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EXHIBIT A
PURCHASE AGREEMENT
BY AND BETWEEN
INPUT/OUTPUT, INC.
AND
SCF-IV, L.P.
SERIES B PREFERRED STOCK
AND
SERIES C PREFERRED STOCK
APRIL 21, 1999
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TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions....................................................3
Section 1.2 References and Titles..........................................8
ARTICLE II.
PURCHASE OF THE SHARES
Section 2.1 Purchase of the Initial Shares.................................8
Section 2.2 Option to Purchase Option Shares...............................8
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power...............................9
Section 3.2 Subsidiaries..................................................10
Section 3.3 Capital Structure.............................................10
Section 3.4 Authority; No Violations; Approvals...........................11
Section 3.5 SEC Documents.................................................12
Section 3.6 Absence of Certain Changes or Events..........................13
Section 3.7 No Undisclosed Material Liabilities...........................14
Section 3.8 No Default....................................................14
Section 3.9 Compliance with Applicable Laws...............................15
Section 3.10 Litigation....................................................15
Section 3.11 Certain Agreements............................................16
Section 3.12 Status of Shares..............................................16
Section 3.13 Intellectual Property; Year 2000..............................16
Section 3.14 Environmental Matters.........................................17
Section 3.15 No Brokers or Finders.........................................17
Section 3.16 Vote..........................................................17
Section 3.17 Related Party Transactions....................................18
Section 3.18 Certain Anti-Takeover Provisions; Rights Plan.................18
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization, Standing and Power..............................18
Section 4.2 Authority; Approvals..........................................18
Section 4.3 Investment Intent.............................................19
Section 4.4 Purchaser Status..............................................19
Section 4.5 No Brokers or Finders.........................................19
Section 4.6 Access to Information.........................................20
ARTICLE V.
COVENANTS
Section 5.1 Affirmative Covenants of the Company..........................20
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Section 5.2 Negative Covenants of the Company..............................20
Section 5.3 Cooperation; Approvals.........................................21
Section 5.4 HSR Act Notification...........................................21
Section 5.5 Notification of Certain Matters................................21
Section 5.6 Board of Directors.............................................22
Section 5.7 Registration Rights Agreement..................................22
Section 5.8 Transfer Restrictions..........................................22
Section 5.9 Stock Exchange Listing.........................................24
Section 5.10 Access; Confidentiality........................................24
Section 5.11 Issuance of Additional Preferred Stock.........................24
Section 5.12 Standstill Agreement...........................................25
Section 5.13 Indemnification................................................26
Section 5.14 Rights Plan....................................................27
ARTICLE VI.
CONDITIONS PRECEDENT TO THE CLOSINGS
Section 6.1 Conditions Precedent to Each Party's Obligation................27
Section 6.2 Conditions Precedent to Obligation of Purchaser................27
Section 6.3 Conditions Precedent to Obligations of Company.................28
ARTICLE VII.
THE CLOSINGS
Section 7.1 The Closings...................................................29
Section 7.2 Actions to Occur at the Initial Closing........................29
Section 7.3 Actions to Occur at the Option Closing.........................30
ARTICLE VIII.
TERMINATION
Section 8.1 Termination....................................................30
Section 8.2 Effect of Termination..........................................31
ARTICLE IX.
RECOVERY OF FEES.................................31
ARTICLE X.
MISCELLANEOUS
Section 10.1 Survival of Provisions.........................................32
Section 10.2 No Waiver; Modification in Writing.............................32
Section 10.3 Specific Performance...........................................32
Section 10.4 Severability...................................................33
Section 10.5 Fees and Expenses..............................................33
Section 10.6 Parties in Interest............................................33
Section 10.7 Notices........................................................33
Section 10.8 Counterparts...................................................34
Section 10.9 Entire Agreement; Termination of Confidentiality Agreement.....34
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Section 10.10 Governing Law...........................................34
Section 10.11 Public Announcements....................................34
Section 10.12 Assignment..............................................35
Section 10.13 Headings................................................35
Exhibit 1.1(a) Certificate of Designation relating to Series B
Preferred Stock
Exhibit 1.1(b) Certificate of Designation relating to Series C
Preferred Stock
Exhibit 5.7 Form of Registration Rights Agreement
Exhibits 6.2(e)(i) and (ii) Form of Company Counsel Opinions
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of April 21, 1999, by and between
Input/Output, Inc., a Delaware corporation (together with its successors, if
any, the "Company"), and SCF-IV, L.P., a Delaware limited partnership, (the
"Purchaser").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"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 purposes of this
definition and this Agreement, the term "control" (and 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.
"Agreement" means this Purchase Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Approval" means any approval, authorization, grant of authority,
consent, order, qualification, permit, license, variance, exemption, franchise,
concession, certificate, filing or registration or any waiver of the foregoing,
or any notice, statement or other communication required to be filed with,
delivered to or obtained from any Governmental Entity or any other Person.
"Board" means the Board of Directors of the Company.
"Business Combination" means (i) any consolidation, merger, share
exchange or similar business combination transaction involving the Company with
any Person or (ii) the sale, assignment, conveyance, transfer, lease or other
disposition by the Company of all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in Houston,
Texas generally are authorized or required by law or other government actions
to close.
"Bylaws" mean the Company's bylaws, as amended from time to time.
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"Capital Stock" means (i) with respect to any Person that is a
corporation or company, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person and
(ii) with respect to any Person that is not a corporation or company, any and
all partnership or other equity interests of such Person.
"Certificates of Designation" shall mean the Certificates of
Designation for the Series B Preferred Stock and the Series C Preferred Stock
in substantially the form attached hereto as Exhibits 1.1(a) and 1.1(b), with
such changes as are contemplated by the terms thereof or this Agreement.
"Certificate of Incorporation" means the Company's Certificate of
Incorporation, as amended from time to time.
"Change of Control" means the occurrence of any event specified in
clauses (ii), (iii) or (iv) of the definition of "Initial Conversion Date" set
forth in the Certificate of Designation for the Series B Preferred Stock.
"Closing" has the meaning set forth in Section 7.1(b).
"Closing Date" has the meaning set forth in Section 7.1(b).
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder as in effect on the date hereof.
"Common Stock" means the Company's common stock, par value $.01 per
share, and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to an agreement or Business Combination to which the Company is a party.
"Company" has the meaning set forth in the introductory paragraph
hereof.
"Company Disclosure Schedule" has the meaning set forth in Article
III.
"Company 1998 Form 10-K" means the Report on Form 10-K filed by the
Company with the SEC for the year ended May 31, 1998.
"Company Options" has the meaning set forth in Section 3.3(c).
"Company SEC Documents" has the meaning set forth in Section 3.5.
"Contracts" means all agreements, contracts, or other binding
commitments, arrangements or plans, written or oral (including any amendments
and other modifications thereto), to which the Company or any of its
Subsidiaries is a party or is otherwise bound.
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"Current SEC Reports" means the Company 1998 Form 10-K, the proxy
statement for the Company's 1998 annual meeting of stockholders, and all
Company SEC Documents filed by the Company since the time of initial filing of
either documents.
"Environmental Laws" has the meaning set forth in Section 3.14.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Exercise Notice" has the meaning set forth in Section 2.2(a).
"GAAP" has the meaning set forth in Section 3.5(b).
"Governmental Entity" means any agency, bureau, commission, court,
authority, department, official, political subdivision, tribunal or other
instrumentality of any government, whether (i) regulatory, administrative or
otherwise, (ii) federal, state or local, or (iii) domestic or foreign.
"Hazardous Materials" has the meaning set forth in Section 3.14.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Initial Closing" has the meaning set forth in Section 7.1(a).
"Initial Closing Date" has the meaning set forth in Section 7.1(a).
"Initial Purchase Price" has the meaning set forth in Section 2.1(b).
"Initial Shares" means the 40,000 shares of Series B Preferred Stock
to be purchased by Purchaser pursuant to this Agreement.
"Intellectual Property" has the meaning set forth in Section 3.13.
"Knowledge" of any Person means the actual knowledge of such Person's
executive and financial officers and directors, in each case after reasonable
inquiry of such other officers of such Person with direct responsibility for
the Person's business relating to such knowledge.
"Law" means any constitutional provision, statute or other law,
ordinance, rule, regulation or interpretation of any thereof and any Order of
any Governmental Entity (including Environmental Laws) now in effect.
"Lien" means any mortgage, lien, pledge, encumbrance, easement, charge
or security interest of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"Litigation" has the meaning set forth in Section 3.10.
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"Material Adverse Effect" or "Material Adverse Change" means any
effect, change, event or occurrence that is materially adverse to 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.
"Material Contracts" has the meaning set forth in Section 3.11(a).
"Option Closing" has the meaning set forth in Section 7.1(b).
"Option Closing Date" has the meaning set forth in Section 7.1(b).
"Option Purchase Price" has the meaning set forth in Section 2.2(c).
"Option Shares" means the up to 15,000 shares of Series C Preferred
Stock of the Company that may be purchased by Purchaser in accordance with
Section 2.2.
"Order" means any decree, injunction, judgment, settlement, order,
ruling, assessment or writ of a court.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Purchaser" has the meaning set forth in the introductory paragraph
hereto.
"Purchaser's Expenses" means all reasonable out-of-pocket fees, costs
and expenses incurred by Purchaser in connection with the transactions
contemplated by this Agreement and the other Transaction Documents and its due
diligence efforts in connection therewith, including (i) fees, costs and
expenses of its accountants, counsel and other similar advisors (including a
$25,000 fee to be paid to a technical advisor) and (ii) fees paid to any
Governmental Entity (including fees payable in connection with filings under
the HSR Act pursuant to Section 5.4).
"Registration Rights Agreement" means the Registration Rights
Agreement in the form of Exhibit 5.7.
"Rights Plan" has the meaning set forth in Section 3.3(a).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series B Preferred Stock" means the Company's Series B Preferred
Stock, $.01 par value per share, which shall have the terms set forth in the
Certificate of Designation attached hereto as Exhibit 1.1(a).
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"Series C Preferred Stock" means the Company's Series C Preferred
Stock, $.01 par value per share, which shall have the terms set forth in the
Certificate of Designation attached hereto as Exhibit 1.1(b), except that the
initial "Conversion Price" set forth therein shall be equal to 125% of the
average Market Price (as defined in such Certificate of Designation) for the
ten Trading Days (as defined in such Certificate of Designation) ending on and
including the Trading Day prior to the Exercise Notice; provided, however, that
if such average is less than $4.80, then the initial Conversion Price shall be
$6.00 and if such average is higher than $6.80, the initial Conversion Price
shall be $8.50 (which dollar amounts shall be adjusted for events or actions
occurring prior to the date of the Exercise Notice, and which Conversion Price
shall be adjusted for events or actions occurring after the date of the
Exercise Notice and prior to the Option Closing, in each case in the same
manner as the Conversion Price would be adjusted as set forth in such
Certificate of Designation for events occurring after the Option Closing).
"Shares" means the Initial Shares and the Option Shares.
"Stock Plans" means the Company's stock option, stock incentive,
restricted stock, employee stock purchase or other similar plans.
"Subsidiary" means, (i) a corporation, a majority of whose stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by a Subsidiary of the Company or
by the Company and another Subsidiary, or (ii) any other Person (other than a
corporation) in which the Company, a Subsidiary or the Company and a
Subsidiary, directly or indirectly, at the date of determination thereof has at
least a majority ownership interest.
"Transaction Documents" means this Agreement, the Certificates of
Designation and the Registration Rights Agreement.
"Transfer" has the meaning set forth in Section 5.8.
"Underlying Shares" means the shares of Common Stock issuable upon
conversion of the Shares in accordance with the terms thereof.
"Voting Stock" of a Person means Capital Stock of such Person of the
class or classes pursuant to which the holders thereof have the general voting
power under ordinary circumstances to vote in the election of the board of
directors, managers or trustees of such Person; provided that if such Person
has more than one class or series of Voting Stock, any calculation as to a
percentage of such Voting Stock shall be made with respect to the percentage of
aggregate votes entitled to be cast in respect of all such Voting Stock in such
circumstances.
Section 1.2 References and Titles. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any
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part of such Articles, Sections, subsections or other subdivisions, and shall
be disregarded in construing the language contained therein. The words "this
Agreement," "herein," "hereby," "hereunder," and "hereof," and words of similar
import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Section," "this
subsection," and words of similar import, refer only to the Sections or
subsections hereof in which such words occur. The word "including" (in its
various forms) means "including without limitation." Pronouns in masculine,
feminine, or neuter genders shall be construed to state and include any other
gender and words, terms, and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise expressly requires. Unless the context otherwise
requires, all defined terms contained herein shall include the singular and
plural forms of such defined terms.
ARTICLE II.
PURCHASE OF THE SHARES
Section 2.1 Purchase of the Initial Shares.
(a) Subject to the terms and conditions herein set forth, at the
Initial Closing, the Company will sell to Purchaser, and Purchaser will
purchase from the Company, the Initial Shares.
(b) The aggregate purchase price payable for the Initial Shares shall
be $40 million (the "Initial Purchase Price").
(c) Delivery of the Initial Shares shall be made at the Initial
Closing by delivery to Purchaser, against payment of the Initial Purchase Price
therefor as provided herein, of one or more share certificates, registered in
the name of Purchaser, representing the Initial Shares.
(d) Payment of the Initial Purchase Price for the Initial Shares to be
purchased hereunder shall be made by or on behalf of Purchaser by wire transfer
of immediately available funds to an account of the Company (the number for
which account shall have been furnished to Purchaser at least two Business Days
prior to the Initial Closing Date).
Section 2.2 Option to Purchase Option Shares.
(a) Purchaser may, at its sole option, at any time prior to the
expiration of 90 days after the Initial Closing, deliver a written notice of
its intention to purchase up to 15,000 Option Shares (the "Exercise Notice") to
the Company. The Exercise Notice shall specify the number of Option Shares to
be purchased and a Business Day between 10 and 20 calendar days after such
notice upon which the Option Closing shall occur.
(b) If Purchaser delivers the Exercise Notice in accordance with
Section 2.2(a), then, subject to the terms and conditions herein set forth, at
the Option Closing, the Company will sell to Purchaser, and Purchaser will
purchase from the Company, the number of Option Shares to be purchased by the
Purchaser as specified in the Exercise Notice.
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(c) The purchase price payable for the Option Shares shall be $1,000
per share (the aggregate amount of such purchase price being referred to herein
as the "Option Purchase Price").
(d) Delivery of the Option Shares shall be made at Option Closing by
delivery to Purchaser, against payment of the Option Purchase Price therefor as
provided herein, of one or more share certificates, registered in the name of
Purchaser, representing the Option Shares so purchased.
(e) Payment of the Option Purchase Price for the Option Shares to be
purchased hereunder shall be made by or on behalf of Purchaser by wire transfer
of immediately available funds to an account of the Company (the number for
which account shall have been furnished to Purchaser at least two Business Days
prior to the Option Closing Date).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows (in each
case as qualified by matters reflected on the disclosure schedule dated as of
the date of this Agreement by reference to the Section of this Agreement so
qualified and delivered by the Company to Purchaser prior to the date of this
Agreement (the "Company Disclosure Schedule") and made a part hereof by
reference):
Section 3.1 Organization, Standing and Power. Each of the Company and
each of its Subsidiaries is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or organized and has the requisite corporate or other
such entity power and authority to own its properties and carry on its business
as now being conducted. Each of the Company and each of its Subsidiaries 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 in
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. The Company has
delivered to Purchaser prior to the execution of this Agreement complete and
correct copies of its Certificate of Incorporation and Bylaws, each as amended
to date, and, in the case of the Company's Subsidiaries, made available similar
organizational documents in each case, as in effect on the date of this
Agreement.
Section 3.2 Subsidiaries. Except as set forth in the Current SEC
Reports, all the outstanding shares of Capital Stock of each Subsidiary of the
Company that would constitute a "significant subsidiary" within the meaning of
the SEC's Regulation S-X have been validly issued and are fully paid and
nonassessable (with respect to corporate Subsidiaries) and are owned directly
or indirectly by the Company, free and clear of all Liens other than Liens
securing obligations for money borrowed by the Company.
Section 3.3 Capital Structure.
(a) The authorized Capital Stock of the Company consists of
100,000,000 shares of Common Stock and 5,000,000 shares of preferred stock,
$.01 par value, which may be divided into
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and issued in one or more series upon the creation thereof by the Board. As of
the date of this Agreement, (A) 50,499,898 shares of Common Stock are issued
and outstanding (including the attached preferred share purchase rights issued
pursuant to the Rights Agreement dated as of January 17, 1997, as amended to
date, between the Company and Xxxxxx Trust and Savings Bank as rights agent
(the "Rights Plan")), (B) 7,991,161 shares of Common Stock have been authorized
and reserved for issuance under the Stock Plans, (C) 0 shares of Common Stock
are held by the Company in its treasury, (D) no shares of Common Stock are held
by any of the Company's Subsidiaries, and (E) an aggregate of 100,000 shares of
preferred stock have been designated as the Series A Preferred Stock. Except as
described in this Section 3.3, the Company has no authorized, issued or
outstanding shares or Capital Stock as of the date of this Agreement.
(b) There are no restrictions or limitations, contractual or
otherwise, binding upon the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries is subject that prohibit or limit the
enforceability of the terms and provisions of the Certificates of Designation
or will prohibit or limit the right of a holder of Shares to convert the Shares
into shares of Common Stock in accordance with their terms; and the conversion
of any Shares into shares of Common Stock will not violate or result in or
constitute a default under any loan or credit agreement, note, bond, mortgage,
indenture, lease, permit, concession, franchise, license or any other contract,
agreement, arrangement or understanding to which the Company or any of its
Subsidiaries is a party or by which they or any of their properties or assets
are bound.
(c) There are no outstanding warrants, share or stock options, share
or stock appreciation rights or other rights to receive or purchase any Capital
Stock of the Company or any of its Subsidiaries granted under the Stock Plans
or otherwise except as set forth in Schedule 3.3(c) of the Company Disclosure
Schedule (such warrants, share or stock options, shares or stock appreciation
rights or other rights disclosed thereon, collectively, the "Company Options").
Except for the Company Options and except as provided in the Transaction
Agreements, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, any Capital Stock of the
Company or of any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding obligations of the Company or any of its Subsidiaries
(contingent or otherwise) to repurchase, redeem or otherwise acquire any
Capital Stock of the Company or any of its Subsidiaries or any security
exchangeable for or convertible into such Capital Stock.
(d) All outstanding Capital Stock of the Company and its Subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive or similar rights.
(e) Except as contemplated hereby or in the other Transaction
Documents or as set forth in the Current SEC Reports, there are not any
registration rights agreements, stockholder agreements, voting agreements or
trusts, proxies or other agreements or contractual obligations to which the
Company or any Subsidiary is a party or bound with respect to the registration
with any Government
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Entity, or the voting or disposition of any Capital Stock of the Company or any
of its Subsidiaries and, to the Company's Knowledge there are no other
shareholder agreements, voting agreements or trusts, proxies or other
agreements or contractual obligations among the shareholders of the Company
with respect to the voting or disposition of any Capital Stock of the Company
or any of its Subsidiaries.
Section 3.4 Authority; No Violations; Approvals.
(a) The Board has approved this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby, and declared
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby to be in the best interests of the Company. The
Board has approved the acquisition of the Shares and, upon any conversion of
the Shares, the issuance of the Underlying Shares by Purchaser hereunder. The
Company has all requisite corporate power and authority to enter into this
Agreement and each of the other Transaction Documents 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
Transaction Documents 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 necessary corporate action on the part of the
Company. This Agreement has been, and at or prior to the Initial Closing the
other Transaction Documents will be, duly executed and delivered by the Company
and the Certificates of Designation have been duly adopted by the Board of
Directors in accordance with applicable Law. Each of the Certificates of
Designation and, assuming this Agreement and each of the other Transaction
Documents to which Purchaser is a party constitute the valid and binding
obligations of Purchaser, this Agreement and each of the other Transaction
Documents constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms, subject, as to enforceability, 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) The execution and delivery of this Agreement and each of the other
Transaction Documents does not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof and
thereof will not, conflict with, require the consent of any other Person to or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to the loss of any material benefit
under, or give rise to a right of purchase under, result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
Subsidiaries under, any provision of (A) the Certificate of Incorporation or
Bylaws or any provision of the comparable organizational documents of any of
the Company's Subsidiaries, (B) any loan or credit agreement, note, bond,
mortgage, indenture, lease, instrument, permit, concession, franchise, license
or other contract or agreement, arrangement or understanding to which the
Company or any of its Subsidiaries is a party or otherwise is bound or by which
any of them or their respective properties are bound or any existing Approval
applicable to the Company or any of its Subsidiaries, (C) any joint venture or
other ownership arrangement to which the Company or any of its Subsidiaries is
a party or otherwise is bound or by which any of them or their respective
properties
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are bound or (D) assuming the Approvals referred to in Section 3.4(c)
are duly and timely obtained or made, any Law or Order applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clause (B) (other than with respect to any
material loan or credit agreement, note, bond, mortgage or indenture or any
Material Contract or any plan or agreement providing for the payment of any
benefit to directors, officers or employees of the Company or its
subsidiaries), (C) or (D), any such conflicts, violations, defaults, rights,
Liens or detriments, that, individually or in the aggregate, (x) have not had
and could not reasonably be expected to have a Material Adverse Effect, (y)
have not impaired and could not reasonably be expected to impair the ability of
the Company to perform its obligations under any of the Transaction Documents
in any material respect, and (z) have not and could not reasonably be expected
to delay in any material respect or prevent the consummation of any of the
transactions, or performance of the obligations, contemplated by any of the
Transaction Documents.
(c) No Approval from any Governmental Entity is required by or with
respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or any other Transaction Document by
the Company or the consummation by the Company of the transactions contemplated
hereby or thereby, except for: (A) the filing of a notification report by the
Company under the HSR Act and the expiration or termination of the applicable
waiting period with respect thereto (which filing and expiration or termination
are not required for the Initial Closing), (B) the filing of the Certificates
of Designation in accordance with Section 103 of the Delaware General
Corporation Law, and (C) any such Approvals the failure of which to be made or
obtained (1) has not had and could not reasonably be expected to have a
Material Adverse Effect, (2) has not impaired and could not reasonably be
expected to impair the ability of the Company to perform its obligations under
any of the Transaction Documents in any material respect and (3) have not and
could not reasonably be expected to delay in any material respect or prevent
the consummation of any of the transactions contemplated by any of the
Transaction Documents.
Section 3.5 SEC Documents.
(a) The Company has made available to Purchaser a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by the Company with the SEC since May 31, 1997 (the "Company
SEC Documents") including the Company 1998 Form 10-K, which are all the
documents (other than preliminary materials) that the Company was required to
file with the SEC since May 31, 1997. As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of the Company SEC Documents contained as of their respective dates any
untrue statement of a material fact or omitted 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.
(b) The financial statements of the Company included in the Company
SEC Documents, including the notes and schedules thereto, complied as to form
in all material respects with the rules and regulations of the SEC with respect
thereto, were prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
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involved (except as may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the
SEC) and fairly present the consolidated financial position of the Company and
its consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of the Company and its
consolidated Subsidiaries for the periods presented therein in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which are material)
applied on a consistent basis during the periods presented.
Section 3.6 Absence of Certain Changes or Events.
(a) Except as disclosed in the Current SEC Reports filed prior to the
date of this Agreement or Schedule 3.6 of the Company Disclosure Schedule, or
except as contemplated by this Agreement, since May 31, 1998, each of the
Company and its Subsidiaries have conducted their business only in the ordinary
course of business consistent with past practice, and there has not been: (i)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any Capital Stock of the
Company; (ii) any split, combinations, reclassification or amendment of any
term of any outstanding Capital Stock or other security of the Company or any
of its Subsidiaries or (other than issuance of Common Stock upon the exercise
of any Company Options) any issuance or the authorization of the issuance of
any securities of the Company or any of its Subsidiaries, other than in
connection with the transactions contemplated hereby; (iii) any repurchase,
redemption or other acquisition by the Company or any Subsidiary of the Company
of any outstanding Capital Stock or other securities of the Company or any
Subsidiary of the Company, except as contemplated by the Stock Plans; (iv) (A)
any grant by the Company or any of its Subsidiaries to any officer of the
Company or any of its Subsidiaries of any increase in compensation, except for
increases in the ordinary course of business consistent with past practice or
as required under employment or other agreements or benefit arrangements in
effect as of May 31, 1998, or (B) any grant by the Company or any of its
Subsidiaries to any such officer of any increase in severance or termination
pay, except as was required or provided for under any employment, severance,
termination or other agreements or benefit arrangements in effect as of May 31,
1998; (v) except as required by a change in GAAP, any material change in
accounting methods, principles or practices by the Company or any of its
Subsidiaries; and (vi) any material casualties affecting the Company and its
Subsidiaries, taken as a whole, or any material loss, damage or destruction to
any of their properties or assets, whether covered by insurance or not.
(b) Except as disclosed in the Company's consolidated financial
statements included in the Company 1998 Form 10-K, and the notes thereto, or as
disclosed in the other Current SEC Reports, since May 31, 1998, there has not
been any event, circumstance or fact that (x) has had or could reasonably be
expected to have a Material Adverse Effect, (y) has impaired or could
reasonably be expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any material respect, or
(z) could reasonably be expected to delay in any material respect or prevent
the consummation of any of the transactions contemplated by any of the
Transaction Documents.
Section 3.7 No Undisclosed Material Liabilities. Except as disclosed
in Schedule 3.7 of the Company Disclosure Schedule or the Company's financial
statements included in the Company
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1998 Form 10-K, and the notes thereto, or as disclosed in the other Current SEC
Reports, there are no liabilities or obligations of the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than: (i) liabilities adequately
provided for on the balance sheet of the Company dated as of May 31, 1998
(including the notes thereto) contained in the Company 1998 Form 10-K; (ii)
liabilities incurred in the ordinary course of business consistent with past
practice since May 31, 1998, which liabilities, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
(iii) liabilities arising under the Transaction Documents; and (iv) liabilities
not required by GAAP to be recognized or disclosed on a consolidated balance
sheet of the Company and its consolidated Subsidiaries or in the notes thereto,
which liabilities, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
Section 3.8 No Default. Except as disclosed in Schedule 3.8 of the
Company Disclosure Schedule or in the Current SEC Reports, neither the Company
nor any of its Subsidiaries is in default or violation (and no event has
occurred which, with notice or the lapse of time or both, would constitute a
default or violation) of any term, condition or provision of (i) the
Certificate of Incorporation or Bylaws of the Company or the comparable
organizational documents of any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease, instrument, permit,
concession, franchise, license or any other contract, agreement, arrangement or
understanding 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 or assets is bound, or (iii) any Order or Law applicable to the
Company or any of its Subsidiaries, except in the case of clause (ii) and
(iii), for violations or defaults that, individually or in the aggregate, (x)
have not had and could not reasonably be expected to have a Material Adverse
Effect, (y) have not impaired and could not reasonably be expected to impair
the ability of the Company to perform its obligations under any of the
Transaction Documents in any material respect, and (z) have not and could not
reasonably be expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by any of the Transaction
Documents. Except as disclosed in Schedule 3.8 of the Company Disclosure
Schedule or in the Current SEC Reports, the Company and its Subsidiaries (i)
are not in breach of or default under any covenant, including financial
covenants, under agreements relating to money borrowed in excess of $5 million,
and (ii) do not believe that it is reasonably likely that they will be in
breach of or default under any covenant under any such agreement as of the next
date on which they are required to be in compliance with any such covenants.
Section 3.9 Compliance with Applicable Laws.
(a) The Company and each of its Subsidiaries has in effect all
Approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses, and there has occurred no default or violation
(and no event has occurred which, with notice or the lapse of time or both,
would constitute a default or violation) under any such Approval, except for
failures to obtain, or for defaults or violations under, Approvals which
failures, defaults or violations, individually or in the aggregate, (i) have
not had and could not reasonably be expected to have a Material Adverse Effect,
(ii) have not impaired and could not reasonably be expected to impair the
ability of the Company to perform its obligations under any of the Transaction
Documents in any
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material respect, and (iii) could not reasonably be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
(b) Except as otherwise disclosed in the Current SEC Reports, the
Company and its Subsidiaries are in compliance with all applicable Laws and
Orders, except for possible noncompliance which, individually or in the
aggregate, (i) has not had and could not reasonably be expected to have a
Material Adverse Effect, (ii) has not impaired and could not reasonably be
expected to impair the ability of the Company to perform its obligations under
any of the Transaction Documents in any material respect, and (iii) could not
reasonably be expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by any of the Transaction
Documents.
(c) No investigation or review by any Governmental Entity with respect
to the Company, any of its Subsidiaries or the transactions contemplated by
this Agreement and the other Transaction Documents is pending or, to the
Knowledge of the Company, threatened, nor has any Governmental Entity notified
the Company or any of its Subsidiaries in writing or, to the Company's
Knowledge, otherwise of any intention to conduct the same, other than those the
outcome of which, individually or in the aggregate, (i) have not had and could
not reasonably be expected to have a Material Adverse Effect, (ii) have not
impaired and could not reasonably be expected to impair the ability of the
Company to perform its obligations under any of the Transaction Documents in
any material respect, or (iii) could not reasonably be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
Section 3.10 Litigation. Except as disclosed in the Current SEC
Reports or Schedule 3.10 of the Company Disclosure Schedule, there is no suit,
action, proceeding or indemnification claim, at law or in equity, pending
before any Governmental Entity or arbitrator, or, to the Knowledge of the
Company, threatened, against or affecting the Company, any Subsidiary of the
Company or any of its Material Contracts ("Litigation"), and neither the
Company nor any Subsidiary is a party to any Litigation, that (i) has had or
could reasonably be expected to have a Material Adverse Effect, (ii) has
impaired or reasonably could be expected to impair the ability of the Company
to perform its obligations under any of the Transaction Documents in any
material respect, or (iii) reasonably could be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents, nor is there any Order of any
Governmental Entity or arbitrator outstanding against or binding upon the
Company or any Subsidiary of the Company or any of its Material Contracts which
(i) has had or could reasonably be expected to have a Material Adverse Effect,
(ii) has impaired or reasonably could be expected to impair the ability of the
Company to perform its obligations under any of the Transaction Documents in
any material respect, or (iii) reasonably could be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
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Section 3.11 Certain Agreements.
(a) Except as disclosed in the Current SEC Reports and Schedule
3.11(a) of the Company Disclosure Schedule, there are no, whether in oral or
written form, Contracts that are material to the Company and its Subsidiaries,
taken as a whole, or their respective business, (such Contracts disclosed or
required to be disclosed herein, in the Current SEC Reports or in the Company
Disclosure Schedule, the "Material Contracts"). Each Material Contract is a
valid and binding obligation of the Company or one of its Subsidiaries and, to
the Company's Knowledge, of each other party thereto, enforceable in accordance
with its terms, and is in full force and effect.
(b) The Company or the relevant Subsidiary and, to the Company's
Knowledge, each other party to the Material Contracts has performed in all
material respects the obligations required to be performed by it under the
Material Contracts and is not (with or without lapse of time or the giving of
notice, or both) in breach or default thereunder. No party to any Material
Contract has given written or, to the Company's Knowledge, oral notice of any
action to terminate, cancel, rescind or procure a judicial reformation thereof.
Section 3.12 Status of Shares. The issuance and sale of the Shares and
the reservation and issuance of the Underlying Shares have been duly authorized
by all necessary corporate action on the part of the Company (other than the
filing of the respective Certificates of Designation with the Secretary of
State of the State of Delaware) and the Shares, when delivered to Purchaser at
the Initial Closing or Option Closing, as applicable, against payment therefor
as provided herein, and the Underlying Shares, when issued upon conversion of
the Shares in accordance with the terms thereof, will be validly issued, fully
paid and non-assessable and the issuance and sale of the Shares and the
issuance of the Underlying Shares are not and will not be subject to preemptive
rights of any Person.
Section 3.13 Intellectual Property; Year 2000. The Company and the
Subsidiaries own, possess or license, or, to the Company's Knowledge can
acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of the
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property (including Intellectual Property which is licensed) or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of the Subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
The Company and its Subsidiaries have reviewed the areas within their business
and operations and products (including computer software and hardware) which
could be adversely affected by, and have developed or are developing programs
to address on a timely basis, any "Year 2000 Problem" (that is, the risk that
computer hardware or software used by the Company and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999). Based on such
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review and program, the Company reasonably believes that any such "Year 2000
Problem" caused by its products or operations will not have a Material Adverse
Effect.
Section 3.14 Environmental Matters. Except for such matters as could
not, singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, (A) neither the Company nor any of the Subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
the Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the Company's Knowledge or any of
the Subsidiaries, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of the Subsidiaries and (D) there are no events or
circumstances known to the Company or any of the Subsidiaries that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of the
Subsidiaries relating to Hazardous Materials or Environmental Laws.
Section 3.15 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 or its Subsidiaries 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, the other Transaction Documents or the transactions
contemplated hereby or thereby, other than any such fees or commissions that
have been disclosed to Purchaser and as to which the Company shall have full
responsibility.
Section 3.16 Vote. There are no approvals required of the holders of
any class or series of shares or stock of the Company necessary to approve this
Agreement or any other Transaction Documents and the transactions contemplated
hereby or thereby.
Section 3.17 Related Party Transactions. No relationship, direct or
indirect, exists between or among any of the Company, the Subsidiaries or any
affiliate of the Company, on the one hand, and any director, officer,
stockholder, customer or supplier of any of them, on the other hand, which
would be required by the Exchange Act or by the rules and regulations enacted
thereunder to be described in the Company's proxy statement for the election of
directors in 1999 which is not described in the Current SEC Reports or Schedule
3.17 of the Company Disclosure Schedule.
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Section 3.18 Certain Anti-Takeover Provisions; Rights Plan. The Board
of Directors of the Company has duly approved the Purchaser and its Affiliates
becoming an "interested stockholder" within the meaning of Section 203 of the
Delaware General Corporation Law and a "Related Person" within the meaning of
Article THIRTEENTH of the Certificate of Incorporation by reason of the
acquisition by Purchaser or any of its Affiliates of (i) the Shares, (ii) the
Underlying Shares, (iii) any shares of Common Stock permitted to be acquired by
Purchaser or any of its Affiliates in accordance with the limitation set forth
in Section 5.12(a) or (iv) any securities (including shares of Common Stock
issuable upon conversion, exercise or exchange thereof pursuant to their terms)
received by Purchaser or its Affiliates pursuant to Section 5.11 (collectively,
the "Share Acquisitions"), and has otherwise taken all action necessary to
exempt the Share Acquisitions from the application of Section 203 of the
Delaware General Corporation Law, Article THIRTEENTH of the Certificate of
Incorporation, or any similar anti-takeover provisions of Law or otherwise that
could adversely affect the rights of the Purchaser or its Affiliates with
respect to their ownership of securities acquired by means of such Share
Acquisitions. In addition, the Company has amended the Rights Plan to provide
that neither Purchaser nor any of its Affiliates will be deemed to be an
Acquiring Person within the meaning of the Rights Plan by reason of the Share
Acquisitions.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
Section 4.1 Organization, Standing and Power. Purchaser is a limited
partnership duly organized, validly existing, and in good standing under the
laws 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 Transaction
Documents to which Purchaser is a party and consummate the transactions
contemplated hereby and thereby.
Section 4.2 Authority; Approvals.
(a) (i) The execution and delivery of this Agreement and the other
Transaction Documents to which it is a party and the purchase of the Shares to
be purchased by it have been duly and properly authorized by all necessary
partnership action on the part of Purchaser, (ii) this Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by it or on its behalf and, assuming the accuracy of the
representations and warranties of the Company in Section 3.4 hereof, constitute
the valid and legally binding obligations of Purchaser, 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); (iii) the purchase of the Shares to be purchased by it does
not conflict with or violate (1) its organizational documents or any other
material agreement to which it is a party or to which its properties are
subject or (2) assuming the approvals referred to in Section 4.2(b) are duly
and timely made or obtained, any Law applicable to it, in each case in a manner
that could reasonably be expected to materially hinder or impair the completion
of any of
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the transactions contemplated hereby; and (iv) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on
Purchaser that could reasonably be expected to materially hinder or impact the
completion of any of the transactions contemplated hereby.
(b) No Approval from any Governmental Entity is required by or with
respect to Purchaser in connection with the execution and delivery by Purchaser
of this Agreement or any other Transaction Document to which it is a party or
the consummation by Purchaser of the transactions contemplated hereby or
thereby, except for: (A) the filing of a notification report by Purchaser under
the HSR Act, and the expiration or termination of the applicable waiting period
with respect thereto (which filing and expiration or termination are not
required for the Initial Closing); and (B) any such Approval the failure of
which to be made or obtained (1) has not impaired and could not reasonably be
expected to impair the ability of Purchaser to perform its obligations under
any of the Transaction Documents in any material respect and (2) could not
reasonably be expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by any of the Transaction
Documents.
Section 4.3 Investment Intent. The Shares to be acquired by it
hereunder and any Underlying Shares to be acquired upon the conversion of such
Shares are being, or in the case of the Underlying Shares, will be, acquired
for its own account for investment and with no intention of distributing or
reselling such Shares or 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.
Section 4.4 Purchaser Status. Purchaser represents and warrants to,
and covenants and agrees with the Company that (i) at the time it was offered
the Shares, it was, (ii) at the date hereof, it is, and (iii) at the Initial
Closing Date and the Option Closing Date (if any), it will be, an accredited
investor as defined in Rule 501(a) under 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 Shares, and
is able to bear the economic risk of such investment.
Section 4.5 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 Purchaser 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 that have been disclosed to the Company
and as to which Purchaser shall have full responsibility.
Section 4.6 Access to Information. Purchaser 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 Shares, and for its own analysis of
the terms of the investment in
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the Shares. Anything herein to the contrary notwithstanding, the provisions of
this Section 4.6 shall not in any way limit any of the representations and
warranties of the Company set forth in this Agreement or in any Schedule
delivered pursuant hereto by the Company or its authorized representatives or
the rights of Purchaser with respect to any breach of any such representations
and warranties.
ARTICLE V.
COVENANTS
Section 5.1 Affirmative Covenants of the Company. The Company hereby
covenants and agrees that, until the earlier of the Initial Closing or the
termination of this Agreement, unless otherwise expressly contemplated by this
Agreement or consented to in writing by Purchaser (such consent not to be
unreasonably withheld), the Company will and will cause each of its
Subsidiaries to operate its business in the usual and ordinary course
consistent with past practices except as contemplated by this Agreement and
except as set forth in Schedule 5.1 of the Company Disclosure Schedule.
Section 5.2 Negative Covenants of the Company.
(a) Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Purchaser, from the date of this Agreement until
earlier of the Initial Closing or the termination of this Agreement, the
Company shall not do, and shall not permit any of its Subsidiaries to do, any
of the following:
(i) adopt or propose to adopt any amendments to the Company's
Certificate of Incorporation or Bylaws, adopt resolutions authorizing
a liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization of the Company or any
Subsidiary or make any other changes in the Company's capital
structure;
(ii) declare or pay any dividend or make any other distribution
(whether in cash, stock or property) with respect to its Capital
Stock, other than dividends paid by any Subsidiary to the Company or
another Subsidiary in the ordinary and usual course of the Company's
business, or take any other action that, if taken after the issuance
of the Shares, would result in an adjustment to the number of shares
acquirable upon conversion of the Shares;
(iii) take any action that will, or is reasonably likely to cause,
the condition in Section 6.2(a) not to be satisfied; or
(iv) agree in writing or otherwise to do any of the foregoing.
Section 5.3 Cooperation; Approvals. The Company and Purchaser each
agrees to cooperate and use all commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully with
the other parties
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to obtain (and will promptly prepare all registrations, filings and
applications, requests and notices preliminary to) all Approvals that may be
necessary or which may be reasonably requested by the Company or Purchaser to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. In case at any time after the date hereof any further
action is necessary or desirable to carry out the purposes of this Agreement,
the parties shall take all such necessary action.
Section 5.4 HSR Act Notification. Each of the parties hereto shall (a)
file or cause to be filed, as promptly as practicable after the execution and
delivery of this Agreement, with the Federal Trade Commission and the United
States Department of Justice, all reports and other documents required to be
filed by such party under the HSR Act concerning the transactions contemplated
hereby and (b) promptly comply with or cause to be complied with any requests
by the Federal Trade Commission or the United States Department of Justice for
additional information concerning the transactions contemplated by this
Agreement, in each case so that the waiting period applicable to this Agreement
and the transaction contemplated hereby under the HSR Act shall expire as soon
as practicable after the execution and delivery of this Agreement. Each party
hereto agrees to request, and to cooperate with the other party or parties in
requesting, early termination of any applicable waiting period under the HSR
Act. If after the Initial Closing or Option Closing and until the date on which
the Shares are fully converted in accordance with their terms, further filings
are required under the HSR Act so that Purchaser may acquire the Underlying
Shares or otherwise acquire securities pursuant to the Transaction Documents,
the Company will upon the written request of Purchaser, and Purchaser will upon
the written request of the Company, (i) file or cause to be filed, as promptly
as practicable after the receipt of such notice and in no event later than
fifteen Business Days after the receipt of such notice with the Federal Trade
Commission and the United States Department of Justice, all reports and other
documents required to be filed by such party under the HSR Act concerning the
transactions contemplated in such notice, (ii) promptly comply with or cause to
be complied with any requests by the Federal Trade Commission or the United
States Department of Justice for additional information so that the waiting
period applicable thereto under the HSR Act shall expire as soon as
practicable, and (iii) cooperate with the other Parties in requesting, early
termination of any applicable waiting period under the HSR Act. The Company
will reimburse Purchaser for any filing fees in connection with such filings by
Purchaser.
Section 5.5 Notification of Certain Matters. The Company shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (a) the occurrence, or failure to occur, of any event that causes
any representation or warranty contained in any Transaction Document to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Initial Closing Date and (b) any failure of the Company or
Purchaser to comply with or satisfy, in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it under any
Transaction Document. The provisions of this Section 5.5 shall survive for so
long as any representation, warranty, covenant, or agreement shall survive
hereunder.
Section 5.6 Board of Directors. The Company shall use its best efforts
to take, or cause to be taken, such action as may be necessary or advisable to
ensure that immediately following the later of (i) the Initial Closing and (ii)
the expiration or termination of the applicable waiting period under the HSR
Act, the Board shall be increased by one (if necessary) and the individual
identified
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by Purchaser to the Company shall be elected as a director of the Company in
accordance with the terms of the Shares.
Section 5.7 Registration Rights Agreement. At the Closing, the Company
agrees to enter into a Registration Rights Agreement in substantially the form
attached hereto as Exhibit 5.7.
Section 5.8 Transfer Restrictions. (a) If Purchaser should decide to
dispose of any of the Shares to be purchased by it or any Underlying Shares to
be issued to it upon the conversion of such Shares, Purchaser 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 any Shares or
Underlying Shares other than pursuant to an effective registration statement,
the Company may require that the transferor of such Shares or Underlying Shares
provide to the Company an opinion of counsel which opinion shall be reasonably
satisfactory in form and substance 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. Purchaser agrees to the
imprinting, so long as appropriate, of substantially the following legend on
certificates representing the Shares and any 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 THEY
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 Shares or
Underlying Shares, as the case may be, represented by such certificate 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 Share certificates 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.
Purchaser agrees that, in connection with any Transfer of 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 any resale
of Shares or Underlying Shares.
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(b) Purchaser agrees that, without the prior written consent of the
Company, it will not sell or otherwise transfer any Shares to any other person
or entity other than a partner of Purchaser, who, in any event, shall agree to
be bound by this Section 5.8(b), it being understood that the foregoing
provision shall not apply to Underlying Shares. Purchaser agrees to the
imprinting of the following legend on certificates representing the Shares to
indicate the foregoing restriction:
THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN THE PURCHASE AGREEMENT DATED AS
OF [DATE] AMONG THE COMPANY AND SCF-IV, L.P., A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF THE COMPANY.
(c) Purchaser agrees that, without the prior written consent of the
Company, it will not, prior to the earlier of (i) the seventh anniversary of
the Initial Closing, or (ii) the occurrence of a Change of Control, sell or
otherwise transfer any Underlying Shares in a single transaction or series of
related transactions involving a number of shares in the aggregate constituting
in excess of 1% of the Company's issued and outstanding shares of Common Stock
at the time of such sale or transfer (based on the Company's most recent
Exchange Act report filed with the SEC prior to such sale or transfer
disclosing such number of outstanding shares) to any entity which Purchaser
knows competes to a material extent with the Company or is engaged to a
material extent in the energy services or equipment business (an "Industry
Party"), without first offering such shares to the Company on the same terms;
provided that if the Purchaser is selling such shares pursuant to an
underwritten offering, such sale shall be deemed to comply with the foregoing
limitation so long as the managing underwriter advises the Purchaser and the
Company that, based on a reasonable inquiry of all persons to whom shares are
being sold in an amount exceeding the 1% limitation described above (other than
financial or insurance institutions, pension plans or funds or registered
investment companies), no such proposed purchaser is an Industry Party. If,
upon receiving an offer pursuant to the foregoing sentence, the Company does
not notify Purchaser that it wishes to purchase the offered shares within 20
Business Days of receiving such offer, Purchaser may sell such shares on the
terms set forth in the offer within six months thereof, provided that the
purchaser thereof agrees to a standstill agreement substantially similar to
that set forth in Section 5.12 with an 18 month term from the date of such
purchaser's acquisition. If the Company does notify Purchaser that it intends
to purchase the offered shares, it shall deliver payment for such shares
(against delivery of the certificates therefor) within five Business Days of
giving such notice.
Section 5.9 Stock Exchange Listing. Prior to the time the Shares
become convertible in accordance with their terms, the Company shall, at its
expense, procure the listing of the Underlying Shares on all stock exchanges on
which the Common Stock is then listed.
Section 5.10 Access; Confidentiality.
(a) At all times during normal business hours from and after the date
hereof until all of the outstanding Shares have been converted in accordance
with their terms, the Company shall afford Purchaser and its counsel and other
authorized representatives reasonable access to the properties, employees and
officers of the Company and to all books, accounts, tax returns, financial and
other records, including audit work papers, correspondence and contracts of
every kind of the Company as Purchaser may reasonably request.
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(b) Purchaser shall, and shall cause its representatives to, hold
confidential all information relating to the Company or its Subsidiaries it has
received prior to the Initial Closing from the Company or any of its
representatives, or information, if any, it receives after the Initial Closing
from the Company or any of its representatives as a result of or in connection
with Section 5.10(a) hereof or Purchaser's ownership of the Shares; provided,
however, that the foregoing shall not apply to (i) information that is or
becomes generally available to the public other than as a result of a
disclosure by Purchaser or any of its Affiliates or representatives in
violation of this Section 5.10(b), (ii) information that is or becomes
available to Purchaser or any of its representatives on a nonconfidential basis
from a source other than the Company or its Affiliates or representatives,
provided that such source is not known by Purchaser to be bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
any other party, or (iii) information that is required to be disclosed by
Purchaser or any of its representatives as a result of any applicable Law;
provided further, however, that in the event information is required to be
disclosed pursuant to clause (iii), the Person proposing such disclosure shall
provide the Company to the extent practicable an opportunity, reasonably in
advance of any such disclosure, to review and comment on the form and content
of such proposed disclosure. The provisions of this Section 5.10(b) shall
terminate on the first anniversary of the date that all of the outstanding
Shares have been converted in accordance with their terms.
Section 5.11 Issuance of Additional Preferred Stock.
(a) The Company agrees that, from and after the date of this
Agreement, it will not issue any Permitted Parity Securities (as defined in the
Certificate of Designation for the Series B Preferred Stock), except for (i)
the issuance of the Option Shares to Purchaser or its Affiliate pursuant to
this Agreement, or (ii) the issuance of a number of shares of Permitted Parity
Securities issued at a price of $1,000 cash per share in a single series within
eighteen months of the Initial Closing equal to 35,000 less the number of
Option Shares purchased hereunder (or, if the option period referred to in
Section 2.2(a) shall not yet have expired, less the full 15,000 Option Shares);
provided that if such Permitted Parity Securities are issued after the first
anniversary of the Initial Closing, then Purchaser shall be entitled to prior
written notice of such proposed issuance and the terms thereof and shall have a
right of first refusal option to purchase any or all of such securities on the
same terms as offered to the proposed purchaser, which option may be exercised
by Purchaser by notice to the Company at any time during the 20 Business Days
following the receipt of the Company's notice. If Purchaser elects to exercise
such option, the closing for such purchase shall be at a time to be mutually
agreed between the Company and Purchaser but not later than the 15th day
following the receipt of any required regulatory approvals. If Purchaser does
not elect to exercise such option within the 20 Business Day period (or the
closing of the exercise of such option does not occur within the period
described in the previous sentence for any reason not caused by the Company),
the Company may sell such securities on the terms set forth in its notice, but
only until the expiration of the eighteen month period specified in clause (ii)
above.
(b) The Company agrees that if it issues any Permitted Parity
Securities (other than Option Shares) pursuant to the foregoing that have terms
that the Purchaser reasonably believes to be more favorable to the purchaser
thereof than the terms of the Initial Shares, then the Purchaser shall have the
right to exchange all of the Shares purchased hereunder (or, if such issuance
occurs
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prior to the expiration of the option period specified in Section 2.2(a) and
the Option Closing has not occurred, all of the Shares that may be purchased
hereunder if Purchaser agrees to pay the applicable purchase price therefor
upon such exchange) on a share for share basis.
Section 5.12 Standstill Agreement. Purchaser hereby agrees that, for a
period commencing on the date hereof and ending on the earlier of the third
anniversary of the Initial Closing or the occurrence of a Change of Control, it
will not:
(a) directly or indirectly, take any action to acquire, in the
aggregate, beneficial ownership of more than 4% of the Company's outstanding
Common Stock or Voting Stock (based on the Company's most recent Exchange Act
report filed with the SEC prior to such acquisition disclosing such number of
outstanding shares), excluding from such ownership the Shares or the Underlying
Shares or any other Common Stock or Voting Stock acquired directly from the
Company;
(b) form or encourage the formation of a "group" within the meaning of
Section 13(d)(3) of the Exchange Act to acquire, change or influence control of
the Company;
(c) solicit, or participate in any "solicitation" of "proxies" or
become a "participant" in any "election contest" or consent solicitation (as
such terms are defined or used under Regulation 14A under the Exchange Act)
with respect to the Company in opposition to the recommendation of a majority
of the Board;
(d) initiate, propose or otherwise solicit stockholders for the
approval of, one or more stockholder proposals with respect to the Company or
induce any Person to initiate any stockholder proposal, in each case in
opposition to the recommendation of a majority of the Board;
(e) deposit any Voting Stock in a voting trust or subject them to a
voting agreement or other agreement or arrangement with respect to the voting
of such Voting Stock, other than any such trust, agreement or other arrangement
involving no Persons other than the Purchaser, its partners or Affiliates of
Purchaser; or
(f) solicit, propose or negotiate with any other Person (including the
Company) with respect to any form of Business Combination or other
extraordinary transaction with the Company or any of its Subsidiaries, in each
case which would result in a Change of Control, or solicit, make or propose or
negotiate with any other Person with respect to or announce an intent to make,
any tender offer or exchange offer for any securities of the Company, in each
case in opposition to the recommendation of a majority of the Board, or
publicly disclose an intent, purpose, plan or proposal with respect to the
Company, any of its Subsidiaries, or any securities or assets of the Company,
that would violate the provisions of this Section 5.12(f);
provided, however, that nothing in this Section 5.12 shall be deemed to limit
in any way (i) the right of Purchaser to exercise its voting rights in any
manner it sees fit with respect to the Shares, the Underlying Shares or any
other shares of Voting Stock acquired by Purchaser in accordance with
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this Agreement, or (ii) the right of any director elected to the Board as a
representative of the holders of the Shares to take any action he believes
necessary to fulfill his fiduciary duties.
Section 5.13 Indemnification.
(a) The Company agrees to indemnify the Purchaser and its Affiliates
and hold the Purchaser 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 Purchaser's
counsel in connection with any investigative, administrative or judicial
proceeding), which may be incurred by Purchaser or such Affiliates as a result
of any claims made against Purchaser or such Affiliates by any Person that
relate to or arise out of (i) any breach by the Company of any of its
representations, warranties or covenants contained in this Agreement or in the
Transaction Documents, or (ii) any litigation, investigation or proceeding
instituted by any Person with respect to this Agreement or the Shares or
Underlying Shares (excluding, however, any such litigation, investigation or
proceeding which arises solely from the acts or omissions of Purchaser or its
Affiliates). Notwithstanding anything to the contrary above, it is expressly
understood between the parties hereto that the Company pursuant to this Section
5.13 shall not be responsible for or assume any of the investment risk
associated with any securities purchased hereunder.
(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 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.
Section 5.14 Rights Plan. The Company will not further amend the
Rights Plan, or adopt any similar rights plan or rights agreement, in a manner
that conflicts with, or restricts the Purchaser to a greater extent than, the
provisions hereof, including the representation set forth in Section 3.18.
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ARTICLE VI.
CONDITIONS PRECEDENT TO THE CLOSINGS
Section 6.1 Conditions Precedent to Each Party's Obligation. The
respective obligations of Purchaser and the Company to effect the transactions
contemplated hereby at each Closing are subject to the satisfaction on or prior
to the applicable Closing Date of the following conditions:
(a) Approvals. All Approvals of, or expirations of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement at such Closing shall have been
filed, occurred, or been obtained, as applicable.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any statute, rule,
or regulation shall have been enacted by any Governmental Entity that makes the
consummation of the transactions contemplated hereby illegal.
Section 6.2 Conditions Precedent to Obligation of Purchaser. The
obligation of Purchaser to effect the transactions contemplated by this
Agreement at each Closing is subject to the satisfaction of the following
conditions unless waived, in whole or in part, by Purchaser:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement that are qualified by a materiality
standard or a Material Adverse Effect qualification shall be true and correct
in all respects and the representations and warranties of the Company set forth
in this Agreement 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
applicable Closing Date as though made on and as of the applicable Closing
Date, and Purchaser shall have received a certificate to the foregoing effect
signed on behalf of the Company and its Subsidiaries by the chief executive
officer or by the chief financial officer of the Company.
(b) Performance of Obligations. The Company and its Subsidiaries shall
have performed in all material respects all obligations required to be
performed by it or them under this Agreement prior to the applicable Closing
Date, and Purchaser shall have received a certificate to such effect signed on
behalf of the Company and its Subsidiaries by the chief executive officer or by
the chief financial officer of the Company.
(c) No Adverse Action or Decision. There shall be no action, suit,
investigation or proceeding, pending or threatened, against or affecting the
Company or any of its Subsidiaries or any of their respective properties or
rights, or any of their Affiliates, officers or directors, before any court,
arbitrator or administrative or governmental body which (i) seeks to restrain,
enjoin or prevent the consummation of or otherwise affect the transactions
contemplated by this Agreement or the
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other Transaction Documents or (ii) questions the validity or legality of any
such transaction or seeks to recover damages or to obtain other relief in
connection with any such transaction.
(d) Consents Under Agreements. Purchaser shall have been furnished
with evidence of all consents or approvals required to be obtained by the
Company or any of its Subsidiaries with respect to the consummation of each of
the transactions contemplated by this Agreement the failure of which to obtain
reasonably could be expected to result in a Material Adverse Effect, and each
such consent or approval shall be unconditional.
(e) Legal Opinions. At the Initial Closing, Purchaser shall have
received from Xxxxxx and Xxxxx, LLP an opinion dated the Initial Closing Date,
in the form of Exhibit 6.2(e)(i) and, at the Option Closing, Purchaser shall
have received from Xxxxxx and Xxxxx, LLP, an opinion dated the Option Closing
Date, in the form of Exhibit 6.2(e)(ii).
(f) HSR Filings. The Company shall have filed all reports required to
be filed by the Company under the HSR Act concerning the transactions
contemplated hereby.
(g) Closing Deliveries. All documents, instruments, certificates or
other items required to be delivered by the Company pursuant to Section 7.2(b),
in the case of the Initial Closing, or Section 7.3(b), in the case of the
Option Closing, shall have been delivered.
(h) Certificate of Designation. The Certificate of Designation
relating to the Series B Preferred Stock, in the case of the Initial Closing,
and the Series C Preferred Stock, in the case of the Option Closing, shall have
been filed with the Delaware Secretary of State.
Section 6.3 Conditions Precedent to Obligations of Company. The
obligation of the Company to effect the transactions contemplated by this
Agreement at each Closing is subject to the satisfaction of the following
conditions unless waived, in whole or in part, by the Company:
(a) Representations and Warranties. The representations and warranties
of Purchaser set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the applicable
Closing Date as though made on and as of the applicable Closing Date, and the
Company shall have received a certificate to the foregoing effect signed on
behalf of Purchaser by its general partner.
(b) Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects the obligations required to be performed by
it under this Agreement prior to the applicable Closing Date, and the Company
shall have received a certificate to such effect signed on behalf of Purchaser
by its general partner.
(c) Closing Deliveries. All documents, instruments, certificates or
other items required to be delivered by Purchaser pursuant to Section 7.2(a),
in the case of the Initial Closing, or Section 7.3(a), in the case of the
Option Closing, shall have been delivered.
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(d) HSR Filings. The Purchaser shall have filed all reports required
to be filed by the Purchaser under the HSR Act concerning the transactions
contemplated hereby.
ARTICLE VII.
THE CLOSINGS
Section 7.1 The Closings.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Article VI, the purchase and sale of the Initial Shares to be purchased by
Purchaser hereunder (the "Initial Closing") will take place at the offices of
Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx, 00000, at 10:00 a.m.,
local time, on the later of the May 7, 1999 or the third Business Day following
the satisfaction or waiver (subject to applicable Law) of each of the
conditions to the obligations of the parties to effect the transactions to
occur at the Initial Closing as set forth in Article VI, or on such other date
as mutually agreed to by the parties hereto. The date on which the Initial
Closing occurs is herein referred to as the "Initial Closing Date." All closing
transactions at the Initial Closing shall be deemed to have occurred
simultaneously.
(b) Subject to the satisfaction or waiver of the conditions set forth
in Article VI, the purchase and sale of the Option Shares to be purchased by
Purchaser hereunder (the "Option Closing") will take place at the offices of
Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx, 00000, at 10:00 a.m.,
local time, on the Business Day specified in the Exercise Notice, or on such
other date as mutually agreed to by the parties hereto. The date on which the
Option Closing occurs is herein referred to as the "Option Closing Date". All
closing transactions at the Option Closing shall be deemed to have occurred
simultaneously. The Initial Closing and the Option Closing are sometimes
referred to herein as the "Closings" or individually as a "Closing" and the
Initial Closing Date and the Option Closing Date are sometimes referred to
herein as the "Closing Dates" or individually as a "Closing Date".
Section 7.2 Actions to Occur at the Initial Closing.
(a) At the Initial Closing, Purchaser shall deliver to the Company the
following:
(i) Purchase Price. An amount equal to the Initial Purchase Price
for the Initial Shares in accordance with Article II.
(ii) Certificates. The certificates described in Sections 6.3(a)
and 6.3(b).
(iii) Registration Rights Agreement. The Registration Rights
Agreement, duly executed by Purchaser.
(b) At the Initial Closing, the Company shall deliver to Purchaser the
following:
(i) Share Certificates. Certificates representing the Initial
Shares.
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(ii) Registration Rights Agreement. The Registration Rights
Agreement, duly executed.
(iii) Certificates. The certificates described in Sections 6.2(a)
and 6.2(b).
(iv) Consents Under Agreements. The original of each consent or
approval, if any, pursuant to Section 6.2(d).
(v) Legal Opinions. The opinion of counsel referred to in Section
6.2(e).
Section 7.3 Actions to Occur at the Option Closing.
(a) At the Option Closing, Purchaser shall deliver to the Company the
following:
(i) Purchase Price. An amount equal to the Option Purchase Price
for the Option Shares being purchased in accordance with Article II.
(ii) Certificates. The certificates described in Sections 6.3(a)
and 6.3(b).
(b) At the Option Closing, the Company shall deliver to Purchaser the
following:
(i) Share Certificates. Certificates representing the Option
Shares being purchased.
(ii) Certificates. The certificates described in Sections 6.2(a)
and 6.2(b).
(iii) Legal Opinions. The opinion of counsel referred to in
Section 6.2(e).
ARTICLE VIII.
TERMINATION
Section 8.1 Termination. This Agreement may be terminated prior to the
Initial Closing:
(a) by mutual consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) in the event of a breach by the other party of any
representation, warranty, covenant or agreement contained in this
Agreement which (A) would give rise to the failure of a condition set
forth in Section 6.2 or 6.3, and (B) cannot be cured or, if curable,
has not been cured within 20 days following receipt by the breaching
party of written notice of such breach;
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(ii) if a court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree, or ruling or taken any
other action (which order, decree, or ruling Purchaser and the Company
shall use all commercially reasonable efforts to lift), in each case
permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling, or other action shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement under
this clause (ii) shall not be available to any party whose breach of
this Agreement has been the cause of, or resulted in, such order,
decree, ruling or other action; or
(iii) if the Initial Closing shall not have occurred by May 14,
1999, provided, however, that the right to terminate this Agreement
under this clause (iii) shall not be available to any party whose
breach of this Agreement has been the cause of, or resulted in, the
failure of the Initial Closing to occur on or before such date.
The right of any party hereto to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement, written notice thereof shall forthwith be given to the other
party specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void, except for
liability of a party arising out of a willful breach of, or misrepresentation
under, this Agreement prior to such termination (but in no event shall any
party hereto be entitled to recover punitive, consequential, special or
exemplary damages).
ARTICLE IX.
RECOVERY OF FEES
Any party who shall obtain a final judgment in a court of competent
jurisdiction for the payment of damages by another party for a breach of this
Agreement or any other Transaction Document shall be entitled to recover
reasonable attorneys' fees and court costs incurred in connection with the
obtaining of such judgment.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Survival of Provisions.
(a) The representations and warranties of the Company and Purchaser
made herein or in any other Transaction Document and the covenants of the
Company and Purchaser to be complied with on or prior to the Closings shall
remain operative and in full force and effect pursuant to their terms,
regardless of (x) any investigation made by or on behalf of Purchaser or the
Company, as the case may be, or (y) acceptance of any of the Shares and payment
by Purchaser therefor, until the date
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which is 18 months following the Initial Closing; provided that the
representations and warranties contained in Sections 3.1, 3.3, 3.4, 3.12 and
3.18 shall survive until the sixth anniversary of the Initial Closing; and
provided, further, that such representations and warranties shall survive as to
any claim or demand made prior to their termination date until such claim or
demand is fully paid or otherwise resolved by the parties hereto in writing or
otherwise.
(b) The covenants and agreements of the Company and Purchaser
contained in this Agreement that, by their terms, are to be performed or
complied with after either Closing Date will survive until the period specified
herein with respect to such covenant or agreement; and provided, further, that
such covenants and agreements shall survive as to any claim or demand made
prior to their termination date until such claim or demand is fully paid or
otherwise resolved by the parties hereto in writing or otherwise.
Section 10.2 No Waiver; Modification in Writing. No failure or delay
on the part of the Company or Purchaser 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 Purchaser. 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 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.
Section 10.3 Specific Performance. The parties recognize that in the
event the Company or Purchaser should refuse to perform under the provisions of
this Agreement or any other Transaction Document, monetary damages alone will
not be adequate. Purchaser or the Company, as the case may be, shall therefore
be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement or any other
Transaction Document specifically, the Company and Purchaser hereby waive the
defense that there is an adequate remedy at law.
Section 10.4 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.
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Section 10.5 Fees and Expenses. Within 30 days after the Initial
Closing, the Company shall pay to Purchaser an amount equal to Purchaser's
Expenses through the Initial Closing Date (the amount of such costs and
expenses shall have been furnished to the Company at least within 25 days after
the Initial Closing Date), and within 30 days after the Option Closing, the
Company shall pay to Purchaser an amount equal to Purchaser's Expenses through
the Option Closing Date that have not been reimbursed pursuant to the preceding
sentence (the amount of such costs and expenses shall have been furnished to
the Company at least within 25 days after the Option Closing Date); provided,
however, that all such Purchaser's Expenses to be paid by the Company pursuant
to the foregoing (other than fees payable in connection with filings under the
HSR Act pursuant to Section 5.4) shall not in the aggregate exceed $150,000.
Section 10.6 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 nothing 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.
Section 10.7 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 Purchaser, to:
SCF-IV, L.P.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(b) If to the Company, to:
Input/Output, Inc.
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Chairman
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 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 telecopied, 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.
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Section 10.8 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.
Section 10.9 Entire Agreement; Termination of Confidentiality
Agreement. This Agreement (which term shall be deemed to include the Exhibits
and Schedules hereto and the other certificates, documents and instruments
delivered hereunder) and the other Transaction Documents 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. There are no representations or warranties,
agreements, or covenants of the parties with respect to the subject matter
hereof and thereof other than those expressly set forth in this Agreement and
the other Transaction Documents. The parties hereby agree that the terms of
this Agreement supersede and terminate the provisions of the Confidentiality
and Standstill Agreement dated as of February 24, 1999 between the Company and
SCF Partners, provided that if this Agreement is terminated prior to the
Initial Closing, such agreement shall be reinstated pursuant to its terms.
Section 10.10 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.
Section 10.11 Public Announcements. The Company and Purchaser 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
Securities Act or the Exchange Act.
Section 10.12 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.
Section 10.13 Headings. The headings of this Agreement are for
convenience of reference only and are not part of the substance of this
Agreement.
[The remainder of this page is intentionally left blank.]
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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/ X.X. Xxxxxxxx
------------------------------------------
Name: X.X. Xxxxxxxx
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
SCF-IV, L.P.
By: SCF-IV, G.P., Limited Partnership,
its General Partner
By: X. X. Xxxxxxx & Associates, Incorporated,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: Managing Director
---------------------------------------
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