violation of or deficiency in any material respect under any Applicable Law by
Parent.
(b) Parent holds all material permits, licenses, certifications, grants, easements,
permissions, qualifications, registrations, variances, exemptions, consents, orders,
franchises, approvals or other authorizations (the “Parent Permits”) of all Governmental
Authorities or other Persons necessary for the ownership, leasing and operation of its
assets and the lawful conduct of its business. All Parent Permits are in full force and
effect and there exists no default thereunder or breach thereof in any material respect.
Parent has not received written notice that any such material Parent Permit will be
terminated or modified or cannot be renewed in the ordinary course of business (either
before or after the Effective Time), and Parent has no knowledge of any reasonable basis for
any such termination, modification or nonrenewal.
Section 6.9 Litigation.
(a) There are no material (i) Proceedings pending or, to Parent’s knowledge, threatened
against Parent or its assets, or any director, officer or employee of Parent in respect of
which Parent may be liable, at law or in equity, or (ii) Proceedings pending or, to Parent’s
knowledge, threatened against Parent or its respective assets, or any director, officer or
employee of Parent in respect of which Parent may be liable, before any Governmental
Authority or arbitrator.
37
(b) No material order, writ, fine, injunction, decree, judgment, award or determination
of any Governmental Authority has been issued or entered against Parent or any of its
officers or directors that continues to be in effect that affects the ownership or operation
of any of its assets. Since October 1, 2008, no criminal order, writ, fine, injunction,
decree, judgment or determination of any court or Governmental Authority has been issued
against Parent.
Section 6.10 Absence of Certain Changes. Since September 30, 2010, there has not been any event,
change, occurrence, effect, or development of circumstances or facts that, individually or in the
aggregate, would reasonably be expected to have a Parent Material Adverse Effect. From September
30, 2010 to the date of this Agreement, Parent has conducted its business only in the ordinary
course and consistent with past practice in all material respects, and during such period there has
not occurred:
(a) any recapitalization of Parent or any merger or consolidation of Parent with any
other Person;
(b) any acquisition of any business from any other Person;
(c) any creation or incurrence of any Liens, except for Permitted Liens, on any assets
used in the business Parent having an aggregate value in excess of $100,000;
(d) any making of any loan, advance or capital contribution to, or investment in, any
Person;
(e) any material change by Parent in any of its material accounting methods, policies,
principles, procedures or practices, except for any change required by changes in GAAP or by
Applicable Law;
(f) any declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock, property or any combination thereof) in respect of any capital stock of
Parent or any redemption, purchase, repurchase or other acquisition by Parent, directly or
indirectly, of any outstanding shares of capital stock or other securities of, or other
ownership interests in, Parent;
(g) any issuance of shares of Parent Common Stock or other equity securities of Parent
except pursuant to the Parent Stock Plans;
(h) any split, combination or reclassification of any capital stock of Parent or any
issuance or the authorization of any issuance of shares of Parent Common Stock or any other
securities in respect of, in lieu of or in substitution for shares of that capital stock
except pursuant to Parent Stock Plans;
(i) any sale, transfer, lease, license, mortgage, pledge or other disposition or
encumbrance of any assets of Parent, except for (i) surplus or obsolete equipment, (ii)
sales, transfers, leases, licenses, mortgages, pledges or other dispositions or
38
encumbrances of assets for a purchase price not in excess of, or with a fair market
value not in excess of, $100,000 in any single transaction or series of related
transactions;
(j) any material damage to or any material destruction or loss of physical properties
Parent owns or uses, whether or not covered by insurance;
(k) except to the extent required under any Parent Benefit Plan as in effect on the
date of this Agreement, any (i) increase in the compensation (including bonus opportunities)
or fringe benefits of any of its directors, executive officers or employees (except in the
ordinary course of business consistent with past practice with respect to employees who are
not parties to an employment or change in control agreement), (ii) grant of any severance or
termination pay, other than nominal severance to terminated employees in the ordinary course
of business consistent with past practice, (iii) grant of equity awards to any director,
officer, employee or contractor, (iv) entry into or amendment of any employment, consulting,
change in control or severance agreement or arrangement with any of its present, former or
future directors, officers, employees or contractors, or (v) except as required to comply
with Applicable Law, establishment, adoption, entry into, or amendment in any material
respect or termination of any Parent Benefit Plan or any action to accelerate entitlement to
compensation or benefits under any Parent Benefit Plan or otherwise for the benefit of any
present, former or future director, officer, employee or contractor, in each such case,
except as otherwise permitted pursuant to clauses (i) or (ii) of this paragraph; or
(l) any agreement to do any of the foregoing.
Section 6.11 Taxes.
(a) All material Returns required to be filed by or with respect to Parent (including
any Return required to be filed by an affiliated, consolidated, combined, unitary or similar
group that included Parent) have been properly filed on a timely basis with the appropriate
Governmental Authorities, and all material Taxes that have become due (regardless of whether
reflected on any Return) have been duly paid or deposited in full on a timely basis or
adequately reserved for in accordance with GAAP. All material Taxes required by law to have
been withheld or collected by Parent (including, but not limited to, Taxes required to have
been withheld with respect to amounts paid or owing to any officer, employee, creditor,
shareholder, independent contractor or other individual) have been withheld and collected
and, to the extent required by law, have been timely paid, remitted or deposited to or with
the relevant Governmental Authority.
(b) There is no Proceeding now pending or (to the knowledge of Parent) threatened in
respect of any material Tax liability of Parent, and Parent has not received written notice
from any Governmental Authority of its intent to examine or audit any Returns of Parent, and
no Governmental Authority is now asserting in writing any deficiency or claim for Taxes or
any adjustment to Taxes with respect to which Parent may be liable. Parent has no liability
for any Tax under Treas. Reg. § 1.1502-6 or any similar provision of any other Tax law,
except for Taxes of an affiliated group of which Parent is the common parent, within the
meaning of Section 1504(a)(1) of the Code or any similar provision of any other Tax law. As
of the date of this Agreement, Parent has not granted any material request,
39
agreement, consent or waiver to extend any period of limitations applicable to the
assessment of any Tax upon Parent. Parent is not a party to any closing agreement described
in Section 7121 of the Code or to any agreement under any similar provision of any state,
local or foreign law, and no agreement has otherwise been entered into with any Governmental
Authority which require Parent to adjust any Tax items of Parent in any Return due after the
date hereof. Parent is not a party to, is not bound by and has no obligation under any Tax
sharing, allocation or indemnity agreement or any similar agreement or arrangement (other
than customary Tax indemnifications contained in credit or similar agreements). Since
January 1, 2007, Parent has not rescinded any material election relating to Taxes or settled
or compromised any Proceeding or audit relating to any material Taxes, or except as may be
required by Applicable Law, made any material change to any of its methods of reporting
income or deductions for federal income tax purposes. As of the date of this Agreement,
there are no requests for rulings, outstanding subpoenas or unsatisfied written requests
from any Governmental Authority for information with respect to Taxes of Parent. Parent has
not been a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code at any time within the past five years.
(c) No Return filed by Parent with respect to any Taxable period ending on or after
January 1, 2008 contains a disclosure statement under Section 6662 of the Code or any
predecessor provision or comparable provision of state, local or foreign law, and no Return
has been filed by Parent with respect to which the preparer of such Return advised
consideration of inclusion of such a disclosure statement, which disclosure statement was
not included. Parent has not at any time participated in a “reportable transaction” within
the meaning of Treasury Regulations Section 1.6011-4(b)(1) that was or is required to be
disclosed under Treasury Regulations Section 1.6011-4 or participated in a transaction that
has been disclosed pursuant to IRS Announcement 2002-2, 2002-2 I.R.B. 304.
(d) Parent has not, for any tax year for which the statute of limitations is still open
for income tax purposes, been a “distributing” or “controlled” corporation within the
meaning of Section 355 of the Code in any transaction intended to qualify under such section
or any corresponding provision of foreign or state law.
(e) To the extent required, Parent has properly and in a timely manner documented its
transfer pricing methodologies in compliance with Section 6662(e) (and any related sections)
of the Code, the Treasury Regulations promulgated thereunder and any comparable provisions
of state, local, domestic or foreign Tax law.
(f) Parent does not own any interest in a controlled foreign corporation (as defined in
Section 957 of the Code) or passive foreign investment company (as defined in Section 1297
of the Code).
(g) Parent is not currently, and has not been during the five year period preceding the
date hereof, subject to any type of Tax in any country other than the United States. Except
for claims that were resolved more than five years prior to the date hereof, no claim has
been made by any Governmental Authority in any foreign country where Parent has not filed
Returns and has not paid Taxes that Parent is subject to Tax by that jurisdiction.
40
(h) Parent does not know of any fact, and has not taken or failed to take any action,
that would reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
Section 6.12 Employee Benefit Plans.
(a) Section 6.12(a) of the Parent Disclosure Letter contains a list of all
Parent Benefit Plans, as well as all outstanding Parent Equity Awards and their respective
holders, along with their respective exercise prices, if applicable, and vesting schedules.
The term “Parent Benefit Plans” means all employee benefit plans and other benefit
arrangements, including all “employee benefit plans” as defined in Section 3(3) of ERISA,
whether or not U.S.-based plans, and all other material employee benefit, pension, bonus,
incentive, deferred compensation, stock option (or other equity-based, including all Parent
Stock Plans), severance, employment, consulting, change in control, welfare (including
post-retirement medical and life insurance), cafeteria, VEBA, vacation or other paid time
off and fringe benefit plans, practices or agreements, whether or not subject to ERISA or
U.S.-based and whether written or oral, sponsored, maintained or contributed to or required
to be contributed to by Parent or ERISA Affiliates, to which Parent or ERISA Affiliates is a
party or is required to provide benefits under any Applicable Law or in which any Person who
is currently, has been or, prior to the Effective Time, is expected to become an employee of
Parent or ERISA Affiliates is a participant.
(b) Parent has made available to the Company true and complete copies of (i) the Parent
Benefit Plans (including amendments) and, if applicable, the most recent trust agreements
and amendments (including but not limited to any tax-exempt trust, secular trust, VEBA and
rabbi trust documents), (ii) associated contracts and amendments thereto (including, but not
limited to, insurance contracts, HMO/PPO/POS agreements, recordkeeping agreements, third
party administrator agreements and stop loss insurance contracts), Forms 5500 or any
analogous reports filed with respect to non-U.S. based Parent Benefit Plans, including all
schedules and attachments for the past three years, (iii) summary plan descriptions,
summaries of material modifications including any analogous communications provided with
respect to non-U.S. based Parent Benefit Plans, (iv) funding statements, annual trust
reports and actuarial reports for the past three years, (v) Internal Revenue Service
determination or opinion letters for each such plan that is intended to be qualified within
the meaning of Section 401(a) of the Code, Internal Revenue Service exemption rulings for
any VEBA or other trust intended to be tax-exempt under Section 501(a) of the Code and any
analogous letters or rulings for any non-U.S. based Parent Benefit Plan or funding
arrangement intended to qualify for favorable tax treatment under foreign law.
(c) All applicable reporting and disclosure requirements have been met in all material
respects with respect to the Parent Benefit Plans. The Parent Benefit Plans comply in all
material respects with the requirements of ERISA, the Code and the regulations issued
thereunder or with the statues and regulations of any applicable jurisdiction (including but
not limited to non-U.S. jurisdictions with respect to any non-U.S. based Parent Benefit
Plan).
41
(d) Each Parent Benefit Plan intended to be qualified under Section 401(a) of the Code
has been timely amended to comply with the applicable qualification requirements, or may be
retroactively amended to satisfy such requirements within the applicable remedial amendment
period under Section 401(b) of the Code and has received, or has currently pending or will
timely submit an application for, a favorable determination letter from the Internal Revenue
Service that considers the qualification requirements enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001 (EGTRRA) and related legislation (or is entitled to rely
upon a favorable opinion letter issued by the Internal Revenue Service with respect to such
requirements). Each such Parent Benefit Plan has been maintained and operated in all
material respects in accordance with its terms (or if applicable, such terms as will be
adopted pursuant to a retroactive amendment under Section 401(b) of the Code), and has not,
since receipt of the most recent favorable determination letter or opinion letter, been
amended in a manner that would adversely affect such qualified status.
(e) Each Parent Benefit Plan that is a “nonqualified deferred compensation plan” (as
defined in Section 409A(d)(1) of the Code) has been operated in good faith compliance with
Section 409A of the Code, Internal Revenue Service Notice 2005-1 and the proposed or final
Treasury regulations issued pursuant to Section 409A of the Code, as applicable, and, since
January 1, 2009, has complied with the written document and operational requirements of
Section 409A of the Code.
(f) To Parent’s knowledge, (i) there are no breaches of fiduciary duty in connection
with the Parent Benefit Plans that would subject Parent or Employees or any trustee,
administrator or other fiduciary to any material liability for breach of fiduciary duty
under ERISA or any other Applicable Law and (ii) no prohibited transaction under Section
4975 of the Code or Section 406 of ERISA with respect to which an individual, class or
statutory exemption is not available has occurred that involves the assets of any Parent
Benefit Plan that could subject Parent or Employees, or any trustee, administrator or other
fiduciary to material taxes or penalties under Section 4975 of the Code or Section 409 or
502 of ERISA.
(g) There are no pending or, to Parent’s knowledge, threatened Proceedings against or
otherwise involving any Parent Benefit Plan, and no suit, action or other litigation
(excluding routine claims for benefits incurred in the ordinary course of Parent Benefit
Plan activities) has been brought against or with respect to any such Parent Benefit Plan.
There is no matter pending (other than routine qualification determination filings) with
respect to any Parent Benefit Plan before the Internal Revenue Service, Department of Labor,
Pension Benefit Guaranty Corporation or other Governmental Authority.
(h) All contributions required to be made as of the date of this Agreement to the
Parent Benefit Plans have been timely made or provided for. All accruals (including where
appropriate, proportional accruals for partial periods) under any Parent Benefit Plan for
periods prior to the Effective Time have been made.
(i) No Parent Benefit Plan (including for such purpose, any employee benefit plan
described in Section 3(3) of ERISA which Parent or ERISA Affiliates established, maintained,
sponsored or contributed to within the six-year period preceding the
42
Effective Time) is (i) a “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA), (ii) a “multiple employer plan” (within the meaning of Section 413(c) of the Code),
(iii) a “defined benefit plan” (as defined in Section 3(35) of ERISA) or (iv) subject to
Title IV or Section 302 or 303 of ERISA or Section 412, 430 or 436 of the Code.
(j) Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby (either alone or upon the occurrence of any additional or subsequent
events) shall (i) cause any payments or benefits to any employee, officer or director of
Parent to be either subject to an excise tax or non-deductible to Parent under Sections 4999
and 280G of the Code (or similar non-U.S. law), respectively, whether or not some other
subsequent action or event would be required to cause such payment or benefit to be
triggered, or (ii) constitute an event under any benefit plan, policy, arrangement or
agreement or any trust or loan (in connection therewith) that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligations to fund benefits with respect to
any employee of Parent thereof.
(k) To Parent’s knowledge, each Parent Benefit Plan, which is an employee benefit plan
within the meaning of Section 3(3) of ERISA, regardless of whether subject to ERISA, may be
unilaterally amended or terminated in its entirety without material liability except as to
benefits vested and accrued thereunder prior to such amendment or termination. No Parent
Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees or former employees of Parent for periods extending beyond
their retirement or other termination of service other than (i) coverage mandated by Section
4980B of the Code, as amended, and Sections 601 through 609 of ERISA, or similar state law
(COBRA) or non-U.S. law, as applicable, (ii) death benefits under any pension plan or (iii)
benefits the full cost of which is borne by the current or former employee (or his or her
beneficiary).
(l) With respect to any non-U.S. based Parent Benefit Plan, (i) if intended to qualify
for special tax treatment, each such non-U.S. plan meets the requirements for such treatment
in all material respects; (ii) if intended to be book reserved, any such non-U.S. plan is
fully book reserved based upon reasonable GAAP actuarial assumptions and methodology and
fully reflects the financial effects of all prior transactions in relation to any such book
reserved plan; and (iii) if intended to be funded, any such non-U.S. plan is either fully
funded or any shortfall is fully recognized as a book reserve, based upon reasonable GAAP
actuarial assumptions and methodology and fully reflects the financial effects of all prior
transactions in relation to such funded plan.
Section 6.13 Labor and Employee Matters.
(a) Parent is not a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment practices,
including worker health and safety. Since January 1, 2008, (i) Parent has not been a party
to any Proceeding in which Parent was, or is, alleged to have violated any Contract or
Applicable Law relating to employment, equal employment opportunity, discrimination,
harassment or retaliation, wrongful termination, immigration, the payment or calculation of
43
wages or other compensation, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and/or privacy rights of
employees; and (ii) Parent has not received any written notice of intent by any Governmental
Authority responsible for the enforcement of any Applicable Law regarding labor or
employment to conduct an investigation or inquiry relating to Parent, and no such
investigation or inquiry is in progress.
(b) Parent is not a party to any collective bargaining agreements, or any other labor
union contracts. No labor organization or group of employees of Parent has made, or to the
knowledge of Parent threatened to make, a demand against Parent for recognition or
certification, and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or, to the knowledge of Parent,
threatened to be brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority involving any employees of Parent. There are no ongoing, or
to Parent’s Knowledge, threatened, organizing activities, strikes, work stoppages,
slowdowns, lockouts, or other material labor disputes pending or, to the knowledge of
Parent, threatened against or involving Parent.
(c) Parent is in material compliance with (i) the documentary and other requirements of
the Immigration Reform and Control Act of 1986 and the regulations promulgated thereunder
(IRCA) and similar foreign Applicable Law and (ii) the wages and hours requirements under
the Fair Labor Standards Act and the regulations promulgated thereunder and any similar
state, local or foreign Applicable Law. Parent has not misclassified any person as (i) an
independent contractor rather than as an employee under any Applicable Law or (ii) an
employee exempt from Applicable Law regarding minimum wage or overtime compensation.
(d) Except for such matters as have not had and would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, (i) Parent has
complied with all Applicable Laws respecting the employment of labor, (ii) Parent has not
received any complaint of any unfair labor practice, violation of worker health and safety
or other unlawful employment practice or any notice of any material violation of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders or directives
with respect to the employment of individuals by, or the employment practices of, Parent or
the work conditions or the terms and conditions of employment and wages and hours of their
respective businesses and (iii) there are no unfair labor practice charges, worker health
and safety or other employee-related complaints against Parent pending or, to the knowledge
of Parent, threatened, before any Governmental Authority by or concerning the employees
working in their respective businesses.
Section 6.14 Environmental Matters.
(a) Parent is and since January 1, 2008, has been in compliance in all material
respects with Environmental Laws (other than common law). There are no past or present
facts, conditions or circumstances relating to or arising under any Environmental Laws that
interfere in any material respect with the conduct of any of their respective businesses in
the manner now conducted.
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(b) Parent has, and is in compliance in all material respects with, all material
permits and other authorizations and approvals required under applicable Environmental Laws
for its operations, such permits, authorizations and approvals are in full force and effect,
and all applications, notices or other documents have been timely filed as required to
effect timely renewal, issuance or reissuance of such permits, authorizations and approvals.
(c) No judicial or administrative Proceedings or governmental investigations are
pending or, to the knowledge of Parent, threatened against Parent that allege the violation
of or seek to impose liability, injunctive relief or remedial obligations pursuant to any
Environmental Law, and except as would not reasonably be expected to result in a material
violation of or liability under Environmental Law or would not be reasonably expected to
have a Parent Material Adverse Effect, there has been no release or spill of or any other
incident, condition or circumstance involving any Hazardous Materials (i) at, on, or from
any property currently owned or operated by Parent or, during the time of Parent’s ownership
or operation, formerly owned or operated by Parent, (ii) for which Parent has assumed
responsibility, or (iii) associated with the off-site disposal of Hazardous Materials by
Parent.
(d) Parent has not (i) received any written notice of noncompliance with, violation of,
deficiency, or liability or potential liability under any Environmental Law, (ii) received
any written third-party claim asserting liability of Parent for matters arising under
Environmental Laws or under contracts pursuant to which Parent assumed environmental
obligations with respect to those environmental obligations, or (iii) entered into any
consent decree or order or is subject to any order of any court or Governmental Authority in
each case either under any Environmental Law or relating to the cleanup of any Hazardous
Materials and in each case, since January 1, 2008 or that remains unresolved or outstanding.
(e) Parent has delivered to or otherwise made available for inspection by the Company
true, complete and correct copies and results of any material reports, studies, analyses,
cost estimates, tests or monitoring possessed or initiated by Parent pertaining to Hazardous
Materials in, on, beneath or adjacent to any property currently or formerly owned, operated
or leased by Parent or for which Parent has assumed contractual liability for environmental
conditions, or regarding Parent’s compliance with applicable Environmental Laws.
(f) The representations and warranties made pursuant to this Section 6.14 and Section
6.6 are the exclusive representations and warranties by Parent regarding compliance with or
liability under Environmental Laws or Hazardous Materials.
Section 6.15 Properties.
(a) Parent has good and marketable title to, or valid leasehold interests in, all
properties and assets purported to be owned or leased by it in Parent’s annual report on
Form 10-K for the year ended September 30, 2010, except for such properties and assets as
are no longer used or useful in the conduct of its businesses or as have been disposed of in
the ordinary course of business, and except for defects in title, easements, restrictive
45
covenants and similar encumbrances or impediments that, individually or in the
aggregate, do not and will not materially interfere with its ability to conduct its business
as currently conducted. All such assets and properties are free and clear of all Liens,
other than Permitted Liens.
(b) Parent has complied, in all material respects, with the terms of all leases,
subleases, easements, licenses and other occupancy agreements to which it is a party and
under which it is in occupancy, and all such agreements are in full force and effect.
Parent enjoys peaceful and undisturbed possession under all such agreements.
(c) The assets, properties and rights owned or leased by Parent comprises all the
assets, properties and rights utilized by Parent in the operation of its business as
presently conducted, and, in the aggregate, are sufficient to permit Parent to operate its
business as presently conducted.
(d) All items of operating equipment owned or leased by Parent are in a state of repair
so as to be adequate, in all material respects, for operations in the areas in which they
are operated.
(e) Section 6.15(e) of the Parent Disclosure Letter sets forth a true and
complete list of all real property, facilities, office space and similar property owned by
Parent, together with the physical address of and primary use for each such property.
Section 6.16 Intellectual Property.
(a) Section 6.16(a) of the Parent Disclosure Letter (i) lists all U.S. and
foreign patents, published patent applications, trademark and service xxxx applications and
registrations, copyright registrations and domain names that are owned by Parent (the
“Parent Registered IP”), (ii) indicates for each item of Parent Registered IP the applicable
jurisdiction, title, registration number (or application number), the owner and all current
applicants, (iii) lists all agreements (excluding shrink wrap or other similar licenses with
respect to off-the-shelf-software) whereby Parent has been granted the legal right to use
any Parent IP that Parent does not own, (iv) lists all agreements whereby Parent grants to
any Person the right to use any Parent IP, other than such agreements which grant such
rights, without payment of a royalty, for use with a specific project or with equipment
purchased from Parent and (v) lists all agreements entered into since January 1, 2008
whereby Parent grants to any Person an indemnity with respect to the Intellectual Property
of any Person.
(b) The Parent Registered IP is currently in compliance with all formal legal
requirements (including the payment of all filing, examination and annuity and maintenance
fees and proof of working or use) and none of the registrations of such Parent Registered IP
has lapsed or expired or been cancelled, abandoned or deemed abandoned, other than at the
election of Parent or at the end of the full available term for such rights.
(c) Parent owns or has the legal right to use, free and clear of all Liens other than
Permitted Liens, all the Parent IP.
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(d) (i) No Proceeding against Parent regarding any Parent IP is pending or, to the
knowledge of Parent, threatened, (ii) to the knowledge of Parent, no Person is infringing or
misappropriating Parent IP that is material to the business or operations of Parent, (iii)
neither the Parent IP nor any product or service of Parent currently offered or provided, or
offered or provided since January 1, 2006, infringes or misappropriates the Intellectual
Property of any Person, (v) Parent has not received any claim or notice alleging any
infringement, misappropriation or violation by Parent of the Intellectual Property of any
Person or alleging that the operation of the business of Parent as currently conducted or as
currently proposed to be conducted in the future requires a license to the Intellectual
Property of any Person, and (v) Parent has not received any charge, complaint, claim or
notice that any of the Parent Registered IP is unenforceable or invalid.
Section 6.17 Insurance. Section 6.17 of the Parent Disclosure Letter lists each insurance
policy (including any commercial property and casualty, general liability, workers’ compensation,
liability, pollution liability, directors and officers and other liability policies) owned by
Parent or which names Parent as an insured (or loss payee) currently in effect, and Parent has made
available to the Company a true, complete and correct copy of each such policy or the binder
therefor. Each such policy is in full force and effect, is in such amount and covers such losses
and risks as are consistent with industry practice and is adequate, in the judgment of senior
management of Parent, to protect the properties and businesses of Parent and its Subsidiaries, and
all premiums due under each such policy have been paid. With respect to each such insurance
policy, neither Parent, nor to Parent’s knowledge, any other party to the policy is in breach or
default in any material respect thereunder (including with respect to the payment of premiums or
the giving of notices), and Parent does not know of any occurrence or any event which (with notice
or the lapse of time or both) would constitute such a breach or default or permit termination,
modification or acceleration under the policy. Parent has not been refused any insurance with
respect to its assets or operations since January 1, 2008. Section 6.17 of the Parent
Disclosure Letter describes any self-insurance arrangements affecting Parent.
Section 6.18 Certain Contracts.
(a) Section 6.18 of the Parent Disclosure Letter sets forth a list, as of the
date of this Agreement, of each of the following Contracts by which Parent is a party or
bound:
(i) any lease of real or personal property providing for annual rentals of
$100,000 or more;
(ii) any partnership, joint venture or other similar agreement or arrangement;
(iii) any Contract relating to (A) any outstanding Debt or (B) any guarantee
furnished by or on behalf of Parent;
(iv) any Contract made since January 1, 2008 relating to the disposition or
acquisition of material assets not in the ordinary course of business having a value
in excess of $100,000;
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(v) any Contract that is a “material contract” (as such term is defined in Item
601(b)(10) of Regulation S-K under the Exchange Act);
(vi) any Contract or covenant that (A) purports to limit the type of business in
which Parent may engage or the manner or locations in which any of them may so engage
in any business or (B) could require the disposition of any material assets or line
of business of Parent;
(vii) any Contract under which Parent has agreed to indemnify or reimburse any
surety in respect of amounts paid or claimed against any surety bonds, which such
surety bonds (bid, performance or other) were obtained in connection with services
being performed by Parent are set forth in Section 6.18(a)(vii) of the Parent
Disclosure Letter; and
(viii) any other Contract or group of Contracts with a single counterparty that,
if terminated or subject to a default by any party thereto, would reasonably be
expected to result, individually or in the aggregate, in a Parent Material Adverse
Effect (the Contracts described in clauses (i)–(viii), whether or not included as an
exhibit to the Parent Reports, and together with all exhibits and schedules to such
Contracts, being referred to herein each as a “Parent Material Contract”).
(b) Parent has previously made available to the Company true, complete and
correct copies of each Parent Material Contract that is not included as an exhibit to
the Parent Reports.
(c) Each Parent Material Contract is in full force and effect, and Parent has
performed all obligations required to be performed by it, in all material respects, to date
under each Parent Material Contract to which it is party. Parent (i)is not in material
breach of or violation or default under any Parent Material Contract or (ii) has not
received written notice of any such material breach, violation or default or the desire of
the other party or parties to any such Parent Material Contract to exercise any rights such
party has to cancel, terminate or repudiate such contract or exercise remedies thereunder.
Each Parent Material Contract is enforceable by Parent in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors’ rights and general principles of equity.
Section 6.19 Government Contract. Section 6.19 of the Parent Disclosure Letter sets forth
a true, correct and complete list, of all (a) Government Contracts to which Parent is a party, the
period of performance of which has not yet expired or terminated and for which final payment has
not yet been received and (b) outstanding bids and proposals that have been submitted by Parent to
any Governmental Authority, any proposed prime contractor to a Governmental Authority or any
proposed higher-tiered subcontractor. The Government Contracts set forth on Section
6.19(a) of the Parent Disclosure Letter are in full force and effect, and Parent is not in
material breach or non-compliance thereunder or under any representation or certification in
respect thereof.
Section 6.20 No Brokers. Parent has not entered into any contract, arrangement or understanding
with any Person which may result in the obligation of Parent, the Company or their
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respective Affiliates to pay any finder’s fees, brokerage or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the Merger and the other
transactions contemplated hereby, except that Parent has retained the Parent Financial Advisor.
Parent has heretofore furnished to the Company a correct and complete copy of all agreements
(including any amendment, waivers of other charges thereto) between Parent and the Parent Financial
Advisor pursuant to which such firm would be entitled to any payment relating to the transactions
contemplated hereby.
Section 6.21 Company Stock Ownership. Parent does not own any shares of capital stock of the
Company or any other securities convertible into or otherwise exercisable to acquire shares of
capital stock of the Company.
Section 6.22 Vote Required. The only vote of the holders of any class or series of Parent capital
stock necessary to approve any transaction contemplated by this Agreement is the vote of the
holders of shares of Parent Common Stock required by the rules of NASDAQ to approve the issuance of
shares of Parent Common Stock in the Merger (the “Parent Shareholder Approval”).
Section 6.23 Improper Payments.
(a) Parent and its Affiliates, directors, officers and employees have complied with the
Foreign Corrupt Practices Act, and any other applicable anticorruption or antibribery laws.
Except for “facilitating payments” (as such term is defined in the Foreign Corrupt Practices
Act and other Applicable Law), neither Parent nor any of its Affiliates, directors,
officers, employees, agents or other Representatives acting on its behalf have directly or
indirectly offered, paid, promised to pay or authorized the payment of anything of value,
including but not limited to cash, checks, wire transfers, tangible and intangible gifts,
favors and services, to a Foreign Government Official or any other person while knowing or
having a reasonable belief that all or some portion would be used for the purpose of: (i)
influencing any act or decision of a Foreign Government Official, including a decision to
fail to perform official functions, (ii) inducing any Foreign Government Official to do or
omit to do any act in violation of the lawful duty of such official, or (iii) inducing any
Foreign Government Official to use influence with any government, department, agency or
instrumentality in order to assist Parent in obtaining or retaining business with, or
directing business to any person or otherwise securing for any person an improper advantage.
(b) Parent and its Affiliates have developed and implemented a Foreign Corrupt
Practices Act compliance program which includes corporate policies and procedures designed
to ensure compliance with the Foreign Corrupt Practices Act and any other applicable
anticorruption and antibribery laws.
(c) No civil or criminal penalties have been imposed on Parent or any of its Affiliates
with respect to violations of the Foreign Corrupt Practices Act or any other applicable
anticorruption or antibribery laws and, since January 1, 2008, no Governmental Authority has
notified Parent of any actual or alleged violation or breach of the Foreign Corrupt Practice
Act or any other applicable anticorruption or antibribery law.
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(d) To Parent’s knowledge, Parent has not been since January 1, 2008 and is not now
under any administrative, civil or criminal investigation or indictment involving alleged
violations of the Foreign Corrupt Practices Act or any other applicable anticorruption or
antibribery laws. Parent is not participating in any investigation by a Governmental
Authority relating to alleged violations by Parent or its Affiliates of the Foreign Corrupt
Practices Act or any other applicable anticorruption or antibribery laws.
Section 6.24 Affiliate Transactions. Section 6.24 of the Parent Disclosure Letter sets
forth a correct and complete list of the Contracts (other than Parent Benefit Plans) or
transactions under which Parent has any existing or future liabilities, in each case between
Parent, on the one hand, and, on the other hand, any (a) present executive officer or director of
Parent or any individual that has served as such an executive officer or director within the past
two years or any of such executive officer’s or director’s immediate family members, (b) record or
beneficial owner of more than 5% of the Parent Common Stock, or (c) to the knowledge of Parent, any
Affiliate of any such executive officer, director or owner (other than Parent) (each, a “Parent
Affiliate Transaction”). Company has been provided with true and complete copies of any such
Contracts or arrangements.
ARTICLE VII.
COVENANTS
Section 7.1 Conduct of Business by the Company. The Company covenants and agrees as to itself and
its Subsidiaries that, prior to the Effective Time, unless Parent has consented in writing, and
except as otherwise expressly contemplated by this Agreement, the business of the Company and its
Subsidiaries shall be conducted only in the ordinary course of business consistent with past
practices and, to the extent consistent therewith, the Company and its Subsidiaries shall use their
respective reasonable best efforts to preserve their business organizations intact, maintain
existing relations and goodwill with Governmental Authorities, customers, suppliers, creditors,
lessors, employees and business associates and keep available the services of the present employees
and agents of the Company and its Subsidiaries. Without limiting the generality of the foregoing
and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as
otherwise expressly contemplated by this Agreement, (B) as Parent may consent in writing or (C) as
set forth in Section 7.1 of the Company Disclosure Letter, the Company shall not directly
or indirectly, and shall not permit any of its Subsidiaries to:
(a) amend the Company Articles of Incorporation or Company Bylaws or other applicable
governing instruments or the organizational documents of any of its Subsidiaries;
(b) merge or consolidate with any Person or acquire (whether by acquisition of stock or
assets, joint venture or otherwise) any Person or assets, in any single transaction (or
series of related transactions) in excess of $100,000;
(c) (i) adjust, reclassify, split, combine, subdivide, authorize for issuance, issue or
sell, pledge, dispose of or subject to any Lien any shares of any class of capital stock or
other equity interest of the Company or any Subsidiary or any options, warrants, restricted
stock, restricted stock units, convertible securities, stock appreciation rights,
performance units, bonus stock, “phantom” stock rights, redemption rights, repurchase
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rights, agreements, arrangements, calls, commitments or other rights of any kind to
acquire any such shares or any other equity interest, of the Company or any Subsidiary,
other than issuances of shares of the Company Common Stock upon exercise or settlement of
the Company Equity Awards outstanding on the date of this Agreement or (ii) repurchase,
redeem or otherwise acquire any securities or equity equivalents except in the ordinary
course of business in connection with (x) the cashless exercise of the Company Options in
accordance with the Company Stock Plans, or (y) the settlement of the Company Equity Awards
or the Company Options, in each case, in order to satisfy withholding or exercise price
obligations in accordance with the Company Stock Plans;
(d) except to the extent required under any Company Benefit Plan as in effect on the
date of this Agreement, (i) increase the compensation (including bonus opportunities) or
fringe benefits of any of its directors, executive officers or employees (except in the
ordinary course of business consistent with past practice with respect to employees who are
not executive officers or parties to an employment or change in control agreement),
(ii) grant any severance or termination pay, other than nominal severance to terminated
employees in the ordinary course of business consistent with past practice, (iii) make any
new equity awards to any director, officer, employee or contractor, (iv) enter into or amend
any employment, consulting, change in control or severance agreement or arrangement with any
of its present, former or future directors, officers, employees or contractors,
(v) establish, adopt, enter into, freeze or amend in any material respect or terminate any
Company Benefit Plan or,
except as otherwise provided herein,
take any action to accelerate entitlement to compensation or
benefits under any Company Benefit Plan or otherwise for the benefit of any present, former
or future director, officer, employee or contractor, in each such case, except as otherwise
permitted pursuant to clauses (i), (ii) or (iii) of this paragraph; provided that in no
event may any tax gross-up or tax reimbursement feature be granted or made more favorable to
any individual, (vi) pay, accrue or certify performance level achievements at levels in
excess of actually achieved performance in respect of any component of an incentive-based
award, or amend or waive any performance or vesting criteria or accelerate vesting,
exercisability, distribution, settlement or funding under any Company Benefit Plan or
otherwise for the benefit of any present, former or future director, officer, employee or
contractor, except as required by the terms of the Company Benefit Plans as in effect on the
date hereof, (vii) take any action with respect to salary, compensation, benefits or other
terms and conditions of employment that would result in the holder of an employment or
change in control agreement having “good reason” (within the meaning of such agreement) to
terminate employment and collect severance payments and benefits pursuant to such agreement,
and (viii) terminate the employment of any holder of an employment or change in control
agreement other than for “cause” (within the meaning of such agreement);
(e) (i) declare, set aside, make or pay any dividend or other distribution or payment
(whether in cash, equity interests or property or any combination thereof) with respect to
any shares of any class of capital stock or other equity interests of the Company or any of
its Subsidiaries (other than dividends or distributions by any Subsidiary to the Company or
another wholly-owned Subsidiary) or (ii) redeem, purchase or otherwise acquire any of the
Company’s or any of its Subsidiaries’ capital stock, or make any commitment for any such
action other than pursuant to the Company Stock Plans as in effect on the date hereof;
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(f) sell, lease, license, subject to a Lien, encumber (including by the grant of any
option thereon) or otherwise surrender, relinquish or dispose of any of the assets or
properties of the Company or its Subsidiaries (including capital stock of Subsidiaries)
except for (i) sales of surplus or obsolete equipment, (ii) sales, leases, licenses or other
transfers between the Company and its wholly-owned Subsidiaries or between those
Subsidiaries or (iii) sales, leases, licenses or other dispositions of assets or properties
with a fair market value not in excess of $100,000;
(g) enter into any joint venture, partnership or other similar arrangement or make any
loan, capital contribution or advance to or investment in any other Person (other than the
Company or any wholly-owned Subsidiary of the Company);
(h) change any of the material accounting methods, policies, principles, procedures or
practices except as may be required as a result of a change in GAAP;
(i) fail to maintain in full force without interruption its present insurance policies
or comparable insurance coverage;
(j) (i) make or rescind any material election relating to Taxes, including elections
for any and all joint ventures, partnerships, limited liability companies or other
investments where it has the capacity to make such binding election, (ii) settle or
compromise any material Proceeding relating to Taxes, except to the extent of any reserve
reflected on the Company’s consolidated balance sheet as of December 31, 2010 as filed with
the SEC in its Annual Report on Form 10-K for the year then ended relating to such matter
that was established in the ordinary course of business consistent with past practice, (iii)
change in any material respect any of its methods of reporting any item for Tax purposes
from those employed in the preparation of its Tax returns for the most recent taxable year
for which a return has been filed, (iv) amend any material Return or file any material
refund claim, (v) enter into a closing agreement with any taxing authorities, or (vi) give
or request any waiver of a statute of limitations with respect to any Tax or Tax Return;
(k) settle or compromise any Proceeding, other than in the ordinary course of business
consistent with past practice, or enter into any consent, decree, injunction or similar
restraint or form of equitable relief in settlement of any material Proceeding or waive,
release or assign any rights or claims;
(l) (i) create, incur or assume any Debt, issue or sell any debt securities or calls,
options, warrants or other rights to acquire any debt securities of the Company or any of
its Subsidiaries, guarantee any Debt or debt securities of another Person, enter into any
“keep well” or other Contract to maintain any financial condition of another Person or enter
into any arrangement having the economic effect of any of the foregoing, except intercompany
Debt among the Company and its Subsidiaries in the ordinary course of business consistent
with past practice; (ii) repurchase, repay, defease or pre-pay any Debt, except (A)
repayments in the ordinary course of business or (B) repayments of indebtedness by a
Subsidiary of the Company to the Company or its wholly-owned Subsidiaries; or (iii) except
with respect any Proceeding, pay, discharge or satisfy any material claims, liabilities or
52
obligations (absolute, accrued, contingent or otherwise), except in the ordinary course
of business consistent with past practice;
(m) (i) mortgage, pledge, or suffer to exist any Liens (other than Permitted Liens) on,
any asset or property, or (ii) pledge or otherwise encumber any shares of capital stock of
the Company or any of its Subsidiaries;
(n) except for capital expenditures for items and in the amounts set forth in the
capital budget included in Section 7.1(n) of the Company Disclosure Letter, make,
authorize or enter into any commitment for any capital expenditures in excess of $100,000 in
the aggregate;
(o) other than in the ordinary course of business consistent with past practice, (i)
modify, amend or terminate or waive any rights under any Company Material Contract, or (ii)
enter into any new agreement that would have been a Company Material Contract if it were
entered into at or prior to the date hereof;
(p) enter into, renew, extend, amend, grant a waiver under or terminate (other than
terminations in accordance with their terms) any Company Affiliate Transaction or
transaction that would be a Company Affiliate Transaction if such transaction occurred prior
to the date hereof;
(q) adopt or implement a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization of the Company or any of its
Subsidiaries;
(r) purchase or otherwise acquire, directly or indirectly, any of the capital stock of
Parent or securities convertible or exchangeable into or exercisable for any shares of
capital stock of Parent;
(s) subject to Section 7.3, take any action that would, or would reasonably be
expected to, (i) result in any condition in Article VIII not being satisfied, (ii) prevent,
materially delay or materially impede the consummation of the Merger or the other
transactions contemplated by this Agreement or (iii) cause any representation in the
applicable form of representation certificate contemplated by Section 8.2(d) hereof
to be untrue as of the Closing; or
(t) agree or commit to do any of the foregoing.
Section 7.2 Conduct of Business by Parent. Parent covenants and agrees as to itself that, prior to
the Effective Time, unless the Company has consented in writing, and except as otherwise expressly
contemplated by this Agreement, the business of Parent shall be conducted only in the ordinary
course of business consistent with past practices and, to the extent consistent therewith, Parent
shall use its respective reasonable best efforts to preserve its business organizations intact,
maintain existing relations and goodwill with Governmental Authorities, customers, suppliers,
creditors, lessors, employees and business associates and keep available the services of the
present employees and agents of Parent. Without limiting the generality of the foregoing and in
furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as
otherwise expressly
53
contemplated by this Agreement, (B) as the Company may consent in writing or (C) as set forth in
Section 7.1 of the Parent Disclosure Letter, Parent shall not directly or indirectly:
(a) amend the Parent Articles of Incorporation or other applicable governing
instruments;
(b) merge or consolidate with any Person or acquire (whether by acquisition of stock or
assets, joint venture or otherwise) any Person or assets, in any single transaction (or
series of related transactions) in excess of $100,000;
(c) (i) adjust, reclassify, split, combine, subdivide, authorize for issuance, issue or
sell, pledge, dispose of or subject to any Lien any shares of any class of capital stock or
other equity interest of Parent or any options, warrants, restricted stock, restricted stock
units, convertible securities, stock appreciation rights, performance units, bonus stock,
“phantom” stock rights, redemption rights, repurchase rights, agreements, arrangements,
calls, commitments or other rights of any kind to acquire any such shares or any other
equity interest, of Parent, other than issuances of shares of the Parent Common Stock upon
exercise or settlement of the Parent Equity Awards outstanding on the date of this Agreement
or (ii) repurchase, redeem or otherwise acquire any securities or equity equivalents except
in the ordinary course of business in connection with (x) the cashless exercise of the
Parent Options in accordance with the Parent Stock Plans, or (y) the settlement of the
Parent Equity Awards or the Parent Options, in each case, in order to satisfy withholding or
exercise price obligations in accordance with the Parent Stock Plans;
(d) except to the extent required under any Parent Benefit Plan as in effect on the
date of this Agreement, (i) increase the compensation (including bonus opportunities) or
fringe benefits of any of its directors, executive officers or employees (except in the
ordinary course of business consistent with past practice with respect to employees who are
not executive officers or parties to an employment or change in control agreement),
(ii) grant any severance or termination pay, other than nominal severance to terminated
employees in the ordinary course of business consistent with past practice, (iii) make any
new equity awards to any director, officer, employee or contractor, (iv) enter into or amend
any employment, consulting, change in control or severance agreement or arrangement with any
of its present, former or future directors, officers, employees or contractors,
(v) establish, adopt, enter into, freeze or amend in any material respect or terminate any
Parent Benefit Plan or take any action to accelerate entitlement to compensation or benefits
under any Parent Benefit Plan or otherwise for the benefit of any present, former or future
director, officer, employee or contractor, in each such case, except as otherwise permitted
pursuant to clauses (i), (ii) or (iii) of this paragraph; provided that in no event may any
tax gross-up or tax reimbursement feature be granted or made more favorable to any
individual, or (vi) pay, accrue or certify performance level achievements at levels in
excess of actually achieved performance in respect of any component of an incentive-based
award, or amend or waive any performance or vesting criteria or accelerate vesting,
exercisability, distribution, settlement or funding under any Parent Benefit Plan or
otherwise for the benefit of any present, former or future director, officer, employee or
contractor, except as required by the terms of the Parent Benefit Plans as in effect on the
date hereof;
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(e) (i) declare, set aside, make or pay any dividend or other distribution or payment
(whether in cash, equity interests or property or any combination thereof) with respect to
any shares of any class of capital stock or other equity interests of Parent or (ii) redeem,
purchase or otherwise acquire any of Parent’s capital stock, or make any commitment for any
such action other than pursuant to the Parent Stock Plans as in effect on the date hereof;
(f) sell, lease, license, subject to a Lien, encumber (including by the grant of any
option thereon) or otherwise surrender, relinquish or dispose of any of the assets or
properties of Parent except for (i) sales of surplus or obsolete equipment, or (ii) sales,
leases, licenses or other dispositions of assets or properties with a fair market value not
in excess of $100,000;
(g) enter into any joint venture, partnership or other similar arrangement or make any
loan, capital contribution or advance to or investment in any other Person;
(h) change any of the material accounting methods, policies, principles, procedures or
practices except as may be required as a result of a change in GAAP;
(i) fail to maintain in full force without interruption its present insurance policies
or comparable insurance coverage;
(j) (i) make or rescind any material election relating to Taxes, including elections
for any and all joint ventures, partnerships, limited liability companies or other
investments where it has the capacity to make such binding election, (ii) settle or
compromise any material Proceeding relating to Taxes, except to the extent of any reserve
reflected on Parent’s balance sheet as of September 30, 2010 as filed with the SEC in its
Annual Report on Form 10-K for the year then ended relating to such matter that was
established in the ordinary course of business consistent with past practice, (iii) change
in any material respect any of its methods of reporting any item for Tax purposes from those
employed in the preparation of its Tax returns for the most recent taxable year for which a
return has been filed, (iv) amend any material Return or file any material refund claim, (v)
enter into a closing agreement with any taxing authorities, or (vi) give or request any
waiver of a statute of limitations with respect to any Tax or Tax Return;
(k) settle or compromise any Proceeding, other than in the ordinary course of business
consistent with past practice, or enter into any consent, decree, injunction or similar
restraint or form of equitable relief in settlement of any material Proceeding or waive,
release or assign any rights or claims;
(l) (i) create, incur or assume any Debt, issue or sell any debt securities or calls,
options, warrants or other rights to acquire any debt securities of Parent, guarantee any
Debt or debt securities of another Person, enter into any “keep well” or other Contract to
maintain any financial condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except in the ordinary course of business
consistent with past practice; (ii) repurchase, repay, defease or pre-pay any Debt, except
55
repayments in the ordinary course of business or (iii) except with respect any
Proceeding, pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), except in the ordinary course of business
consistent with past practice;
(m) (i) mortgage, pledge, or suffer to exist any Liens (other than Permitted Liens) on,
any asset or property, or (ii) pledge or otherwise encumber any shares of capital stock of
Parent;
(n) except for capital expenditures for items and in the amounts set forth in the
capital budget included in Section 7.2(n) of the Parent Disclosure Letter, make,
authorize or enter into any commitment for any capital expenditures in excess of $100,000 in
the aggregate;
(o) other than in the ordinary course of business consistent with past practice, (i)
modify, amend or terminate or waive any rights under any Parent Material Contract, or (ii)
enter into any new agreement that would have been a Parent Material Contract if it were
entered into at or prior to the date hereof;
(p) enter into, renew, extend, amend, grant a waiver under or terminate (other than
terminations in accordance with their terms) any Parent Affiliate Transaction or transaction
that would be a Parent Affiliate Transaction if such transaction occurred prior to the date
hereof;
(q) adopt or implement a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization of Parent;
(r) purchase or otherwise acquire, directly or indirectly, any of the capital stock of
the Company or any of its Subsidiaries or securities convertible or exchangeable into or
exercisable for any shares of capital stock of the Company or any of its Subsidiaries;
(s) subject to Section 7.3, take any action that would, or would reasonably be
expected to, (i) result in any condition in Article VIII not being satisfied, (ii) prevent,
materially delay or materially impede the consummation of the Merger or the other
transactions contemplated by this Agreement or (iii) cause any representation in the
applicable form of representation certificate contemplated by Section 8.3(d) hereof
to be untrue as of the Closing; or
(t) agree or commit to do any of the foregoing.
Section 7.3 No Solicitation.
(a) Each of the Company and Parent (each, a “No-Shop Party” and, with respect to each
other, the “Other Party”) agrees that neither it nor any of its Subsidiaries shall, and each
No Shop Party shall cause its and its Subsidiaries’ Representatives not to, directly or
indirectly, (i) solicit, initiate, approve, endorse, recommend or encourage, or take any
other action designed to, or which would reasonably be expected to,
56
facilitate, any inquiry or the making or announcement of any proposal or offer that
constitutes, or that would reasonably be expected to lead to, an Acquisition Proposal in
respect of such No-Shop Party, (ii) engage, continue or otherwise participate in any
discussions or negotiations regarding, or furnish (or cause to be furnished) non-public
information relating to such No-Shop Party or any of its Subsidiaries or afford access to
properties, books or records of the No-Shop Party or any of its Subsidiaries to any Person
in connection with or in furtherance of any Acquisition Proposal, (iii) approve or
recommend, or propose to approve or recommend, or consummate, execute or enter into any
letter of intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, exchange agreement, option agreement, joint venture agreement,
partnership agreement or other agreement, constituting or related to, or that is intended to
or would reasonably be expected to lead to an Acquisition Proposal (other than
confidentiality agreements contemplated by this Section 7.3), or (iv) propose
publicly or agree to do any of the foregoing. Without limiting the foregoing, it is agreed
that any violation of the restrictions set forth in this paragraph by any Representative of
a No-Shop Party or any of its Subsidiaries, whether or not such Person is purporting to act
on behalf of such No-Shop Party or any of its Subsidiaries or otherwise, shall be a breach
of this Section 7.3(a) by such No-Shop Party.
Notwithstanding the foregoing, at any time prior to (but not after) obtaining the Company
Shareholder Approval or the Parent Shareholder Approval, as applicable, a No-Shop Party may,
directly or indirectly through its Representatives, (i) furnish information and access, but
only in response to a written request for information or access, to any person making an
Acquisition Proposal which was not solicited, initiated, knowingly encouraged or knowingly
facilitated by the No-Shop Party or any of its Subsidiaries, Affiliates or Representatives
and (ii) may participate in discussions and negotiate with such Person concerning any such
unsolicited Acquisition Proposal, if and only to the extent all of the following conditions
are met: (A) the No-Shop Party has not breached this Section 7.3(a) in any material
respect with respect to such Acquisition Proposal, (B) the No-Shop Party’s Board of
Directors determines in good faith, after receipt of advice from outside counsel and a
financial advisor of nationally recognized reputation, that such Acquisition Proposal
constitutes or is reasonably likely to lead to a Superior Proposal, and (C) the No-Shop
Party enters into a customary confidentiality agreement with the Person making such
Acquisition Proposal which is (1) no less favorable to the No-Shop Party and (2) no less
restrictive of such Person than the Confidentiality Agreement, dated May 28, 2010, as
amended on June 1, 2010, between Parent and the Company (the “Confidentiality Agreement”)
and all such information provided thereunder has previously been provided to the Other Party
or is provided to the Other Party concurrently with its provision to such Person.
(b) Except as expressly permitted by this Section 7.3(b), neither the Board of
Directors of a No-Shop Party nor any committee thereof shall (i) fail to make, withdraw,
modify or qualify, or propose publicly to withhold, withdraw, modify or qualify, in any
manner adverse to the Other Party, the Company Recommendation or the Parent Recommendation,
as applicable, (ii) make any other public statement that is inconsistent with the Company
Recommendation or the Parent Recommendation, as applicable, (iii) recommend, endorse, adopt
or approve, or propose publicly to recommend, endorse, adopt or approve, any Acquisition
Proposal or (iv) fail to reaffirm or re-publish within five business
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days upon request by the Other Party (publicly if so requested) the Company
Recommendation or the Parent Recommendation, as applicable (any action or failure described
in this clause (i) being referred to as a “Company Adverse Recommendation Change” or a
“Parent Adverse Recommendation Change”, as applicable).
Notwithstanding the foregoing, at any time prior to (but not after) obtaining the Company
Shareholder Approval or the Parent Shareholder Approval, as applicable, and subject to the
No-Shop Party’s compliance at all times with the provisions of this Section 7.3, (i)
the Board of Directors of the No-Shop Party may make a Company Adverse Recommendation Change
or a Parent Adverse Recommendation Change, as applicable, or (ii) the No-Shop Party may
terminate this Agreement and enter into an agreement, understanding or arrangement providing
for an Acquisition Proposal (a “Superior Acquisition Proposal Termination”), in each case,
if and only to the extent all of the following conditions are met: (A) the Acquisition
Proposal has not been withdrawn, (B) the No-Shop Party’s Board of Directors determines in
good faith, after receipt of advice from outside counsel and a financial advisor of
nationally recognized reputation, that such Acquisition Proposal constitutes a Superior
Proposal, (C) the No-Shop Party’s Board of Directors determines in good faith, after receipt
of advice from outside counsel, that the failure to take such action would be reasonably
likely to result in a breach of fiduciary duties to the shareholders of the No-Shop Party
under Applicable Law, and (D) in the case of a Superior Acquisition Proposal Termination,
the concurrent payment of the applicable Termination Fee in accordance with Section
9.5(a) or Section 9.5(b), as applicable; provided, however, no Company Adverse
Recommendation Change or Parent Adverse Recommendation Change, as applicable, or Superior
Acquisition Proposal Termination may be made or occur, in each case,
(1) until after the third business day following the Other Party’s receipt of
written notice (a “Change/Intent to Terminate Notice”) from the No-Shop Party
advising the Other Party that the No-Shop Party’s Board of Directors intends
to take such action or the No-Shop Party intends to terminate this Agreement,
which Change/Intent to Terminate Notice will specify the terms and conditions
of such Superior Proposal (it being understood and agreed that any amendment
to the financial terms or any other material term of such Superior Proposal
shall require a new Change/Intent to Terminate Notice and a new three
business day period);
(2) unless during such three business day period, the No-Shop Party shall,
and shall cause its financial and legal advisors to, upon the Other Party’s
request, discuss with the Other Party in good faith this Agreement and any
adjustments to the terms and conditions of this Agreement that the Other
Party may propose in response to the Acquisition Proposal; and
(3) if, prior to the expiration of such three business day period, the Other
Party makes a proposal to adjust the terms and conditions of this Agreement
that the No-Shop Party’s Board of Directors determines in good faith, after
receipt of advice from outside legal counsel and a financial advisor of
nationally recognized reputation, to be at least as favorable as the
Acquisition Proposal so that such Acquisition Proposal no longer constitutes
a Superior Proposal;
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provided, however, that the No-Shop Party need not comply with the provisions of subclauses
(2) and (3) of this Section 7.3(b) if the No-Shop Party’s Board of Directors
determines in good faith, after receipt of advice from a financial advisor of nationally
recognized reputation, that such Superior Proposal (as specified in the Change/Intent to
Terminate Notice issued to the Other Party pursuant to subclause (1) of this
Section 7.3(b)) constitutes a Special Valuation Proposal.
(c) In addition to the obligations of each No-Shop Party set forth in paragraphs
(a) and (b) of this Section 7.3, each No-Shop Party shall promptly (and in any event
within 24 hours after receipt thereof) advise the Other Party orally and in writing of any
Acquisition Proposal or any inquiry with respect to or that would reasonably be expected to
lead to any Acquisition Proposal, including the material terms and conditions of any such
Acquisition Proposal or inquiry (including any changes thereto). Each No-Shop Party shall
(i) keep the Other Party reasonably informed of the status and details (including any change
to the terms thereof) of any such Acquisition Proposal or inquiry and (ii) provide to the
Other Party as soon as practicable after receipt or delivery thereof with copies of all
correspondence and other written material sent or provided to such No-Shop Party or any of
its Subsidiaries from any Person that describes any of the terms or conditions of any
Acquisition Proposal; provided, however, that such No-Shop Party need not inform the Other
Party regarding the identity of the Person making any such Acquisition Proposal or inquiry.
(d) Nothing contained in this Section 7.3 shall prohibit any No-Shop Party or
any Board of Directors of a No-Shop Party from taking and disclosing to its shareholders a
position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act, or
other Applicable Law, if, in the good faith judgment of the No-Shop Party’s Board of
Directors, after receipt of advice from outside counsel, failure to so disclose would be
reasonably likely to result in a breach of its fiduciary duties to shareholders of the
No-Shop Party under Applicable Law; provided, however, that in no event shall the No-Shop
Party or its Board of Directors take, or agree or resolve to take, any action prohibited by
Section 7.3(b).
(e) Each No-Shop Party (i) shall, and shall cause its Subsidiaries to, immediately
cease and cause to be terminated and shall cause its and its Subsidiaries’ Representatives
to, immediately cease and cause to be terminated, all discussions and negotiations, if any,
with any Person conducted heretofore with respect to any Acquisition Proposal in respect of
such No-Shop Party and (ii) shall promptly request the return or destruction of all
confidential information previously furnished and immediately terminate all physical and
electronic dataroom access previously granted to any such Person or its Representatives.
(f) For purposes of this Agreement:
(i) “Acquisition Proposal” means, with respect to either No-Shop Party, any
inquiry, proposal or offer, whether or not in writing, from any Person other than the
Other Party or its Affiliates relating to, or that would reasonably be expected to
lead to, any (A) direct or indirect acquisition or purchase, in one transaction or a
series of transactions, of (i) assets or businesses that constitute 20% or
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more of the consolidated net revenues, net income or assets (based on either
book or fair market value) of such No-Shop Party and its Subsidiaries, or (ii) 20% or
more of any class of equity securities of such No-Shop Party, (B) tender offer or
exchange offer that if consummated would result in any Person beneficially owning 20%
or more of any class of equity securities of such No-Shop Party, or (C) merger,
consolidation, business combination, recapitalization, liquidation, dissolution,
joint venture, share exchange or similar transaction involving such No-Shop Party, in
each case other than the transactions contemplated by this Agreement.
(ii) “Special Valuation Proposal” means a Superior Proposal that the No-Shop
Party’s Board of Directors determines in good faith, after receipt of advice from a
financial advisor of nationally recognized reputation, that, if consummated, would
result in such No-Shop Party’s shareholders receiving consideration valued at 115% or
more of the consideration to be received by such No-Shop Party’s shareholders
pursuant to the transactions contemplated by this Agreement, as such consideration
may have then been modified by the Other Party in response to such Acquisition
Proposal.
(iii) “Superior Proposal” means any bona fide written Acquisition Proposal made
by any Person other than the Other Party or its Affiliates, which, if consummated,
would result in such Person (or its shareholders) owning, directly or indirectly, at
least 80% of the shares of Company Common Stock or Parent Common Stock, as
applicable, then outstanding (or of the surviving entity in a merger or the direct or
indirect parent of the surviving entity in a merger) or at least 80% of all the
assets of the No-Shop Party, which the No-Shop Party’s Board of Directors determines
in good faith, after receipt of advice from a financial advisor of nationally
recognized reputation and outside counsel, to be (A) more favorable to the
shareholders of the No-Shop Party from a financial point of view than the Merger,
taking into account all the terms and conditions of such proposal, the Person making
such proposal and this Agreement (including any break-up fees, expense reimbursement
provisions, conditions to consummation, strategic considerations, legal and
regulatory considerations, and any changes to the terms of this Agreement proposed by
the Other Party in response to such offer or otherwise pursuant to this Section
7.3) and (B) reasonably likely to be completed on the terms proposed, taking into
account all financial, legal, regulatory and other aspects of such proposal. For
purposes of the definitions of “Acquisition Proposal,” “Special Valuation Proposal”
and “Superior Proposal,” the term “Person” shall include any group within the meaning
of Section 13(d) of the Exchange Act.
Section 7.4 Preparation of Proxy Statement; Meetings of Shareholders.
(a) As promptly as practicable after the date of this Agreement, each of Parent and the
Company shall cooperate and prepare the joint proxy statement with respect to the meetings
of the shareholders of Parent and of the Company in connection with the transactions
contemplated by this Agreement (the “Proxy Statement/Prospectus”), and Parent shall prepare
and file with the SEC, a Registration Statement on Form S-4 (with any amendments or
supplements thereto, the “Form S-4”) under the Securities Act with respect to
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the shares of Parent Common Stock issuable in the Merger, a portion of which Form S-4
shall also serve as the Proxy Statement/Prospectus. The respective parties will cause the
Proxy Statement/Prospectus and the Form S-4 to comply as to form in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Each of Parent and the Company shall use its reasonable best
efforts to have the Form S-4 declared effective by the SEC as promptly as practicable and to
keep the Form S-4 effective as long as is necessary to consummate the Merger and the other
transactions contemplated thereby. As promptly as practicable after receipt thereof, each
party shall provide the other party copies of any written comments, and advise the other
party of any oral comments, received from the SEC with respect to the Proxy
Statement/Prospectus. Each of the parties shall provide the other with a reasonable
opportunity to review and comment on any amendment or supplement to the Proxy
Statement/Prospectus or Form S-4 and, except for annual, quarterly and current reports filed
or furnished with the SEC under the Exchange Act, which may be incorporated by reference in
the Form S-4, any substantive communications prior to filing such with the SEC, and will
promptly provide the other party with a copy of all such filings and communications made
with the SEC.
(b) Parent shall use reasonable best efforts, and the Company shall cooperate, to
obtain, prior to the effective date of the Form S-4, all necessary state securities law or
“Blue Sky” permits or approvals required with respect to the issuance of Parent Common Stock
pursuant to the Merger. The Company shall furnish all information concerning the Company
and the holders of Company Common Stock as may be reasonably requested in connection with
any such action. Each Party shall advise the other party, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective, the issuance of any stop order,
the suspension of qualification of the Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement/Prospectus or the Form S-4.
(c) Each of Parent and the Company shall cause the Proxy Statement/Prospectus to be
mailed to its shareholders as promptly as reasonably practicable after the Form S-4 is
declared effective under the Securities Act.
(d) Each of Parent and the Company shall ensure that the information provided by it for
inclusion in the Proxy Statement/Prospectus and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the respective meetings of shareholders of Parent
and the Company, or, in the case of information provided by it for inclusion in the Form S-4
or any amendment or supplement thereto, at the time it becomes effective, (i) will not
include any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and (ii) will comply as to form in all material
respects with the provisions of the Securities Act and the Exchange Act. If at any time
prior to the Effective Time any information relating to Parent or the Company, or any of
their respective Affiliates, officers or directors, should be discovered by Parent or the
Company which should be set forth in an amendment or supplement to any of the Form S-4 or
the Proxy Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made,
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not misleading, the party that discovers such information shall promptly notify the
other party hereto and, to the extent required by Applicable Law, an appropriate amendment
or supplement describing such information shall be filed promptly with the SEC and
disseminated to the shareholders of the Company.
(e) The Company, acting through the Company Board, shall, in accordance with Applicable
Law and the Company Articles of Incorporation or Company Bylaws, duly call, give notice of,
convene and hold an annual or special meeting of its shareholders (the “Company Shareholders
Meeting”) as soon as reasonably practicable after the Form S-4 is declared effective under
the Securities Act for the purpose of obtaining the Company Shareholder Approval. The
Company Board shall, subject to Section 7.3(b), make the Company Recommendation,
include such recommendation in the Proxy Statement/Prospectus and use its reasonable best
efforts to obtain the Company Shareholder Approval. Notwithstanding anything in this
Agreement to the contrary, unless (i) a Company Adverse Recommendation Change has occurred
in accordance with Section 7.3 or (ii) this Agreement is terminated in accordance
with Article IX and subject to compliance with Section 7.3, the Company will submit
this Agreement for approval by the shareholders of the Company at the Company Shareholders
Meeting. The Company shall use its reasonable best efforts to cause the Company
Shareholders Meeting to be held on the same date as the Parent Shareholders Meeting.
(f) Parent, acting through the Parent Board, shall, in accordance with Applicable Law
and Parent’s articles of incorporation and bylaws, duly call, give notice of, convene and
hold an annual or special meeting of its shareholders (the “Parent Shareholders Meeting”) as
soon as reasonably practicable after the Form S-4 is declared effective under the Securities
Act for the purpose of obtaining the Parent Shareholder Approval. Except to the extent
permitted by Section 7.3(b), the Parent Board shall make the Parent Recommendation,
include such recommendation in the Proxy Statement/Prospectus and use its reasonable best
efforts to obtain the Parent Shareholder Approval. Notwithstanding anything in this
Agreement to the contrary, unless (i) a Parent Adverse Recommendation Change has occurred in
accordance with Section 7.3 or (ii) this Agreement is terminated in accordance with
Article IX and subject to compliance with Section 7.3, Parent will submit this
Agreement for approval by the shareholders of Parent at the Parent Shareholders Meeting.
Parent shall use its reasonable best efforts to cause the Parent Shareholders Meeting to be
held on the same date as the Company Shareholders Meeting. Notwithstanding anything to the
contrary in this Agreement, Parent may, in its sole discretion, submit a proposal to its
shareholders at the Parent Shareholders Meeting to approve an amendment to the Parent
Articles of Incorporation.
Section 7.5 Filings; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions herein provided, and subject to
Section 7.3, each of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under Applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, including (i) to satisfy the conditions
precedent to the obligations of any of the parties hereto, (ii) preparing and filing as
promptly as
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practicable with any Governmental Authority or other third-party documentation to
effect all necessary filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents and (iii) obtaining and maintaining all
approvals, consents, registrations, permits, authorizations and other confirmations required
to be obtained from any Governmental Authority or other third party that are necessary,
proper or advisable to consummate the transactions contemplated by this Agreement. Without
limiting the foregoing, the Company and Parent shall, as soon as practicable and in any
event within ten business days after the date of this Agreement, file Notification and
Report Forms under the HSR Act with the Federal Trade Commission and the Antitrust Division
of the Department of Justice and make such other filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents as the parties
determine are necessary under applicable Antitrust Laws. Each of the parties hereto will
furnish to the other parties such necessary information and reasonable assistance as such
other parties may reasonably request in connection with the foregoing; provided, that
neither party is obligated to share any document submitted to or received from a
Governmental Authority that reflects the negotiations between the parties or the valuation
of some or all of any party’s business.
(b) Each of the parties hereto shall use its reasonable best efforts and shall
cooperate with the other parties to resolve such objections, if any, as may be asserted with
respect to the transactions contemplated hereby under Applicable Law. The Company and
Parent shall use reasonable best efforts to respond as promptly as practicable to all
inquiries received from the Federal Trade Commission, the Antitrust Division of the
Department of Justice or the competition authorities of any other jurisdiction for
additional information or documentation under applicable Antitrust Laws.
(c) The parties shall cooperate in all respects with each other in connection with any
antitrust defense of the transactions contemplated by this Agreement in any Proceeding by,
or negotiations with, any Governmental Authority or other Person relating to the Merger or
regulatory filings under applicable Antitrust Law.
(d) Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, in no event shall any party hereto be obligated to (i) agree to, or proffer to,
divest or hold separate, or enter into any licensing or similar arrangement with respect to,
any assets (whether tangible or intangible) or any portion of any business of Parent or of
the Company or any of its Subsidiaries or (ii) agree to, or proffer to, limit in any respect
the ownership or operation by Parent or the Company or any of its Subsidiaries of any asset
(whether tangible or intangible) or any portion of any business of Parent or the Company or
any of its Subsidiaries, including the ability of Parent to acquire or hold, or exercise
full rights of ownership of, any shares of capital stock, including the right to vote the
Company Common Stock on all matters properly presented to the shareholders of the Company.
(e) Notwithstanding anything in this Agreement to the contrary, Parent shall have the
right, but not the obligation, to oppose by refusing to consent to, through litigation or
otherwise any request, attempt or demand by any Governmental Authority or other Person for
any divestiture, hold separate condition or any other restriction with respect to any
assets, businesses or product lines of either Parent or the Company.
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Section 7.6 Inspection. Subject to any limitations imposed by Applicable Law, from the date of
this Agreement to the Effective Time, each of the Company and Parent shall allow all designated
officers, attorneys, accountants and other Representatives of Parent or the Company, as the case
may be, reasonable access, at reasonable times, upon reasonable notice, to its and its
Subsidiaries’ personnel, properties, Contracts, commitments, books and records and any other
information pertaining to the business and affairs of the Company or Parent (as applicable) or
their respective Subsidiaries, as Parent or the Company may reasonably request, including
inspection, testing or sampling of such properties; provided, that no investigation pursuant to
this Section 7.6 shall affect any representation or warranty given by any party hereunder.
Notwithstanding any provision of this Agreement or a party’s provision of information or
investigation pursuant to the preceding sentence, no party shall be deemed to make any
representation or warranty except as expressly set forth in this Agreement. Notwithstanding the
foregoing, no party shall be required to provide any information which it may not provide to the
other party by reason of any Applicable Law, which constitutes information protected by
attorney/client privilege, or which it is required to keep confidential by reason of contract or
agreement with third parties. The parties hereto shall make reasonable and appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the preceding sentence
apply. Each of the Company and Parent agrees that it shall not, and shall cause its respective
Representatives not to, use any information obtained pursuant to this Section 7.6 for any
purpose unrelated to the consummation of the transactions contemplated by this Agreement. All
non-public information obtained pursuant to this Section 7.6 shall be governed by the
Confidentiality Agreement.
Section 7.7 Publicity. The Company and Parent will, unless otherwise required by Applicable Law or
by obligations pursuant to any national securities exchange, consult with each other before issuing
any press release or, to the extent practical, otherwise making any public announcement pertaining
to this Agreement or the other transactions contemplated hereby. In addition to the foregoing,
except to the extent disclosed in or consistent with the Proxy Statement/Prospectus in accordance
with the provisions of Section 7.4, neither Parent nor the Company shall issue any such
press release or otherwise make any public statement or disclosure concerning the other party or
the other party’s business, financial condition or results of operations without the consent of the
other party, which consent shall not be unreasonably withheld or delayed, except as may be required
by Applicable Law or by obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make such public
statement shall use its reasonable best efforts to consult in good faith with the other party
before issuing any such press releases or making any such public statement. The foregoing shall
not apply with respect to any press release or public announcement arising out of a Company Adverse
Recommendation Change or Parent Adverse Recommendation Change effected in accordance with
Section 7.3. Parent and the Company agree to issue a mutually acceptable joint press
release announcing this Agreement.
Section 7.8 Listing Application. Parent shall use its reasonable best efforts to cause the shares
of Parent Common Stock to be issued as Merger Consideration to be approved for listing on the
NASDAQ, subject to official notice of issuance, prior to the Effective Time.
Section 7.9 Section 16 Matters. Prior to the Effective Time, each of Parent and the Company shall
take all such steps as may be required to cause any dispositions of the Company Common Stock
(including derivative securities with respect to the Company Common Stock) or
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acquisitions of Parent Common Stock (including derivative securities with respect to Parent Common
Stock) resulting from the transactions contemplated by this Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.10 Expenses. Whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement, the Merger and the other transactions contemplated hereby shall
be paid by the party incurring such expenses, except: (a) as Section 9.5 otherwise
provides; and (b) that the Company and Parent shall share equally (i) the fees incident to the
filings referred to in Section 7.5(a), (iii) the SEC and other filing fees incident to the
Form S-4 and the Proxy Statement/Prospectus and the costs and expenses associated with printing the
Proxy Statement/Prospectus and (iii) the fees associated with the NASDAQ listing referred to in
Section 7.8.
Section 7.11 Indemnification and Insurance.
(a) The certificate of incorporation and bylaws of the Surviving Entity and each of its
Subsidiaries shall, for a period of six years after the Effective Time, contain provisions
no less favorable to the Persons covered thereby on the date hereof with respect to
exculpation, indemnification and advancement of expenses than as set forth in the Company
Articles of Incorporation or Company Bylaws and the organizational documents of the
Company’s Subsidiaries, respectively, as of the date of this Agreement.
(b) Prior to the Effective Time, the Company shall purchase “tail” insurance coverage
covering the six-years after the Effective Time and providing coverage not materially less
favorable than the coverage afforded by the current directors and officers liability
insurance policies maintained by the Company pursuant to the terms set forth in Section
7.11(b) of the Company Disclosure Letter.
(c) As a separate and independent obligation, Parent hereby guarantees the payment and
performance by the Surviving Entity of its indemnification obligations pursuant to this
Section 7.11 and pursuant to the contractual agreements entered into by the Company
prior to the date hereof relating to indemnification of directors and officers of the
Company and set forth in Section 7.11(c) of the Company Disclosure Letter (the
“Existing Indemnification Agreements”). From and after the Effective Time, Parent shall
cause the Surviving Entity to comply with all of its obligations under this Section
7.11 and under the Existing Indemnification Agreements.
(d) In the event the Surviving Entity or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, in any such case, proper
provision shall be made so that the successors and assigns of the Surviving Entity shall
assume the obligations set forth in this Section 7.11.
Section 7.12 Antitakeover Statutes. If any Takeover Statute is or may become applicable to the
transactions contemplated hereby, each of the parties hereto and the members of its
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Board of Directors shall grant such approvals and take such actions as are necessary so that the
transactions contemplated by this Agreement may be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover
Statute on any of the transactions contemplated by this Agreement.
Section 7.13 Notification. Each party shall give to the others prompt notice of (a) any
representation or warranty made by it or contained in this Agreement becoming untrue or inaccurate
in any material respect and (b) the failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of the parties under
this Agreement.
Section 7.14 Employee Matters.
(a) For a period of not less than 12 months following the Effective Time, the
participants in the Company Benefit Plans who were employed by the Company and remain in the
employment of the Surviving Entity and its Subsidiaries (“Continuing Employees”) and their
dependents (collectively, “Affected Participants”) shall receive employee benefits that are
substantially comparable in the aggregate to the employee benefits provided to the employees
of the Company immediately prior to the Effective Time either through Company Benefit Plans,
if any, that are continued by Parent or through Parent Benefit Plans; provided that neither
Parent nor the Surviving Entity nor any of their Subsidiaries shall have any obligation to
issue, or adopt any plans or arrangements providing for the issuance of shares of capital
stock, warrants, options, stock appreciation rights or other rights in respect of any shares
of capital stock of any entity or any securities convertible or exchangeable into such
shares pursuant to any such plans or arrangements; provided, further, that no plans or
arrangements of the Company or any of its Subsidiaries providing for such issuance shall be
taken into account in determining whether employee benefits are substantially comparable in
the aggregate.
(b) Nothing contained herein shall be construed as requiring Parent or the Surviving
Entity to continue any specific plans or to continue the employment of any specific Person.
(c) To the extent Parent elects to have Affected Participants participate in any
applicable Parent Benefit Plans, Parent shall cause the Surviving Entity to recognize the
service of each Continuing Employee with Parent, the Company or its Subsidiaries (or
predecessor employers to the extent the Company provides past service credit) as if such
service had been performed with Parent (i) for purposes of eligibility for vacation under
Parent’s vacation program, (ii) for purposes of eligibility and participation under any
health or welfare plan maintained by Parent (other than any post-employment health or
post-employment welfare plan), and (iii) for purposes of eligibility, contributions and
vesting under any “defined contribution plan” (as defined in Section 3(34) of ERISA)
maintained by Parent or any of its ERISA Affiliates, but not for purposes of any other
employee benefit plan of Parent.
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(d) To the extent Parent elects to have Affected Participants participate in an
applicable Parent Benefit Plan that is a welfare plan, Parent shall, and shall cause the
Surviving Entity to, (i) waive all limitations as to preexisting conditions and exclusions
with respect to participation and coverage requirements applicable to such Affected
Participants to the extent such conditions and exclusions were satisfied or did not apply to
such Affected Participants under the welfare plans of the Company and its Subsidiaries prior
to the Effective Time and (ii) provide each Affected Participant, upon presentment of
appropriate documentation such as explanations of benefits statements with credit for any
co-payments and deductibles paid during the plan year or policy year, as applicable, in
which the Effective Time occurs (or, if later, the plan year or policy year in which a
Company Benefit Plan is terminated to the extent such Company Benefit Plan is maintained
after the Effective Time pursuant to Section 7.14(a)), for purposes of satisfying
any analogous deductible or out-of-pocket requirements to the extent applicable under any
such plan.
(e) Notwithstanding any provision herein to the contrary, immediately prior to the
Closing Date, the Company shall cause any Company Benefit Plans that are intended to be
qualified under Section 401(a) of the Code (the “Company Qualified Plans”) to be terminated,
and prior to such termination, all required plan amendments and restatements under
Applicable Law shall be made to such Company Qualified Plans. The Company shall confirm to
Parent at such time that such Company Qualified Plans are terminated. The parties hereto
shall take all necessary and legally permissible actions in order to cause the Company
Qualified Plans to distribute the account balances thereunder for each Affected Participant
who participated in such Company Qualified Plans as soon as practicable following the
Closing Date, and, subject to Applicable Law, the consent of the Affected Participants, and
the terms of any defined contribution plan sponsored by the Parent post-Closing (the
“Post-Closing Plan”), to accomplish the rollover of cash distributed to the Affected
Participants, if such Affected Participants so elect, on account of the transactions
contemplated herein to the Post-Closing Plan as soon as practicable following the Closing
Date.
(f) The parties hereto acknowledge and agree that all provisions contained in this
Section 7.14 are included for the sole benefit of the respective parties hereto and
shall not create any right (i) in any other person, including, without limitation, any
employees, former employees, any participant in any Company Benefit Plan or any beneficiary
thereof or (ii) to continued employment with the Company, Parent or any of their Affiliates.
Section 7.15 Other Pre-Closing Matters.
(a) Parent shall use its reasonable best efforts to (i) prior to the Closing, enter
into an employment agreement with its Chief Executive Officer in substantially the form
attached hereto as Exhibit E, (ii) enter, or cause the Surviving Entity to enter,
into employment agreements with the officers of the Company and its Subsidiaries named in
Section 7.15(a)(ii) of the Parent Disclosure Letter effective as of the Effective
Time in substantially the form attached hereto as Exhibit E, as each such form may
be modified pursuant to the terms set forth in Section 7.15(a)(ii) of the Parent
Disclosure Letter and (iii)
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enter into indemnification agreements with the Designated Directors effective as of the
Effective Time in substantially the form attached hereto as Exhibit F.
(b) The Company shall use its reasonable best efforts to obtain a reconfirmation of the
Fairness Opinion from the Company Financial Advisor as of the Closing Date (the
“Reconfirmation Opinion”). The Company shall promptly advise Parent of its receipt of such
opinion or other written indication of its inability to obtain such opinion.
(c) The Company shall use its reasonable best efforts to cause the shares beneficially
owned by the directors and officers named in
Section 7.15(c) of the Parent
Disclosure Letter to be subject to Company Shareholder
Voting Agreements as soon as
reasonably practicable after the date hereof but in no event later than five business days
after the date hereof. Parent shall use its reasonable best efforts to cause the shares beneficially owned by the director
named in
Section 7.15(c) of the Company Disclosure Letter to be subject to the Parent Shareholder Voting Agreement
as soon as reasonably practicable after the date hereof but in no event later than five business days after the
date hereof.
Section 7.16 Shareholder Litigation. Each party hereto shall give the other the opportunity to
reasonably participate in the defense of any shareholder litigation against the Company and/or its
directors or officers or against the Parent and/or its directors or officers, as applicable,
relating to the transactions contemplated by this Agreement.
Section 7.17 Tax Treatment. Prior to and at the Effective Time, each party hereto shall use its
reasonable best efforts to cause the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code and shall not take any action reasonably likely to cause the Merger to
not so qualify.
ARTICLE VIII.
CONDITIONS
Section 8.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations
of the parties hereto to effect the Merger shall be subject to the fulfillment or waiver (to the
extent permitted by Applicable Law and in accordance with the provisions hereof) by each of the
parties hereto to this Agreement at or prior to the Closing Date of the following conditions:
(a) Each of the Company Shareholder Approval and the Parent Shareholder Approval shall
have been obtained.
(b) Any waiting period applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(c) (i) No judgment, injunction, order or decree of any Governmental Authority of
competent jurisdiction in the United States that would prohibit or enjoin the consummation
of the Merger shall be in effect and (ii) no law, statute, rule or regulation shall have
been enacted by any Governmental Authority of competent jurisdiction in the United States
which prohibits or makes unlawful the consummation of the Merger shall be in effect.
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(d) The Form S-4 shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Form S-4 shall have been issued by
the SEC and no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) The shares of Parent Common Stock to be issued pursuant to the Merger shall have
been authorized for listing on the NASDAQ, subject to official notice of issuance.
(f) The Company shall have received the opinion of Xxxxxx and Xxxxx, LLP, counsel to
the Company, in form and substance reasonably satisfactory to the Company and dated the
Closing Date, a copy of which shall have been furnished to Parent, to the effect that (i)
the Merger will qualify as a reorganization under Section 368(a) of the Code and (ii) no
gain or loss will be recognized for United States federal income tax purposes by the
shareholders of the Company who exchange Company Common Stock for Parent Common Stock
pursuant to the Merger (except with respect to cash received in lieu of fractional shares).
In rendering such opinion, such counsel shall be entitled to receive and rely upon customary
representations of officers of the Company and Parent. The Company shall use reasonable
best efforts to cause its tax counsel to render such opinion or to indicate in writing as
soon as practicable after the execution of this Agreement as to which facts specific to the
Merger preclude it from providing such opinion. The Company shall promptly advise Parent of
its receipt of such opinion or other written indication.
(g) Parent shall have received the opinion of Xxxxx Xxxxx, L.L.P., counsel to Parent,
in form and substance reasonably satisfactory to Parent and dated the Closing Date, a copy
of which shall have been furnished to the Company, to the effect that (i) the Merger will
qualify as a reorganization under Section 368(a) of the Code and (ii) no gain or loss will
be recognized for United States federal income tax purposes by the shareholders of the
Company who exchange Company Common Stock for Parent Common Stock pursuant to the Merger
(except with respect to cash received in lieu of fractional shares). In rendering such
opinion, such counsel shall be entitled to receive and rely upon customary representations
of officers of the Company and Parent. Parent shall use reasonable best efforts to cause
its tax counsel to render such opinion or to indicate in writing as soon as practicable
after the execution of this Agreement as to which facts specific to the Merger preclude it
from providing such opinion. Parent shall promptly advise the Company of its receipt of
such opinion or other written indication.
Section 8.2 Conditions to Obligation of the Company to Effect the Merger. The obligation of the
Company to effect the Merger shall be subject to the satisfaction or waiver (to the extent
permitted by Applicable Law and in accordance with the provisions hereof) at or prior to the
Closing Date of the following conditions:
(a) The representations and warranties of Parent and Merger Sub contained in this
Agreement (i) that are qualified as to materiality or a Parent Material Adverse Effect shall
be true and correct as so qualified, and (ii) that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement and
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as of the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such earlier date).
(b) Parent and Merger Sub shall have performed, in all material respects, the covenants
and agreements contained in this Agreement required to be performed by them on or prior to
the Closing Date.
(c) At any time after the date of this Agreement, there shall not have occurred and be
continuing as of the Closing Date, any change, event, occurrence, state of facts or
development that, individually or in the aggregate, has had or would reasonably be likely to
have a Parent Material Adverse Effect.
(d) The Company shall have received a certificate of Parent and Merger Sub, executed on
behalf of each of them by their Chief Executive Officer or Chief Financial Officer, dated
the Closing Date, certifying to the effect that the conditions set forth in Section
8.2(a), (b) and (c) have been satisfied.
(e) The Company shall have received the Reconfirmation Opinion.
Section 8.3 Conditions to Obligation of Parent and Merger Sub to Effect the Merger. The
obligations of Parent and Merger Sub to effect the Merger shall be subject to the fulfillment or
waiver (to the extent permitted by Applicable Law and in accordance with the provisions hereof) at
or prior to the Closing Date of the following conditions:
(a) The representations and warranties of the Company contained in this Agreement (i)
that are qualified as to materiality or a Company Material Adverse Effect shall be true and
correct as so qualified, and (ii) that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the Closing Date,
except to the extent such representations and warranties expressly relate to an earlier date
(in which case as of such earlier date).
(b) The Company shall have performed, in all material respects, the covenants and
agreements contained in this Agreement required to be performed by it on or prior to the
Closing Date.
(c) At any time after the date of this Agreement, there shall not have occurred and be
continuing as of the Closing Date, any change, event, occurrence, state of facts or
development that, individually or in the aggregate, has had or is reasonably likely to have
a Company Material Adverse Effect.
(d) Parent shall have received a certificate of the Company, executed on its behalf by
its Chief Executive Officer or Chief Financial Officer, dated the Closing Date, certifying
to the effect that the conditions set forth in Section 8.3(a), (b) and
(c) have been satisfied.
(e) The authorizations, consents or approvals identified in Section 8.3(e) of
the Company Disclosure Letter shall have been obtained and evidence thereof reasonably
satisfactory to Parent shall have been delivered to Parent.
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(f) The officers of the Company and its Subsidiaries named in Section
7.15(a)(ii) of the Parent Disclosure Letter shall have entered into employment
agreements with the Surviving Entity as provided in Section 7.15(a)(ii).
Section 8.4 Frustration of Conditions. No party may rely on the failure of any condition set forth
in this Article VIII to be satisfied if such failure was caused by such party’s failure to act in
good faith or to use its reasonable best efforts to consummate the transactions contemplated by
this Agreement.
ARTICLE IX.
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may be terminated, and the Merger may be
abandoned, at any time prior to the Effective Time, whether before or after the Company Shareholder
Approval or Parent Shareholder Approval has been obtained, by the mutual written consent of the
Company and Parent.
Section 9.2 Termination by Parent or the Company. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder Approval or Parent
Shareholder Approval has been obtained, by action of the Board of Directors of Parent or the
Company if:
(a) the Merger shall not have been consummated by August 31, 2011 (the “Termination
Date”); provided, however, that if by the Termination Date, any of the conditions set forth
in Section 8.1(b) or Section 8.1(c) shall not have been satisfied but all
other conditions shall be satisfied or shall be capable of being satisfied, then the
Termination Date may be extended from time to time by either Parent or the Company, in its
discretion, by written notice to the other to a date not later than October 31, 2011 (in
which case any references to the Termination Date herein shall mean the Termination Date as
extended); provided, further, that the right to extend or terminate this Agreement pursuant
to this clause (a) shall not be available to any party whose failure to perform or observe
in any material respect any of its obligations under this Agreement in any manner shall have
been the cause of, or resulted in, the failure of the Merger to occur on or before the
Termination Date;
(b) the Company Shareholders Meeting (including adjournments and postponements) shall
have concluded and the Company Shareholder Approval shall not have been obtained upon a vote
taken thereon;
(c) the Parent Shareholders Meeting (including adjournments and postponements) shall
have concluded and the Parent Shareholder Approval shall not have been obtained upon a vote
taken thereon;
(d) a Governmental Authority shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable; provided,
however, that the party seeking to terminate this Agreement
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pursuant to this Section 9.2(d) shall have complied with its obligations
pursuant to Section 7.5 with respect to such order, decree, ruling or other action;
or
(e) an Ultimate Price Event shall have occurred, the period set for renegotiation
pursuant to Section 4.1(b) shall have elapsed and the party seeking termination
shall have provided the other parties hereto with notice of intent to terminate not less
than two business days’ prior to such termination.
Section 9.3 Termination by the Company. This Agreement may be terminated at any time prior to the
Effective Time by the Company if:
(a) Parent or Merger Sub shall have breached or failed to perform any of its
representations and warranties, covenants or agreements set forth in this Agreement such
that the conditions set forth in Section 8.2(a) or Section 8.2(b) would not
be satisfied, and such breach or failure to perform is not capable of being cured by Parent
prior to the Termination Date or is not cured by Parent within 30 days after the Company has
delivered to Parent a written notice of such breach or failure to perform; provided,
however, that the Company may not terminate this Agreement under this Section 9.3(a)
if the Company is then in breach of any representation, warranty, covenant or agreement set
forth in this Agreement such that the conditions set forth in Section 8.3(a) or
Section 8.3(b) shall not be satisfied; or
(b) a Parent Adverse Recommendation Change shall have occurred;
(c) prior to obtaining the Company Shareholder Approval, concurrently with the entry by
the Company into a binding definitive agreement providing for a Superior Proposal; provided,
that (i) the Company has complied in all respects with Section 7.3, and (ii) the
Company has previously paid (or concurrently with such termination pays to Parent) the fee
provided for under Section 9.5(a); or
(d) the Company shall have not received the Reconfirmation Opinion as provided in
Section 8.2(e); provided, however, that all conditions set forth in Section
8.1 shall have been satisfied; provided, further, that the Company may not terminate
this Agreement under this Section 9.3(d) if the Company is then in breach of any
representation, warranty, covenant or agreement set forth in this Agreement such that the
conditions set forth in Section 8.3(a) or Section 8.3(b) shall not be
satisfied.
Section 9.4 Termination by Parent. This Agreement may be terminated at any time prior to the
Effective Time by Parent if:
(a) The Company shall have breached or failed to perform any of its representations and
warranties, covenants or agreements set forth in this Agreement such that the conditions set
forth in Section 8.3(a) or Section 8.3(b) would not be satisfied, and such
breach or failure to perform is not capable of being cured by the Company prior to the
Termination Date or is not cured by the Company within 30 days after Parent has delivered to
the Company a written notice of such breach or failure to perform; provided, however, that
Parent may not terminate this Agreement under this Section 9.4(a) if Parent is then
in breach of any representation, warranty, covenant or agreement set forth in this Agreement
such that the conditions set forth in Section 8.2(a) or Section 8.2(b) shall
not be satisfied; or
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(b) a Company Adverse Recommendation Change shall have occurred;
(c) prior to obtaining the Parent Shareholder Approval, concurrently with the entry by
Parent into a binding definitive agreement providing for a Superior Proposal; provided, that
(i) Parent has complied in all respects with Section 7.3, and (ii) Parent has
previously paid (or concurrently with such termination pays to Company) the fee provided for
under Section 9.5(b); or
(d) the Company shall have not received the Reconfirmation Opinion as provided in
Section 8.2(e); provided, however, that all conditions set forth in Section
8.1 shall have been satisfied and the Company shall not have waived the condition set
forth in Section 8.2(e); provided, further, that Parent may not terminate this
Agreement under this Section 9.4(d) if Parent is then in breach of any
representation, warranty, covenant or agreement set forth in this Agreement such that the
conditions set forth in Section 8.2(a) or Section 8.2(b) shall not be
satisfied.
Section 9.5 Effect of Termination.
(a) If this Agreement is terminated:
(i) by Parent or the Company pursuant to Section 9.2(a) or Section
9.2(b), or by Parent pursuant to Section 9.4(a), in each case, after the
public disclosure of a Acquisition Proposal made in respect of the Company, whether
or not contingent (unless such disclosure occurs after the date of the failure to
obtain such Company Shareholder Approval pursuant to Section 9.2(b)), and
within 12 months after the termination of this Agreement, the Company or any of its
Subsidiaries enters into a definitive agreement providing for any Acquisition
Proposal, or an Acquisition Proposal is consummated by the Company; provided,
however, that if either Parent or the Company terminates this Agreement pursuant to
Section 9.2(b) at any time after a Company Adverse Recommendation shall have
occurred, this Agreement shall be deemed terminated pursuant to Section
9.4(b) for purposes of this Section 9.5;
(ii) by the Company pursuant to Section 9.3(d) or the Parent pursuant to
Section 9.4(d);
(iii) by Parent pursuant to Section 9.4(b); or
(iv) by the Company pursuant to Section 9.3(c);
then the Company shall pay Parent a fee of (x) $2,350,000, in the case of clauses (a)(i),
(a)(iii) or (a)(iv), or (y) $3,125,000, the case of clause (a)(ii), in each case, in cash by
wire transfer to an account designated by Parent; provided, that for purposes of this
Section 9.5(a), the references to “20%” in the definition of Acquisition Proposal
shall be deemed to be references to “50%.” The Company shall cause any such payment
required to be paid pursuant to this Section 9.5(a) to be paid to Parent at the time of such
termination of this Agreement or, in the case of clause (a)(i), prior to or at the time of
entry into such definitive agreement or consummation of such Acquisition Proposal.
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(b) If this Agreement is terminated:
(i) by Parent or the Company pursuant to Section 9.2(a) or Section
9.2(c) or by Company pursuant to Section 9.3(a), in each case, after the
public disclosure of a Acquisition Proposal made in respect of Parent, whether or not
contingent (unless such disclosure occurs after the date of the failure to obtain
such Parent Shareholder Approval pursuant to Section 9.2(c)), and within 12
months after the termination of this Agreement, Parent enters into a definitive
agreement providing for any Acquisition Proposal, or a Acquisition Proposal is
consummated by Parent; provided, however, that if either Parent or the Company
terminates this Agreement pursuant to Section 9.2(c) at any time after a
Parent Adverse Recommendation shall have occurred, this Agreement shall be deemed
terminated pursuant to Section 9.3(b) for purposes of this Section
9.5;
(ii) by the Company pursuant to Section 9.3(b); or
(iii) by Parent pursuant to Section 9.4(c);
then (x) prior to or at the time of entry into such definitive agreement or consummation of
such Acquisition Proposal, in the case of clause (b)(i), or (y) prior to or at the time of
such termination, in the case of clauses (b)(ii) or (b)(iii), Parent shall pay the Company a
fee of $2,350,000, in cash by wire transfer to an account designated by the Company;
provided, that for purposes of this Section 9.5(b), the references to “20%” in the
definition of Acquisition Proposal shall be deemed to be references to “50%.”
(c) If this Agreement is terminated by:
(i) the Company or Parent pursuant to Section 9.2(b) after the public
disclosure of a Acquisition Proposal made in respect of the Company, whether or not
contingent (unless such disclosure occurs after the date of the failure to obtain
such Company Shareholder Approval pursuant to Section 9.2(b)), and within 12
months after the termination of this Agreement, the Company or any of its
Subsidiaries enters into a definitive agreement providing for any Acquisition
Proposal, or an Acquisition Proposal is consummated by the Company;
(ii) by the Company pursuant to Section 9.3(c) or Section 9.3(d); or
(iii) by Parent pursuant to Section 9.4(a), Section 9.4(b) or
Section 9.4(d);
then the Company shall reimburse Parent for its third party costs and expenses in connection
with this transaction, up to a maximum of $1.5 million.
(d) If this Agreement is terminated by:
(i) the Company or Parent pursuant to Section 9.2(c) after the public
disclosure of a Acquisition Proposal made in respect of Parent, whether or
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not contingent (unless such disclosure occurs after the date of the failure to
obtain such Parent Shareholder Approval pursuant to Section 9.2(c)), and
within 12 months after the termination of this Agreement, Parent enters into a
definitive agreement providing for any Acquisition Proposal, or an Acquisition
Proposal is consummated by Parent;
(ii) Parent pursuant to Section 9.4(c); or
(iii) the Company pursuant to Section 9.3(a) or Section 9.3(b);
then Parent shall reimburse the Company for its third party costs and expenses in
connection with this transaction, up to a maximum of $1.5 million.
(e) In circumstances where Section 9.5(c) or Section 9.5(d) requires a
reimbursement of costs and expenses, the reimbursing party shall reimburse the other party
for such costs and expenses on the later of (i) the day that is three business days after
the date of termination of this Agreement and (ii) the day that is three business days after
the delivery of documentation of such costs and expenses. In the event the payment of a fee
by the Company is required pursuant to Section 9.5(a)(i) or the payment of a fee by
Parent is required pursuant to Section 9.5(b)(i), and such party has already
reimbursed Parent or the Company, respectively, for its third party costs and expenses
pursuant to Section 9.5(c) or Section 9.5(d), the amount of such costs and
expenses so reimbursed will be offset against the fee payable.
(f) Each party acknowledges and agrees that the agreements contained in this
Section 9.5 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the other parties hereto would not enter into this
Agreement. Each party further acknowledges and agrees that the fee contemplated by this
Section 9.5 is not a penalty, but rather liquidated damages in amounts reasonably
estimated by the parties to compensate the other party for efforts and resources expended
and opportunities foregone while negotiating this Agreement and in reliance on this
Agreement and on the expectation of the consummation of the transactions contemplated
hereby. Accordingly, if the Company or Parent fails to pay the amount due pursuant to this
Section 9.5, and, in order to obtain such payment, the other party commences a suit
that results in a judgment for a fee payable pursuant to this Section 9.5, such
party shall also reimburse the other party’s costs and expenses (including attorneys’ fees
and expenses) in connection with such suit, together with interest on the amount of such fee
from the date such payment was required to be made until the date of payment at the prime
lending rate prevailing during such period as published in The Wall Street Journal. Any
payment to be made under this Section 9.5 shall be made by wire transfer of same-day
funds.
(g) Each party agrees that in the event that a termination fee is paid pursuant to
Section 9.5(a) or Section 9.5(b), the payment of such termination fee shall
be the sole and exclusive remedy of the party to which such fee is paid, its Subsidiaries
and any of its respective shareholders, Affiliates, officers, directors, employees or
Representatives (collectively, “Related Persons”), and in no event will the party to which
such fee is paid or
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any of its Related Persons be entitled to recover any other money damages or any other
remedy based on a claim in law or equity with respect to, (i) any loss suffered as a result
of the failure of the Merger to be consummated, (ii) the termination of this Agreement,
(iii) any liabilities or obligations arising under this Agreement, or (iv) any Proceedings
arising out of or relating to any breach, termination or failure of or under this Agreement,
and upon payment to the Company or Parent, as applicable, such other party shall not have
any further liability or obligation to the party that paid such termination fee or any of
its Related Persons relating to or arising out of this Agreement or the transactions
contemplated hereby.
(h) In the event of termination of this Agreement and the abandonment of the Merger
pursuant to Section 9.1 through Section 9.4, this Agreement shall forthwith
become null and void and all obligations of the parties hereto and their Related Persons
shall terminate, except the obligations of the parties pursuant to this Section 9.5, the
last sentence of Section 7.6, Section 7.10 and Article X; provided, that,
except as provided in Section 9.5(g), nothing herein shall relieve any party from
any liability arising out of actual fraud or for any willful and material breach by such
party of any of its representations, warranties, covenants or agreements set forth in this
Agreement, and all rights and remedies of the nonbreaching party under this Agreement, at
law or in equity, shall be preserved. The Confidentiality Agreement shall survive any
termination of this Agreement, and the provisions of such Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
Section 9.6 Extension; Waiver. At any time prior to the Effective Time, each party may by action
taken by its Board of Directors (or by any duly authorized committee thereof), to the extent
legally allowed, (a) extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive in whole or in part any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered pursuant hereto and (c)
waive in whole or in part compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.
Except as provided in this Agreement, no action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, or delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default hereunder by any other
party, shall be deemed to impair any such right, power or remedy, nor will it be deemed to
constitute a waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by any party hereto of
a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
ARTICLE X.
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and Agreements. All representations,
warranties and agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Merger; provided, however, that the agreements contained in Article
IV and in Sections 3.1, Section 3.2, Section 7.10, Section 7.11,
Section 7.14 and this Article
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X shall survive the Merger. After a representation and warranty has terminated and expired, no
claim for damages or other relief may be made or prosecuted through a Proceeding or otherwise by
any Person who would have been entitled to that relief on the basis of that representation and
warranty prior to its termination and expiration.
Section 10.2 Notices. Except as otherwise provided herein, any notice required to be given
hereunder shall be sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
(a) if to the Company, to it at:
TGC Industries, Inc.
000 Xxxx Xxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy, which will not constitute notice for purposes hereof, to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Rice Xxxxxx
Facsimile: (000) 000-0000
(b) if to Parent or Merger Sub, to it at:
Xxxxxx Geophysical Company
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy, which will not constitute notice for purposes hereof, to:
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given, and such notice
shall be deemed to have been delivered as of the date so telecommunicated, personally delivered or
mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other parties, except that
77
Merger Sub may assign, in its sole discretion, all or any of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly-owned Subsidiary of Parent. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for (a) the provisions of Section
7.11 and (b) the right of the Company’s shareholders to receive the consideration provided for
herein after the Closing (a claim with respect to which may not be made unless and until the
Closing shall have occurred), nothing in this Agreement, expressed or implied, shall or is intended
to confer on any Person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 10.4 Entire Agreement. This Agreement, the exhibits to this Agreement, the Company
Disclosure Letter, the Parent Disclosure Letter, the Confidentiality Agreement and any documents
delivered by the parties in connection herewith constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect thereto, except that the Confidentiality
Agreement shall continue in effect.
Section 10.5 Amendments. This Agreement may be amended by the parties hereto, by action taken or
authorized by their Boards of Directors, at any time before or after approval of matters presented
in connection with the Merger by the shareholders of the Company or Parent, but after any such
shareholder approval, no amendment shall be made which by Applicable Law requires the further
approval of shareholders without obtaining such further approval. To be effective, any amendment
or modification hereto must be in a written document each party has executed and delivered to the
other parties.
Section 10.6
Governing Law. This Agreement and the rights and obligations of the parties hereto
shall be governed by and construed and enforced in accordance with the substantive laws of the
State of
Texas, without regard to the conflicts of law provisions thereof that would cause the laws
of any other jurisdiction to apply.
Section 10.7 Headings. Headings of the Articles and Sections of this Agreement are for the
convenience of the parties only and shall be given no substantive or interpretative effect
whatsoever.
Section 10.8 Definitions and Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the singular number shall
include the plural and vice versa, words denoting any gender shall include all genders, and
words denoting natural persons shall include corporations, limited liability companies and
partnerships and vice versa.
(b) “Affiliate” means, as to any specified Person, any other Person that, directly or
indirectly through one or more intermediaries or otherwise, controls, is controlled by or is
under common control with the specified Person; and, as used in this definition, “control”
means the possession, directly or indirectly, of the power to direct or
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cause the direction of the management or policies of a Person, whether through
ownership of capital stock of that Person, by contract or otherwise.
(c) “Antitrust Laws” means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the HSR Act, Non-U.S. Antitrust Laws, the Federal Trade Commission Act, as amended, and all
other federal, state or foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other Applicable Law, including without limitation
any antitrust, competition or trade regulation laws, that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening competition through merger or acquisition.
(d) “Applicable Law” means any applicable U.S. or non-U.S. law (including common law),
rule, regulation, code, judgment, ordinance, governmental determination, order, decree,
treaty, convention, governmental certification requirement or other public limitation.
(e) “Company IP” means all Intellectual Property used in or material to the business of
the Company or any of its Subsidiaries as currently conducted or as currently proposed to be
conducted.
(f) “Company Material Adverse Effect” means, with respect to the Company, any Material
Adverse Effect.
(g) “Contract” means any agreement, arrangement, lease, easement, license, contract,
note, mortgage, indenture, commitment, understanding or other legally binding obligation.
(h) “Debt” means, with respect to any Person, the outstanding principal amount of, all
accrued and unpaid interest on and other payment obligations in respect of, (i) all
obligations of such Person for borrowed money or with respect to deposits with such Person
or advances to such Person of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of such Person upon
which interest charges are customarily paid, other than trade credit incurred in the
ordinary course of business consistent with past practice, (iv) all obligations of such
Person under conditional sale or other title retention agreements relating to property or
assets purchased by such Person, (v) all obligations of such Person issued or assumed as the
deferred purchase price of property or services (other than deferred compensation and
post-retirement and other similar benefits), (vi) all indebtedness of others secured by (or
for which the holder of such indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vii) all capital lease obligations of such
Person, (viii) all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange rate hedging
arrangements, (ix) all obligations of such Person as an account party in respect of letters
of credit and bankers’ acceptances and (x) all obligations, contingent or otherwise, of such
Person guaranteeing any of the foregoing obligations of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly.
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(i) “GAAP” means U.S. generally accepted accounting principles.
(j) “Governmental Authority” means any federal, state or local or foreign government,
any court, administrative, regulatory or other governmental agency, commission or authority
or any non-governmental United States or foreign self-regulatory agency, commission, body,
entity or authority or any arbitral tribunal.
(k) “Intellectual Property” means all intellectual or industrial property and rights
therein, however denominated, throughout the world, whether or not registered, including all
patent applications, patents, trade secrets, trademarks, service marks, corporate names,
business names, brand names, trade names, all other names and slogans embodying business or
product goodwill (or both), trade styles or dress, mask works, copyrights, moral rights of
authorship, including any rights in designs, works of authorship, technology, inventions,
invention disclosures, discoveries, improvements, know-how, program materials, processes,
methods, and confidential or proprietary information, and all other intellectual and
industrial property rights, whether or not subject to statutory registration or protection
and, with respect to each of the foregoing, all registrations and applications for
registration, renewals, extensions, continuations, reissues, divisionals, improvements,
modifications, derivative works, goodwill, and common law rights, and causes of action,
including the right to collect damages, relating to any of the foregoing.
(l) “Material Adverse Effect” means, with respect to any party, any change, effect,
event, occurrence, state of facts or development or developments which, individually or in
the aggregate, has had, or would reasonably be expected to have, a material adverse effect
on (i) the business, properties, assets, liabilities (contingent or otherwise), condition
(financial or otherwise), results of operations or prospects of such party and its
Subsidiaries, taken as a whole, or (ii) the ability of such party to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby, except in the
case of clause (i) above, for any such change, effect, event, occurrence, state of facts or
development that arises or results from (A) changes in general economic, capital market,
regulatory or political conditions or changes in Applicable Law or the interpretation
thereof that, in any case, do not disproportionately affect such Person relative to other
participants in such Person’s industry, (B) acts of war or terrorism that do not
disproportionately affect such Person in any material respect relative to other participants
in such Person’s industry, or (C) the announcement or proposed consummation of this
Agreement and the transactions contemplated hereby. For purposes of this definition, the
parties agree that the industry in which both the Company and Parent operate is the seismic
industry.
(m) “Parent IP” means all Intellectual Property used in or material to the business of
Parent as currently conducted or as currently proposed to be conducted.
(n) “Parent Material Adverse Effect” means, with respect to Parent, any Material
Adverse Effect.
(o) “Permitted Liens” mean, with respect to any Person: (i) Liens for Taxes not yet
due and payable; (ii) statutory Liens of lessors; (iii) Liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics and materialmen arising by operation
80
of law in the ordinary course of business; and (iv) easements, rights of way,
restrictions, and other similar encumbrances, and minor defects in the chain of title, none
of which interfere with the ordinary conduct of the business of such Person or any
Subsidiary of such Person or materially detract from the value or use of the property to
which they apply.
(p) “Person” means any natural person, firm, individual, partnership, joint venture,
business trust, trust, association, corporation, company, limited liability company,
unincorporated entity or Governmental Authority.
(q) “Proceeding” means any claim, charge, assertion, cause of action, complaint,
litigation, controversy, action, suit, arbitration, proceeding or investigation.
(r) “Representatives” means, with respect to any Person, such Person’s directors,
officers, employees or agents or any investment banker, financial advisor, attorney,
accountant or other advisor or representative.
(s) “Subsidiary,” when used with respect to any Person, means any other Person, of
which such Person (i) directly or indirectly owns or controls a majority of the securities
or other interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such corporation
or other organization (or if there are no voting interests, a majority of the equity
interests or the right to receive more than 50% of the distributions) or (ii) is a general
partner or managing member.
(t) “Tax” or “Taxes” means all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, accumulated earnings, alternative or add-on minimum, environmental
(including taxes under Section 59A of the Code), franchise, unclaimed property, social
security (or similar), national insurance contributions, unemployment, employment insurance,
registration, value added, goods and services, estimated, excess profits, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, disability, capital stock or windfall profits taxes, customs duties or
other taxes, fees, assessments or other governmental charges of any kind whatsoever, and any
liability for the foregoing under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), or as a transferee or successor, by contract, or
otherwise, in each case including any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (U.S. or non-U.S.).
(u) This Agreement uses the words “herein,” “hereof” and “hereunder” and words of
similar import to refer to this Agreement as a whole and not to any provision of this
Agreement, and the words “Article,” “Section,” “Schedule” and “Exhibit” refer to Articles
and Sections of and Schedules and Exhibits to this Agreement, unless it otherwise specifies.
This Agreement uses the word “party” to refer to any original signatory hereto and its
permitted successors and assigns under Section 10.3.
(v) The phrase “to the knowledge of” and similar phrases relating to knowledge of the
Company or Parent, as the case may be, shall mean the collective
81
knowledge, after reasonable investigation, of the individuals listed on Section
10.8 of the Company Disclosure Letter or the Parent Disclosure Letter, respectively.
(w) The word “including,” and, with correlative meaning, the word “include,” means
including, without limiting the generality of any description preceding that word, and the
words “shall” and “will” are used interchangeably and have the same meaning. The word “or”
shall be deemed to mean “and/or.”
(x) Except as this Agreement otherwise specifies, all references herein to any
Applicable Law, including the Code, ERISA, the Exchange Act and the Securities Act, are
references to that Applicable Law or any successor Applicable Law, as the same may have been
amended or supplemented from time to time, and any rules or regulations promulgated
thereunder.
Section 10.9 Severability. If any provision of this Agreement is invalid, illegal or unenforceable
in any jurisdiction, that provision will, as to that jurisdiction, to the extent possible, be
modified in such a manner as to be valid, legal and enforceable but so as to retain most nearly the
intent of the parties as expressed herein. If such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality and enforceability
of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.
If any provision of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
Section 10.10 Enforcement of Agreement. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms of this Agreement in addition to any other
remedy at law or equity. The parties accordingly agree that the parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement, this being in addition to any other remedy to which they
are entitled at law or in equity or under this Agreement.
Section 10.11 Consent to Jurisdiction and Venue; Appointment of Agent for Service of Process. Each
of the parties hereto irrevocably and unconditionally confirms and agrees that it shall be subject
to the jurisdiction of any state or federal court located in the State of Texas. Each party
hereto hereby irrevocably and unconditionally acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and difficult issues, and therefore
each such party hereby irrevocably and unconditionally waives any right such party may have to a
trial by jury in respect of any litigation directly or indirectly arising or relating to this
Agreement or the transactions contemplated by this Agreement.
Section 10.12 No Recourse. This Agreement may only be enforced against, and any Proceedings that
may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or
performance of this Agreement may only be made against the Persons that are expressly identified as
parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator,
member, manager, partner, shareholder, agent, attorney or Representative of any party
82
hereto shall have any liability for any obligations or liabilities of the parties to this Agreement
or for any Proceeding based on, in respect of, or by reason of, the transactions contemplated
hereby.
Section 10.13 Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. Each counterpart may consist
of a number of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
[signature page follows]
83
The parties have caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
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XXXXXX GEOPHYSICAL COMPANY
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/s/ Xxxxxxx X. Xxxxxx |
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Name: |
Xxxxxxx X. Xxxxxx |
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Title: |
President and Chief Executive Officer |
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6446 ACQUISITION CORP.
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/s/ Xxxxxxx X. Xxxxxx |
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Xxxxxxx X. Xxxxxx |
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Title: |
President |
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TGC INDUSTRIES, INC.
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By: |
/s/ Xxxxx X. Xxxxxxxx |
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Name: |
Xxxxx X. Xxxxxxxx |
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Title: |
President and Chief Executive Officer |
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[signature page to Agreement and Plan of Merger]
EXHIBIT A
RESTATED CERTIFICATE OF FORMATION
OF
TGC INDUSTRIES, INC.,
A TEXAS FOR-PROFIT CORPORATION
ARTICLE I
NAME
The name of the corporation is TGC Industries, Inc. (the “Corporation”).
ARTICLE II
ENTITY TYPE
The Corporation is a for-profit corporation.
ARTICLE III
PURPOSE
The purpose for which the Corporation is organized is the transaction of all lawful business
for which corporations may be organized under the Texas Business Organizations Code (the
“Code”), as may be amended from time to time.
ARTICLE IV
AUTHORIZED SHARES
The aggregate number of shares which the Corporation shall have authority to issue is 1,000
shares of common stock. All such shares are to be common stock, par value $0.01 per share, and are
to be of one class.
ARTICLE V
REGISTERED OFFICE
The post office address of its registered agent is 000 X. Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx, and
the name of its registered agent at such address is Xxxxxxx X. Xxxxxx.
ARTICLE VI
DIRECTORS
The number of directors constituting the current Board of Directors is three. The post office
address of each of the Corporation’s directors is 000 X. Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx, and the
name of the persons serving as directors of the corporation at the time of the filing of this
Certificate of Formation and who shall serve until their successors shall be chosen and shall
qualify are: Xxxxxxx X. Xxxxxx, C. Xxx Xxxxxx and Xxxxx X. Xxxxxxxx.
ARTICLE VII
INDEMNIFICATION
(1) The Corporation shall indemnify, to the extent provided in the following
paragraphs, any person who is or was a director, officer, agent, or employee of the
Corporation and any person who serves or served at the corporation’s request as a
director, officer, agent, employee, partner, or trustee of another corporation or of a
partnership, joint venture, trust, or other enterprise. In the event the provisions of
indemnification set forth below are more restrictive than the provisions of
indemnification allowed by Chapter 8 of the Code, then such persons named above shall be
indemnified to the full extent permitted by Chapter 8 of the Code as it may exist from
time to time.
(2) In case of a suit by or in the right of the Corporation against a person named in
paragraph (1) of this ARTICLE VII by reason of such person’s holding a position named in
such paragraph (1) hereafter referred to as a derivative suit, the corporation shall
indemnify such person for reasonable expenses actually incurred by such person in
connection with the defense or settlement of the suit, but only if such person satisfies
the standard in paragraph (4) of this ARTICLE VII.
(3) In case of a threatened or pending suit, action, or proceeding (whether civil,
criminal, administrative, or investigative), other than a derivative suit, hereafter
referred to as a non-derivative suit, against a person named in paragraph (1) of this
ARTICLE VII by reason of such person’s holding a position named in such paragraph (1), the
Corporation shall indemnify such person if such person satisfies the standard contained in
paragraph (4) of this ARTICLE VII, for amounts actually and reasonably incurred by such
person in connection with the defense or settlement of the non-derivative suit as expenses
(including court costs and attorneys’ fees), amounts paid in settlement, judgments, and
fines.
(4) Whether in the nature of a derivative suit or non-derivative suit, a person named
in paragraph (1) of this ARTICLE VII will be indemnified only if it is determined in
accordance with paragraph (5) of this ARTICLE VII that such person:
(a) acted in good faith in the transaction which is the subject of the suit;
(b) reasonably believed:
(i) in the case of conduct in such person’s official capacity, that his conduct was
in the best interests of the Corporation; and
(ii) in all other cases, that his conduct was not opposed to the best interests of
the Corporation; and
(c) in the case of any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful.
A-2
The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent will not, of itself, create a presumption that this person failed to
satisfy the standard contained in this paragraph.
(5) A determination that the standard of paragraph (4) of this ARTICLE VII has been
satisfied must be made:
(a) by a majority vote of the of directors of the Corporation who at the time of the
vote are disinterested and independent, regardless of whether the directors who are
disinterested and independent constitute a quorum; or
(b) by a majority vote of a committee of the Board of Directors, if the committee (i)
is designated to act in the matter by a majority vote of the directors of the Corporation
who at the time of the vote are disinterested and independent, regardless of whether the
directors who are disinterested and independent constitute a quorum and (ii) consists
solely of two or more directors who are disinterested and independent; or
(c) by special legal counsel selected by the Board of Directors or a committee of the
Board of Directors by vote as set forth in subparagraphs (a) and (b) above; or
(d) by the shareholders in a vote that excludes the vote of directors who are not
disinterested and independent.
(6) Authorization of indemnification and determination as to reasonableness of
expenses must be made in the same manner as the determination that indemnification is
permissible, except that if the determination that indemnification is permissible is made
by special legal counsel, authorization of indemnification and determination as to
reasonableness of expenses must be made in the manner specified by subparagraph (5)(c) of
this ARTICLE VII for the selection of special legal counsel.
(7) The corporation may reimburse or pay in advance any reasonable expenses
(including court costs and attorneys’ fees) which may become subject to indemnification
under paragraphs (1) through (6) above, but only in accordance with the provisions as
stated in paragraph (5) of this ARTICLE VII, and only after the person to receive the
payment (a) signs a written affirmation of his good faith belief that he has met the
standard of conduct necessary for indemnification under paragraph (4) of this ARTICLE VII,
and (b) undertakes in writing to repay such advances unless it is ultimately determined
that such person is entitled to indemnification by the Corporation. The written
undertaking required by this paragraph must be an unlimited general obligation of the
person to receive the payment but need not be secured. It may be accepted without reference to financial
ability to make repayment.
(8) The indemnification provided by paragraphs (1) through (6) of this ARTICLE VII
will not be exclusive of any other rights to which a person may be entitled by law, bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise.
A-3
(9) The indemnification and advance payment provided by paragraphs (1) through (7) of
this ARTICLE VII will continue as to a person who has ceased to hold a position named in
paragraph (1) of this ARTICLE VII and will inure to such person’s heirs, executors, and
administrators.
(10) The Corporation may purchase and maintain insurance on behalf of any person who
holds or has held any position named in paragraph (1) of this ARTICLE VII against any
liability incurred by such person in any such position, or arising out of such person’s
status as such, whether or not the Corporation would have power to indemnify such person
against such liability under paragraphs (1) through (7) of
this ARTICLE VII.
(11) Indemnification payments and advance payments made under paragraphs (1) through
(10) of this ARTICLE VII are to be reported in writing to the shareholders of the
Corporation in the next notice or waiver of notice of annual meeting, or within twelve
months, whichever is sooner.
ARTICLE VIII
EXCULPATION
No director of the Corporation shall be personally liable to the Corporation or its
shareholders for monetary damages for any act or omission in the director’s capacity as a director,
except that this Article VIII does not eliminate or limit the liability of a director for:
(1) a breach of the director’s duty of loyalty to the Corporation or its
shareholders;
(2) an act or omission not in good faith that constitutes a breach of duty of the
director to the Corporation or that involves intentional misconduct or a knowing violation
of the law;
(3) a transaction from which the director received an improper benefit, regardless of
whether the benefit resulted from an action taken within the scope of the director’s
duties;
(4) an act or omission for which the liability of a director is expressly provided
for by statute; or
(5) an act related to an unlawful corporate distribution
Neither the amendment nor repeal of this ARTICLE VIII shall eliminate or reduce the effect of
this ARTICLE VIII in respect of any matter occurring, or any cause of action, suit or claim that,
but for this ARTICLE VIII, would accrue or arise, prior to such amendment or repeal. If Texas law
is hereinafter amended to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by Texas law, as so amended from time to time.
A-4
EXHIBIT B
SECOND AMENDED AND RESTATED BYLAWS
OF
TGC INDUSTRIES, INC.
(Amended and Restated on __________, 2011)
ARTICLE I
OFFICES
Section 1.1. Registered Office. The initial registered office of TGC
Industries, Inc. (the “Corporation”) shall be in the City of Midland, County of Midland.
Section 1.2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Texas as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1. Place of Meetings. All meetings of shareholders of the
Corporation shall be held at the registered office of the Corporation, or at such other place
within or without the State of Texas as may be designated by the Board of Directors or the officer
calling the meeting.
Section 2.2. Annual Meeting. Annual meetings of shareholders of the
Corporation shall be held when called by the President, the Secretary or the Board of Directors.
Failure to hold the annual meeting at the designated time shall not work a dissolution of the
Corporation.
Section 2.3. Special Meetings. Special meetings of shareholders (a) may be
called by the Board of Directors or the President of the Corporation
or (b) shall be called by the President or the Secretary of the Corporation on the written request
of the holders of not less than the minimum percentage of shares of the Corporation entitled to
vote at the proposed special meeting that is specified by the
Corporation’s Certificate of Formation (as amended from time
to time, the “Certificate of Formation”) as
necessary to call a special meeting of shareholders (or in the absence of such specification, the
minimum percentage necessary to call a special meeting specified by the Texas Business
Organizations Code (the “Code”), as amended). Any such request by shareholders shall state the
purpose or purposes of the proposed special meeting and the matters proposed to be acted on at that
meeting.
Section 2.4. Notice of Meeting. Written or printed notice of all meetings
stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more
than sixty (60) days before the date of the meeting, either personally or by mail, by or at
the direction of the President, the Secretary or the officer or person calling the meeting, to each
shareholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder at his address as
it appears on the share transfer records of the Corporation, with postage thereon prepaid.
Section 2.5. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of business except as
otherwise provided by statute or by the Certificate of Formation. If, however, such quorum shall
not be present or represented at any meeting of the shareholders, the shareholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2.6. Voting. When a quorum is present or represented at any meeting,
the vote of the holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the Certificate of Formation a different
vote is required, in which case such express provision shall govern and control the decision of
such question. Every shareholder of record of the corporation shall be entitled at each meeting of
shareholders to one vote for each share of stock standing in his name on the books of the
corporation.
Section 2.7. Proxies. At any meeting of the shareholders, any shareholder may
be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event
that any such written instrument shall designate two or more persons to act as proxies, a majority
of such persons present at the meeting, (or, if only one shall be present, then that one) shall
have and may exercise all of the powers conferred by such written instrument upon all of the
persons so designated, unless the instrument shall otherwise provide. No such proxy shall be valid
after the expiration of eleven months from the date of its execution, unless coupled with an
interest, or unless the person executing it specified therein the length of time for which it is to
continue in force, which in no case shall exceed seven years from the date of its execution.
Subject to the above, any proxy duly executed is not revoked and continues in full force and effect
until an instrument revoking it or a duly executed proxy bearing a later date is filed with the
secretary of the corporation.
Section 2.8. Shareholder Action Without a Meeting. Whenever the vote of
shareholders at a meeting thereof is required or permitted to be taken in connection with any
corporate action by any provision of the statutes or of the Certificate of Formation, the meeting
and vote of shareholders may be dispensed with if all the shareholders who would have been entitled
to vote upon the action if such meeting were held shall consent in writing to such corporate action
being taken. At all corporate meetings, the manner of voting shall be by ballot, by voice vote, or
by a showing of hands, at the discretion of the chairman of the meeting.
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Section 2.9. Telephone Meetings. Subject to the provisions required or
permitted by the Code for notice of meetings, unless otherwise restricted by the Certificate of
Formation or these Bylaws, shareholders may participate in and hold a meeting of such shareholders
by means of conference telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting pursuant to this
Section 2.9 shall constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
Section 3.1. Number and Tenure. The powers of the Corporation shall be
exercised by or under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors of the Corporation. The number of directors
that shall constitute the whole Board of Directors of the Corporation shall be fixed by the
affirmative vote of a majority of the members at any time constituting the Board of Directors, and
such number may be increased or decreased from time to time by resolution of the Board of
Directors. Each director shall hold office for the term for which he is elected and until his
successor shall have been duly elected and qualified or until the earliest of his death,
resignation or removal.
Section 3.2. Qualifications. Directors need not be residents of the State of
Texas or the United States of America, or shareholders of the Corporation.
Section 3.3. Vacancies.
(a) Any vacancy occurring in the Board of Directors may be filled (i) by election at an annual
or special meeting of shareholders called for that purpose or (ii) by the affirmative vote of a
majority of the remaining directors, though less than a quorum, of the Board of Directors. A
director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in
office.
(b) A directorship to be filled by reason of an increase in the number of directors may be
filled, (i) by election at an annual or special meeting of shareholders called for that purpose or,
(ii) by the Board of Directors for a term of office continuing only until the next election of one
or more directors by the shareholders; provided, that the Board of Directors may not fill more than
two such directorships during the period between any two successive annual meetings of
shareholders.
Section 3.4. Place of Meeting. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Texas, at whatever place is specified by
the person or persons calling the meeting. In the absence of specific designation, the meetings
shall be held at the principal office of the Corporation.
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Section 3.5. Regular Meetings. After each annual election of directors, the
Board of Directors shall meet for the purpose of the election of officers and the transaction of
other business, at the place where such annual election is held. The Board of Directors may also
hold other regular meetings at such time or times and at such place or places as shall be
designated by the Board of Directors from time to time. Notice of regular meetings of the Board of
Directors need not be given.
Section 3.6. Special Meetings. Special meetings of the Board of Directors may
be called by the President or by a majority of the Board of Directors. Notice shall be sent to the
last known address of each director, by mail, telegram, cable or telex, at least two days before
the meeting, or oral notice may be substituted for such written notice if received not later than
the day preceding such meeting. Special meetings shall be called by the President or by the
Secretary in like manner and on like notice at the written request of a majority of directors, and
the place and time of such special meeting shall be as designated in the notice of such meetings.
Section 3.7. Attendance at and Notice of Meetings. Attendance of a director
at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business on the ground that
the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 3.8. Quorum of and Action by Directors. A majority of the number of
directors fixed in the manner provided in these Bylaws shall constitute a quorum for the
transaction of business unless a different number or portion is required by law, the Certificate of
Formation or these Bylaws. The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors, unless the act of a greater number
is required by law, the Certificate of Formation or these Bylaws. Once a quorum is present at a
meeting of directors, the directors at the meeting may conduct such business as may be properly
brought before the meeting until it is adjourned, and a subsequent withdrawal from the meeting of
any director or the refusal of any director to vote shall not affect the presence of a quorum at
the meeting. At a meeting of directors at which a quorum is not present, the directors present may
adjourn the meeting until such time and to such place as may be determined by a vote of the
majority of the directors at that meeting.
Section 3.9. Compensation. Directors, in their capacities as directors, shall
not receive any stated salary for their services, but by resolution of the Board of Directors a
fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board of Directors; provided, however, nothing contained herein shall be
construed to preclude any director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 3.10. Removal. At any meeting of shareholders called expressly for
that purpose any director or the entire Board of Directors may be removed, with or without cause,
by a vote of the holders of a majority of the shares then entitled to vote at an election of
directors.
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Section 3.11. Resignations. Any director may resign at any time. Such
resignations shall be made in writing and shall take effect at the time specified therein, or, if
no time be specified, at the time of its receipt by the President or the Secretary. The acceptance
of a resignation shall not be necessary to make it effective, unless expressly so provided in the
resignation.
Section 3.12. Committees of the Board of Directors.
(a) The Board of Directors may, by resolution passed by a majority of the whole board,
designate one or more directors of the corporation, which, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of Directors in the management of
the business and affairs of the corporation, and may have power to authorize the seal of the
corporation to be affixed to all papers which may require it. Such committee or committees shall
have such name or names as may be determined from time to time by resolution adopted by the Board
of Directors.
(b) The committees shall keep regular minutes of their proceedings and report the same to the
board when required.
Section 3.13. Board and Committee Action Without a Meeting. Unless otherwise
restricted by the Certificate of Formation or these Bylaws, any action required or permitted to be
taken at a meeting of the Board of Directors or any committee thereof may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed by all the members of
the Board of Directors or committee, as the case may be. Such consent shall have the same force
and effect as a unanimous vote at a meeting, and may be stated as such in any document or
instrument filed with the Secretary of State of the State of Texas.
Section 3.14. Telephone Meetings. Subject to the provisions required or
permitted by the Code for notice of meetings, unless otherwise restricted by the Certificate of
Formation or these Bylaws, members of the Board of Directors, or members of any committee
designated by the Board of Directors, may participate in and hold a meeting of such Board of
Directors or committee by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 3.14 shall constitute presence in person at such meeting, except
where a person participates in the meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE IV
OFFICERS
Section 4.1. Officers.
(a) The officers of the Corporation may consist of a President, one or more Vice Presidents
and a Secretary, each of whom shall be elected by the Board of Directors. Such other officers,
including managers, general managers, assistant officers, and agents as may be deemed necessary may
be elected or appointed by the Board of Directors. Any two or more offices may be held by the same
person. All officers and agents of the Corporation, as between
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themselves and the Corporation, shall have such authority and perform such duties in the
management of the Corporation as is provided in these Bylaws, or as may be determined by resolution
of the Board of Directors not inconsistent with these Bylaws.
(b) The salaries of the officers shall be determined by the Board of Directors.
Section 4.2. Vacancies. Whenever any vacancies shall occur in any office by
death, resignation, increase in the number of offices of the Corporation, or otherwise, the same
shall be filled by the Board of Directors, and the officer so elected shall hold office until his
successor is chosen and qualified.
Section 4.3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment the best interests
of the Corporation will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights.
Section 4.4. Resignations. Any officer may resign at any time. Such
resignations shall be made in writing and shall take effect at the time specified therein, or, if
no time be specified, at the time of its receipt by the President or the Secretary. The acceptance
of a resignation shall not be necessary to make it effective, unless expressly so provided in the
resignation.
Section 4.5. President. The President shall be the chief executive officer of
the Corporation, and, under the direction and subject to the control of the Board of Directors, the
President in general shall supervise and control all of the business and affairs of the
Corporation. The President shall preside at all meetings of the shareholders and of the Board of
Directors and shall perform such other duties as the Board of Directors may assign to him from time
to time. The President may execute and deliver certificates for shares of the Corporation, any
deeds, mortgages, bonds, contracts or other instruments that the Board of Directors has authorized
to be executed and delivered, except in cases where the execution and delivery thereof shall be
expressly and exclusively delegated to another officer or agent of the Corporation by the Board of
Directors or these Bylaws, or where the execution and delivery thereof shall be required by law to
be executed and delivered by another person. In general, the President shall perform all duties
incident to the office of President and such other duties as may be prescribed from time to time by
the Board of Directors.
Section 4.6. Vice President. Any Vice President shall report to the
President. He may perform the usual and customary duties that pertain to such office (but not
unusual or extraordinary duties or the duties conferred by the Board of Directors upon the
President) and, under the direction and subject to the control of the Board of Directors and the
President, such other duties as may be assigned to him from time to time by the Board of Directors
or the President.
Section 4.7. Secretary. It shall be the duty of the Secretary to attend all
meetings of the shareholders and the Board of Directors and to record correctly the proceedings
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of such meetings in a book suitable for such purposes. It shall also be the duty of the
Secretary to attest with his signature and the seal of the Corporation all stock certificates
issued by the Corporation and to keep a stock ledger in which all transactions pertaining to the
capital stock of the Corporation shall be correctly recorded. The Secretary shall also attest with
his signature and the seal of the Corporation all deeds, conveyances or other instruments requiring
the seal of the Corporation. The Secretary shall have full power and authority on behalf of the
Corporation to execute any shareholders’ consents and to attend, and to act and to vote in person
or by proxy at, any meetings of the shareholders of any corporation in which the Corporation may
own stock, and at any such meetings, the Secretary shall possess and may exercise any and all the
rights and powers incident to the ownership of such stock that, as the owner thereof the
Corporation might have possessed and exercised if present. The Secretary shall also perform, under
the direction and subject to the control of the Board of Directors, such other duties as may be
assigned to him from time to time. The duties of the Secretary may also be performed by any
Assistant Secretary.
Section 4.8. Delegation of Authority. In the case of any absence of any
officer of the Corporation or for any other reason that the Board of Directors may deem sufficient,
the Board of Directors may delegate some or all of the powers or duties of such officer to any
other officer or to any director, employee, shareholder or agent for whatever period of time the
Board of Directors deems appropriate.
ARTICLE V
CAPITAL STOCK
Section 5.1. Certificates of Shares. The certificates for shares of the
capital stock of the Corporation shall be in such form as shall be approved by the Board of
Directors. The Corporation shall deliver certificates representing shares to which shareholders
are entitled. Certificates representing shares shall be signed by the President or a Vice President
and either the Secretary, and may bear the seal of the Corporation or a facsimile thereof. The
signatures of such officers upon a certificate may be facsimiles. In case any officer who has
signed or whose facsimile signature has been placed upon such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Corporation with the same
effect as if he or she were such officer at the date of its issuance. Certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as they are issued and
shall state upon the face thereof: (a) that the Corporation is organized under the laws of the
State of Texas, (b) the name of the person to whom the shares are issued, (c) the number and class
of shares and the designation of the series, if any, which such certificate represents, and (d) the
par value of each share represented by such certificate, or a statement that the shares are without
par value. Each certificate representing shares issued by the Corporation (a) shall conspicuously
set forth on the face or back of the certificate a full statement of all the designations,
preferences, limitations, and relative rights of the shares of each series to the extent they have
been fixed and determined and the authority of the Board of Directors to fix and determine the
designations, preferences, limitations, and relative rights of subsequent series or the limitation
or (b) shall conspicuously state on the face or back of the certificate that (i) such a statement
is set forth in the Certificate of Formation on file in the office of the Secretary of State of the
State of Texas and (ii) the Corporation will furnish a copy of such statement to the record holder
of the certificate without
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charge on request to the Corporation at its principal place of business or registered office.
Each certificate representing shares issued by the Corporation (x) shall conspicuously set forth on
the face or back of the certificate a full statement of the limitation or denial of preemptive
rights contained in the Certificate of Formation or (y) shall conspicuously state on the face or
back of the certificate that (i) such a statement is set forth in the Certificate of Formation on
file in the office of the Secretary of State of the State of Texas and (ii) the Corporation will
furnish a copy of such statement to the record holder of the certificate without charge on request
to the Corporation at its principal place of business or registered office.
Section 5.2. Share Transfer Records. The Corporation shall keep at its
registered office or principal place of business, or at the office of its transfer agent or
registrar, a record of the original issuance of shares issued by the Corporation and a record of
each transfer of those shares that have been presented to the Corporation for registration of
transfer. Such records shall contain the names and addresses of all past and current shareholders
of the Corporation and the number and class or series of shares issued by the Corporation held by
each of them. Any books, records, minutes and share transfer records may be in written form or in
any other form capable of being converted into written form within a reasonable time. The office
of the Corporation’s transfer agent or registrar may be located outside the State of Texas.
ARTICLE VI
INDEMNIFICATION
Section 6.1. (a) The Corporation shall indemnify, to the extent provided in
the following subsections, any person who is or was a director, officer, agent, or employee of the
Corporation and any person who serves or served at the Corporation’s request as a director,
officer, agent, employee, partner, or trustee of another corporation or of a partnership, joint
venture, trust, or other enterprise. In the event the provisions of indemnification set forth below
are more restrictive than the provisions of indemnification allowed by Chapter 8 of the Code, then
such persons named above shall be indemnified to the full extent permitted by Chapter 8 of the
Code.
(b) In case of a suit by or in the right of the Corporation against a person named in
subsection (a) of this Article VI by reason of such person’s holding a position named in such
subsection (a), hereafter referred to as a derivative suit, the Corporation shall indemnify such
person for reasonable expenses actually incurred by such person in connection with the defense or
settlement of the suit, but only if such person satisfies the standard in subsection (d) to follow.
(c) In case of a threatened or pending suit, action, or proceeding (whether civil, criminal,
administrative, or investigative), other than a derivative suit, hereafter referred to as a
non-derivative suit, against a person named in subsection (a) of this Article VI by reason of such
person’s holding a position named in such subsection (a), the Corporation shall indemnify such
person if such person satisfies the standard contained in subsection (d), for amounts actually and
reasonably incurred by such person in connection with the defense or settlement of the
nonderivative suit as expenses (including court costs and attorneys’ fees), amounts paid in
settlement, judgments and fines.
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(d) Whether in the nature of a derivative suit or non-derivative suit, a person named in
subsection (a) of this Article VI will be indemnified only if it is determined in accordance with
subsection (e) of this Article VI that such person:
(i) acted in good faith in the transaction which is the subject of the suit; and
(ii) reasonably believed:
(A) if acting in his official capacity as director, officer, agent or employee of the
Corporation, that his or her conduct was in the best interests of the Corporation; and
(B) in all other cases, that his or her conduct was not opposed to the best interests of the
Corporation.
(iii) in the case of any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of a proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent will not, of itself, create a presumption that
such person failed to satisfy the standard herein contained.
(e) A determination that the standard contained in subsection (d) of this Article VI has been
satisfied must be made:
(i) by a majority vote of the of directors of the Corporation who at the time of the vote are
disinterested and independent, regardless of whether the directors who are disinterested and
independent constitute a quorum; or
(ii) by a majority vote of a committee of the Board of Directors, if the committee (i) is
designated to act in the matter by a majority vote of the directors of the Corporation who at the
time of the vote are disinterested and independent, regardless of whether the directors who are
disinterested and independent constitute a quorum and (ii) consists solely of two or more directors
who are disinterested and independent; or
(iii) by special legal counsel selected by the Board of Directors or a committee of the Board
of Directors by vote as set forth in subparagraphs (i) and (ii) above; or
(iv) by the shareholders in a vote that excludes the vote of directors who are not
disinterested and independent.
(f) Authorization of indemnification and determination as to reasonableness of expenses must
be made in the same manner as the determination that indemnification is permissible, except that if
the determination that indemnification is permissible is made by special legal counsel,
authorization of indemnification and determination
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as to reasonableness of expenses, must be made in the manner specified by paragraph (e)(3) of
this Article VI for the selection of special legal counsel.
(g) The Corporation may reimburse or pay in advance any reasonable expenses (including court
costs and attorneys’ fees) which may become subject to indemnification under subsections (a)
through (f) of this Article VI, but only in accordance with the provisions as stated in subsection
(e) of this Article VI, and only after the person to receive the payment: (i) signs a written
affirmation of his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification under subsection (d); and (ii) undertakes in writing to repay such
advances unless it is ultimately determined that such person is entitled to indemnification by the
Corporation. The written undertaking required by this subsection (g) must be an unlimited general
obligation of the person to receive the payment but need not be secured. It may be accepted without reference to
financial ability to make repayment.
(h) The indemnification provided by subsections (a) through (f) of this Article VI will not be
exclusive of any other rights to which a person may be entitled by law, these Bylaws, agreement,
vote of shareholders or disinterested directors, or otherwise.
(i) The indemnification and advance payment provided by subsections (a) through (g) of this
Article VI will continue as to a person who has ceased to hold a position named in subsection (a)
of this Article VI and will inure to such person’s heirs, executors, and administrators.
(j) The Corporation may purchase and maintain insurance on behalf of any person who holds or
has held any position named in subsection (a) of this Article VI against any liability incurred by
such person in any such position, or arising out of such person’s status as such, whether or not
the Corporation would have power to indemnify such person against such liability under subsections
(a) through (g) of this Article VI.
(k) Indemnification payments and advance payments made under subsections (a) through (j) of
this Article VI are to be reported in writing to the shareholders of the Corporation at the next
notice or waiver of notice of annual meeting, or within twelve months, whichever is sooner.
ARTICLE VII
LIMITATION ON LIABILITY
Section 7.1 No director of the Corporation may be held personally liable to the
Corporation or its shareholders for monetary damages for an act or omission in the director’s
capacity as a director, except that this paragraph does not eliminate or limit the liability of a
director for:
(a) breach of a director’s duty of loyalty to the Corporation;
(b) an act or omission not in good faith or that involves intentional misconduct or a knowing
violation of the law;
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(c) a transaction from which a director received an improper benefit, whether or not the
benefit resulted from an action taken within the scope of the director’s office;
(d) an act or omission for which the liability of a director is expressly provided for by
statute; or
(e) an act related to an unlawful corporate distribution.
Neither the amendment nor repeal of this Article VII may eliminate or reduce the effect of this
Article VII in respect of any matter occurring, or any cause of action, suit or claim that, but for
this Article VII, would accrue or arise, prior to such amendment or repeal. If the Code is
hereinafter amended to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Code, as so amended from time to time.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Bylaw Amendments. The Board of Directors may amend or repeal
these Bylaws, or adopt new Bylaws, unless: (a) the Certificate of Formation or the Code reserves
the power exclusively to the shareholders of the Corporation in whole or in part; or (b) the
shareholders of the Corporation, in amending, repealing or adopting a particular Bylaw, expressly
provide that the Board of Directors may not amend or repeal that Bylaw. Unless the Certificate of
Formation or a Bylaw adopted by the shareholders of the Corporation provides otherwise as to all or
some portion of the Corporation’s Bylaws, the Corporation’s shareholders may amend, repeal or adopt
the Corporation’s Bylaws even though the Bylaws may also be amended, repealed or adopted by the
Board of Directors.
Section 8.2. Books and Records. The Corporation shall keep books and records
of account and shall keep minutes of the proceedings of its shareholders, its Board of Directors
and each committee of its Board of Directors.
Section 8.3. Waiver. Whenever any notice is required to be given to any
shareholder, director or committee member under the provisions of the Code or under the Certificate
of Formation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be equivalent to the giving
of such notice.
Section 8.4. Seal. The seal of the Corporation shall be in such form as the
Board of Directors may adopt.
Section 8.5. Fiscal Year. The fiscal year of the Corporation shall end on the
thirtieth day of September of each year or as otherwise provided by a resolution adopted by the
Board of Directors.
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EXHIBIT C
FORM OF VOTING AGREEMENT
THIS VOTING AGREEMENT (this “Agreement”), dated as of March 20, 2011, is by and between Xxxxxx
Geophysical Company, a Texas corporation (“Parent”), and __________________ (the “Voting
Shareholder”).
RECITALS
A. Concurrently with the execution and delivery of this Agreement, TGC Industries, Inc., a
Texas corporation (the “Company”), Parent and 6446 Acquisition Corp., a Texas corporation and a
direct wholly owned subsidiary of Parent (“Merger Sub”), are entering into an Agreement and Plan of
Merger, dated as of the date hereof (as the same may be amended from time to time, the “Merger
Agreement”), which provides, among other things, for (i) Merger Sub to be merged with and into the
Company, with the Company continuing as the surviving entity (the “Merger”), and (ii) each issued
and outstanding share of common stock, par value $0.01 per share, of the Company (“Company Common
Stock”) (other than any Company Common Stock owned by Parent, Merger Sub or the Company or any
wholly owned Subsidiary of the Company), to be converted into the right to receive the shares of
common stock, par value $0.33-1/3 per share, of Parent (“Parent Common Stock”).
B. As of the date hereof, the Voting Shareholder is the Beneficial Owner (as defined below) of
the shares of Company Common Stock set forth opposite the Voting Shareholder’s name on Schedule A
hereto (all such shares set forth on Schedule A, together with any shares of Company Common Stock
that are hereafter issued to or otherwise acquired or owned by the Voting Shareholder prior to the
termination of this Agreement being referred to herein as the “Subject Shares”), which Subject
Shares represent ___% of the outstanding shares of Company Common Stock and voting power of the
outstanding capital stock of the Company.
C. As a condition to its willingness to enter into the Merger Agreement, Parent has required
that the Voting Shareholder, and in order to induce Parent to enter into the Merger Agreement the
Voting Shareholder (in the Voting Shareholder’s capacity as a holder of the Subject Shares) has
agreed to, enter into this Agreement.
NOW, THEREFORE, in consideration of premises and the representations, warranties and
agreements contained herein, the benefits to be derived by each party hereunder and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Section 1. Certain Definitions. Capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Merger Agreement. In addition, for
purposes of this Agreement:
(a) “Agreement” shall have the meaning set forth in the preamble.
(b) “Beneficially Owned” or “Beneficial Ownership” shall have the meaning given
to such term in Rule 13d-3 under the Exchange Act.
“Beneficial Owner” shall mean, with respect to any securities, a Person who has
Beneficial Ownership of such securities.
(c) “Company” shall have the meaning set forth in the recitals.
(d) “Company Common Stock” shall have the meaning set forth in the recitals.
(e) “Expiration Date” shall mean the earlier of (i) the date upon which the
Merger Agreement is validly terminated pursuant to its terms, (ii) the date upon
which the parties hereto agree to terminate this Agreement, (iii) the occurrence of
a Company Adverse Recommendation Change made in accordance with the provisions of
Section 7.3(b) of the Merger Agreement and (iv) the Effective Time.
(f) “Merger” shall have the meaning set forth in the recitals.
(g) “Merger Agreement” shall have the meaning set forth in the recitals.
(h) “Merger Sub” shall have the meaning set forth in the recitals.
(i) “Parent Common Stock” shall have the meaning set forth in the recitals.
(j) “Parent” shall have the meaning set forth in the preamble.
(k) “Subject Shares” shall have the meaning set forth in the recitals.
(l) “Transfer” shall mean, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security,
rights relating thereto or the Beneficial Ownership of such security or rights
relating thereto, the offer to make such a sale, transfer, pledge, hypothecation,
encumbrance, assignment or disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, “Transfer” shall have a correlative meaning.
(m) “Voting Shareholder” shall have the meaning set forth in the preamble.
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Section 2. No Disposition or Solicitation.
(a) Except as set forth in Section 5 of this Agreement, the Voting Shareholder
undertakes that the Voting Shareholder shall not (i) Transfer or agree to Transfer
any Subject Shares or (ii) grant or agree to grant any proxy or power-of-attorney
with respect to any Subject Shares.
(b) The Voting Shareholder undertakes that, in his, her or its capacity as a
shareholder of the Company, the Voting Shareholder shall not, and shall cause his,
her or its investment bankers, financial advisors, attorneys, accountants and other
advisors, agents and representatives not to, directly or indirectly solicit,
initiate, facilitate or encourage any inquiries or proposals from discuss or
negotiate with, or provide any non-public information to, any Person relating to, or
otherwise facilitate, any Acquisition Proposal.
Section 3. Voting of Subject Shares. The Voting Shareholder undertakes that (a) at such time
as the Company conducts a meeting of, or otherwise seeks a vote or consent of, its shareholders,
the Voting Shareholder shall, or shall cause the holder of record on any applicable record date to,
vote the Subject Shares Beneficially Owned by the Voting Shareholder in favor of, or provide a
consent with respect to, (i) approval and adoption of the Merger Agreement and each of the other
transactions contemplated by the Merger Agreement, (ii) approval of any proposal to adjourn or
postpone any shareholder meeting to a later date if there are not sufficient votes for the approval
and adoption of the Merger Agreement on the date on which such meeting is held, and (iii) any other
matter necessary for consummation of the transactions contemplated by the Merger Agreement which is
considered at any such meeting or is the subject of any such consent solicitation, and (b) at each
meeting of shareholders of the Company and in connection with each consent solicitation, the Voting
Shareholder shall, or shall cause the holder of record on any applicable record date to, vote the
Subject Shares Beneficially Owned by the Voting Shareholder against, and not provide consents with
respect to, (i) any agreement or arrangement related to or in furtherance of any Acquisition
Proposal, (ii) any liquidation, dissolution, recapitalization, extraordinary dividend or other
significant corporate reorganization of the Company or any of its Subsidiaries, (iii) any action,
proposal, transaction or agreement that would delay, prevent, frustrate, impede or interfere with
the Merger or the other transactions contemplated by the Merger Agreement or result in the failure
of any condition set forth in ARTICLE VIII of the Merger Agreement to be satisfied, and (iv) any
action, proposal, transaction or agreement that would result in a breach of any covenant,
representation or warranty or other obligation or agreement of the Company under the Merger
Agreement or of the Voting Shareholder under this Agreement.
Section 4. Reasonable Efforts to Cooperate. The Voting Shareholder hereby consents to the
publication and disclosure in the Proxy Statement/Prospectus (and, as and to the extent otherwise
required by securities laws or the SEC or any other securities authorities, any other documents or
communications provided by the Company, Parent or Merger Sub to any Governmental Authority or to
securityholders of the Company) of the Voting Shareholder’s identity and Beneficial Ownership of
Subject Shares and the nature of the Voting Shareholder’s commitments, arrangements and
understandings under and relating to this Agreement and, if deemed appropriate by the Company or
Parent, a copy of this Agreement. The Voting
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Shareholder will promptly provide any information reasonably requested by the Company, Parent
or Merger Sub for any regulatory application or filing made or approval sought in connection with
the Merger or the other transactions contemplated by the Merger Agreement (including filings with
the SEC).
Section 5. Irrevocable Proxy. In furtherance of the agreements contained in Section 3 of this
Agreement, the Voting Shareholder hereby irrevocably grants to and appoints Parent and each of the
executive officers of Parent, in their respective capacities as officers of Parent, as the case may
be, and any individual who shall hereafter succeed to any such office of Parent, and each of them
individually, the Voting Shareholder’s proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Voting Shareholder, to vote all Subject
Shares Beneficially Owned by the Voting Shareholder that are outstanding from time to time, to
grant or withhold a consent or approval in respect of such Subject Shares and to execute and
deliver a proxy to vote such Subject Shares, in each case solely to the extent and in the manner
specified in Section 3 of this Agreement. The Voting Shareholder represents and warrants to Parent
that all proxies heretofore given in respect of the Subject Shares are not irrevocable and that all
such proxies have been properly revoked or are no longer in effect as of the date hereof. The
Voting Shareholder hereby affirms that the irrevocable proxy set forth in this Section 5 is given
by the Voting Shareholder in connection with, and in consideration of, the execution of the Merger
Agreement by Parent and that the irrevocable proxy set forth in this Section 5 is coupled with an
interest and, except as set forth in Section 8 hereof, may under no circumstances be revoked. The
irrevocable proxy set forth in this Section 5 is executed and intended to be irrevocable in
accordance with the provisions of Section 21.369 of the TBOC, subject, however, to automatic
termination on the Expiration Date.
Section 6. Further Action. If any further action is necessary or desirable to carry out the
purposes of this Agreement, the Voting Shareholder shall take all such action reasonably requested
by Parent.
Section 7. Representations and Warranties of the Voting Shareholder. The Voting Shareholder
represents and warrants to Parent as follows:
(a) The Voting Shareholder has all necessary power and authority and legal
capacity to execute and deliver this Agreement and perform his, her or its
obligations hereunder. [The Voting Shareholder, if it is a corporation,
partnership, limited liability company, trust or other entity, is duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
organization.] The execution, delivery and performance of this Agreement by the
Voting Shareholder and the consummation by the Voting Shareholder of the
transactions contemplated hereby have been duly authorized by all necessary action
on the part of the Voting Shareholder and no further proceedings or actions on the
part of the Voting Shareholder are necessary to authorize the execution, delivery or
performance of this Agreement or the consummation of the transactions contemplated
hereby.
(b) This Agreement has been duly and validly executed and delivered by the
Voting Shareholder and, assuming it has been duly and validly
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authorized, executed and delivered by Parent, constitutes the valid and binding
agreement of the Voting Shareholder, enforceable against the Voting Shareholder in
accordance with its terms, except to the extent that enforceability may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditor’s rights
generally and (ii) general principles of equity.
(c) The Voting Shareholder is the sole Beneficial Owner of his, her or its
Subject Shares. The Voting Shareholder has legal, good and marketable title (which
may include holding in nominee or “street” name) to all of the Subject Shares
Beneficially Owned by the Voting Shareholder, free and clear of all liens, claims,
options, proxies, voting agreements and security interests (other than as created by
this Agreement or the restrictions on Transfer under the Securities Act). The
Subject Shares listed on Schedule A opposite the Voting Shareholder’s name
constitute all of the shares of Company Common Stock Beneficially Owned by the
Voting Shareholder as of the date hereof.
(d) Except as set forth on Schedule A hereto, the Voting Shareholder has full
voting power, full power of disposition, full power to issue instructions with
respect to the matters set forth herein and full power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of the Subject
Shares Beneficially Owned by the Voting Shareholder. None of the Voting
Shareholder’s Subject Shares are subject to any voting trust or other agreement or
arrangement with respect to the voting of such shares, except as provided hereunder.
(e) The execution and delivery of this Agreement by the Voting Shareholder does
not and the performance of this Agreement by the Voting Shareholder will not (i)
conflict with, result in any violation of, require any consent under or constitute a
default (whether with notice or lapse of time or both) under any mortgage, bond,
indenture, agreement, instrument or obligation to which the Voting Shareholder is a
party or by which the Voting Shareholder or any of his, her or its properties
(including the Subject Shares) is bound, (ii) [if the Voting Shareholder is a
corporation, partnership, limited liability company, trust or other entity, conflict
with, result in any violation of, require any consent under or constitute a default
(whether with notice or lapse of time or both) under the Voting Shareholder’s
constituent documents], (iii) violate any judgment, order, injunction, decree or
award of any court, administrative agency or other Governmental Authority that is
binding on the Voting Shareholder or any of his, her or its properties or assets
(including the Subject Shares) and (iv) constitute a violation by the Voting
Shareholder of any law applicable to the Voting Shareholder, except for any
violation, conflict or consent in clause (i), (iii) and (iv) as would not reasonably
be expected to materially impair the ability of the Voting Shareholder to perform
his, her or its obligations hereunder or to consummate the transactions contemplated
herein on a timely basis.
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(f) As of the date hereof, there is no action, suit, investigation or
proceeding pending against, or to the knowledge of the Voting Shareholder,
threatened against or affecting, the Voting Shareholder or any of his, her or its
properties or assets (including the Subject Shares) that could reasonably be
expected to impair the ability of the Voting Shareholder to perform his, her or its
obligations hereunder or to consummate the transactions contemplated hereby on a
timely basis.
(g) The Voting Shareholder has had the opportunity to review this Agreement and
the Merger Agreement with counsel of his, her or its own choosing. The Voting
Shareholder understands and acknowledges that Parent is entering into the Merger
Agreement in reliance upon the Voting Shareholder’s execution, delivery and
performance of this Agreement.
Section 8. Termination. This Agreement shall terminate automatically, without any notice or
other action by any Person, on the Expiration Date; provided, however, nothing set forth in this
Section 8 or elsewhere in this Agreement shall relieve any party hereto from liability, or
otherwise limit the liability of any party hereto, for any material breach of this Agreement.
Section 9. Shareholder Capacity. Notwithstanding anything herein to the contrary, nothing set
forth herein shall restrict any officer or director of the Company in the exercise of his or her
fiduciary duties as an officer or director of the Company, but such officer or director shall take
no action that would cause the Company to breach the Merger Agreement or any agreements
contemplated thereby.
Section 10. Miscellaneous.
(a) Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier service
(with proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
(i) if to Parent, to it at:
Xxxxxx Geophysical Company
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy, which will not constitute notice for purposes hereof, to:
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
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and
(ii) if to the Voting Shareholder, to his, her or its address set forth
on a signature page hereto
with a copy, which will not constitute notice for purposes hereof, to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Rice Xxxxxx
Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given, and
such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
(b) Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Parent may assign, in its sole
discretion, all or any of its rights, interests and obligations hereunder to any
direct or indirect wholly owned Subsidiary of Parent. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of and
be enforceable by the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, shall or is intended to confer on any Person
other than the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
(c) Entire Agreement. This Agreement, Schedule A hereto and any
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, both written and oral, among the parties
with respect thereto.
(d) Amendments. This Agreement may be amended by the parties hereto in
any and all respects. To be effective, any amendment or modification hereto must be
in a written document each party has executed and delivered to the other parties.
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(e) Extension; Waiver. At any time prior to the Expiration Date, each
party may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive in
whole or in part any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto or (iii) waive
in whole or in part compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including any investigation by or on behalf
of any party, or delay or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default hereunder by any other
party, shall be deemed to impair any such right, power or remedy, nor will it be
deemed to constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this Agreement.
The waiver by any party hereto of a breach of any provision hereunder shall not
operate or be construed as a waiver of any prior or subsequent breach of the same or
any other provision hereunder.
(f) Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by and construed and enforced in accordance
with the substantive laws of the State of Texas, without regard to the conflicts of
law provisions thereof that would cause the laws of any other jurisdiction to apply.
(g) Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only and shall be given no substantive or interpretative
effect whatsoever.
(h) Severability. If any provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, that provision will, as to that
jurisdiction, to the extent possible, be modified in such a manner as to be valid,
legal and enforceable but so as to retain most nearly the intent of the parties as
expressed herein. If such a modification is not possible, that provision will be
severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement will not in any way be
affected or impaired thereby. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
(i) Enforcement of Agreement. The parties hereto agree that Parent
would be irreparably damaged in the event that the Voting Shareholder fails to
perform any of its obligations under this Agreement in accordance with its specific
terms of this Agreement and that Parent would not have an adequate remedy at law for
money damages in such event. It is accordingly agreed that Parent shall be entitled
to specific performance of the terms of this Agreement in addition to any other
remedy at law or equity. The parties accordingly agree that
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Parent will be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which Parent is entitled at
law or in equity or under this Agreement.
(j) Consent to Jurisdiction and Venue; WAIVER OF JURY TRIAL. To the
fullest extent permitted by applicable law, each party hereto (i) agrees that any
claim, action or proceeding by such party seeking any relief whatsoever arising out
of, or in connection with, this Agreement or the transactions contemplated hereby
shall be brought only in a state or federal court located in the State of Texas and
not in any other state or federal court in the United States of America or any court
in any other country, (ii) agrees to submit to the exclusive jurisdiction of such
courts located in the State of Texas for purposes of all legal proceedings arising
out of, or in connection with, this Agreement or the transactions contemplated
hereby, (iii) waives and agrees not to assert any objection that it may now or
hereafter have to the laying of the venue of any such proceeding brought in such a
court or any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum, (iv) agrees that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
10(a)or any other manner as may be permitted by law shall be valid and sufficient
service thereof and (v) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by applicable law. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
(k) Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each signed
by less than all, but together signed by all of the parties hereto.
(l) No Presumption. This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party drafting of causing any instrument to be drafted.
[signature pages follow]
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The parties hereto have executed this Voting Agreement as of the date first written above.
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XXXXXX GEOPHYSICAL COMPANY
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[Voting Agreement — Parent Signature Page]
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[SHAREHOLDER]
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[Voting Agreement — Voting Shareholder Signature Page]
EXHIBIT D
FORM OF VOTING AGREEMENT
THIS VOTING AGREEMENT (this “Agreement”), dated as of March 20, 2011, is by and among TGC
Industries, Inc., a Texas corporation (the “Company”), and each of the individuals or entities
listed on a signature page hereto (each, a “Voting Shareholder” and collectively, the “Voting
Shareholders”).
RECITALS
A. Concurrently with the execution and delivery of this Agreement, the Company, Xxxxxx
Geophysical Company, a Texas corporation (“Parent”), 6446 Acquisition Corp., a Texas corporation
and a direct wholly owned subsidiary of Parent (“Merger Sub”), are entering into an Agreement and
Plan of Merger, dated as of the date hereof (as the same may be amended from time to time, the
“Merger Agreement”), which provides, among other things, for (i) Merger Sub to be merged with and
into the Company, with the Company continuing as the surviving entity (the “Merger”), and (ii) each
issued and outstanding share of common stock, par value $0.01 per share, of the Company (“Company
Common Stock”) (other than any Company Common Stock owned by Parent, Merger Sub or the Company or
any wholly owned Subsidiary of the Company), to be converted into the right to receive the shares
of common stock, par value $0.33-1/3 per share, of Parent (“Parent Common Stock”).
B. As of the date hereof, each Voting Shareholder is the Beneficial Owner (as defined below)
of the shares of Parent Common Stock set forth opposite such Voting Shareholder’s name on Schedule
A hereto (all such shares set forth on Schedule A, together with any shares of Parent Common Stock
that are hereafter issued to or otherwise acquired or owned by any Voting Shareholder prior to the
termination of this Agreement being referred to herein as the “Subject Shares”), which Subject
Shares represent 3.82% of the outstanding shares of Parent Common Stock and voting power of the
outstanding capital stock of Parent.
C. As a condition to its willingness to enter into the Merger Agreement, the Company has
required that each Voting Shareholder, and in order to induce the Company to enter into the Merger
Agreement each Voting Shareholder (in such Voting Shareholder’s capacity as a holder of the Subject
Shares) has agreed to, enter into this Agreement.
NOW, THEREFORE, in consideration of premises and the representations, warranties and
agreements contained herein, the benefits to be derived by each party hereunder and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Section 1. Certain Definitions. Capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Merger Agreement. In addition, for
purposes of this Agreement:
(a) “Agreement” shall have the meaning set forth in the preamble.
(b) “Beneficially Owned” or “Beneficial Ownership” shall have the meaning given
to such term in Rule 13d-3 under the Exchange Act.
“Beneficial Owner” shall mean, with respect to any securities, a Person who has
Beneficial Ownership of such securities.
(c) “Company” shall have the meaning set forth in the recitals.
(d) “Company Common Stock” shall have the meaning set forth in the recitals.
(e) “Expiration Date” shall mean the earlier of (i) the date upon which the
Merger Agreement is validly terminated pursuant to its terms, (ii) the date upon
which the parties hereto agree to terminate this Agreement, (iii) the occurrence of
a Parent Adverse Recommendation Change made in accordance with the provisions of
Section 7.3(b) of the Merger Agreement and (iv) the Effective Time.
(f) “Merger” shall have the meaning set forth in the recitals.
(g) “Merger Agreement” shall have the meaning set forth in the recitals.
(h) “Merger Sub” shall have the meaning set forth in the recitals.
(i) “Parent Common Stock” shall have the meaning set forth in the recitals.
(j) “Parent” shall have the meaning set forth in the preamble.
(k) “Subject Shares” shall have the meaning set forth in the recitals.
(l) “Transfer” shall mean, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security,
rights relating thereto or the Beneficial Ownership of such security or rights
relating thereto, the offer to make such a sale, transfer, pledge, hypothecation,
encumbrance, assignment or disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, “Transfer” shall have a correlative meaning.
(m) “Voting Shareholder” shall have the meaning set forth in the preamble.
Section 2. No Disposition or Solicitation.
(a) Except as set forth in Section 5 of this Agreement, each Voting Shareholder
undertakes that such Voting Shareholder shall not (i) Transfer or agree to Transfer
any Subject Shares or (ii) grant or agree to grant any proxy or power-of-attorney
with respect to any Subject Shares.
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(b) Each Voting Shareholder undertakes that, in his, her or its capacity as a
shareholder of Parent, such Voting Shareholder shall not, and shall cause his, her
or its investment bankers, financial advisors, attorneys, accountants and other
advisors, agents and representatives not to, directly or indirectly solicit,
initiate, facilitate or encourage any inquiries or proposals from discuss or
negotiate with, or provide any non-public information to, any Person relating to, or
otherwise facilitate, any Acquisition Proposal.
Section 3. Voting of Subject Shares. Each Voting Shareholder undertakes that (a) at such time
as Parent conducts a meeting of, or otherwise seeks a vote or consent of, its shareholders, each
Voting Shareholder shall, or shall cause the holder of record on any applicable record date to,
vote the Subject Shares Beneficially Owned by such Voting Shareholder in favor of, or provide a
consent with respect to, (i) approval of the issuance of shares of Parent Common Stock in the
Merger, (ii) approval of any proposal to adjourn or postpone any shareholder meeting to a later
date if there are not sufficient votes for the approval of the issuance of shares of Parent Common
Stock in the Merger on the date on which such meeting is held, and (iii) any other matter necessary
for consummation of the transactions contemplated by the Merger Agreement which is considered at
any such meeting or is the subject of any such consent solicitation, and (b) at each meeting of
shareholders of Parent and in connection with each consent solicitation, such Voting Shareholder
shall, or shall cause the holder of record on any applicable record date to, vote the Subject
Shares Beneficially Owned by such Voting Shareholder against, and not provide consents with respect
to, (i) any agreement or arrangement related to or in furtherance of any Acquisition Proposal, (ii)
any liquidation, dissolution, recapitalization, extraordinary dividend or other significant
corporate reorganization of Parent, (iii) any action, proposal, transaction or agreement that would
delay, prevent, frustrate, impede or interfere with the Merger or the other transactions
contemplated by the Merger Agreement or result in the failure of any condition set forth in ARTICLE
VIII of the Merger Agreement to be satisfied, and (iv) any action, proposal, transaction or
agreement that would result in a breach of any covenant, representation or warranty or other
obligation or agreement of Parent under the Merger Agreement or of such Voting Shareholder under
this Agreement.
Section 4. Reasonable Efforts to Cooperate. Each Voting Shareholder hereby consents to the
publication and disclosure in the Proxy Statement/Prospectus (and, as and to the extent otherwise
required by securities laws or the SEC or any other securities authorities, any other documents or
communications provided by the Company, Parent or Merger Sub to any Governmental Authority or to
securityholders of Parent) of such Voting Shareholder’s identity and Beneficial Ownership of
Subject Shares and the nature of such Voting Shareholder’s commitments, arrangements and
understandings under and relating to this Agreement and, if deemed appropriate by the Company or
Parent, a copy of this Agreement. Each Voting Shareholder will promptly provide any information
reasonably requested by the Company, Parent or Merger Sub for any regulatory application or filing
made or approval sought in connection with the Merger or the other transactions contemplated by the
Merger Agreement (including filings with the SEC).
Section 5. Irrevocable Proxy. In furtherance of the agreements contained in Section 3 of this
Agreement, each Voting Shareholder hereby irrevocably grants to and appoints the
D-3
Company and each of the executive officers of the Company, in their respective capacities as
officers of the Company, as the case may be, and any individual who shall hereafter succeed to any
such office of the Company, and each of them individually, such Voting Shareholder’s proxy and
attorney-in-fact (with full power of substitution), for and in the name, place and stead of such
Voting Shareholder, to vote all Subject Shares Beneficially Owned by such Voting Shareholder that
are outstanding from time to time, to grant or withhold a consent or approval in respect of such
Subject Shares and to execute and deliver a proxy to vote such Subject Shares, in each case solely
to the extent and in the manner specified in Section 3 of this Agreement. Each Voting Shareholder
represents and warrants to the Company that all proxies heretofore given in respect of the Subject
Shares are not irrevocable and that all such proxies have been properly revoked or are no longer in
effect as of the date hereof. Each Voting Shareholder hereby affirms that the irrevocable proxy
set forth in this Section 5 is given by such Voting Shareholder in connection with, and in
consideration of, the execution of the Merger Agreement by the Company and that the irrevocable
proxy set forth in this Section 5 is coupled with an interest and, except as set forth in Section 8
hereof, may under no circumstances be revoked. The irrevocable proxy set forth in this Section 5
is executed and intended to be irrevocable in accordance with the provisions of Section 21.369 of
the TBOC, subject, however, to automatic termination on the Expiration Date.
Section 6. Further Action. If any further action is necessary or desirable to carry out the
purposes of this Agreement, each Voting Shareholder shall take all such action reasonably requested
by the Company.
Section 7. Representations and Warranties of the Voting Shareholders. Each Voting Shareholder
represents and warrants to the Company as to such Voting Shareholder, severally and not jointly, as
follows:
(a) Such Voting Shareholder has all necessary power and authority and legal
capacity to execute and deliver this Agreement and perform his, her or its
obligations hereunder. Such Voting Shareholder, if it is a corporation,
partnership, limited liability company, trust or other entity, is duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
organization. The execution, delivery and performance of this Agreement by such
Voting Shareholder and the consummation by such Voting Shareholder of the
transactions contemplated hereby have been duly authorized by all necessary action
on the part of such Voting Shareholder and no further proceedings or actions on the
part of such Voting Shareholder are necessary to authorize the execution, delivery
or performance of this Agreement or the consummation of the transactions
contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered by such
Voting Shareholder and, assuming it has been duly and validly authorized, executed
and delivered by the Company, constitutes the valid and binding agreement of such
Voting Shareholder, enforceable against such Voting Shareholder in accordance with
its terms, except to the extent that enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium,
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fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditor’s rights generally and (ii) general principles of equity.
(c) Such Voting Shareholder is the sole Beneficial Owner of his, her or its
Subject Shares. Such Voting Shareholder has legal, good and marketable title (which
may include holding in nominee or “street” name) to all of the Subject Shares
Beneficially Owned by such Voting Shareholder, free and clear of all liens, claims,
options, proxies, voting agreements and security interests (other than as created by
this Agreement or the restrictions on Transfer under the Securities Act). The
Subject Shares listed on Schedule A opposite such Voting Shareholder’s name
constitute all of the shares of Company Common Stock Beneficially Owned by such
Voting Shareholder as of the date hereof.
(d) Except as set forth on Schedule A hereto, such Voting Shareholder has full
voting power, full power of disposition, full power to issue instructions with
respect to the matters set forth herein and full power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of the Subject
Shares Beneficially Owned by such Voting Shareholder. None of such Voting
Shareholder’s Subject Shares are subject to any voting trust or other agreement or
arrangement with respect to the voting of such shares, except as provided hereunder.
(e) The execution and delivery of this Agreement by such Voting Shareholder
does not and the performance of this Agreement by such Voting Shareholder will not
(i) conflict with, result in any violation of, require any consent under or
constitute a default (whether with notice or lapse of time or both) under any
mortgage, bond, indenture, agreement, instrument or obligation to which such Voting
Shareholder is a party or by which such Voting Shareholder or any of his, her or its
properties (including the Subject Shares) is bound, (ii) if such Voting Shareholder
is a corporation, partnership, limited liability company, trust or other entity,
conflict with, result in any violation of, require any consent under or constitute a
default (whether with notice or lapse of time or both) under such Voting
Shareholder’s constituent documents, (iii) violate any judgment, order, injunction,
decree or award of any court, administrative agency or other Governmental Authority
that is binding on such Voting Shareholder or any of his, her or its properties or
assets (including the Subject Shares), and (iv) constitute a violation by such
Voting Shareholder of any law applicable to such Voting Shareholder, except for any
violation, conflict or consent in clause (i), (iii) and (iv) as would not reasonably
be expected to materially impair the ability of such Voting Shareholder to perform
his, her or its obligations hereunder or to consummate the transactions contemplated
herein on a timely basis.
(f) As of the date hereof, there is no action, suit, investigation or
proceeding pending against, or to the knowledge of such Voting Shareholder,
threatened against or affecting, such Voting Shareholder or any of his, her or its
properties or assets (including the Subject Shares) that could reasonably be
expected to impair the ability of such Voting Shareholder to perform his, her or its
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obligations hereunder or to consummate the transactions contemplated hereby on
a timely basis.
(g) Such Voting Shareholder has had the opportunity to review this Agreement
and the Merger Agreement with counsel of his, her or its own choosing. Such Voting
Shareholder understands and acknowledges that the Company is entering into the
Merger Agreement in reliance upon such Voting Shareholder’s execution, delivery and
performance of this Agreement.
Section 8. Termination. This Agreement shall terminate automatically, without any notice or
other action by any Person, on the Expiration Date; provided, however, nothing set forth in this
Section 8 or elsewhere in this Agreement shall relieve any party hereto from liability, or
otherwise limit the liability of any party hereto, for any material breach of this Agreement.
Section 9. Shareholder Capacity. Notwithstanding anything herein to the contrary, nothing set
forth herein shall restrict any officer or director of Parent in the exercise of his or her
fiduciary duties as an officer or director of Parent, but such officer or director shall take no
action that would cause Parent to breach the Merger Agreement or any agreements contemplated
thereby.
Section 10. Miscellaneous.
(a) Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier service
(with proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
(i) if to the Company, to it at:
TGC Industries, Inc.
000 Xxxx Xxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy, which will not constitute notice for purposes hereof, to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Rice Xxxxxx
Facsimile: (000) 000-0000
and
(ii) if to a Voting Shareholder, to his, her or its address set forth
on a signature page hereto
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with a copy, which will not constitute notice for purposes hereof, to:
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given, and
such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
(b) Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, shall or is intended to confer on any Person other than the
parties hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
(c) Entire Agreement. This Agreement, Schedule A hereto and any
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, both written and oral, among the parties
with respect thereto.
(d) Amendments. This Agreement may be amended by the parties hereto in
any and all respects. To be effective, any amendment or modification hereto must be
in a written document each party has executed and delivered to the other parties.
(e) Extension; Waiver. At any time prior to the Expiration Date, each
party may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive in
whole or in part any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto or (iii) waive
in whole or in part compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including
D-7
any investigation by or on behalf of any party, or delay or omission in the
exercise of any right, power or remedy accruing to any party as a result of any
breach or default hereunder by any other party, shall be deemed to impair any such
right, power or remedy, nor will it be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a breach
of any provision hereunder shall not operate or be construed as a waiver of any
prior or subsequent breach of the same or any other provision hereunder.
(f) Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by and construed and enforced in accordance
with the substantive laws of the State of Texas, without regard to the conflicts of
law provisions thereof that would cause the laws of any other jurisdiction to apply.
(g) Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only and shall be given no substantive or interpretative
effect whatsoever.
(h) Severability. If any provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, that provision will, as to that
jurisdiction, to the extent possible, be modified in such a manner as to be valid,
legal and enforceable but so as to retain most nearly the intent of the parties as
expressed herein. If such a modification is not possible, that provision will be
severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement will not in any way be
affected or impaired thereby. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
(i) Enforcement of Agreement. The parties hereto agree that the
Company would be irreparably damaged in the event that any Voting Shareholder fails
to perform any of its obligations under this Agreement in accordance with its
specific terms of this Agreement and that the Company would not have an adequate
remedy at law for money damages in such event. It is accordingly agreed that the
Company shall be entitled to specific performance of the terms of this Agreement in
addition to any other remedy at law or equity. The parties accordingly agree that
the Company will be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which the Company is
entitled at law or in equity or under this Agreement.
(j) Consent to Jurisdiction and Venue; WAIVER OF JURY TRIAL. To the
fullest extent permitted by applicable law, each party hereto (i) agrees that any
claim, action or proceeding by such party seeking any relief whatsoever arising out
of, or in connection with, this Agreement or the
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transactions contemplated hereby shall be brought only in a state or federal
court located in the State of Texas and not in any other state or federal court in
the United States of America or any court in any other country, (ii) agrees to
submit to the exclusive jurisdiction of such courts located in the State of Texas
for purposes of all legal proceedings arising out of, or in connection with, this
Agreement or the transactions contemplated hereby, (iii) waives and agrees not to
assert any objection that it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court or any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum, (iv) agrees that
mailing of process or other papers in connection with any such action or proceeding
in the manner provided in Section 10(a)or any other manner as may be permitted by
law shall be valid and sufficient service thereof and (v) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
applicable law. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(k) Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each signed
by less than all, but together signed by all of the parties hereto.
(l) No Presumption. This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party drafting of causing any instrument to be drafted.
(m) Obligations. The obligations of each Voting Shareholder under this
Agreement are several and not joint, and no Voting Shareholder shall have any
liability or obligation under this Agreement for any breach hereunder by any other
Voting Shareholder.
[signature pages follow]
D-9
The parties hereto have executed this Voting Agreement as of the date first written above.
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TGC INDUSTRIES, INC.
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By: |
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Name: |
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Title: |
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[Voting Agreement — Company Signature Page]
[Voting Shareholder Signature Page Begins on Next Page]
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[SHAREHOLDER]
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By: |
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Name: |
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Address: |
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[Voting Agreement — Voting Shareholder Signature Page]
EXHIBIT E
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is made as of the _____ day of
_________________, 20__ (the “Effective Date”) by and between
__________________1, a Texas corporation (the “Company”), and
_________________
(the “Executive”). The Company and the Executive are hereinafter collectively referred to
as the “Parties.”
RECITALS
WHEREAS, the Company desires to employ the Executive on the terms and conditions, and for the
consideration, hereinafter set forth, and the Executive desires to be employed by the Company on
such terms and conditions and for such consideration;
WHEREAS, this Agreement is intended to benefit Xxxxxx Geophysical Company and its
subsidiaries;
AGREEMENT
NOW, THEREFORE, for good and valuable consideration and in further consideration of the mutual
covenants and agreements contained herein, the Parties hereby covenant and agree as follows:
1. |
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Definitions |
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For purposes of this Agreement, the following definitions shall apply: |
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(a) |
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“Affiliate” shall mean, as to the Company, each of Xxxxxx Geophysical Company
and its subsidiaries. |
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(b) |
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“Board” shall mean the Board of Directors of the Company. |
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(c) |
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“Cause” shall mean any of the following conduct by the Executive: (A)
fraud, embezzlement, misappropriation of funds, willful or intentional misconduct or
gross negligence in connection with the business of the Company or its affiliates; (B)
commission or conviction of any felony or of any misdemeanor involving theft or moral
turpitude, or entry of a plea of guilty or nolo contendere to any felony or any
misdemeanor involving theft or moral turpitude; (C) acts of dishonesty or disloyalty
that adversely affect or could reasonably be expected to adversely affect the Company
or its affiliates in any material respect; (D) engagement in any activity that the
Executive knows or should know could materially harm the business or reputation of the
Company or its affiliates, including alcohol or substance abuse that has impaired or
could reasonably be expected to impair the ability of the Executive to perform the
Executive’s duties; (E) a material failure to adhere to requirements applicable to the
Company’s operations, published corporate codes, policies or procedures of the Company;
(F) the Executive’s failure to meet applicable performance standards as determined by
the Board from time to time; (G) the Executive’s excess absenteeism, willful or
persistent neglect of, or abandonment of his duties (other than due to illness or any
other physical condition that could reasonably be expected to result in Disability); or |
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To be Xxxxxx Geophysical Company or its subsidiaries as applicable. |
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(H) material breach of any contract entered into between the Executive and the
Company or an affiliate of the Company, including this Agreement. Notwithstanding
the foregoing, no event or condition described under clauses (D), (E), (F), (G) or
(H) above that is capable of being cured or corrected shall constitute Cause unless
(1) the Company gives the Executive written notice or objection to such event or
condition after the occurrence of the event or condition and (2) such event or
condition is not corrected by the Executive within 20 days after receipt of such
notice. |
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(d) |
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“Confidential Information” is defined as information the Executive
learns as a consequence of or through employment by the Company (including information
conceived, originated, discovered, or developed by the Executive), not generally known
in the trade or industry and not freely available to persons not employed by the
Company, about the Company’s or its Affiliates’ products, services, processes, and
business operating procedures, or those of any organization to whom the Company or its
Affiliates is bound by contract, including, but not limited to, trade secrets and
information relating to research, development, inventions, equipment, services,
distribution, manufacturing, purchasing, marketing, customer lists, financial data,
engineering, business opportunities or ventures and information relating to the
analysis, computation and estimation of the physical properties of three dimensional
porous media. For clarity, Confidential Information shall include all information
generated by the Executive that is derived from, contains, reflects or incorporates the
information provided as Confidential Information. |
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(e) |
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“Disability” means any event where the Executive is or becomes
physically or mentally disabled, whether totally or partially, during the Term so that
the Executive is unable to perform the essential job functions hereunder, as determined
by the Company in its good faith judgment, for: (A) a period of 90 consecutive days; or
(B) for shorter periods aggregating 120 days during any 12-month period. |
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(f) |
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“Good Reason” means: (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties, or responsibilities, or any
other action by Employer which results in a diminution in such position, authority,
duties, or responsibilities, excluding for this purpose an isolated, insubstantial, and
inadvertent action not taken in bad faith and which is remedied by Employer within 20
days after receipt of notice thereof given by the Executive; (B) any material reduction
in the amount or type of compensation and benefits paid to the Executive, as described
in Section 4 and 5; (C) the Company requiring the Executive to be based at any office
or location other than facilities within 50 miles of ____________2, (D) the
Company materially interfering with the Executive’s ability to fulfill the Executive’s
duties, (E) any material breach of any material contract entered into between the
Executive and the Company or an affiliate of the Company, including this Agreement or
(F) any purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement. |
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To reflect Executive’s base of operations. |
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(g) |
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“Non-Competition Period” is defined as: |
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(A) |
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in the case of a termination pursuant to Section 7(a)(i) [for
Cause], Section 7(a)(iii) [without Good Reason] or Section 7(a)(vi)
[Disability], a period of one year after termination of the Executive; |
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(B) |
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in the case of a termination pursuant to Section 7(A)(ii)
[without Cause] or Section 7(A)(iv) [with Good Reason], the period beginning on
the termination of the Executive and continuing for the longer of (x) one year
or (y) the remainder of the Term; provided, however, that in the event the
Executive becomes employed during such period in a position that would be
prohibited by Section 9(b), the obligations set forth in Section 9(b) and
Section 9(c) (and only such obligations) shall terminate and the compensation
to be received by the Executive under Section 7(b)(ii) shall terminate from the
date of such employment; and |
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(C) |
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in the case of expiration of this Agreement, (i) if the Company
elects not to renew, a period of six months after termination of the Executive
for the obligations in Section 9(d), but the Executive shall have no
obligations under Section 9(b) or Section 9(c) or (ii) if the Executive elects
not to renew, a period of six months after termination of the Executive;
provided, however, that during such six month term, the Company shall continue
to pay Executive the Executive’s then-current Base salary on each applicable
payroll date. |
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“Work Product” is defined as all inventions, ideas, and discoveries
(whether patentable or not), designs, products, processes, procedures, methods,
developments, formulae, techniques, analyses, drawings, notes, documents, information,
materials, improvements and all other developments, whether tangible or intangible,
including, but not limited to, computer programs and related documentation, and all
intellectual property rights therein, made, conceived, developed, or prepared, in whole
or in part, by the Executive during the Term, alone or with others, whether or not
during work hours or on the Company’s premises, which are (a) within the scope of
business operations of the Company or its Affiliates, or a reasonable or contemplated
expansion thereof, of which reasonable or contemplated expansion the Executive is or
should have been aware, (b) related to any work or project of the Company or any of its
Affiliates, present, past or contemplated, of which contemplation the Executive is or
should have been aware (c) created with the aid of the Company’s or its Affiliates’
materials, equipment or personnel, or (d) based upon information to which the Executive
has access solely as a result of or in connection with his employment with the Company. |
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(a) |
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Employment by the Company. The Company hereby employs the Executive in
the capacity of _____________________, and the Executive hereby accepts such
employment, upon the terms and conditions of this Agreement. |
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(b) |
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Duties. The Executive shall devote the Executive’s best efforts to the
performance of the Executive’s duties. The Executive shall comply with all |
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policies and procedures of the Company which are provided to the Executive. The
Executive understands and acknowledges that employment with the Company requires the
Executive’s full attention and effort. The Executive agrees that, during the Term
(as defined below), the Executive shall devote all of the Executive’s working time,
attention, knowledge and skill to the business and interests of the Company. The
Executive will not, without the express written consent of the Board, engage in any
employment or business activity other than for the Company, including but not
limited to employment or business activity which is competitive with, or would
otherwise conflict with, his employment by the Company. Further, the Executive
shall refer to the Company any business opportunity similar to the business of the
Company or its affiliates or any opportunity to perform services which comes to the
Executive’s attention, and shall accept the decision of the Company in its sole
discretion to accept or reject any such opportunity. The foregoing shall not
preclude the Executive from managing private investments, participating in industry
and/or trade groups, engaging in volunteer civic, charitable or religious
activities, serving on boards of directors of charitable not-for-profit entities or,
with the consent of the Board, serving on board of directors of other entities, in
each case as long as such activities, individually or in the aggregate, do not
materially interfere or conflict with Employee’s responsibilities to the Company. |
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(c) |
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[Service on the Board. For so long as Executive remains an employee of
the Company, the Company shall take all necessary action to cause Executive to be
nominated as a director of the Company at any meeting of shareholders for the election
of directors.]3 |
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(d) |
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The Executive’s Ability to Perform. The Executive represents and
warrants that with respect to the Executive’s employment or services for the Company,
the Executive is not under any obligation, contractual or otherwise, to any other
person or entity which would preclude the Executive from entering into this Agreement
or performing the terms hereof or permit any other person or entity to obtain
substantial damages in connection with the Executive’s employment by the Company. The
Executive represents and warrants that the Executive is free to enter into the employ
of the Company and perform the terms of this Agreement. |
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(a) |
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Initial Term. The term of the Executive’s employment pursuant to this
Agreement (the “Initial Term”) shall begin on the Effective Date and shall
terminate at the close of business on the third anniversary of the Effective Date,
subject to earlier termination in accordance with Section 7 and the other terms,
provisions and conditions set forth in this Agreement. |
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(b) |
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Renewal Terms. At the end of the Initial Term, unless either the
Company or the Executive provides sixty (60) days’ notice of the intent not to renew
this Agreement, the Executive’s employment and this Agreement shall renew for
successive one-year terms (“Renewal Terms”). |
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Provision to be applicable to Mr. Jumper and Xx. Xxxxxxxx only. |
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(c) |
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Term. Together, the Initial Term and any Renewal Terms are defined as
the “Term.” |
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Compensation |
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In consideration of the services to be rendered by the Executive pursuant to this Agreement,
including without limitation any services that may be rendered by the Executive as an
officer, director, manager or member of any committee of the Company or any of its
subsidiaries or affiliates, the Executive shall receive the following compensation and
benefits: |
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(a) |
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Base Salary. The Company shall pay the Executive an base salary of
$___________ if annualized (the “Base Salary”), which shall be earned and
payable in accordance with the Company’s usual payroll practices. The Base Salary may
be reviewed annually by the Company, and may be adjusted upward in the Board’s sole
discretion. |
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(b) |
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Bonus. In addition to the Base Salary, the Executive may be awarded, at
the discretion of the Board for any fiscal year ending during the Term, a bonus.
Participation in any bonus, profit sharing or other plan measured shall be at the
sole discretion of the Board. Eligibility for bonuses of any kind ceases on the day
that employment terminates, regardless of when such bonuses were earned. |
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Reimbursed Expenses. Reasonable expenses actually incurred by the
Executive in direct conduct of the Company’s business shall be reimbursed to the
Executive to the extent they are reimbursable under the established policies of the
Company. Any such reimbursement of expenses shall be made by the Company in accordance
with its established policies (but in any event not later than the close of the
Executive’s taxable year following the taxable year in which the expense is incurred by
the Executive). |
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(b) |
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Benefits. During the Term, the Executive and where applicable the
Executive’s spouse and dependents shall be eligible to participate in the same benefit
plans or fringe benefit policies such as health, dental, life insurance, vision, and
401(k), as are offered to members of the Company’s executive management, subject to
applicable eligibility requirements and the terms and conditions of all plans and
policies |
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(c) |
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Vacation, Holidays and Paid Time Off. During the Term, the Executive
shall be entitled to paid vacation, holidays, sick leave, or other paid time off in
accordance with the most favorable plans, policies, programs and practices of the
Company then in effect for its executives. |
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(d) |
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Automobile. During the Term, the Company will provide Executive a
___________ or, at Executive’s choice, comparable automobile commensurate with
Executive’s position with the Company and pay for fuel, insurance, |
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maintenance, repair and all other reasonable costs of such automobile. Executive
may also use the automobile for reasonable personal use. |
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Key Man Insurance |
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The Company may, at its sole discretion, own (and pay for) life insurance on Executive’s
life in the name of parties as designated by the Company as the beneficiaries. The
Executive agrees that he shall, at Company’s request, submit to such medical examinations,
supply such information, and execute such documents as may be requested by the insuring
company or companies. It is agreed and understood that if Employee dies during the Term,
the full amount of the proceeds payable under any such policy will be receivable solely as
designated by the Company. |
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Termination of Employment |
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(a) |
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Termination of Employment. The Executive’s employment with the Company
may be terminated as follows: |
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(i) Termination by the Company for Cause. The Company may, on written notice to the
Executive, immediately terminate the Executive’s employment for Cause, in which
event both this Agreement and the Executive’s employment with the Company shall
terminate as of the date provided in such notice of termination, which notice must
state the reasons for such termination. |
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(ii) Termination by the Company Without Cause. The Company may, on written notice
to the Executive, terminate the Executive’s employment other than for Cause or for
no reason, in which event both this Agreement and the Executive’s employment with
the Company shall terminate 30 days after the date of delivery of such notice of
termination. |
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(iii) Termination by the Executive Without Good Reason. The Executive may, on
written notice to the Company, terminate the Executive’s employment at any time and
for any reason, in which event both this Agreement and the Executive’s employment
with the Company shall terminate on a date specified by the Executive in such notice
of termination, which date shall be at least 30 days after the date of delivery of
such notice of termination to the Company. |
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(iv) Termination by the Executive for Good Reason. The Executive may terminate the
Executive’s employment for Good Reason after providing the Company with written
notice of the Executive’s intent to terminate the Executive’s employment and the
reason(s) therefor. The Company will have 30 days in which to cure the reason(s)
provided by the Executive. At the end of the 30-day period, if the Company has not
cured the Good Reason cause of the Executive’s termination, the Executive’s
employment will terminate following a reasonable transition period specified by the
Company not to exceed 30 days. |
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(v) Termination upon Death. The Executive’s date of death shall constitute
termination of employment and all rights to further compensation or benefits,
including bonuses, shall cease as of that date. |
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(vi) Termination upon Disability. If the Executive becomes Disabled, the Company
may, but shall not be required to, by written notice to the Executive, terminate the
Executive’s employment with the Company, in which event this Agreement shall
terminate 30 days after the date upon which the Company shall have given notice the
Executive of its intention to terminate the Executive’s employment because of
Disability. |
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Effect of Termination. |
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(i) Payment Upon Termination for any Reason. In the case of a termination
of the Executive’s employment with the Company pursuant to Section 7(a), (A) on the
next regular payroll date, or sooner if required by law, the Company shall pay to
the Executive (or, in the case of death, the Executive’s estate) (1) all Base Salary
that has accrued and not been paid as of the effective date of termination in
accordance with the Company’s customary payroll schedules for salaried Executives
and (2) any employment benefits that have fully accrued and vested but have not been
paid as of the effective date of such termination in accordance with the terms of
any applicable employment benefit arrangements and applicable law and (B) all other
rights and benefits of the Executive hereunder shall terminate upon such
termination, except for (1) any right of the Executive or his dependants to continue
benefits pursuant to applicable law, (2) any rights that the Executive may have
under Section 7(b)(ii) or under Section 7(b)(iii). |
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(ii) Payment Upon Termination by the Company Without Cause or by the Executive
for Good Reason. In the case of a termination pursuant to Section 7(a)(ii) or
Section 7(a)(iv) (but not any other applicable termination provisions of this
Agreement), provided the Executive has executed and delivered (without subsequent
revocation) to the Company a release, in a form satisfactory to the Company, of all
claims against the Company arising from or associated with the Executive’s
employment by such date, the Executive shall be entitled to severance payments in an
amount equal to the greater of (A) the continuation of the Executive’s then-current
Base Salary for the remainder of the Term or (B) the continuation of the Executive’s
Base Salary for one year. The form of any release shall be specified at such time by
the Company. Any payments pursuant to this Section shall commence on the first
payroll date following the sixtieth (60th) day following the Executive’s termination
of employment, subject to the Executive’s return of the release, and shall continue
on each following payroll date through the applicable severance period. |
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(iii) Return of Company Property. Upon termination of the Executive’s
employment with the Company, the Executive (or, in the event of death, the
Executive’s estate) shall promptly deliver to the Company all of the Company’s
property in the Executive’s possession or under the Executive’s control or related
to the Company’s business, including but not limited to any vehicle, keys, records,
notes, books, maps, plans, data, memoranda, models, electronically recorded data or
software, and any computers, mobile phones and other equipment owned by the Company
(including any of the foregoing reflecting or containing any information relating to
any assets or projects in which the Company has any direct or indirect interest),
and all other Confidential |
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Information (as defined above), and shall retain no
copies or duplicates of any such property or Confidential Information. |
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(iv) Defense of Claims. The Executive agrees that, upon the request of the
Company, the Executive will reasonably cooperate with the Company in the defense of
any claims or actions that may be made by or against the Company that relate to the
Executive’s areas of responsibility during the Executive’s employment with the
Company, except if the Executive’s reasonable interests are adverse to the Company
or its affiliate(s), as applicable, in such claim or action. The Company agrees to
pay or reimburse Employee for all of Employee’s reasonable travel and other direct
expenses incurred, or to be reasonably incurred, to comply with Employee’s
obligations under this Section, provided Employee provides reasonable documentation
of same and obtains the Company’s prior approval for incurring such expenses. |
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(v) Form of Payments. Except as expressly set forth otherwise, the Company,
in its sole discretion, may elect any method or manner of payment with respect to
any payments to be made pursuant to this Section 7, and may also require the
Executive to continue to perform the Executive’s duties or other appropriate
transition duties during the period of time after any notices required pursuant to
this Section 7 and prior to the Executive’s specified termination date. |
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(vi) Automobile Upon Termination. Upon termination of Executive’s
employment other than for Cause pursuant to Section 7(a)(i) or without Good Reason
pursuant to Section 7(a)(iii), Executive may for consideration of $10.00 purchase
the automobile referenced in Section 5(d). If the Executive’s employment terminates
without Good Reason pursuant to Section 7(a)(iii), the Executive may purchase the
automobile for blue book value or, if leased, by assuming the lease. Furthermore,
(A) if the Company owns the automobile, the Company shall transfer the title
therefor (free and clear of any liens or other encumbrances) to the Executive (along
with insurance coverages, if assignable), or (B) if Company was leasing such
automobile, Company shall assign to Executive all of its right, title and interest
in and to such lease. Such transfer or assignment shall be completed by the Company
not later than seventy-five (75) days after the end of the calendar year in which
the termination occurs. |
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Provision of Confidential Information; Acknowledgements. During the
Term of this Agreement, in order to assist the Executive with the Executive’s duties,
the Company agrees to provide the Executive with Confidential Information. The
Executive acknowledges and agrees that all Confidential Information is confidential and
a valuable, special and unique asset of the Company that gives the Company an advantage
over its actual and potential, current and future competitors. The Executive
acknowledges and agrees that, as between the Executive and the Company, the
Confidential Information is now, and will at all times remain, the exclusive property
of the Company, and the Executive has no ownership interest in any Confidential
Information. The Executive acknowledges and agrees that, as part of the Executive’s
duties under this Agreement, the Executive owes the Company a fiduciary duty to
preserve and protect all Confidential Information from unauthorized disclosure or use.
The Executive |
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recognizes that disclosure of the Confidential Information to
competitors, non-authorized third parties or the general public, or use of the
Confidential
Information by the Executive for the Executive’s own benefit, would be detrimental
and cause irreparable harm to the Company. |
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Non-Disclosure of the Confidential Information. The Executive
covenants and agrees that during the Term and following the termination (for any
reason) of this Agreement, the Executive will keep secret and treat confidentially the
Confidential Information, and will not disclose any Confidential Information to any
person or entity for any purpose other than as directed by the Company in connection
with the business and affairs of the Company nor shall the Executive use any
Confidential Information for any purpose other than as directed by the Company in
connection with the business and affairs of the Company. Except in the proper
performance of his duties, the Executive will not copy, reproduce, decompile, or
reverse engineer, any Confidential Information, or remove or transmit by email or other
electronic means Confidential Information from the premises of the Company absent
specific consent. The Executive agrees that all restrictions contained in this clause
are reasonable and valid in the circumstances. This contractual confidentiality
obligation shall be in addition to, and in no way a limitation of, all such
confidentiality obligations as may exist at law or in equity. |
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Consideration; Voluntary Agreement. The Company shall provide the
Executive access to the Confidential Information for use only during the Term, and the
Executive acknowledges and agrees that the Company will be entrusting the Executive, in
the Executive’s unique and special capacity, with developing the goodwill of the
Company, and in consideration thereof and in consideration of the access to
Confidential Information, has voluntarily agreed to the covenants set forth in this
Section 9. The Executive further agrees and acknowledges that the limitations and
restrictions set forth herein, including but not limited to geographical and temporal
restrictions on certain competitive activities, are reasonable and not oppressive and
are material and substantial parts of this Agreement intended and necessary to prevent
unfair competition and to protect the Confidential Information and substantial and
legitimate business interests and goodwill. |
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Non-Competition. During the Term and during the applicable
Non-Competition Period, the Executive agrees that the Executive will not, directly or
indirectly, acting alone or in conjunction with others, or as an employee, consultant
or independent contractor, or as partner, officer, director, shareholder, manager,
member or owner of any interest in or security of, any partnership, corporation,
limited liability company or other business entity, venture or enterprise, engage or
participate, for compensation or without compensation, in any business which is in
competition with the Company or its Affiliates as conducted at the time of termination
of the Executive’s employment by the Company, in the geographic locations where the
Company or its Affiliates does business; provided, however, the Executive may have
investments in publicly-owned companies which investments do not constitute more than
5% of the voting securities of any such company. |
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Non-Solicitation of Customers. During the Term and during the
applicable Non-Competition Period, the Executive agrees that the Executive will not,
directly or indirectly, solicit any customer of the Company or its Affiliates with whom
the Executive conducted business during the Term either to purchase products or
services that are competitive to the products and services then sold by the Company
(customer defined as any person or entity for which the Company has performed services
or sold goods during the Term) or to reduce or cease business with the Company or its
Affiliates. |
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Non-Solicitation of Employees. During the Term and during the
applicable Non-Competition Period, the Executive agrees that the Executive will not,
directly or indirectly, hire or induce or solicit any current employee of the Company
or any Affiliate or any person who was an employee of the Company or any Affiliate
during the final 12 months of the Executive’s employment to terminate the employee’s
employment with the Company or to work for the Executive or the Executive’s employer. |
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Non-Disparagement. During the Term and for five years after
termination (for any reason) of the Executive’s employment, the Executive agrees to
refrain from criticizing, denigrating or speaking adversely of the Company and its
Affiliates and their respective operations and their respective executives, and
disclosing negative information about the Company or its Affiliates and their
respective operations and respective executives, management, directors, except as
required by law. During such same five-year period, the Company agrees to instruct its
senior management and the senior management of its Affiliates to refrain from
criticizing, denigrating or speaking adversely of the Executive, and disclosing
negative information about the Executive, except as required by law. |
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Reasonableness of Scope. The Executive represents and agrees that the
geographic scope of the restrictive covenants are necessary and reasonable in light of
the scope of the Company’s and its Affiliates’ business. The Executive further
represents and agrees that the time periods of the restrictive covenants set forth in
this Agreement are reasonable given the value of the good will, customer relationships,
Confidential Information and other tangible and intangible assets. If one or more of
the provisions of this Agreement shall for any reason be held to be excessively broad
as to scope, activity or subject matter so as to be unenforceable at law, such
provision(s) shall be construed and reformed by the appropriate judicial body by
limiting and reducing it (or them), so as to be enforceable to the maximum extent
compatible with the applicable law as it shall then appear. |
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Assignment of Work Product to the Company. The Executive assigns and
agrees to assign to the Company, without additional compensation, all the Executive’s
right, title, and interest in and to any and all Work Product and any related or
associated intellectual property. For clarity, Work Product does not have to be
subject to or eligible for federal or state patent, copyright or trademark protection
to be subject to this provision. If any such Work Product is created wholly or in part
by the Executive during the Executive’s hours of actual work for the Company, or with
the aid of the Company’s materials, equipment, or |
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personnel, or at the premises of the Company, or resulted from or in any way were
derived or generated by performance of the Executives duties under this Agreement,
or is in any way related to or derived from the services or products the Company or
its Affiliates produces or offers, then such creation shall be deemed conclusively
to have occurred in the course of the Executive’s employment. It is recognized that
the Executive will perform the duties assigned to the Executive at times other than
the Executive’s actual working hours and the Company’s rights hereunder shall not be
diminished because the Work Product was created at such other time. |
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Cooperation; Grant of License. The Executive agrees to perform all
acts necessary or reasonably requested by the Company to enable the Company to learn
of, understand, protect, obtain and enforce patent or copyright rights to the Work
Product, including but not limited to, making full and immediate disclosure and
description to the Company of the Work Product, and assisting in preparation and
execution of documents required to transfer and convey the Work Product and to convey
to the Company patent, copyright or any other intellectual property protection in the
United States and any foreign jurisdiction. In the event the Company is unable to
secure the signature of the Executive to any document required to file, prosecute,
register or memorialize the assignment of any patent copyright maskwork, the Executive
irrevocably appoints the Chief Executive Officer of the Company as the Executive’s
agent and attorney in fact to act for and on behalf of and instead of the Executive to
take such actions needed to enforce and obtain the Company’s rights hereunder. To the
extent any of the Executive’s rights, title or interest to the Work Product can not be
assigned to the Company, the Executive grants and will grant an exclusive, world wide,
transferable, irrevocable, royalty-license (with rights to sublicense without consent
of the Executive) to the Company to exploit fully such Work Product. These obligations
shall continue beyond the termination of this Agreement and shall be binding upon the
Executive’s assigns, executors, administrators and other legal representatives. |
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The Executive acknowledges that the provisions of Sections 8, 9 and 10 are necessary for the
protection of the Company. The Company and its affiliates would be irreparably damaged in
the event any of the restrictions contained in Sections 8, 9 or 10 were not performed in
accordance with their specific terms or were to be otherwise breached. Therefore, the
Company shall be entitled to temporary restraining orders and temporary and permanent
injunction or injunctions to specifically enforce the restrictions in Sections 8, 9 or 10 in
any court, without the necessity of proving actual damages or posting a bond of any type or
size, in addition to any other remedy to which the Company may be entitled, at law or in
equity, all of which shall be cumulative and not exclusive. No failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate as a waiver of
such right, power or privilege, nor shall any whole or partial exercise of any such right
power or privilege preclude any other or further exercise thereof. |
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Subject to Section 12(b), any dispute, controversy or claim between the
Executive and the Company arising out of or relating to this Agreement or the
Executive’s employment with the Company will be finally settled by arbitration in
Midland, Texas before, and in accordance with the rules for the resolution of
employment disputes then in effect of, the American Arbitration Association
(“AAA”). The arbitration award shall be final and binding on both parties. |
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Any arbitration conducted under this Section 12 shall be heard by a single
arbitrator (the “Arbitrator”) selected in accordance with the then-applicable
rules of the AAA. The Arbitrator shall expeditiously (and, if possible, within 90 days
after the selection of the Arbitrator) hear and decide all matters concerning the
dispute. Except as expressly provided to the contrary in this Agreement, the
Arbitrator shall have the power to (i) gather such materials, information, testimony
and evidence as he or she deems relevant to the dispute before him or her (and each
party will provide such materials, information, testimony and evidence requested by the
Arbitrator, except to the extent any information so requested is subject to an
attorney-client or other privilege or other valid objection and, if the information so
requested is proprietary or subject to a third party confidentiality restriction, the
arbitrator shall enter an order providing that such material will be subject to a
confidentiality agreement), and (ii) grant injunctive relief and enforce specific
performance. The decision of the Arbitrator shall be rendered in writing, be final,
non-appealable and binding upon the disputing parties and the parties agree that
judgment upon the award may be entered by any court of competent jurisdiction; provided
that the parties agree that the Arbitrator and any court enforcing the award of the
Arbitrator shall not have the right or authority to award punitive or exemplary damages
to any disputing party. |
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Each side shall share equally the cost of the arbitration and bear its own
costs and attorneys’ fees incurred in connection with any arbitration, unless the
Arbitrator determines that compelling reasons exist for allocating all or a portion of
such costs and fees to the other side. |
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Notwithstanding Section 12(a), an application for emergency or temporary
injunctive relief by either party shall not be subject to arbitration under this
Section; provided, however, that the remainder of any such dispute (beyond the
application for emergency or temporary injunctive relief) shall be subject to
arbitration under this Section. |
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By entering into this Agreement and entering into the arbitration provisions of
this Section 12, THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THEY ARE KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTS TO A JURY TRIAL. |
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Nothing in this Section 12 shall prohibit a party to this Agreement from (i)
instituting litigation to enforce any arbitration award, or (ii) joining another party
to this Agreement in a litigation initiated by a person or entity which is not a party
to this Agreement. |
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Notification of Restrictions to Third Parties. The Executive agrees
that during any period in which Sections 9(b), (c) or (d) of this Agreement are in
effect, if any, the Company may notify any person or entity employing or contracting
with the Executive or evidencing any intention of employing or contracting with the
Executive of the existence and provisions of this Agreement. After termination of the
Executive’s employment and during any period in which Sections 9(b), (c) or (d) of this
Agreement are in effect, if any, if the Executive enters into an employment consulting,
or independent contractor relationship with any third party which is in any way
competitive with the Company, the Executive agrees to provide the Company with written
notice of the Executive’s job responsibilities within five business days of the
Executive’s acceptance of such employment or other relationship (the “Employment
Notice”). The Employment Notice shall include (1) a description of the duties and
responsibilities of the proposed position, (2) identity of the employer(s) or
contracting entity, and (3) the territory in which the Executive will be providing
services. If the Executive fails to provide the required Employment Notice, the
Parties acknowledge and agree that the Company is entitled to presume that the
Executive’s employment or relationship violates the terms of this Agreement, and the
Company will be authorized by this Agreement to seek immediate injunctive relief as
outlined in this Agreement. |
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Severability. If any covenant or provision herein is finally
adjudicated to be void or unenforceable in whole or in part, it shall be reformed, or
if reformation is not possible, deleted from the remaining Agreement and shall not
affect or impair the validity of any other covenant or provision of this Agreement.
The Executive hereby agrees that all restrictions in this Agreement are reasonable and
valid. |
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Entire Agreement. This Agreement contains all of the terms, conditions
and agreements of the Parties with respect to the Executive’s employment by the Company
and cancels and supersedes all prior agreements and understandings between the Parties
relating to the Company’s employment and compensation of the Executive for any period
and in any capacity whatsoever. No executive or other representative of the Company
has any authority to make any representation or promise to the Executive not
specifically contained in this Agreement, and the Executive expressly acknowledges and
agrees that he has not executed this Agreement in reliance upon such representation or
promise. |
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Withholding and other Deductions. The Company shall have the right to
deduct from the Base Salary, other compensation payable to the Executive, and any other
payments, including severance payments, that the Company may make to the Executive
pursuant to the terms hereof, social security taxes and all federal, state, and
municipal taxes and charges as may now be in effect or which may hereafter be enacted
or required under applicable law as charges on the compensation of the Executive.
Subject to applicable law, the Executive further agrees that the Company may deduct
from the Base Salary or other compensation or payments to the Executive to satisfy any
outstanding financial obligations or debts owed to the Company, and to satisfy any
losses resulting from any unlawful activities of the Executive. Subject to applicable
law, the Company may also deduct any money advanced to the Executive as an expense
advance from the Executive’s salary or other compensation. In the event the |
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Executive’s wages are garnished by any court of competent jurisdiction, the
Executive consents to the Company’s compliance with such order and agrees to
reimburse the Company for all costs incurred in complying therewith. |
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Headings; Interpretation. The section headings hereof are for
convenience only and shall not control or affect the meaning or construction or limit
the scope or intent of any of the provisions of this Agreement. Whenever the context
may require, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. In addition, as used in this Agreement,
unless otherwise provided to the contrary, (i) all references to days, months or years
shall be deemed references to calendar days, months or years or (ii) any reference to a
“Section” shall be deemed to refer to a section of this Agreement. |
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Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if delivered
in person or mailed, first class postage prepaid or delivered by overnight messenger
service, to the Executive at his last known home address, and to the Company addressed
to the Secretary of the Company at _________________ (delivery of such copy being a
necessary requirement for the notice, request, demand or communication to be effective)
or to such other address as the addressee hereunder may designate. |
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Modification; Waiver. No modification, amendment or waiver of this
Agreement shall be binding upon the Company unless executed in writing on behalf of the
Company by a person designated by the Board to sign such modification, amendment or
waiver. A waiver by any Party of any breach of this Agreement shall not constitute a
waiver of future reoccurrences of such breach, or other breaches. A waiver by any
Party of any terms, conditions, rights or obligations under this Agreement shall not
constitute a waiver of such term, condition, rights or obligation in the future. No
delay or omission by a Party to exercise any right, power or remedy shall impair or
waive any such right, power or remedy, or be construed as a waiver of any default. No
whole or partial exercise of any right, power or privilege shall preclude any other or
further exercise thereof. |
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Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the Company, but shall not be
assignable by the Executive. The Company may, without the Executive’s consent, assign
this Agreement to any of its affiliates or to a purchaser, or any of its affiliates, of
the stock or assets of the Company. Xxxxxx Geophysical Company shall be a third party
beneficiary of this Agreement. |
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Applicable Law; Venue. THIS AGREEMENT SHALL BE INTERPRETED AND
ENFORCED IN CONFORMITY WITH THE LAW OF THE STATE OF TEXAS, WITHOUT REGARD TO ANY
CONFLICTS OF LAW PROVISION THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF
ANY OTHER JURISDICTION. UNLESS PROVIDED OTHERWISE BY THE MANDATORY VENUE PROVISIONS OF
THE STATE OF TEXAS, VENUE OF ANY LEGAL ACTION ARISING FROM OR RELATING TO THIS
AGREEMENT SHALL BE IN MIDLAND COUNTY, TEXAS. |
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(i) This Agreement is intended to provide payments that are exempt from or compliant
with the provisions of Section 409A of the Internal Revenue Code (the
“Code”) and related regulations and Treasury pronouncements (“Section
409A”), and the Agreement shall be interpreted accordingly. Notwithstanding any
provision of this Agreement to the contrary, the Parties agree that any benefit or
benefits under this Agreement that the Company determines are subject to the
suspension period under Code Section 409A(a)(2)(B) shall not be paid or commence
until a date following six months after the Executive’s termination date, or if
earlier, the Executive’s death. |
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(ii) Each payment under this Agreement is intended to be (i) excepted from Section
409A, including, but not limited to, by compliance with the short-term deferral
exception as specified in Treasury Regulation § 1.409A-1(b)(4) and the involuntary
separation pay exception within the meaning of Treasury Regulation §
1.409A-1(b)(9)(iii), or (ii) in compliance with Section 409A, including, but not
limited to, being paid pursuant to a fixed schedule or specified date pursuant to
Treasury Regulation § 1.409A-3(i)(1)(v), and the provisions of this Agreement will
be administered, interpreted and construed accordingly (or disregarded to the extent
such provision cannot be so administered, interpreted, or construed). |
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Survival of Obligations. The Parties expressly agree the provisions of
Sections 7 through 13 shall survive the termination of this Agreement. |
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Knowledge and Legal Representation. THE EXECUTIVE ACKNOWLEDGES THAT
THE EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT, HAS CONSULTED WITH AN ATTORNEY OF THE
EXECUTIVE’S CHOOSING TO THE EXTENT THE EXECUTIVE DESIRES LEGAL ADVICE REGARDING THIS
AGREEMENT, AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT. |
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Counterparts. This Agreement may be executed in any number of
counterparts (including executed counterparts delivered and exchanged by facsimile
transmission) with the same effect as if the Parties had originally executed the same
document, and all counterparts shall be construed together and shall constitute the
same instrument. |
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IN WITNESS WHEREOF, the Parties have hereunto executed this Agreement on the dates indicated
below.
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THE EXECUTIVE: |
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E-16
EXHIBIT F
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “Agreement”) is made and entered into as of
________ __, 2011, by and between Xxxxxx Geophysical Company, a Texas corporation (the
“Company”), and ________________ (the “Indemnitee”).
WHEREAS, qualified persons are reluctant to serve organizations as directors or officers or in
other capacities unless they are provided with adequate protection against risks of claims and
actions against them arising out of their service to and activities on behalf of such
organizations;
WHEREAS, the parties hereto recognize that the legal risks and potential liabilities, and the
threat thereof, associated with lawsuits filed against persons serving the Company and/or its
subsidiaries, and the resultant substantial time, expense and anxiety spent and endured in
defending lawsuits bears no reasonable relationship to the compensation received by such persons,
and thus poses a significant deterrent and increased reluctance on the part of experienced and
capable individuals to serve the Company and/or its subsidiaries;
WHEREAS, the uncertainties related to obtaining adequate insurance and indemnification have
increased the difficulty of attracting and retaining such persons;
WHEREAS, Chapter 8 of the Texas Business Organizations Code (the “TBOC”) of the State
of Texas, under which law the Company is organized, empowers a corporation organized in Texas to
indemnify persons who serve as directors and/or officers of the corporation, or persons who serve
at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise;
WHEREAS, the Bylaws of the Company permit indemnification to the fullest extent permitted by
applicable law;
WHEREAS, it is reasonable, prudent and necessary for the Company to contractually agree to
indemnify such persons to the fullest extent permitted by law, so that such persons will serve or
continue to serve the Company and/or its subsidiaries free from undue concern that they will not be
adequately indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and to take on additional
service for and on behalf of the Company on the condition that the Indemnitee is indemnified
according to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and of the Indemnitee’s agreement to provide
services to the Company and/or its subsidiaries and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions. For purposes of this Agreement:
(a) “Agreement” shall have the meaning ascribed to such term in the
preamble.
(b) “Board” means the Board of Directors of the Company.
(c) “Change in Control” means a change in control of the Company
occurring after the date hereof in any of the following circumstances: (i) there
shall have occurred an event required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any similar
schedule or form) promulgated under the Exchange Act, whether or not the Company is
then subject to such reporting requirement; (ii) any “person” (as such term is used
in Section 13(d) and 14(d) of the Exchange Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation or other entity owned directly or indirectly by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the
Company, shall have become the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company’s then outstanding voting
securities without prior approval of at least two-thirds of the members of the Board
in office immediately prior to such person attaining such percentage interest; (iii)
the Company is a party to a merger, consolidation, share exchange, sale of assets or
other reorganization, or a proxy contest, 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 (iv) during any fifteen-month period,
individuals who at the beginning of such period constituted the Board (including for
this purpose any new director whose election or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds 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.
(d) “Company” shall have the meaning ascribed to such term in the
preamble.
(e) “Disqualifying Event” shall have the meaning ascribed to such term
in Section 6(d).
(f) “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
(g) “Expenses” means any judgment, penalty, settlement, fine, excise or
similar tax and all reasonable attorneys’ fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs, printing
and binding costs, telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in connection with
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prosecuting, defending, preparing to prosecute or defend, investigating, or
being or preparing to be a witness or otherwise participating in a Proceeding.
(h) “Indemnifiable Event” means any event or occurrence related to the
fact that the Indemnitee is or was serving as a member of the Board and/or an
officer of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(i) “Indemnitee” shall have the meaning ascribed to such term in the
preamble.
(j) “Special Legal Counsel” means a law firm, or member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor in
the five years previous to his selection or appointment has been, retained to
represent: (i) the Company or the Indemnitee in any matter material to either such
party; (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder; or (iii) the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power of
the Company’s then outstanding voting securities. Notwithstanding the foregoing,
the term “Special Legal Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing in the State of Texas,
would have a conflict of interest in representing either the Company or the
Indemnitee in an action to determine the Indemnitee’s rights to indemnification
under this Agreement.
(k) “Proceeding” includes (i) any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution proceeding, investigation,
administrative hearing and any other proceeding, whether civil, criminal,
administrative, arbitrative, investigative or other, (ii) any appeal of an action or
proceeding described in (i), or (iii) any inquiry or investigation, whether
conducted by or on behalf of the Company, a subsidiary of the Company or any other
party, formal or informal, that the Indemnitee in good faith believes might lead to
the institution of an action or proceeding described in (i), except one initiated by
the Indemnitee (other than as provided pursuant to Section 8).
(l) “TBOC” shall have the meaning ascribed to such term in the
recitals.
2. Indemnification Arrangement. In the event the Indemnitee was, is or becomes a
party to or witness or other participant in, or is threatened to be made a party to or witness or
other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event,
to the fullest extent permitted by the TBOC or other applicable law as the same may exist or be
hereinafter amended (by statute or judicial decision) (but in the case of any such amendment, with
respect to matters occurring before such amendment, only to the extent that such amendment permits
the Company to provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment), the Company shall, subject to
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and in accordance with the provisions of Section 6, indemnify and hold harmless the Indemnitee
against any and all Expenses of such Proceeding as soon as practicable but in any event no later
than (a) in the case of an initial written request for indemnification in connection with a
Proceeding, five days after a determination has been made, or is deemed to have been made, that the
Indemnitee is entitled to indemnification and (b) in the case of a written request for
indemnification made pursuant to Section 5 in connection with a Proceeding for which a
determination has been made that the Indemnitee is entitled to indemnification in connection with
such Proceeding, five days after such written request.
3. Advancement or Reimbursement of Expenses. The rights of the Indemnitee provided
under Section 2 shall include, but not be limited to, the right to be indemnified and to have all
Expenses advanced (including the payment of Expenses before final disposition of a Proceeding) in
all Proceedings to the fullest extent permitted, or not prohibited, by the TBOC or other applicable
law. In addition, to the extent the Indemnitee is, by reason of (or arising in part out of) an
Indemnifiable Event, a witness or otherwise participates in any Proceeding at a time when he is not
named a defendant or respondent in the Proceeding, he shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection therewith. The Indemnitee
shall be advanced Expenses, within five days after any request for such advancement, to the fullest
extent permitted, or not prohibited, by Chapter 8 of the TBOC; provided that the Indemnitee has
provided to the Company all affirmations, acknowledgments, representations and undertakings that
may be required of the Indemnitee by Chapter 8 of the TBOC.
4. No Settlement without Consent. The Company shall not be liable to indemnify the
Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected
without its written consent. The Company shall not settle any action or claim in any manner which
would impose any penalty or limitation on the Indemnitee without the Indemnitee’s written consent.
Neither the Company nor the Indemnitee will unreasonably withhold or delay their consent to any
proposed settlement.
5. Request for Indemnification. To obtain indemnification as herein provided, the
Indemnitee shall submit to the Secretary of the Company a written claim or request. Such written
claim or request shall contain sufficient information to reasonably inform the Company about the
nature and extent of the indemnification or advance sought by the Indemnitee. The Secretary of the
Company shall promptly advise the Board of such request.
6. Determination of Request.
(a) Upon written request to the Company by the Indemnitee for indemnification
pursuant to this Agreement, a determination, if required by applicable law, with
respect to the Indemnitee’s entitlement thereto shall be made in accordance with
Section 8.103(a)(1) or (2) of the TBOC; provided, however, that notwithstanding the
foregoing, if a Change in Control shall have occurred, such determination shall be
made by a Special Legal Counsel selected by the Board, unless the Indemnitee shall
request (at the time the Indemnitee submits the written request for indemnification)
that such determination be made in accordance with Section 8.103(a)(1) or (2) of the
TBOC.
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(b) If entitlement to indemnification is to be determined by a Special Legal
Counsel, the Company shall furnish notice to the Indemnitee within ten days after
receipt of a claim of or request for indemnification, specifying the identity and
address of the Special Legal Counsel and a certification by the Special Legal
Counsel that the Special Legal Counsel has reviewed and is in compliance with the
requirements to be a Special Legal Counsel. The Indemnitee may, within seven days
after receipt of such written notice of selection, deliver to the Company a written
objection to such selection. Such objection may be asserted only on the ground that
the Special Legal Counsel selected does not meet the requirements of a Special Legal
Counsel as defined in this Agreement, and the objection shall set forth with
particularity the factual basis for that assertion. If there is an objection to the
selection of the Special Legal Counsel, either the Company or the Indemnitee may
petition the Court for a determination that the objection is without a reasonable
basis and/or for the appointment of a Special Legal Counsel selected by the Court.
The Company shall pay any and all reasonable fees and expenses of the Special Legal
Counsel incurred in connection with any such determination. If a Change in Control
shall have occurred, the Indemnitee shall be presumed (except as otherwise expressly
provided in this Agreement) to be entitled to indemnification under this Agreement
upon submission of a request to the Company for indemnification, and thereafter the
Company shall have the burden of proof in overcoming that presumption in reaching a
determination contrary to that presumption. The presumption shall be used by the
Special Legal Counsel, or such other person or persons determining entitlement to
indemnification, as a basis for a determination of entitlement to indemnification
unless the Company provides information sufficient to overcome such presumption by
clear and convincing evidence or the investigation, review and analysis of the
Special Legal Counsel or such other person or persons convinces him or them by clear
and convincing evidence that the presumption should not apply.
(c) The Indemnitee will cooperate with the person or persons making the
determination under this Section 6 with respect to the Indemnitee’s entitlement to
indemnification under this Agreement, including providing to such person or persons,
on reasonable advance request, any documentation or information that is: (i) not
privileged or otherwise protected from disclosure; (ii) reasonably available to
Indemnitee; and (iii) reasonably necessary to that determination.
(d) Any determination of the Indemnitee’s entitlement to indemnification to be
made pursuant to this Section 6 shall be made, and the Indemnitee shall be notified
of such determination, not later than 20 days after receipt by the Secretary of the
Company of the Indemnitee’s written claim for indemnification; provided, however,
that in the case of a determination to be made by Special Legal Counsel the
selection of whom is the subject of an existing objection, such determination, and
the Indemnitee’s notification of such determination, shall be made not later than 20
days after the selection of the Special Legal Counsel is finally determined.
Notwithstanding anything herein to
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the contrary, if the person or persons empowered under this Section 6 to
determine entitlement to indemnification have not made a determination within the
applicable period set forth in this Section 6(d), the Indemnitee shall be deemed to
be entitled to indemnification unless the Company establishes that a Disqualifying
Event has occurred. Subject to applicable law, determinations of entitlement to
indemnification made, or deemed to have been made, in accordance with the provisions
of this Section 6, shall be conclusive, final and binding on the parties hereto
unless, in the event the Company has previously determined to indemnify the
Indemnitee, the Company establishes as provided in the final sentence of this
Section 6 that: (i) the Indemnitee misrepresented or failed to disclose a material
fact in making the request for indemnification; or (ii) such indemnification is
prohibited by applicable law (each event described in subclause (i) or (ii) of this
Section 6, a “Disqualifying Event”). Notwithstanding the foregoing, the
Company may bring an action, in an appropriate court in the State of Texas or any
other court of competent jurisdiction, contesting the right of the Indemnitee to
receive indemnification hereunder due to the occurrence of a Disqualifying Event;
provided, however, that in any such action the Company will have the burden of
proving the occurrence of such Disqualifying Event.
7. Effect of Certain Proceedings. The termination of any Proceeding or of any matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of the Indemnitee to indemnification or create a presumption that (a)
the Indemnitee did not conduct himself in good faith and in a manner which he reasonably believed,
in the case of conduct in his official capacity, to be in the best interests of the Company, or, in
all other cases, that at least his conduct was not opposed to the Company’s best interests, or (b)
with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that
his conduct was unlawful.
8. Expenses of Enforcement of Agreement. The Indemnitee shall be entitled to seek an
adjudication to enforce his rights under, or to recover damages for breach of rights created under
or pursuant to, this Agreement either, at the Indemnitee’s option, in (a) an appropriate court of
the State of Texas or any other court of competent jurisdiction, or (b) an arbitration to be
conducted by a single arbitrator, selected by mutual agreement of the Company and the Indemnitee
(or, failing such agreement by the then sitting Chief Judge of the United States District Court for
the appropriate jurisdiction), pursuant to the commercial arbitration rules of the American
Arbitration Association. In the event that the Indemnitee seeks any such judicial adjudication or
arbitration award to enforce his rights under, or to recover damages for breach of rights created
under or pursuant to, this Agreement, the Indemnitee shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any and all Expenses actually and reasonably
incurred by him in such judicial adjudication but only if he prevails therein. If it shall be
determined in said judicial adjudication that the Indemnitee is entitled to receive part but not
all of the indemnification or advancement of Expenses sought, the Expenses incurred by the
Indemnitee in connection with such judicial adjudication shall be reasonably prorated in good faith
by counsel for the Indemnitee. Notwithstanding the foregoing, if a Change in Control shall have
occurred, the Indemnitee shall be entitled to indemnification
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under this Section 8 regardless of whether the Indemnitee ultimately prevails in such judicial
adjudication.
9. Common Attorney. Notwithstanding the obligation of the Company to indemnify the
Indemnitee against Expenses pursuant to Section 2, in the event there is a Proceeding by reason of
(or arising in part out of) an Indemnifiable Event against several persons, including the
Indemnitee, who have a right of indemnification against the Company with respect to Expenses
relating to such Proceeding and who have totally common interests such that their goals are
identical and there are no conflicts-of-interest among them, then such group of persons shall, by
majority vote of such persons, select a single attorney or law firm to serve as the sole and
exclusive legal counsel for all of the members of such group (including the Indemnitee). In the
event the Indemnitee acts independently by retaining the legal services of any other attorney or
law firm to additionally or separately represent him, all Expenses relating to such independently
retained attorney or law firm shall be the sole responsibility of the Indemnitee.
10. Nonexclusive Rights; Subsequent Change in Law. The rights of indemnification and
to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of
any other rights to which the Indemnitee may at any time be entitled under applicable law, the
articles of incorporation of the Company, the Bylaws of the Company, agreement, insurance,
arrangement, a vote of shareholders or a resolution of directors, or otherwise. To the extent that
a change in the TBOC or other applicable law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the Company’s articles
of incorporation or bylaws and this Agreement, it is the intent of the parties hereto that the
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.
11. D&O Liability Insurance. The Company shall from time to time make a good faith
determination whether or not it is practicable for the Company to obtain and maintain a policy or
policies of insurance with reputable insurance companies providing the directors and officers of
the Company or its subsidiaries or affiliates, with coverage for losses incurred in connection with
their services to the Company or its subsidiaries or affiliates or to ensure the Company’s
performance of its indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against the protection
afforded by such coverage. To the extent the Company maintains an insurance policy or policies
providing directors’ and/or officers’ liability insurance, the Indemnitee shall be covered by such
policy or policies, in accordance with its or their terms, to the maximum extent of the coverage
available for any of the Company’s directors and/or officers. The Company shall not be liable
under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that the Indemnitee has otherwise actually received such payment under any bylaws, insurance
policy, contract, agreement or otherwise.
12. No Employment Rights. Nothing in this Agreement is intended to create in the
Indemnitee any right to continued service as a director and/or officer with the Company.
13. Amendments; Waiver. No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by both of the parties hereto. No
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waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
14. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who
shall execute all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
15. Term. This Agreement shall be effective from and after the date hereof, and shall
continue until and terminate upon the later of: (a) the sixth anniversary after the Indemnitee has
ceased to be a member of the Board and/or an officer of the Company or otherwise hold a position
that could give rise to an Indemnifiable Event or (b) the final termination or resolution of all
Proceedings with respect to which the Company is indemnifying the Indemnitee against any and all
Expenses relating to such Proceeding pursuant to the terms of this Agreement that are commenced
prior to such six-year anniversary.
16. Notification and Defense of Claims. The Indemnitee agrees to notify the Company
promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment,
information, or other document relating to any matter which may be subject to indemnification
hereunder, whether civil, criminal, or investigative; provided. however, that the failure of the
Indemnitee to give such notice to the Company shall not adversely affect the Indemnitee’s rights
under this Agreement except to the extent the Company has been materially prejudiced as a direct
result of such failure. Nothing in this Agreement shall constitute a waiver of the Company’s right
to seek participation at its own expense in any Proceeding which may give rise to indemnification
hereunder.
17. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors or assigns (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company), spouses, heirs, executors and
personal or legal representatives. This Agreement shall continue in effect regardless of whether
the Indemnitee continues to serve as a director and/or officer of the Company.
18. Severability. The provisions of this Agreement shall be severable in the event
that any of the provisions hereof (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable in any respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law. To the fullest extent possible, the
provisions of this Agreement shall be construed so as to give effect to the intent manifested by
the provision held invalid, illegal or unenforceable.
19. Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed and
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interpreted in accordance with the laws of the State of Texas, without giving effect to
conflicts of law provisions thereof.
20. Notice. All notices, demands and other communications required or permitted under
this Agreement shall be made in writing and shall be deemed to have been duly received upon actual
receipt if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered
mail, return receipt requested, and addressed to the Company at:
Xxxxxx Geophysical Company
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Secretary
and to Indemnitee at the address set forth on the signature page attached hereto.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth
above.
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XXXXXX GEOPHYSICAL COMPANY
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INDEMNITEE
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