Exhibit 10.21
EXCHANGE AGREEMENT
This Exchange Agreement, dated as of the 6th day of August, 2002 (this
"Agreement"), is by and between Input/Output, Inc., a Delaware corporation (the
"Company"), and SCF-IV, L.P., a Delaware limited partnership ("SCF").
WITNESSETH:
WHEREAS, SCF is the legal and beneficial owner of (i) 40,000 shares of
the Company's Series B Preferred Stock, par value $0.01 per share ("Series B
Shares"), and (ii) 15,000 shares of the Company's Series C Preferred Stock, par
value $0.01 per share ("Series C Shares");
WHEREAS, the Company and SCF have agreed, in accordance with the terms
of this Agreement, for SCF to transfer and assign the Series B Shares and Series
C Shares owned by SCF to the Company in exchange for (i) $30 million in cash
payable by the Company to SCF, (ii) an unsecured promissory note of the Company
payable to SCF in the original principal amount of $31 million maturing on May
7, 2004 and (iii) a warrant having a three-year term to purchase 2,673,517
shares of the Company's common stock, par value $.01 per share ("Common Stock"),
at an exercise price of $8.00 per share;
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, and the receipt of such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
THE EXCHANGE
1.1 Exchange. Contemporaneously with the execution and delivery hereof,
but subject in all respects to the terms and conditions hereof, (a) SCF has
sold, conveyed and transferred (and by these presents sells, conveys and
transfers) the Series B Shares and Series C Shares beneficially owned by it to
the Company, and the Company hereby acknowledges receipt of the Series B Shares
and the Series C Shares in exchange for the consideration recited herein, and
(b) the Company has sold, conveyed and transferred (and by these presents sells,
conveys and transfers) to SCF (i) $30 million in cash (payable by wire transfer
of same day funds from the Company to an account designated in writing by SCF to
the Company), (ii) an unsecured promissory note of the Company payable to SCF
(the "Note") in the form set forth in Exhibit A attached hereto and (iii) a
warrant to purchase 2,673,517 shares of Common Stock (the "Warrant") in the form
set forth in Exhibit B attached hereto, and SCF hereby acknowledges receipt of
such consideration. In addition, the Company and SCF shall contemporaneously
with the execution and delivery hereof, execute and deliver a registration
rights agreement regarding the registration of the shares of Common Stock to be
issued upon exercise of the Warrant (the "Registration Rights Agreement")
substantially in the form set forth in Exhibit C attached hereto.
1.2 Deliveries. Contemporaneously with the execution and delivery
hereof on this date (the "Closing Date"), the parties shall make the following
deliveries to each other.
(a) SCF shall deliver to the Company:
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(1) the certificates evidencing all of the Series B
Shares and Series C Shares beneficially owned by SCF, together with
stock powers duly executed in blank for each certificate;
(2) a duly executed counterpart of the Registration
Rights Agreement; and
(3) a duly executed resignation of Xxxxx X. Xxxxxxx
from the Board of Directors of the Company and any and all other
offices and positions of the Company (and its subsidiaries and
affiliates) which he holds.
(b) The Company shall deliver to SCF:
(1) $30 million in cash by wire transfer of same day
funds;
(2) the duly executed Note;
(3) the duly executed Warrant; and
(4) the duly executed counterpart of the Registration
Rights Agreement.
ARTICLE 2
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to SCF as follows:
2.1 Organization, Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own its
properties and carry on its business as now being conducted. The Company is duly
qualified or licensed to transact business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than such
jurisdictions where the failure to be so qualified or licensed or to be in good
standing, individually or in the aggregate, has not had and could not reasonably
be expected to have a material adverse effect on the business, operations,
properties, condition (financial or otherwise), results of operations, assets,
liabilities or prospects of the Company and its subsidiaries, taken as a whole.
2.2 Authority and Approvals.
(a) The Company has all requisite corporate power and
authority to enter into this Agreement and each of the other agreements
contemplated hereby and to consummate each of the transactions and perform each
of the obligations contemplated hereby and thereby. The execution and delivery
of this Agreement and each of the other agreements and instruments contemplated
hereby and the consummation of each of the transactions and the performance of
each of the obligations contemplated hereby and thereby have been duly
authorized by all
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necessary corporate action on the part of the Company. This Agreement and the
other agreements and instruments contemplated hereby have been duly executed and
delivered by the Company. This Agreement and each of the other agreements and
instruments contemplated hereby constitute a valid and binding obligation of the
Company enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or in law).
(b) The execution and delivery of this Agreement and the other
agreements and instruments contemplated hereby and the consummation of the
transactions contemplated hereby and thereby do not conflict with or violate
(i) the organizational documents of the Company, (ii) any material agreement to
which the Company is a party or to which its properties are subject or (iii) any
law applicable to it, in each case in a manner that could reasonably be expected
to have a material adverse effect on the business, operations, properties,
condition (financial or otherwise), results of operations, assets, liabilities
or prospects of the Company and its subsidiaries, taken as a whole.
(c) No approval, authorization or consent from any governmental
entity is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or any other agreement or instrument
contemplated hereby by the Company or the consummation by the Company of the
transactions contemplated hereby or thereby, except for any such approvals,
authorizations or consents, the failure of which to be made or obtained (i) has
not had and could not reasonably be expected to have a material adverse effect
on the business, operations, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole and (ii) has
not impaired and could not reasonably be expected to impair the ability of the
Company to perform its obligations under this Agreement or any other agreement
or instrument contemplated hereby in any material respect.
2.3 No Brokers or Finders. No agent, broker, finder or investment or
commercial banker, or other person or firm engaged by or acting on behalf of the
Company in connection with the negotiation, execution or performance of this
Agreement is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement, other than any such fees or
commissions paid to Xxxxxxx & Co. and such other fees and commissions that have
been disclosed to SCF and as to which the Company shall have full
responsibility.
2.4 Status of Securities. The issuance of the Warrant and the
reservation and issuance of the shares of Common Stock to be issued by the
Company upon exercise or conversion of the Warrant (the "Underlying Shares")
have been duly authorized by all necessary corporate action on the part of the
Company. The Warrant and the Underlying Shares, when issued upon exercise or
conversion of the Warrant in accordance with the terms thereof, will be validly
issued, fully paid and non-assessable. The issuance of the Warrant and the
issuance and sale of the Underlying Shares will not be subject to the preemptive
rights of any person.
2.5 No Other Representations. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Company that
SCF is not making any
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representation or warranty whatsoever, express or implied, other than those
representations and warranties of SCF expressly set forth in this Agreement.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF SCF
3.1 Organization, Standing and Power. SCF is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite partnership power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
to execute and deliver this Agreement and the other agreements contemplated
hereby to which SCF is a party and to consummate the transactions contemplated
hereby and thereby.
3.2 Authority and Approvals.
(a) The execution and delivery of this Agreement and the other
agreements contemplated hereby to which SCF is a party have been duly and
properly authorized by all necessary partnership action on the part of SCF. This
Agreement and the other agreements contemplated hereby to which it is a party
have been duly executed and delivered by SCF and constitute the valid and
legally binding obligations of SCF, enforceable against it in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) No approval, authorization or consent from any
governmental entity is required by or with respect to SCF in connection with the
execution and delivery of this Agreement or any other agreement contemplated
hereby by SCF or the consummation by SCF of the transactions contemplated hereby
or thereby, except for any such approvals, authorizations or consents the
failure of which to be made or obtained has not impaired and could not
reasonably be expected to impair the ability of SCF to perform its obligations
under this Agreement or any other agreement contemplated hereby in any material
respect.
3.3 Series B Shares and Series C Shares. SCF has good title to the
Series B Shares and the Series C Shares, free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation, any
restriction on transfer and any claim of any creditor, partner or affiliate of
SCF on the Series B Shares or the Series C Shares. Upon exchange of the Series B
Shares and the Series C Shares as provided in this Agreement, the Company will
acquire good title to the Series B Shares and the Series C Shares free and clear
of any lien, claim, security interest or other encumbrance.
3.4 No Brokers or Finders. No agent, broker, finder or investment or
commercial banker, or other person or firm engaged by or acting on behalf of SCF
in connection with the negotiation, execution or performance of this Agreement
is or will be entitled to any brokerage or finder's or similar fee or other
commission as a result of this Agreement, other than any such
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fees or commissions that have been disclosed to the Company and as to which SCF
shall have full responsibility.
3.5 No Other Representations. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of SCF that the
Company is not making any representation or warranty whatsoever, express or
implied, other than those representations and warranties of the Company
expressly set forth in this Agreement.
ARTICLE 4
SECURITIES LAWS PROVISIONS
4.1 Investment Intent. The Note, the Warrant and the Underlying Shares
will be acquired for its own account for investment and with no intention of
distributing or reselling such Warrant or such Underlying Shares or any part
thereof or interest therein in any transaction which would be in violation of
the securities laws of the United States of America or any applicable state or
any foreign country or jurisdiction.
4.2 Status. SCF covenants and agrees with the Company that at the date
hereof, it is an accredited investor as defined in Rule 501(a) under the United
States Securities Act of 1933, as amended (the "Securities Act"), and has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the Company and an investment in the Warrant and the
Underlying Shares, and is able to bear the economic risk of such investment.
4.3 Access to Information. SCF represents and acknowledges that it (a)
has had access to and the opportunity to review the Company's properties,
assets, financial statements, contracts and other books and records and has made
such investigation with respect thereto as it deems necessary to enter into the
transactions contemplated hereby, (b) has been afforded the opportunity to ask
appropriate representatives of the Company questions concerning the business,
assets, financial condition and prospects of the company and (c) has been solely
responsible for its own due diligence investigation of the Company and its
business, for its own analysis of the merits and risks of an investment in the
Warrant and the Underlying Shares, and for its own analysis of the terms of the
investment in the Warrant and the Underlying Shares.
4.4 Transfer Restrictions. If SCF should decide to dispose of the Note,
the Warrant or any of the Underlying Shares, SCF understands and agrees that it
may do so only pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. In connection with any offer, resale, pledge or other transfer
(individually and collectively, a "Transfer") of the Note, the Warrant or any of
the Underlying Shares other than pursuant to an effective registration
statement, the Company may require that the transferor of the Note, the Warrant
or any such Underlying Shares provide to the Company an opinion of counsel which
opinion and counsel shall be reasonably satisfactory to the Company, to the
effect that such Transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and any applicable state or foreign securities laws. SCF agrees to the
imprinting, so long as appropriate, of
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substantially the following legend on the Note, the Warrant and certificates
representing any of the Underlying Shares:
THE SECURITIES (THE "SECURITIES") EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE
TRANSFER (INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SECURITIES
EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT. IF THE PROPOSED TRANSFER IS
TO BE MADE OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN
SECURITIES LAW.
The legend set forth above may be removed if and when the Note, the
Warrant or the Underlying Shares, as the case may be, are disposed of pursuant
to an effective registration statement under the Securities Act or the opinion
of counsel referred to above has been provided to the Company. The Note, the
Warrant and the share certificates representing the Underlying Shares shall also
bear any additional legends required by applicable federal, state or foreign
securities laws, which legends may be removed when, in the opinion of counsel to
the Company, the same are no longer required under the applicable requirements
of such securities laws. SCF agrees that, in connection with any Transfer of the
Note, the Warrant or any of the Underlying Shares by it pursuant to an effective
registration statement under the Securities Act, it will comply with all
prospectus delivery requirements of the Securities Act. The Company makes no
representation, warranty or agreement as to the availability of any exemption
from registration under the Securities Act with respect to the Note, the Warrant
or any resale of the Underlying Shares.
4.5 Indemnification.
(a) The Company agrees to indemnify SCF and its Affiliates (as
defined below) and hold SCF and its Affiliates harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind (including,
without limitation, the reasonable fees and disbursements of SCF's counsel in
connection with any investigative, administrative or judicial proceeding), which
may be incurred by SCF or such Affiliates as a result of any claims made against
SCF or such Affiliates by any person that relate to or arise out of (i) any
breach by the
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Company of any of its representations, warranties or covenants contained in this
Agreement, the Note or the Warrant, or (ii) any litigation, investigation or
proceeding instituted by any person with respect to this Agreement, the Note,
the Warrant or the Underlying Shares (excluding, however, any such litigation,
investigation or proceeding which arises solely from the acts or omissions of
SCF or its Affiliates). Notwithstanding anything to the contrary above, it is
expressly understood between the parties hereto that the Company pursuant to
this Section 4.5 shall not be responsible for or assume any of the investment
risk associated with any securities purchased hereunder. For the purposes of
this Section 4.5(a), "Affiliate" means, with respect to any person, any other
person directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such person; for the purposes of this
definition, the term "control" (and the correlative terms "controlling,"
"controlled by" and "under common control with") means possession of the power,
whether by contract, equity ownership or otherwise, to direct the policies or
management of a person.
(b) Any person entitled to indemnification hereunder will (i)
give prompt notice to the Company of any claim with respect to which it seeks
indemnification (but omission of such notice shall not relieve the Company from
liability hereunder except to the extent that it is actually prejudiced by such
failure to give notice) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified party and the
Company with respect to such claim, permit the Company to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is not assumed by the Company, the Company will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). The Company will not consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of an unconditional release from all liability in respect to such claim or
litigation. If the Company elects not to or is not entitled to assume the
defense of a claim, it will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified with respect to such claim,
unless an actual conflict of interest exists between such indemnified party and
any other of such indemnified parties with respect to such claim, in which event
the Company will be obligated to pay the fees and expenses of such additional
counsel or counsels.
ARTICLE 5
MISCELLANEOUS
5.1 No Waiver; Modification in Writing. No failure or delay on the part
of the Company or SCF in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the written consent of the Company
and SCF. Any amendment, supplement or modification of or to any provision of
this Agreement, or any waiver of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
made or given. Except where notice is specifically required by this
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Agreement, no notice to or demand on any party hereto in any case shall entitle
the other party to any other or further notice or demand in similar or other
circumstances.
5.2 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of applicable law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.
5.3 Fees and Expenses. Each party shall be responsible for its own
expenses and the expenses of its legal and other advisors in conjunction with
the negotiation, execution and performance of this Agreement.
5.4 Parties in Interest. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and noting in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
5.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile or
mailed by registered or certified mail (return receipt requested) or Federal
Express or another recognized overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to SCF, to:
SCF-IV, L.P.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx XxXxxx
Facsimile: (000) 000-0000
(b) If to the Company, to:
Input/Output, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Mr. C. Xxxxxx Xxxxx
Facsimile: (000) 000-0000
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon
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receipt. All notices, requests or instructions given in accordance herewith
shall be deemed received on the date of delivery, if hand delivered, on the date
of receipt, if telecopies, three business days after the date of mailing, if
mailed by registered or certified mail, return receipt requested, and one
business day after the date of sending, if sent by Federal Express or other
recognized overnight courier.
5.6 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
5.7 Entire Agreement. This Agreement (including the Exhibits hereto)
and the other documents contemplated herein constitute the entire agreement of
the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, letters of intent and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof.
5.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAW PROVISIONS.
5.9 Public Announcements. The Company and SCF shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or the transactions contemplated hereby, except
for statements required by law or by any listing agreements with or rules of any
national securities exchange or made in disclosures reasonably determined as
required to be filed pursuant to the applicable law.
5.10 Assignment. 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.
5.11 Headings. The headings of this Agreement are for convenience of
reference only and are not part of the substance of this Agreement.
5.12 Termination of Prior Registration Rights Agreement. The parties
hereto agree that the Purchase Agreement dated April 21, 1999 and the
Registration Rights Agreement dated May 7, 1999, each between the Company and
SCF, are hereby terminated and of no further force or effect.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer as of the date first
written above.
INPUT/OUTPUT, INC.
By /s/ C. Xxxxxx Xxxxx
Name: C. Xxxxxx Xxxxx
Title: Vice President
SCF-IV, L.P.
By: SCF-IV, G.P., Limited Partnership,
its general partner
By: L.E. Simmons & Associates,
Incorporated, its general partner
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Managing Director
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