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Exhibit (c)(4)
AGREEMENT AND PLAN OF MERGER
by and among
WESTERN ATLAS INC.,
WAI ACQUISITION CORP.
and
3-D GEOPHYSICAL, INC.
dated as of
March 8, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.1. The Offer............................................ 2
SECTION 1.2. Company Actions...................................... 3
SECTION 1.3. Directors............................................ 4
ARTICLE II
THE MERGER
SECTION 2.1. The Merger........................................... 5
SECTION 2.2. Effective Time....................................... 5
SECTION 2.3. Effects of the Merger................................ 6
SECTION 2.4. Certificate of Incorporation and By-Laws
of the Surviving Corporation....................... 6
SECTION 2.5. Directors............................................ 6
SECTION 2.6. Officers............................................. 6
SECTION 2.7. Conversion of Common Shares.......................... 6
SECTION 2.8. Conversion of Purchaser Common Stock................. 6
SECTION 2.9. Options; Stock Plans................................. 7
SECTION 2.10. Stockholders' Meeting................................ 7
SECTION 2.11. Merger Without Meeting of Stockholders............... 8
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1. Dissenting Shares.................................... 8
SECTION 3.2. Payment for Common Shares............................ 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1. Organization and Qualification; Subsidiaries......... 10
SECTION 4.2. Charter; By-Laws and Rights Agreement................ 10
SECTION 4.3. Capitalization; Subsidiaries......................... 11
SECTION 4.4. Authority............................................ 12
SECTION 4.5. No Conflict; Required Filings and Consents........... 12
SECTION 4.6. SEC Reports and Financial Statements................. 13
SECTION 4.7. Environmental Matters................................ 14
SECTION 4.8. Compliance with Applicable Laws...................... 16
SECTION 4.9. Change of Control.................................... 16
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Page
SECTION 4.10. Litigation........................................... 17
SECTION 4.11. Information.......................................... 17
SECTION 4.12. Certain Approvals.................................... 17
SECTION 4.13. Employee Benefit Plans............................... 18
SECTION 4.14. Intellectual Property................................ 20
SECTION 4.15. Taxes................................................ 21
SECTION 4.16. Absence of Certain Changes........................... 22
SECTION 4.17. Labor Matters........................................ 22
SECTION 4.18. Rights Agreement..................................... 23
SECTION 4.19. Condition of Assets.................................. 23
SECTION 4.20. Brokers.............................................. 23
SECTION 4.21. Opinion of Financial Advisor......................... 23
SECTION 4.22. Employees............................................ 24
SECTION 4.23. Customers............................................ 24
SECTION 4.24. Material Contracts................................... 24
SECTION 4.25. Affiliated Transactions.............................. 25
SECTION 4.26. Omission of Material Facts........................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
SECTION 5.1. Organization and Qualification....................... 25
SECTION 5.2. Authority............................................ 26
SECTION 5.3. No Conflict; Required Filings and Consents........... 26
SECTION 5.4. Information.......................................... 27
SECTION 5.5. Financing............................................ 27
ARTICLE VI
COVENANTS
SECTION 6.1. Conduct of Business of the Company................... 27
SECTION 6.2. Access to Information................................ 30
SECTION 6.3. Efforts.............................................. 30
SECTION 6.4. Public Announcements................................. 31
SECTION 6.5. Employee Benefit Arrangements........................ 31
SECTION 6.6. Indemnification...................................... 32
SECTION 6.7. Notification of Certain Matters...................... 33
SECTION 6.8. Rights Agreement..................................... 33
SECTION 6.9. State Takeover Laws.................................. 33
SECTION 6.10. No Solicitation...................................... 34
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Page
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. Conditions........................................... 35
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1. Termination.......................................... 35
SECTION 8.2. Effect of Termination................................ 37
SECTION 8.3. Fees and Expenses.................................... 37
SECTION 8.4. Amendment............................................ 38
SECTION 8.5. Extension; Waiver.................................... 38
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Non-Survival of Representations and Warranties....... 38
SECTION 9.2. Entire Agreement; Assignment......................... 39
SECTION 9.3. Validity............................................. 39
SECTION 9.4. Notices.............................................. 39
SECTION 9.5. Governing Law........................................ 40
SECTION 9.6. Descriptive Headings................................. 40
SECTION 9.7. Counterparts......................................... 40
SECTION 9.8. Parties in Interest.................................. 40
SECTION 9.9. Certain Definitions.................................. 40
SECTION 9.10. Specific Performance................................. 41
Signatures ..................................................... 40
ANNEX I Conditions to the Offer
ANNEX II Form of Support Agreement
ANNEX III Form of Consulting and Noncompete Agreement
with Joel Friedman
ANNEX IV Form of Consulting and Noncompete Agreement
with Luis H. Ferran Arroyo
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 8,
1998, by and among Western Atlas Inc., a Delaware corporation ("Parent"), WAI
Acquisition Corp., a Delaware corporation and a subsidiary of Parent (the
"Purchaser"), and 3-D Geophysical, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the acquisition of the Company on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, pursuant to this Agreement the Purchaser has agreed to commence a
tender offer (the "Offer") to purchase all of the outstanding shares of the
Company's common stock, par value $.01 per share (the "Common Shares")
(including the associated preferred share purchase rights (the "Rights") issued
pursuant to the Share Purchase Rights Agreement, dated as of July 17, 1997,
between the Company and American Securities Transfer & Trust, Inc., as Rights
Agent (the "Rights Agreement"), which Rights together with the Common Shares are
hereinafter referred to as the "Shares"), at a price per Share of $9.65 net to
the seller in cash (the "Offer Price");
WHEREAS, the Board of Directors of the Company (the "Company Board") has
(i) approved the Offer and (ii) adopted and approved this Agreement and is
recommending that the Company's stockholders accept the Offer, tender their
Shares to the Purchaser and approve this Agreement;
WHEREAS, the respective Boards of Directors of the Purchaser and the
Company have approved the merger of the Purchaser with and into the Company, as
set forth below (the "Merger"), in accordance with the General Corporation Law
of Delaware (the "GCL") and upon the terms and subject to the conditions set
forth in this Agreement, whereby each of the issued and outstanding Common
Shares not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive $9.65 in cash;
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
willingness to enter into this Agreement, upon the execution and delivery of
this Agreement, Robert P. Andrews, Ralph M. Bahna, Douglas W. Brandrup, Richard
D. Davis, Arthur D. Emil, P. Dennis O'Brien and Emir L. Tavella (the "Director
Stockholders") and Luis H. Ferran Arroyo, Joel Friedman, Ronald L. Koons and
Wayne P. Widynowski (the "Management Stockholders") are simultaneously entering
into and delivering support agreements (the "Support Agreements") in the form
attached hereto as Annex II;
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
willingness to enter into this Agreement, Joel Friedman and Luis H. Ferran
Arroyo are simultaneously entering into and delivering Consulting and Noncompete
Agreements in the forms of Annex III and IV attached hereto;
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WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VIII hereof and none of the events set forth in Annex I
hereto (the "Tender Offer Conditions") shall have occurred, as promptly as
practicable but in no event later than the fifth business day from the date of
this Agreement, the Purchaser shall, and Parent shall cause Purchaser to,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (including the rules and regulations promulgated thereunder,
the "Exchange Act")) an offer to purchase all outstanding Shares at the Offer
Price and shall file all necessary documents with the Securities and Exchange
Commission (the "SEC") in connection with the Offer (the "Offer Documents"). The
obligation of the Purchaser to accept for payment or pay for any Shares tendered
pursuant thereto will be subject only to the satisfaction of the conditions set
forth in Annex I hereto.
(b) Without the prior written consent of the Company, Purchaser shall not
(i) impose conditions to the Offer in addition to the Tender Offer Conditions,
(ii) modify or amend the Tender Offer Conditions or any other term of the Offer
in a manner adverse to the holders of Common Shares, (iii) reduce the number of
Shares subject to the Offer, (iv) reduce the Offer Price, (v) except as provided
in the following sentence, extend the Offer, if all of the Tender Offer
Conditions are satisfied or waived, or (vi) change the form of consideration
payable in the Offer. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, extend the Offer at any time, and from time to time, (i)
if at the then scheduled expiration date of the Offer any of the conditions to
Purchaser's obligation to accept for payment and pay for all Shares shall not
have been satisfied or waived; (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or its staff applicable to the
Offer; or (iii) if all Tender Offer Conditions are satisfied or waived but the
number of Common Shares tendered is at least equal to 70%, but less than 90%, of
the then outstanding number of Common Shares, for an aggregate period of not
more than 10 business days (for all such extensions) beyond the latest
expiration date that would be permitted under clause (i) or (ii) of this
sentence. So long as this Agreement is in effect, the Offer has been commenced
and the Tender Offer Conditions have not been satisfied or waived, Purchaser
shall, and Parent shall cause Purchaser to, cause the Offer not to expire,
subject however to Purchaser's and Parent's rights of termination under this
Agreement.
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Parent and Purchaser shall comply with the obligations respecting prompt payment
pursuant to Rule 14e-1(c) under the Exchange Act.
(c) Parent and Purchaser represent that the Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or the Purchaser with respect to information
supplied by the Company in writing for inclusion in the Offer Documents. Each of
Parent and the Purchaser, on the one hand, and the Company, on the other hand,
agrees promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and the Purchaser further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to stockholders of the Company, in each case, as and to
the extent required by applicable federal securities laws.
SECTION 1.2. Company Actions.
(a) The Company shall file with the SEC and mail to the holders of Common
Shares, as promptly as practicable on the date of the filing by Parent and the
Purchaser of the Offer Documents, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") reflecting the recommendation of the Company Board that
holders of Shares tender their Shares pursuant to the Offer and shall
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act. The Schedule 14D-9 will set forth, and the Company hereby
represents, that the Company Board, at a meeting duly called and held, has (i)
determined by unanimous vote of its directors that the Offer and the Merger, is
fair to and in the best interests of the Company and its stockholders, (ii)
approved the Offer and adopted this Agreement in accordance with the GCL, (iii)
recommended acceptance of the Offer and approval of this Agreement by the
Company's stockholders (if such approval is required by applicable law), and
(iv) taken all other action necessary to render Section 203 of the GCL and the
Rights inapplicable to the Offer, the Merger and the Support Agreements;
provided, however, that such recommendation and approval may be withdrawn,
modified or amended to the extent that the Company Board determines in good
faith and on a reasonable basis, after consultation with its outside counsel,
that failure to take such action would be a breach of the Company Board's
fiduciary obligations under applicable law. The Company further represents that,
prior to the execution hereof, Salomon Smith Barney ("SSB"), the Company's
financial advisor, has delivered to the Company Board its opinion, and as of the
date hereof will deliver its written opinion, to the effect that, as of the date
of this Agreement, the cash consideration to be received by the holders of
Common Shares (other than Common Shares held by Parent or any of its affiliates,
in the treasury of the Company or by any wholly-owned subsidiary of the Company)
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. The Company further represents and warrants that it has been
authorized by SSB to permit, subject to prior review and consent by SSB (such
consent not to be unreasonably withheld), the inclusion of such opinion (or a
reference thereto) in the Offer Documents and
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in the Schedule 14D-9. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Company Board described in this Section
1.2(a).
(b) The Company represents that the Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or the Purchaser in writing for inclusion in the Schedule 14D-9. Each of
the Company, on the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of them for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the holders of Shares, in each case, as and to the extent
required by applicable federal securities law.
(c) In connection with the Offer, the Company will promptly furnish the
Purchaser with mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listing or computer list containing the
names and addresses of the record holders of the Common Shares as of the most
recent practicable date and shall furnish the Purchaser with such additional
information (including, but not limited to, updated lists of holders of Common
Shares and their addresses, mailing labels and lists of security positions and
non-objecting beneficial owner lists) and such other assistance as the Purchaser
or its agents may reasonably request in communicating the Offer to the Company's
record and beneficial stockholders.
SECTION 1.3. Directors.
(a) Subject to compliance with applicable law, promptly upon the payment
by the Purchaser for the Common Shares pursuant to the Offer, and from time to
time thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board as is equal to the
product of the total number of directors on the Company Board (determined after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Common Shares beneficially owned by
Parent or its affiliates bears to the total number of Common Shares then
outstanding, and the Company shall, upon request of Parent, promptly take all
actions necessary to cause Parent's designees to be so elected, including, if
necessary, seeking the resignations of one or more existing directors; provided,
however, that prior to the Effective Time (as defined herein), the Company Board
shall always have at least two members who are neither officers, directors or
designees of the Purchaser or any of its affiliates ("Purchaser Insiders"). If
the number of directors who are not Purchaser Insiders is reduced below two
prior to the Effective Time, the remaining director who is not a Purchaser
Insider shall be entitled to designate a person to fill such vacancy who is not
a Purchaser Insider and who shall be a director not deemed to be a Purchaser
Insider for all purposes of this Agreement.
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(b) The Company's obligations to appoint Parent's designees to the Company
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section 1.3
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3. Parent will
supply any information with respect to itself, and its officers, directors and
affiliates required by such Section and Rule to the Company.
(c) Following the election or appointment of Parent's designees pursuant
to this Section 1.3 and prior to the Effective Time (as defined herein), any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or the Purchaser or waiver of any of the Company's rights hereunder,
will require the concurrence of a majority of the directors of the Company then
in office who are not Purchaser Insiders (or in the case where there are two or
fewer directors who are not Purchaser Insiders, the concurrence of one director
who is not a Purchaser Insider) if such amendment, termination, extension or
waiver would have an adverse effect on the minority stockholders of the Company.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time the Purchaser
shall be merged with and into the Company. Following the Merger, the separate
corporate existence of the Purchaser shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation").
SECTION 2.2. Effective Time. As soon as practicable after the satisfaction
of the conditions set forth in Sections 7.1(a) and 7.1(b), but subject to
Sections 7.1(c) and 7.1(d), the Company shall execute, in the manner required by
the GCL, and deliver to the Secretary of State of the State of Delaware a duly
executed and verified certificate of merger, and the parties shall take such
other and further actions as may be required by law to make the Merger
effective. The time the Merger becomes effective in accordance with applicable
law is referred to as the "Effective Time."
SECTION 2.3. Effects of the Merger. The Merger shall have the effects set
forth in the GCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and the
Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
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SECTION 2.4. Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Certificate of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.6 of this Agreement, the
By-Laws of the Purchaser in effect at the Effective Time shall be the By-Laws of
the Surviving Corporation until amended in accordance with the provisions
thereof and applicable law.
SECTION 2.5. Directors. Subject to applicable law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.6. Officers. The officers of the Purchaser immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.7. Conversion of Common Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof, each
Common Share issued and outstanding immediately prior to the Effective Time
(other than (i) any Common Shares held by Parent, the Purchaser, any wholly
owned subsidiary of Parent or the Purchaser, in the treasury of the Company or
by any wholly owned subsidiary of the Company, which Common Shares, by virtue of
the Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto and (ii) Dissenting Shares (as defined herein)), shall be
cancelled and retired and shall be converted into the right to receive $9.65 in
cash (the "Merger Price"), payable to the holder thereof, without interest
thereon, upon surrender of the certificate formerly representing such Common
Share.
SECTION 2.8. Conversion of Purchaser Common Stock. The Purchaser has
outstanding 1,000 shares of common stock, par value $.01 per share, all of which
are entitled to vote with respect to approval and adoption of this Agreement. At
the Effective Time, each share of common stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
non-assessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
SECTION 2.9. Options; Stock Plans. Prior to the consummation of the Offer,
the Company Board (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and take all other actions necessary to provide for the
cancellation, effective at the Effective Time, of all the outstanding stock
options (the "Options") heretofore granted under any stock option or similar
plan of the Company (the "Stock Plans") or under any agreement, without any
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payment therefor except as otherwise provided in this Section 2.9. Immediately
prior to the Effective Time, all Options (whether vested or unvested) which are
listed in Section 4.3 of the disclosure schedule delivered to Parent by the
Company prior to the date hereof (the "Company Disclosure Schedule") (or were
inadvertently omitted from such schedule and for which the related Cash Payments
are de minimus in the aggregate) shall be cancelled (and to the extent formerly
so exercisable shall no longer be exercisable) and shall entitle each holder
thereof, in cancellation and settlement therefor, to a payment, if any, in cash
by the Company (less any applicable withholding taxes), at the Effective Time,
equal to the product of (i) the total number of Common Shares subject to such
Option (whether vested or unvested) and (ii) the excess, if any, of the Merger
Price over the exercise price per Common Share subject to such Option (the "Cash
Payments"). The Company represents and warrants that the Company Board has taken
all necessary action to terminate the Company's 1995 Long-Term Incentive
Compensation Plan, as amended, the Company's 1997 Long-Term Stock Incentive Plan
and all other Stock Plans and any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Company or any subsidiary in each case effective prior to the Effective
Time.
SECTION 2.10. Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through the Company Board, shall, in accordance with applicable
law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as soon as practicable following
the acceptance for payment of and payment for Common Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy statement
relating to this Agreement, and use reasonable best efforts (A) to obtain
and furnish the information required to be included by the SEC in the
Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond as soon as practicable to any comments made by the SEC
with respect to the preliminary proxy statement and cause a definitive
proxy statement (the "Proxy Statement") to be mailed to its stockholders
and (B) to obtain the necessary approvals of the Merger and adoption of
this Agreement by its stockholders; and
(iii) include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the
approval and adoption of the Merger and of this Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all of the
Common Shares then owned by it, the Purchaser or any of its other subsidiaries
in favor of the approval of the Merger and of this Agreement.
SECTION 2.11. Merger Without Meeting of Stockholders. Notwithstanding
Section 2.10, in the event that the Purchaser shall acquire at least 90% of the
outstanding Com-
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mon Shares pursuant to the Offer, the parties hereto agree to take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Common Shares by
the Purchaser pursuant to the Offer without a meeting of stockholders of the
Company, in accordance with Section 253 of the GCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1. Dissenting Shares. Notwithstanding Section 2.7, Common Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Common Shares in accordance with the GCL
("Dissenting Shares") shall not be converted into a right to receive the Merger
Price, unless such holder fails to perfect or withdraws or otherwise loses such
holder's right to appraisal. If after the Effective Time such holder fails to
perfect or withdraws or loses such holder's right to appraisal, such Common
Shares shall be treated as if they had been converted as of the Effective Time
into a right to receive the Merger Price. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Common Shares,
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, or otherwise negotiate, any such demands.
SECTION 3.2. Payment for Common Shares.
(a) From and after the Effective Time, The Bank of New York or such other
bank or trust company as shall be mutually acceptable to Parent and the Company
shall act as paying agent (the "Paying Agent") in effecting the payment of the
Merger Price in respect of certificates (the "Certificates") that, prior to the
Effective Time, represented Common Shares entitled to payment of the Merger
Price pursuant to Section 2.7. At the Effective Time, Parent or the Purchaser
shall deposit, or cause to be deposited, in trust with the Paying Agent the
aggregate Merger Price to which holders of Common Shares shall be entitled at
the Effective Time pursuant to Section 2.7.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of Certificates a form of letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent and instructions for use in surrendering such Certificates and
receiving the Merger Price in respect thereof. Upon the surrender of each such
Certificate, the Paying Agent shall pay the holder of such Certificate the
Merger Price multiplied by the number of Common Shares formerly represented by
such Certificate, in consideration therefor, and such Certificate shall
forthwith be cancelled. Until so surrendered, each such Certificate (other than
Certificates representing Common Shares held by Parent or the Purchaser, any
wholly owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly owned subsidiary of the Company or Dissenting Shares)
shall represent solely the right to receive the
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aggregate Merger Price relating thereto. No interest or dividends shall be paid
or accrued on the Merger Price. If the Merger Price (or any portion thereof) is
to be delivered to any person other than the person in whose name the
Certificate surrendered is registered, it shall be a condition to such right to
receive such Merger Price that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
surrendering such Common Shares shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such taxes have been paid
or are not applicable. In the event any Certificate shall have been lost, stolen
or destroyed, the Paying Agent shall be required to pay the full Merger Price in
respect of any Common Shares represented by such Certificate; however, Parent
may require the owner of such lost, stolen or destroyed Certificate to execute
and deliver to the Paying Agent a form of affidavit claiming such Certificate to
be lost, stolen or destroyed in form and substance reasonably satisfactory to
Parent and the posting by such owner of a bond in such amount as Parent may
determine is reasonably necessary as indemnity against any claim that may be
made against Parent or the Paying Agent.
(c) Promptly following the date which is 180 days after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in consideration therefor the aggregate Merger Price
relating thereto, without any interest or dividends thereon. Notwithstanding the
foregoing, none of Parent, the Purchaser, the Company or the Paying Agent shall
be liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered immediately prior to such date on
which any payment pursuant to this Article III would otherwise escheat to or
become the property of any Governmental Entity, the cash payment in respect of
such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled thereto.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent, they shall be surrendered and cancelled in return for the payment of the
aggregate Merger Price relating thereto, as provided in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser that
except as set forth in the Company Disclosure Schedule:
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SECTION 4.1. Organization and Qualification; Subsidiaries. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect. The term "Material Adverse Effect," as used in this Agreement, means any
change in or effect on the business, assets, liabilities, financial condition,
results of operations or prospects of the Company or any of its subsidiaries
that would reasonably be expected to be materially adverse to the Company and
its subsidiaries taken as a whole (except for changes or effects that (i) affect
the seismic exploration or oilfield service industries as a whole or (ii) result
from performance by the Company or any of its subsidiaries pursuant to and in
compliance with the terms of the agreement between the Company and Maxus Bolivia
as set forth in the accepted proposal dated December 18, 1997 (other than losses
or liabilities resulting from any breach of contract, negligence or violation of
law in connection with performance of such contract).
SECTION 4.2. Charter; By-Laws and Rights Agreement. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the certificate of incorporation and the by-laws or comparable
organizational documents, each as amended to the date hereof, of the Company and
each of its subsidiaries and a complete and correct copy of the Rights Agreement
as amended to the date hereof.
SECTION 4.3. Capitalization; Subsidiaries. The authorized capital stock of
the Company consists of 25,000,000 Common Shares and 1,000,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of which
100,000 shares are designated Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Junior Preferred Stock"). As of the close of business
on March 2, 1998, 11,916,666 Common Shares were issued and outstanding, all of
which are entitled to vote on this Agreement, and no Common Shares were held in
treasury. As of the close of business on March 2, 1998 there were no shares of
Preferred Stock issued and outstanding. The Company has no shares reserved for
issuance, except that, as of March 2, 1998, there were 790,002 Common Shares
reserved for issuance pursuant to outstanding Options and rights granted under
the Stock Plans or agreements providing for the grant of Options and 100,000
shares of Junior Preferred Stock reserved for issuance upon exercise of the
Rights. Section 4.3 of the Company Disclosure Schedule sets forth the holders of
all outstanding Options and the number, exercise prices and expiration dates of
each grant to such holders. Since September 30, 1997, the Company has not issued
any shares of capital stock except pursuant to the exercise of Options
outstanding as of such date and except pursuant to the exchange of exchangeable
non-voting shares (the "Exchangeable Shares") of 3-D Geophysical Canada, Inc.
("3-D Canada") outstanding as of such date for Common Shares. All the
outstanding Common Shares are, and all the Common Shares which may be issued
pursuant to the exercise of out-
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standing Options will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable and are
not subject to, nor were they issued in violation of, any preemptive rights.
There are no bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such rights) ("Voting
Debt") of the Company or any of its subsidiaries issued and outstanding. Except
as set forth above or in Section 4.3 of the Company Disclosure Schedule or for
the Rights and except for the transactions contemplated by this Agreement, there
are no existing options, warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any of its subsidiaries, obligating
the Company or any of its subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests and neither
the Company nor any of its subsidiaries is obligated to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Except as contemplated by this Agreement or the
Rights Agreement, there are no outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any Common Shares or the capital stock of the Company or any of its
subsidiaries. Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of the Company's subsidiaries are owned by the
Company or by a subsidiary of the Company in each case free and clear of any
lien, claim, option, charge, security interest, limitation, encumbrance and
restriction of any kind (any of the foregoing being a "Lien") except as set
forth in Section 4.3 of the Company Disclosure Schedule. Set forth in Section
4.3 of the Company Disclosure Schedule is a complete and correct list of each
subsidiary (direct or indirect) of the Company and any joint ventures,
partnerships or similar arrangements in which the Company or any of its
subsidiaries has an interest (and the amount and percentage of any such
interest). No entity in which the Company or any of its subsidiaries owns,
directly or indirectly, less than a 50% equity interest is, individually or when
taken together with all such other entities, material to the business of the
Company and its subsidiaries taken as a whole.
SECTION 4.4. Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Company Board and no other corporate proceedings on the part of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the affirmative vote of the holders
of a majority of the then outstanding Common Shares entitled to vote thereon, to
the extent required by applicable law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
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SECTION 4.5. No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), are made and the
waiting periods thereunder have been terminated or have expired, (ii) the
requirements of the Exchange Act and any applicable state securities, "blue sky"
or takeover law are met, (iii) the filing of the certificate of merger and other
appropriate merger documents, if any, as required by the GCL, is made and (iv)
approval of this agreement by the holders of a majority of the Common Shares, if
required by the GCL, is received, none of the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will (i) conflict with or violate the Certificate of Incorporation or
By-Laws of the Company or the comparable organizational documents of any of its
subsidiaries, (ii) except as disclosed in the SEC Reports (as hereinafter
defined) or specifically disclosed in Section 4.5(a) of the Company Disclosure
Schedule, result in a breach or violation of, a default under or the triggering
of any payment or the increase in any other obligations pursuant to, any of the
Company's existing Employee Benefit Arrangements (as hereinafter defined) or any
grant or award made under any of the foregoing, (iii) conflict with or violate
any statute, ordinance, rule, regulation, order, judgment, decree, permit or
license applicable to the Company or any of its subsidiaries, or by which any of
them or any of their respective properties or assets may be bound or affected,
or (iv) except as disclosed in Section 4.5(a) of the Company Disclosure
Schedule, result in a violation or breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any benefit, the triggering of any
payment by, or the increase in any other obligation of, the Company or any of
its subsidiaries or the creation of any material Lien on any of the property or
assets of the Company or any of its subsidiaries (any of the foregoing referred
to in clause (ii), (iii) or this clause (iv) being a "Violation") pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties may be bound or affected,
except in the case of clauses (ii), (iii) and (iv) where such Violations would
not reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(b) None of the execution and delivery of this Agreement by the Company,
the consummation by the Company and its subsidiaries of the transactions
contemplated hereby or compliance by the Company and it subsidiaries with any of
the provisions hereof will require any consent, waiver, approval, authorization
or permit of, or registration or filing with or notification to (any of the
foregoing being a "Consent"), any government or subdivision thereof, domestic,
foreign or supranational or any administrative, governmental or regulatory
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity"), except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of a certificate of
merger pursuant to the GCL, (iii) compliance with the HSR Act, and (iv) such
filings, authorizations, orders and approvals, if any, as set forth in Section
4.5(b) of the Company Disclosure Schedule, as are required under foreign laws
except in the case of clause (iv) for fil-
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ings, authorizations, orders and approvals the failure of which to make or
obtain would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
SECTION 4.6. SEC Reports and Financial Statements.
(a) The Company and its subsidiaries have filed with the SEC all forms,
reports, schedules, registration statements and definitive proxy statements
required to be filed by them with the SEC since February 9, 1996 (as amended
since the time of their filing, collectively, the "SEC Reports") and has
heretofore made available to Parent complete and correct copies of all such
forms, reports, schedules, registration statements, and proxy statements. As of
their respective dates, the SEC Reports (including, but not limited to, any
financial statements or schedules included or incorporated by reference therein)
complied in all material respects with the requirements of the Exchange Act or
the Securities Act of 1933, as amended, including the rules and regulations of
the SEC promulgated thereunder (the "Securities Act") applicable, as the case
may be, to such SEC Reports, and none of the SEC Reports contained 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 made therein, in light of the
circumstances under which they were made, not misleading.
(b) The (i) consolidated balance sheets as of December 31, 1996 (the
"12/31/96 Balance Sheet") and December 31, 1995 and the consolidated statements
of operations, stockholders' equity and cash flows for each of the three years
in the period ended December 31, 1996 (including the related notes and schedules
thereto) of the Company (or its predecessors) contained in the Company's Form
10-K for the fiscal year ended December 31, 1996 and (ii) the unaudited
consolidated balance sheet as of September 30, 1997 (the "9/30/97 Balance
Sheet") and the unaudited consolidated statements of operations, stockholders'
equity and cash flows for the three- and nine-month periods ended September 30,
1997 of the Company contained in the Company's Form 10-Q for the three-month
period ended September 30, 1997 present fairly the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its subsidiaries as of the dates or for the periods presented
therein and were prepared in accordance with United States generally accepted
accounting principles ("GAAP") consistently applied during the periods involved
except as otherwise disclosed therein (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount).
(c) Except as reflected or reserved against in the 9/30/97 Balance Sheet
or as disclosed in the notes thereto or as set forth in Section 4.6(c) of the
Company Disclosure Schedule, as of the date hereof, neither the Company nor any
of its subsidiaries have any liabilities or obligations (absolute, accrued,
fixed, contingent or otherwise) that are material to the Company and its
subsidiaries taken as a whole, other than liabilities incurred in the ordinary
course of business consistent with past practice since September 30, 1997.
(d) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications which have not yet been filed with the
SEC to agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Securities Act or the Exchange
Act.
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SECTION 4.7. Environmental Matters.
(a) Except as set forth in Section 4.7 of the Company Disclosure Schedule,
the operations of the Company and its subsidiaries comply with all applicable
material Environmental Laws, except for such failures to comply which would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect. The Company and its subsidiaries have obtained all
Environmental Permits necessary for the operation of the business, and all such
Environmental Permits are in good standing and the Company and its subsidiaries
are in compliance with all material terms and conditions of such Environmental
Permits, except for such failures to obtain or comply which would not reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is subject to any
ongoing investigation by, order from or written claim by any Person (including
without limitation any current or prior owner or operator of any of the Company
Property) respecting (i) any Environmental Law, (ii) any Remedial Action or
(iii) any claim, demand, complaint or other action arising from the Release or
threatened Release of a Hazardous Material into the environment which
individually or in the aggregate would reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is
subject to any judicial or administrative proceeding, or outstanding order,
judgment, decree or settlement alleging or addressing a violation of or
liability under any Environmental Law, which upon resolution would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
(b) There have been no Releases by the Company or any of its subsidiaries
of any Hazardous Materials (i) into, on or under any Company Property, or (ii)
into, on or under any other properties, including landfills in which Hazardous
Materials have been Released or properties on or under which the Company or any
of its subsidiaries has performed services, in any case in such a way as to
create any material unpaid liability (including the costs of required
remediation) under any applicable Environmental Law. As used in this Agreement,
the term "Knowledge" means the actual Knowledge of the officers and directors of
the Company. Except as set forth in Section 4.7(b) of the Company Disclosure
Schedule, no Company Property has been used at any time as a landfill or as a
treatment, storage or disposal facility for any Hazardous Material. To the
Knowledge of the Company there is no, and there has not been, any underground
storage tank, surface impoundment, landfill, waste pile or leachfield on or in
any Company Property.
(c) Any asbestos-containing material which is on or part of any Company
Property does not create any unpaid material liability (including the costs of
required remediation) under any applicable Environmental Law. No claims have
been made, and no suits or proceedings are pending or, to the Knowledge of the
Company, threatened by any employee against the Company or any of its
subsidiaries that are premised on exposure to asbestos or asbestos-containing
material, which would reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
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(d) For purposes of this Section:
(i) "Company Property" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment, fixture or
unit, or other asset owned, leased or operated by the Company or any of its
subsidiaries.
(ii) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and any rules and regulations
promulgated thereunder.
(iii) "Environmental Law" means all applicable United States
federal, state and local laws or regulations and all foreign laws or regulations
governing the protection of the environment, and employee health or safety,
including but not limited to CERCLA, OSHA and RCRA and any state or foreign
equivalent thereof.
(iv) "Hazardous Materials" means, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; and (b) any chemicals, materials,
substances or wastes which are defined as or included in the definition of
"hazardous materials," "hazardous wastes" or "toxic substances" under applicable
Environmental Law.
(v) "Environmental Permits" means all approvals, authorizations,
consents, permits, licenses, registrations and certificates required by any
applicable Environmental Law.
(vi) "OSHA" means the Occupational Safety and Health Act, as
amended, and any rules and regulations promulgated thereunder.
(vii) "RCRA" means the Resource Conservation and Recovery Act, as
amended, and any rules and regulations promulgated thereunder.
(viii) "Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
Hazardous Materials into the environment or into or out of any Company Property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or Company Property.
(ix) "Remedial Action" means all actions required to (a) clean up,
remove, treat or in any other way remediate any Hazardous Material; (b) prevent
the release of Hazardous Materials so that they do not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (c) perform
studies, investigations and care related to any such Hazardous Material.
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SECTION 4.8. Compliance with Applicable Laws. Except with respect to
Environmental Laws which are covered in Section 4.7, the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities (the "Permits") except for such Permits
as would not reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect. The Company and its subsidiaries are in compliance
with the terms of the Permits which it holds except for such Permits as would
not reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect. Except with respect to Environmental Laws which are
covered in Section 4.7, the operations of the Company and its subsidiaries have
been conducted in compliance with all laws, ordinances and regulations of any
Governmental Entity (except where lack of compliance would not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect).
SECTION 4.9. Change of Control. Except as set forth in Section 4.09 of the
Company Disclosure Schedule, the transactions contemplated by this Agreement
will not constitute a "change of control" under, require the consent from or the
giving of notice to a third party pursuant to, cause termination pursuant to the
terms thereof or permit a third party to terminate or accelerate vesting or
repurchase rights under the terms, conditions or provisions of any (i) note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound,
(ii) Permit, except for such Permits as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect, or
(iii) employment, compensation, termination or severance agreement, instrument,
obligation or other Plan (as defined in Section 4.13(a)) of the Company or any
of its subsidiaries. The total amounts payable to the executives identified in
Section 4.9 of the Company Disclosure Schedule, as a result of the transactions
contemplated by this Agreement and/or any subsequent employment termination
(including any cash-out or acceleration of options and restricted stock and any
other payments with respect thereto or in connection therewith), based on
compensation data applicable as of the date hereof, calculated assuming
effective tax rates of 39.6%, will not exceed the amount set forth on such
schedule.
SECTION 4.10. Litigation. Except as set forth in Section 4.10 of the
Company Disclosure Schedule or Section 4.7, there is no suit, claim, action,
proceeding or investigation pending or, to the Knowledge of the Company,
threatened, against the Company or any of its subsidiaries, which, if adversely
determined, would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or could prevent or materially delay the
consummation of the transactions contemplated by this Agreement. Except as set
forth in Section 4.10 of the Company Disclosure Schedule neither the Company nor
any of its subsidiaries is subject to any outstanding order, writ, injunction or
decree which, individually or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect or could prevent or materially delay the
consummation of the transactions contemplated hereby.
SECTION 4.11. Information. None of the information supplied by the Company
for inclusion or incorporation by reference in (i) the Offer Documents, (ii) the
Proxy Statement or (iii) any other document to be filed with the SEC or any
other Governmental Entity in connection with the transactions contemplated by
this Agreement (the "Other Filings") will, at
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the respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to stockholders, at the time of the Special Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or the Purchaser in writing specifically
for inclusion in the Proxy Statement.
SECTION 4.12. Certain Approvals. The Company Board has taken any and all
necessary and appropriate action to render inapplicable to the Offer, the Merger
and the transactions contemplated by this Agreement and the Support Agreements
the provisions of Section 203 of the GCL. No other state takeover statute or
similar domestic or foreign statute or regulation applies or purports to apply
to the Offer, the Merger or the transactions contemplated by this Agreement or
the Support Agreements.
SECTION 4.13. Employee Benefit Plans.
(a) Section 4.13(a) of the Company Disclosure Schedule includes a complete
list of all employee benefit plans, programs, agreements and other arrangements
providing benefits to any former or current employee, officer or director of the
Company or any of its subsidiaries or any beneficiary or dependent thereof,
whether or not written, and whether covering one person or more than one person,
sponsored or maintained by the Company or any of its subsidiaries or to which
the Company or any of its subsidiaries contributes or is obligated to contribute
("Plans"). Without limiting the generality of the foregoing, the term "Plans"
includes all employee welfare benefit plans within the meaning of Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder ("ERISA") and all employee pension benefit
plans within the meaning of Section 3(2) of ERISA and all other employee
benefit, employment, bonus, incentive, profit sharing, thrift, compensation,
restricted stock, retirement, savings, deferred compensation, stock purchase,
stock option, termination, severance, change in control, fringe benefit and
other similar plans, programs, agreements or arrangements.
(b) With respect to each Plan, the Company has made available to Parent a
true, correct and complete copy of: (i) each writing constituting a part of such
Plan, including, without limitation, all plan documents, benefit schedules,
trust agreements, and insurance contracts and other funding vehicles; (ii) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any;
(iii) the current summary plan description (and any material modification to
such description), if any; (iv) the most recent annual financial report, if any;
(v) the most recent actuarial report, if any; and (vi) the most recent
determination letter from the Internal Revenue Service (the "IRS"), if any.
Except as specifically provided in the foregoing documents made available to
Parent, there are no material amendments to any Plan (or the establishment of
any new Plan), other than those required by law, that have been adopted or
approved nor has the Company or any of its subsidiaries undertaken or committed
to make any such material amend-
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ments or to adopt or approve any new Plans, except any such amendment to a Plan
or establishment of a new Plan, which would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
(c) Section 4.13(c) of the Company Disclosure Schedule identifies each
Plan that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder (the "Code") ("Qualified Plans"). Except as provided in
Section 4.13(c) of the Company Disclosure Schedule, the IRS has issued a
favorable determination letter with respect to each Qualified Plan that has not
been revoked, and there are no existing circumstances nor any events that have
occurred that could adversely affect the qualified status of any Qualified Plan
or the related trust. No Plan is intended to meet the requirements of Section
501(c)(9) of the Code.
(d) Except as provided in Section 4.13(d) of the Company Disclosure
Schedule, all contributions required to be made to any Plan by applicable law or
regulation or by any plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Plan have
been timely made or paid in full or, to the extent not required to be made or
paid on or before the date hereof, have been fully reflected in the financial
statements of the Company included in the SEC Reports to the extent required
under GAAP.
(e) Except as provided in Section 4.13(e) of the Company Disclosure
Schedule, (i) the Company and each of its subsidiaries have complied, and are
now in compliance, in all material respects, with all provisions of ERISA, the
Code and all laws and regulations applicable to the Plans; (ii) there is not
now, nor do any circumstances exist that could give rise to, any requirement for
the posting of security with respect to a Plan or the imposition of any Lien on
the assets of the Company or any of its subsidiaries under ERISA or the Code;
and (iii) no prohibited transaction has occurred with respect to any Plan,
except for such noncompliance, requirements for the posting of security, liens
or prohibited transactions which would not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect.
(f) (i) No Plan is subject to Title IV or Section 302 of ERISA or Section
412 or 4971 of the Code; and (ii) without limiting the generality of the
foregoing, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA and which is subject to Title IV of ERISA
(a "Multiple Employer Plan"), nor has the Company or any of its subsidiaries, or
any of their respective ERISA Affiliates (as defined herein), in the preceding
five years contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan. An "ERISA Affiliate" means any entity, trade or
business that is a member of a group described in Section 414(b), (c) or (m) of
the Code or Section 4001(b)(1) of ERISA that includes the Company or any of its
subsidiaries, or that is a member of the same "controlled group" as the Company
or any of its subsidiaries, pursuant to Section 4001(a)(14) of ERISA.
(g) Except as provided in Section 4.13(g) of the Company Disclosure
Schedule, there does not now exist, nor do any circumstances exist, that could
result in, any liability under
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(i) Title IV of ERISA (other than ordinary course premium payments, if any, to
the Pension Benefit Guaranty Corporation which have been or will be made on a
timely basis, if applicable), (ii) Section 302 of ERISA, (iii) Sections 412 and
4971 of the Code, or (iv) the continuation coverage requirements of Section 601
et seq. of ERISA and Section 4980B of the Code that would be a liability of the
Company or any of its subsidiaries following the Effective Time which would
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect. Without limiting the generality of the foregoing, none
of the Company, its subsidiaries nor any ERISA Affiliate of the Company or any
of its subsidiaries has engaged in any transaction described in Section 4069,
4204 or 4212(c) of ERISA.
(h) Except as provided in Section 4.13(h) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has any liability for
life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA which would
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(i) Except as provided in Section 4.13(i) of the Company Disclosure
Schedule, there are no pending or, to the Knowledge of the Company, threatened
claims (other than claims for benefits in the ordinary course), lawsuits,
arbitrations or other alternate dispute resolution proceedings which have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of the
Plans which would reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(j) Except as provided in Section 4.13(j) of the Company Disclosure
Schedule, all Plans covering foreign employees of the Company or any of its
subsidiaries comply in all material respects with applicable local law
(including any qualification or registration requirements) and, to the extent
applicable, the fair market value of the assets and/or the book reserve
established for each such Plan that is a funded or book reserved Plan is
sufficient to provide for the liability for accrued benefits under such Plans
(based upon reasonable actuarial assumptions) except where any failure to
maintain sufficient assets or liabilities would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 4.14. Intellectual Property.
(a) Set forth in Section 4.14(a) of the Company Disclosure Schedule is a
list and description of all material patents, patent applications, patent
disclosures, assumed names, trade names, trademarks, trademark registrations and
trademark applications, service marks, service mark registrations and service
mark applications, certification marks, certification mark registrations and
certification mark applications, copyrights, copyright registrations and
copyright registration applications, chip registrations and chip registration
applications, both domestic and foreign, which are owned by the Company or any
of its subsidiaries. The assets described in Section 4.14(a) of the Company
Disclosure Schedule and all computer software (and related documentation)
("Software"), trade secrets, know-how, industrial property, technology or other
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proprietary rights which are owned or used by the Company or any of its
subsidiaries are referred to as the "Intellectual Property." Except as otherwise
indicated in Section 4.14(a) of the Company Disclosure Schedule, the Company and
its subsidiaries own all right, title and interest in and to the Intellectual
Property free and clear of all Liens, with the sole and exclusive right to use
the same, subject to those licenses listed on Section 4.14(b) of the Company
Disclosure Schedule except for such liens as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
(b) Set forth in Section 4.14(b) of the Company Disclosure Schedule is a
list and description of (i) all material licenses, assignments and other
transfers of Intellectual Property granted to others by the Company or any of
its subsidiaries, and (ii) all material licenses, assignments and other
transfers of patents, trade names, trademarks, service marks, copyrights, chip
registrations, Software, trade secrets, know-how, technology or other
proprietary rights granted to the Company or any of its subsidiaries by others.
Except as set forth in Section 4.14(b) of the Company Disclosure Schedule, none
of the licenses described above is subject to termination or cancellation or
change in its terms or provisions as a result of this Agreement or the
transactions provided for in this Agreement except where such termination,
cancellation or change in terms would not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect.
(c) To the Knowledge of the Company, no Person or entity is infringing, or
has misappropriated, any material Intellectual Property.
(d) Except as disclosed in Section 4.14(d) of the Company Disclosure
Schedule, no material claims with respect to the Intellectual Property or with
respect to the manufacture, sale or use of any product or process or the
furnishing of any services, have been asserted or, to the Knowledge of the
Company, are threatened by any Person (i) to the effect that the manufacture,
sale or use of any product or process or the furnishing of any service as
previously used, now used or offered or proposed for use or sale by the Company
infringes on any copyright, trade secret, patent, tradename or other
intellectual property right of any Person, (ii) against the use by the Company
or any of its subsidiaries of any Intellectual Property, or (iii) challenging
the ownership, validity or effectiveness of any Intellectual Property. To the
Company's Knowledge, all granted and issued patents and all registered
trademarks and service marks listed in Section 4.14(a) of the Company Disclosure
Schedule and all copyrights held by the Company or any of its subsidiaries are
valid, enforceable and subsisting.
(e) No Intellectual Property is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any manner the
licensing thereof by the Company or any of its subsidiaries. Neither the Company
nor any of its subsidiaries has entered into any agreement to indemnify any
other person against any charge of infringement of any Intellectual Property,
except standard infringement indemnities agreed to in the ordinary course of
business included as part of the Company's license or source agreements. Neither
the Company nor any of its subsidiaries has entered into any agreement granting
any third party the right to bring infringement actions with respect to, or
otherwise to enforce rights with respect to, any Intellectual
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Property. The Company and its subsidiaries have the exclusive right to file,
prosecute and maintain all applications and registrations with respect to
Intellectual Property.
SECTION 4.15. Taxes.
(a) Except as set forth in Section 4.15 of the Company Disclosure
Schedule, the Company and each of its subsidiaries has duly filed all federal,
state, local and foreign income and other Tax Returns (as hereinafter defined)
required to be filed by it, and has duly paid or caused to be paid all Taxes (as
hereinafter defined) shown to be due on such Tax Returns in respect of the
periods covered by such returns and has made adequate provision in the Company's
financial statements for payment of all Taxes anticipated to be payable in
respect of all taxable periods or portions thereof ending on or before the date
hereof, except for such as would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect. Section 4.15 of the
Company Disclosure Schedule lists the periods through which the Tax Returns
required to be filed by the Company or its subsidiaries have been examined by
the IRS or other appropriate taxing authority, or the period during which any
assessments may be made by the IRS or other appropriate taxing authority has
expired. All deficiencies and assessments asserted as a result of such
examinations or other audits by federal, state, local or foreign taxing
authorities have been paid, fully settled or adequately provided for in the
Company's financial statements, and no material issue or claim has been asserted
in writing for Taxes by any taxing authority for any prior period, except for
such as would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, other than those heretofore paid or
adequately provided for in the Company's financial statements. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return of the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(2) of the Code) owned by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries is a party to any agreement, contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code
or that would not be deductible pursuant to the terms of Section 162(a)(l),
162(m) or 162(n) of the Code. Neither the Company nor any of its subsidiaries
(i) has been a member of a group filing consolidated returns for federal income
tax purposes, or (ii) is a party to a tax sharing or tax indemnity agreement or
any other agreement of a similar nature that remains in effect, except that the
Company and its subsidiaries organized under the laws of the United States or
any state file as consolidated entities.
(b) For purposes of this Agreement, the term "Taxes" means all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, property, sales, use, transfer, license,
payroll, withholding, export, import, and customs duties, capital stock and
franchise taxes, imposed by the United States or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions thereto. For purposes of this Agreement, the term "Tax Return"
means any report, return or other information or document required to be
supplied to a taxing authority in connection with Taxes.
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SECTION 4.16. Absence of Certain Changes. Except as disclosed in Section
4.16 of the Company Disclosure Schedule, since September 30, 1997 (i) there has
not been any Material Adverse Effect; (ii) the businesses of the Company and
each of its subsidiaries have been conducted only in the ordinary course and in
a manner consistent with past practice; (iii) neither the Company nor any of its
subsidiaries has engaged in any material transaction or entered into any
material agreement or commitments outside the ordinary course of business; (iv)
neither the Company nor any of its subsidiaries has taken any action referred to
in Section 6.1 hereof except as permitted thereby; and (v) there has not been
any revaluation by the Company or any of its subsidiaries of any of its material
assets, including but not limited to writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary course of
business.
SECTION 4.17. Labor Matters. No work stoppage involving the Company or any
of its subsidiaries is pending or threatened and neither the Company nor any of
its subsidiaries is involved in, or to the Company's Knowledge, threatened with
or affected by any material labor dispute, arbitration, lawsuit or
administrative proceeding. None of the employees of the Company or of any of its
subsidiaries are represented by any labor union or any collective bargaining
organization and, to the Knowledge of the Company, no labor union is attempting
to organize employees of the Company or any of its subsidiaries.
SECTION 4.18. Rights Agreement. The Company and the Company Board have
taken all necessary action to amend the Rights Agreement (without redeeming the
Rights) so that none of the execution or delivery of this Agreement and the
Support Agreements, the making of the Offer, the acquisition of Common Shares
pursuant to the Offer or the consummation of the Merger will (i) cause any
Rights issued pursuant to the Rights Agreement to become exercisable or to
separate from the stock certificates to which they are attached, (ii) cause
Parent, the Purchaser or any of their Affiliates or Associates to be an
Acquiring Person (as each such term is defined in the Rights Agreement) or (iii)
trigger other provisions of the Rights Agreement, including giving rise to a
Distribution Date or a Triggering Event (as each such term is defined in the
Rights Agreement).
SECTION 4.19. Condition of Assets. The properties and assets, including
the equipment, supplies and other consumables, owned, leased or used by the
Company and its subsidiaries in the operation of their respective business are
in good operating condition and repair, ordinary wear and tear excepted, are
reasonably suitable for the purposes for which they are used, are reasonably
adequate and sufficient for the Company's and its subsidiaries' current
operations and are directly related to the business of the Company and its
subsidiaries.
SECTION 4.20. Brokers. Except for the engagement of SSB, none of the
Company, any of its subsidiaries, or any of their respective officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. The Company has previously delivered to Parent a
copy of the Company's engagement letter with SSB. The aggregate fees and
expenses payable to the Company's legal and financial advisors in connection
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with the Offer, the Merger and the transactions contemplated by this Agreement
will not exceed the amount set forth in Section 4.20 of the Company Disclosure
Schedule.
SECTION 4.21. Opinion of Financial Advisor. The Company Board has received
the opinion, and as of the date hereof will receive the written opinion, of SSB,
the Company's financial advisor, to the effect that, as of the date of this
Agreement, the cash consideration to be received in the Offer and the Merger by
the holders of Common Shares (other than Parent and its affiliates) is fair to
such holders from a financial point of view. The Company will deliver to Parent
a copy of SSB's written opinion promptly upon receipt thereof.
SECTION 4.22. Employees. As of the date hereof, to the Company's
Knowledge, its relationship with its employees is satisfactory.
SECTION 4.23. Customers. Section 4.23(a) of the Company Disclosure
Schedule sets forth (a) the names of all customers of Company that accounted for
more than 5% of the Company's consolidated revenues during the twelve-month
period ended December 31, 1997 and (b) the amount for which each such customer
was invoiced during such period. The Company has not received any notice that
any such customer of the Company (i) has ceased, or will cease, to use the
products, goods or services of the Company and its subsidiaries, (ii) has
substantially reduced or will substantially reduce, the use of products, goods
or services of the Company and its subsidiaries or (iii) has sought, or is
seeking, to substantially reduce the price it will pay for products, goods or
services of the Company and its subsidiaries, including in each case after the
consummation of the transactions contemplated hereby. Section 4.23(b) of the
Company Disclosure Schedule sets forth the term, price, any "change in control"
provisions and geographic dimensions of any currently outstanding bids or
proposals of the Company in excess of $1,000,000.
SECTION 4.24. Material Contracts. Except as set forth in Section 4.24 of
the Company Disclosure Schedule, or filed as exhibits to the SEC Reports,
neither the Company nor any of its subsidiaries is a party to or bound by (i)
any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC); (ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any respect the manner in
which, or the localities in which, the business of the Company and its
subsidiaries (including, for purposes of this Section 4.24 Parent and its
subsidiaries, assuming the Merger has taken place), is or would be conducted;
(iii) any employment or consulting agreement requiring payments in the aggregate
in excess of $100,000; (iv) any joint venture, partnership or other similar
agreement; (v) any agreement that grants a right of first refusal with respect
to any asset or property of the Company or any of its subsidiaries; (vi) any
agreement, entered into other than in the ordinary course, for the purchase or
sale of goods, supplies, equipment, services or other assets that provides for
payments by or to the Company or any of its subsidiaries in the aggregate in
excess of $200,000 or, with respect to contracts for the sale of goods,
supplies, equipment, other assets or services, if entered into in the ordinary
course, in excess of $1,000,000; (vii) any agreement relating to indebtedness
for borrowed money or deferred purchase price of property in excess of $200,000
(in either case, whether incurred, assumed, guaranteed or secured); (viii) any
other contract, agreement or arrangement, entered into other than in the
ordinary course of business,
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requiring future payments in the aggregate in excess of $100,000; or (ix) any
contract or other agreement which would prohibit or materially delay the
consummation of the transactions contemplated by this Agreement (all contracts
of the type described in clauses (i) through (ix) being referred to herein as
"Company Material Contracts"). Each Company Material Contract is valid and
binding on the Company (or, to the extent a subsidiary of the Company is a
party, such subsidiary) and is in full force and effect, and the Company and
each subsidiary of the Company have in all material respects performed all
obligations required to be performed by them to date under each Company Material
Contract, except for such instances which would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect. The
Company does not have Knowledge, nor has it or any of its subsidiaries received
written notice of, any violation or default under nor, to the Knowledge of the
Company, does there exist any condition which with the passage of time or the
giving of notice or both would result in such violation or default under any
Company Material Contract, except in such instances which would not reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect.
SECTION 4.25. Affiliated Transactions. Except as set forth in Section 4.25
of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries nor any of their respective officers, directors, employees or
affiliates (nor any individual related by blood, marriage or adoption to any
such individual), is a party to any agreement, contract, commitment, transaction
or understanding with or binding upon the Company or any of its subsidiaries or
any of their respective assets or has engaged in any transaction with any of the
foregoing within the last twelve months except for customary payments to
employees, officers or directors in the ordinary course of business consistent
with past practice for services rendered in their capacity as employees,
officers or directors.
SECTION 4.26. Omission of Material Facts. No statements of the Company
contained in this Agreement or in the Company Disclosure Schedule or any
certificate or opinion delivered or to be delivered pursuant hereto omits or
will omit to state a material fact necessary in order to make any such
statement, in light of the circumstances under which it was made, not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
SECTION 5.1. Organization and Qualification. Each of Parent and the
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware. Each of Parent and the Purchaser has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such
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power or authority, or the failure to be so qualified, licensed or in good
standing, would not have a Material Adverse Effect on Parent. The term "Material
Adverse Effect on Parent," as used in this Agreement, means any change in or
effect on the business, assets, liabilities, financial condition, results of
operation or prospects of Parent or any of its subsidiaries that would be
materially adverse to Parent and its subsidiaries taken as a whole.
SECTION 5.2. Authority. Each of Parent and the Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby have been duly and validly
authorized and approved by the respective Boards of Directors of Parent and the
Purchaser and by Parent as sole stockholder of the Purchaser and no other
corporate proceedings on the part of Parent or the Purchaser are necessary to
authorize or approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of each of Parent and the Purchaser enforceable against each of them
in accordance with its terms.
SECTION 5.3. No Conflict; Required Filings and Consents
(a) Assuming (i) the filings required under the HSR Act are made and the
waiting periods thereunder have terminated or have expired, (ii) the
requirements of the Exchange Act and any applicable state securities, "blue sky"
or takeover law are met and (iii) the filing of the certificate of merger and
other appropriate merger documents, if any, as required by the GCL, is made,
none of the execution and delivery of this Agreement by Parent or the Purchaser,
the consummation by Parent or the Purchaser of the transactions contemplated
hereby or compliance by Parent or the Purchaser with any of the provisions
hereof will (i) conflict with or violate the organizational documents of Parent
or the Purchaser, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment, decree, permit or license applicable to Parent or
the Purchaser or any of their subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a violation pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or the Purchaser or any of their subsidiaries is a party or by
which Parent or the Purchaser or any of their subsidiaries or any of their
respective properties or assets may be bound or affected.
(b) None of the execution and delivery of this Agreement by Parent and the
Purchaser, the consummation by Parent and the Purchaser of the transactions
contemplated hereby or compliance by Parent and the Purchaser with any of the
provisions hereof will require any Consent of any Governmental Entity, except
for (i) compliance with any applicable requirements of the Exchange Act and any
state securities, "blue sky" or takeover law, (ii) the filing of a certificate
of merger pursuant to the GCL, (iii) compliance with the HSR Act and (iv) such
Consents that become applicable solely as a result of the business, operations
or regulatory status of the Company or any of its subsidiaries.
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SECTION 5.4. Information. None of the information supplied or to be
supplied by Parent and the Purchaser for inclusion in (i) the Schedule 14D-9,
(ii) the Proxy Statement or (iii) the Other Filings will, at the respective
times filed with the SEC or such other Governmental Entity and, in addition, in
the case of the Proxy Statement, at the date it or any amendment or supplement
is mailed to stockholders, at the time of the Special Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.5. Financing. Parent and Purchaser collectively have and will
have at the closing of the Offer and the Effective Time and Parent will make
available to Purchaser sufficient funds available to enable Purchaser to
purchase all Common Shares, on a fully diluted basis, and to pay all fees and
expenses related to the transactions contemplated by this Agreement payable by
them.
ARTICLE VI
COVENANTS
SECTION 6.1. Conduct of Business of the Company. Except as contemplated by
this Agreement or otherwise with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will use
its reasonable best efforts, and will cause each of its subsidiaries to use its
reasonable best efforts, to preserve intact the business organization of the
Company and each of its subsidiaries, to keep available the services of its and
their present officers and employees, and to preserve the good will of those
having business relationships with it, including, without limitation,
maintaining satisfactory relationships with licensors, suppliers, customers and
others having business relationships with the Company and its subsidiaries.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement, the Company will not, and will not permit any of
its subsidiaries to, prior to the Effective Time, without the prior written
consent of Parent:
(a) adopt any amendment to its certificate of incorporation or by-laws or
comparable organizational documents or the Rights Agreement or adopt a plan of
merger, consolidation, reorganization, dissolution or liquidation;
(b) sell, pledge or encumber any stock owned by it in any of its
subsidiaries;
(c) (i) issue, reissue or sell, or authorize the issuance, reissuance or
sale of (A) additional shares of capital stock of any class, or securities
convertible into capital stock of any class, or any rights, warrants or options
to acquire any convertible securities or capital stock, other than the issuance
of Common Shares (and the related Rights), in accordance with the terms of the
instruments governing such issuance on the date hereof, pursuant to the exercise
or conversion of Options and any Exchangeable Shares outstanding on the date
hereof, or (B) any other
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securities in respect of, in lieu of, or in substitution for, Common Shares or
any other capital stock of any class outstanding on the date hereof or (ii) make
any other changes in its capital structure;
(d) declare, set aside or pay any dividend or other distribution (whether
in cash, securities or property or any combination thereof) in respect of any
class or series of its capital stock other than between any of the Company and
any of its wholly owned subsidiaries;
(e) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock, or any of its other securities (except as disclosed in
Section 6.1(e) of the Company Disclosure Schedule);
(f) increase the compensation or fringe benefits payable or to become
payable to its directors, officers or, except in the ordinary course of business
consistent with past practice, employees (whether from the Company or any of its
subsidiaries), or pay or award any benefit not required by any existing plan or
arrangement to any officer, director or employee (including, without limitation,
the granting of stock options, stock appreciation rights, shares of restricted
stock or performance units pursuant to the Stock Plans or otherwise), or grant
any severance or termination pay to any officer, director or other employee of
the Company or any of its subsidiaries (other than as required by existing
agreements or policies described in Section 6.01 of the Company Disclosure
Schedule), or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any of its subsidiaries or
establish, adopt, enter into, amend, or waive any performance or vesting
criteria under any Plan for the benefit or welfare of any current or former
directors, officers or employees of the Company or its subsidiaries or their
beneficiaries or dependents (any of the foregoing being an "Employee Benefit
Arrangement"), except, in each case, to the extent required by applicable law or
regulation;
(g) acquire, mortgage, encumber, sell, pledge, lease, license or dispose
of any assets (including Intellectual Property) or securities, except pursuant
to existing contracts or commitments entered into in the ordinary course of
business consistent with past practice, or enter into any contract, arrangement,
commitment or transaction outside the ordinary course of business consistent
with past practice other than transactions between a wholly owned subsidiary of
the Company and the Company or another wholly owned subsidiary of the Company;
(h) (i) incur, assume or prepay any long-term debt or incur or assume any
short-term debt, except that the Company and its subsidiaries may incur or
prepay debt in the ordinary course of business in amounts and for purposes
consistent with past practice under existing lines of credit, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business consistent with past practice, (iii) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, contingent
or otherwise), except in the ordinary course of business consistent with past
practice, (iv) make any loans, advances or capital contributions to, or
investments in, any other person or entity, except for loans, advances, capital
contributions or investments between any wholly owned subsidiary of the Company
and the
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Company or another wholly owned subsidiary of the Company, (v) authorize or make
capital expenditures in excess of $50,000, (vi) materially accelerate or delay
collection of notes or accounts receivable in advance of or beyond their regular
due dates or the dates when the same would have been collected in the ordinary
course of business consistent with past practice, (vii) materially delay or
accelerate payment of accounts payable beyond or in advance of its due date or
the date such liability would have been paid in the ordinary course of business
consistent with past practice, or (viii) vary the Company's inventory practices
in any material respect from the Company's past practices;
(i) settle or compromise any suit or claim or threatened suit or claim
where the amount involved is greater than $50,000;
(j) other than in the ordinary course of business consistent with past
practice, (i) modify, amend or terminate any material contract, (ii) waive,
release, relinquish or assign any contract (or any of the rights of the Company
or any of its subsidiaries thereunder), right or claim, or (iii) cancel or
forgive any indebtedness (other than with respect to indebtedness which is de
minimus in the aggregate) owed to the Company or any of its subsidiaries;
provided, however, that neither the Company nor any of its subsidiaries may
under any circumstance waive or release any of its rights under any
confidentiality agreement to which it is a party;
(k) make any tax election not required by law or settle or compromise any
tax liability;
(l) cancel or terminate any insurance policy naming it as a beneficiary or
a loss payable payee, except in the ordinary course of business consistent with
past practice;
(m) acquire (by merger, consolidation, acquisition of stock or assets,
combination or other similar transaction) any material corporation, partnership
or other business organization or division or assets thereof;
(n) except as may be required as a result of a change in law or in GAAP or
the rules of the SEC, make any change in its methods of accounting, including
tax accounting policies and procedures;
(o) enter into any agreement of a nature that would be required to be
filed as an exhibit to Form 10-K under the Exchange Act or make or submit any
bids or proposals in excess of $1,000,000 with respect to any services proposed
to be rendered in any location in Latin America, or in excess of $3,000,000 with
respect to any services proposed to be rendered in any location outside of Latin
America, provided that Parent agrees not to unreasonably withhold or delay its
consent with respect to such bids or proposals and provided further that Parent
agrees that any information provided by the Company relating to such bids or
proposals shall (i) be treated confidentially, (ii) shall not be disclosed to
any employees of Parent or its subsidiaries who are involved in preparing or
substantively analyzing a bid or proposal on behalf of Parent or any of its
subsidiaries relating to such services at the applicable location and (iii)
shall not be used to the detriment of the Company in connection with such bid or
proposal;
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(p) take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Offer set forth in
Annex I or any of the conditions to the Merger set forth in Article VII not
being satisfied, or would make any representation or warranty of the Company
contained herein, when read without any exception or qualification as to
materiality or Material Adverse Effect, inaccurate in any respect at, or as of
any time prior to, the Effective Time except for such inaccuracies which would
not be reasonably expected to, individually or in the aggregate, result in a
Material Adverse Effect, or that would impair the ability of the Company to
consummate the Merger in accordance with the terms hereof or delay such
consummation; or
(q) agree in writing or otherwise to take any of the foregoing actions
prohibited under this Section 6.1.
SECTION 6.2. Access to Information. From the date of this Agreement until
the Effective Time, the Company will, and will cause its subsidiaries, and each
of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, give Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives (collectively, the "Parent Representatives") full access,
upon reasonable notice and during normal business hours, to the offices and
other facilities and to the books and records of the Company and its
subsidiaries and will cause the Company Representatives and the Company's
subsidiaries to furnish Parent, the Purchaser and the Parent Representatives to
the extent available with such financial and operating data and such other
information with respect to the business and operations of the Company and its
subsidiaries as Parent and the Purchaser may from time to time request subject,
in each case, to the continuing obligations of the parties under the
Confidentiality Agreement between Parent and the Company dated December 19,
1997, which agreement shall survive until termination pursuant to the terms
thereof. The Company shall furnish promptly to Parent and the Purchaser a copy
of each report, schedule, registration statement and other document filed by it
or its subsidiaries during such period pursuant to the requirements of federal
or state or foreign securities laws.
SECTION 6.3. Efforts.
(a) Subject to the terms and conditions provided herein, each of the
Company, Parent and the Purchaser shall, and the Company shall cause each of its
subsidiaries to, cooperate and use their respective reasonable commercial
efforts to take, or cause to be made, all filings reasonably necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including but not
limited to cooperation in the preparation and filing of the Offer Documents, the
Schedule 14D-9, the Proxy Statement, any required filings under the HSR Act, or
other foreign filings and any amendments to any thereof.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, which should be set forth in
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an amendment to the Offer Documents or Schedule 14D-9, the discovering party
will promptly inform the other party of such event or circumstance.
(b) Each of the parties will use its reasonable commercial efforts to
obtain as promptly as practicable all Consents of any Governmental Entity or any
other person required in connection with, and waivers of any Violations that may
be caused by, the consummation of the transactions contemplated by the Offer and
this Agreement.
SECTION 6.4. Public Announcements. The Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree to consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the Offer, the Merger and the other transactions
contemplated hereby, agree to provide to the other party for review a copy of
any such press release or statement, and shall not issue any such press release
or make any such public statement prior to such consultation and review, unless
required by applicable law or any listing agreement with a securities exchange.
SECTION 6.5. Employee Benefit Arrangements.
(a) The Company shall, and Parent agrees to cause the Company to, honor
and, from and after the Effective Time, the Surviving Corporation to honor, all
obligations under the employment and severance agreements to which the Company
or any of its subsidiaries is presently a party which are listed in Section 6.05
of the Company Disclosure Schedule. Notwithstanding the foregoing, from and
after the Effective Time, the Surviving Corporation shall have the right to
amend, modify, alter or terminate any Plan, provided that any such action shall
not affect any rights for which the agreement or consent of the other party or a
beneficiary is required. Employees of the Surviving Corporation immediately
following the Effective Time who immediately prior to the Effective Time were
employees of the Company or any Company subsidiary shall be given credit for
purposes of eligibility and vesting under each employee benefit plan, program,
policy or arrangement of the Parent or the Surviving Corporation in which such
employees participate subsequent to the Effective Time for all service with the
Company and any Company subsidiary prior to the Effective Time (to the extent
such credit was given by the Company or any Company subsidiary) for purposes of
eligibility and vesting.
(b) The Company will not take any action which could prevent or impede the
termination of the 1995 Long-Term Incentive Compensation Plan, as amended, the
1997 Long-Term Incentive Compensation Plan Stock Incentive Plan and all other
Stock Plans and any other plans, programs or arrangements providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary of the Company in each case effective prior to the
Effective Time. The Company will take all necessary action to (i) ensure that
none of Parent, the Company or any of their respective subsidiaries is or will
be bound by any Options, other options, warrants, rights or agreements which
would entitle any Person, other than Parent or its affiliates, to own any
capital stock of the Surviving Corporation or any of its subsidiaries or to
receive any payment in respect thereof as of the Effective Time and (ii) obtain
all necessary consents so that after the Effective Time, holders of Options will
have no rights other
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than the rights of the holders of Options to receive the Cash Payment, if any,
in cancellation and settlement thereof.
SECTION 6.6. Indemnification.
(a) Parent agrees that all rights to indemnification now existing in favor
of any director or officer of the Company and its subsidiaries (the "Indemnified
Parties") as provided in their respective charters or by-laws shall survive the
Merger and shall continue in full force and effect for a period of not less than
six years from the Effective Time. After the Effective Time, Parent agrees to
cause the Surviving Corporation to honor all rights to indemnification referred
to in the preceding sentence.
(b) Parent agrees to cause the Company, and from and after the Effective
Time, the Surviving Corporation to maintain in effect for not less than four
years (except as provided in the last sentence of this Section 6.6(b)) from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company; provided that the Surviving Corporation may
substitute therefor other policies not less advantageous (other than to a de
minimus extent) to the beneficiaries of the current policies and provided that
such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time; and provided, further,
that the Surviving Corporation shall not be required to pay an annual premium in
excess of 175% of the last annual premium paid by the Company prior to the date
hereof (which the Company represents to be $100,000 for the 12-month period
ending December 31, 1998) and if the Surviving Corporation is unable to obtain
the insurance required by this Section 6.6(b) it shall obtain as much comparable
insurance as possible for an annual premium equal to such maximum amount.
Notwithstanding the foregoing, at any time on or after the first anniversary of
the Effective Time, Parent may, at its election, provide funds to the Surviving
Corporation to the extent necessary so that the Surviving Corporation may
self-insure with respect to the level of insurance coverage required under this
Section 6.6(b) in lieu of causing to remain in effect any directors' and
officers' liability insurance policy.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.6, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof (but any such
failure or delay shall not relieve Parent of liability except to the extent
Parent is actually prejudiced as a result of such failure or delay). In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right, from and after the purchase of Common Shares
pursuant to the Offer, to assume the defense thereof and Parent shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent, provided that Parent
shall not have any obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that such person is not entitled to
indemnification under applicable law. Any Indemnified Party may retain its own
separate counsel reasonably satisfactory to Parent if there is a
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conflict of interest requiring separate representation under applicable
principles of professional responsibility and may participate in (but not,
except with respect to matters relating to such conflict, control) the defense
of such claim, action, suit, proceeding or investigation and the Indemnifying
Party shall be responsible for any reasonable legal expenses or any other
reasonable expenses subsequently incurred by such Indemnified Party in
connection with such participation or defense to the extent such Indemnified
Party is entitled to be indemnified therefrom pursuant to this Section 6.6.
Parent shall not settle any claim, action, suit, proceeding or investigation
unless the Indemnified Party shall be fully released and discharged.
SECTION 6.7. Notification of Certain Matters. Parent and the Company shall
promptly notify each other of (i) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (A) to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (B) to cause
any covenant, condition or agreement under this Agreement not to be complied
with or satisfied in any material respect and (ii) any failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder. Each of the Company, Parent and the Purchaser shall give
prompt notice to the other parties hereof of any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement.
SECTION 6.8. Rights Agreement. The Company covenants and agrees that it
will not (i) redeem the Rights, (ii) amend the Rights Agreement or (iii) take
any action which would allow any Person (as defined in the Rights Agreement)
other than Parent or the Purchaser to acquire beneficial ownership of 15% or
more of the Common Shares without causing a Distribution Date or a Triggering
Event to occur.
SECTION 6.9. State Takeover Laws. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement, including the Offer and the Merger, of any state takeover law.
SECTION 6.10. No Solicitation.
(a) The Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore with
respect to any acquisition or exchange of all or any material portion of the
assets of, or any equity interest in, the Company or any of its subsidiaries or
any business combination with the Company or any of its subsidiaries. The
Company agrees that, prior to the Effective Time, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives, directly or
indirectly, to solicit, initiate, encourage or facilitate, or furnish or
disclose non-public information in furtherance of, any inquiries or the making
of any proposal with respect to
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any merger, liquidation, recapitalization, consolidation or other business
combination involving the Company or its subsidiaries or acquisition of any
capital stock or any material portion of the assets of the Company or its
subsidiaries, or any combination of the foregoing (an "Acquisition
Transaction"), or negotiate, explore or otherwise engage in discussions with any
person (other than the Purchaser, Parent or their respective directors,
officers, employees, agents and representatives) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; provided that the Company may
furnish information to, and negotiate or otherwise engage in discussions with,
any party who delivers a bona fide written proposal for an Acquisition
Transaction if the Company Board determines in good faith and on a reasonable
basis by a majority vote, after consultation with its outside legal counsel and
SSB, that (i) such Acquisition Transaction is reasonably likely to be more
favorable to the stockholders of the Company from a financial point of view than
the transactions contemplated by this Agreement and (ii) that failing to take
such action would thus constitute a breach of the fiduciary duties of the
Company Board.
(b) From and after the execution of this Agreement, the Company shall, as
soon as practicable, advise the Purchaser in writing of the receipt, directly or
indirectly, of any discussions, negotiations, proposals or substantive inquiries
relating to an Acquisition Transaction, identify the offeror and furnish to the
Purchaser a copy of any such proposal or substantive inquiry, if it is in
writing, or a written summary of any oral proposal or substantive inquiry
relating to an Acquisition Transaction. The Company shall as soon as practicable
advise Parent in writing of any substantive development relating to such
proposal, including the results of any substantive discussions or negotiations
with respect thereto.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. Conditions. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. The stockholders of the Company shall have duly
approved the transactions contemplated by this Agreement, if required by
applicable law.
(b) Purchase of Common Shares. The Purchaser shall have accepted for
payment and paid for Common Shares pursuant to the Offer in accordance with the
terms hereof.
(c) Injunctions; Illegality. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity and there
shall not have been any statute, rule or regulation enacted, promulgated or
deemed applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger or has the effect of making the purchase of Common
Shares illegal.
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(d) HSR Act. Any waiting period (and any extension thereof) under the HSR
Act applicable to the Merger shall have expired or terminated.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company (with any
termination by Parent also being an effective termination by the Purchaser):
(a) by the mutual written consent of the Company, by action of its Board
of Directors and Parent;
(b) by the Company if (i) the Purchaser fails to commence the Offer as
provided in Section 1.1 hereof, (ii) the Purchaser shall not have accepted for
payment and paid for Common Shares pursuant to the Offer in accordance with the
terms thereof on or before June 30, 1998, provided that if any applicable
waiting period under the HSR Act shall not have expired or been terminated prior
to June 30, 1998, then the Company may not terminate this Agreement pursuant to
this Section 8.1(c)(ii) until August 31, 1998 or (iii) the Purchaser fails to
purchase validly tendered Common Shares in violation of the terms of this
Agreement;
(c) by Parent or the Company if the Offer is terminated or withdrawn
pursuant to its terms without any Common Shares being purchased thereunder;
provided, however, that neither Parent nor the Company may terminate this
Agreement pursuant to this Section 8.1(c) if such party shall have materially
breached this Agreement or, in the case of Parent, if it or the Purchaser is in
material violation of the terms of the Offer;
(d) by Parent or the Company if any court or other Governmental Entity
shall have issued an order, decree, judgment or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Common Shares pursuant to the Offer or the Merger
and such order, decree or ruling or other action shall have become final and
nonappealable;
(e) by the Company if, prior to the purchase of Common Shares pursuant to
the Offer in accordance with the terms of this Agreement, the Company Board
approves an Acquisition Transaction, on terms which a majority of the members of
the Company Board have determined in good faith and on a reasonable basis, after
consultation with its outside counsel and SSB, that (i) such Acquisition
Transaction is more favorable to the Company and its stockholders from a
financial point of view than the transactions contemplated by this Agreement and
(ii) failure to approve such proposal and terminate this Agreement would thus
constitute a breach of fiduciary duties of the Company Board under applicable
law; provided that the termination described in this Section 8.1(e) shall not be
effective unless and until the Company shall have paid to Parent the Termination
Fee (as defined in Section 8.3(b));
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(f) by Parent if the Company breaches its covenant in Section 6.8;
(g) by Parent prior to the purchase of Common Shares pursuant to the
Offer, if the Company Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to the Purchaser its
approval or recommendation of the Offer, this Agreement or the Merger, shall
have approved or recommended another offer or transaction, or shall have
resolved to effect any of the foregoing;
(h) by Parent if any Management Stockholder shall have failed to perform
or to comply with any of his obligations, covenants or agreements in any
material respect under a Support Agreement;
(i) by Parent prior to the purchase of Common Shares pursuant to the Offer
if the Minimum Condition (as defined in Annex I) shall not have been satisfied
by the expiration date of the Offer and on or prior to such date (A) a third
party shall have made a proposal or public announcement or communication to the
Company with respect to (i) the acquisition of the Company by merger, tender
offer or otherwise; (ii) the acquisition of 50% or more of the assets of the
Company and its subsidiaries, taken as a whole; (iii) the acquisition of 15% or
more of the outstanding Common Shares; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary dividend;
or (v) the repurchase by the Company or any of its subsidiaries of 15% or more
of the outstanding Common Shares at a price in excess of the Offer Price or (B)
any person (including the Company or any of its affiliates or subsidiaries),
other than Parent or any of its affiliates, shall have become the beneficial
owner of more than 15% of the Common Shares; or
(j) by Parent if Purchaser shall not have accepted for payment and paid
for Common Shares pursuant to the Offer in accordance with the terms thereof on
or before June 30, 1998.
SECTION 8.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers, employees or stockholders, other than the provisions of
this Section 8.2 and Section 8.3, which shall survive any such termination.
Nothing contained in this Section 8.2 or elsewhere in this Agreement shall
relieve any party from liability for any breach of this Agreement.
SECTION 8.3. Fees and Expenses.
(a) Whether or not the Merger is consummated, except as otherwise
specifically provided herein, all costs and expenses incurred in connection with
the Offer, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
(b) In the event that this Agreement is terminated pursuant to Section
8.1(e), (f), (g), or (h) or pursuant to Section 8.1(c) as a result of the
failure to satisfy any of the conditions set forth in paragraph (d) of Annex I,
then the Company shall within one business day after such
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termination pay Parent (except in the case of termination pursuant to Section
8.1(e) in which case payment shall be made upon or prior to such termination) a
termination fee of $5,500,000 (the "Termination Fee") in immediately available
funds by wire transfer to an account designated by Parent. In the event that
this Agreement is terminated pursuant to Section 8.1(i) and within six months of
such termination the Company shall have entered into a definitive agreement or a
written agreement in principle providing for an Acquisition Transaction, the
Company shall pay Parent the Termination Fee at or prior to execution of such
agreement or agreement in principle in immediately available funds by wire
transfer to an account designated by Parent. In the event this Agreement is
terminated pursuant to Section 8.1(c) as a result of the failure to satisfy the
conditions set forth in paragraphs (f) or (g)(1) of Annex I, then the Company
shall promptly (and in any event within one business day after such termination
and receipt of notice by Parent specifying, in reasonable detail, such fees and
expenses) reimburse Parent for the fees and expenses of Parent and the Purchaser
(including reasonable printing fees, filing fees and reasonable fees and
expenses of its legal and financial advisors) related to the Offer, this
Agreement, the transactions contemplated hereby and any related financing up to
a maximum of $1,500,000 (collectively "Expenses") in immediately available funds
by wire transfer to an account designated by Parent.
(c) The prevailing party in any legal action undertaken to enforce this
Agreement or any provision hereof shall be entitled to recover from the other
party the costs and expenses (including attorneys' and expert witness fees)
incurred in connection with such action.
SECTION 8.4. Amendment. This Agreement may be amended by the Company,
Parent and the Purchaser at any time before or after any approval of this
Agreement by the stockholders of the Company but, after any such approval, no
amendment shall be made which decreases the Merger Price, changes the
consideration to be received or which otherwise adversely affects the rights of
the Company's stockholders hereunder without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties. Any amendment to this Agreement following the
election or appointment of Parent's designees pursuant to Section 1.3 shall be
made only in accordance with Section 1.3(c).
SECTION 8.5. Extension; Waiver. Subject to Section 1.3(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Article III and Sections 6.5(a) and 6.6 shall survive the Effective Time
indefinitely (except to the extent a shorter period of time is explicitly
specified therein).
SECTION 9.2. Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred
to herein) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder will be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of each other party (except
that Parent may assign its rights and the Purchaser may assign its rights,
interest and obligations to any affiliate or direct or indirect subsidiary of
Parent without the consent of the Company provided that no such assignment shall
relieve Parent of any liability for any breach by such assignee). Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION 9.3. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
Western Atlas Inc.
10205 Westheimer Road
Houston, Texas 77042-3115
Attention: James E. Brasher, Esq.
Fax: (713) 266-1717
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with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Daniel A. Neff, Esq.
Fax: (212) 403-2000
If to the Company:
3-D Geophysical, Inc.
599 Lexington Avenue
Suite 4102
New York, New York 10022
Attention: Joel Friedman
Fax: (212) 317-9230
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Fax: (212) 715-8000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.8. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except with respect to
Sections 6.5(a) and 6.6, 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.
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SECTION 9.9. Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any Person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "Person" or "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with respect to Parent,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such other person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the holders of
which are generally entitled to 50% or more of the vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
SECTION 9.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity, without posting any bond
or proving that damages would be inadequate.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
WESTERN ATLAS INC.
By: /s/ Richard White
---------------------------------
Name: Richard White
Title:
WAI ACQUISITION CORP.
By: /s/ Richard White
---------------------------------
Name: Richard White
Title:
3-D GEOPHYSICAL, INC.
By: /s/ Joel Friedman
---------------------------------
Name: Joel Friedman
Title:
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Annex I
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement and Plan of Merger to which this Annex is attached,
except that the term "Merger Agreement" shall be deemed to refer to such
Agreement and Plan of Merger.
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Common Shares and may terminate or, subject to the terms of the Merger
Agreement, amend the Offer, if (i) there shall not be validly tendered and not
properly withdrawn prior to the expiration date for the Offer (the "Expiration
Date") that number of Common Shares which represents at least a majority of the
total number of outstanding Common Shares on a fully diluted basis on the date
of purchase (not taking into account the Rights) (the "Minimum Condition"), (ii)
any applicable waiting period under the HSR Act shall not have expired or been
terminated, or (iii) at any time on or after March 8, 1998 and prior to the time
of payment for any Common Shares, any of the following exist:
(a) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, ruling, judgment, order or
injunction enacted, enforced, promulgated, amended, issued or deemed
applicable to the Offer, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency, domestic
or foreign, that would reasonably be expected to, directly or indirectly:
(1) make illegal or otherwise prohibit or materially delay consummation of
the Offer or the Merger or seek to obtain material damages or make
materially more costly the making of the Offer, (2) prohibit or materially
limit the ownership or operation by Parent or the Purchaser of all or any
portion of the business or assets of the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or compel Parent or the Purchaser to dispose of or hold
separately all or any portion of the business or assets of Parent or the
Purchaser or the Company or any of its subsidiaries that is material to
the Company and its subsidiaries, taken as a whole, or impose any material
limitation on the ability of Parent or the Purchaser to conduct its
business or own such assets, (3) impose material limitations on the
ability of Parent or the Purchaser effectively to acquire, hold or
exercise full rights of ownership of the Common Shares, including, without
limitation, the right to vote any Common Shares acquired or owned by the
Purchaser or Parent on all matters properly presented to the Company's
stockholders, (4) require divestiture by Parent or the Purchaser of any
Common Shares, or (5) result in a Material Adverse Effect; or
(b) there shall be instituted or pending any action or proceeding by
any Governmental Entity seeking, or by any third party that would
reasonably be expected to result in, any of the consequences referred to
in clauses (1) through (5) of paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving prospective
change) in the business, assets, liabilities, financial condition, results
of operations or prospects of the Company or any of its subsidiaries that
has, or would reasonably be expected to have, a Material Adverse Effect;
or
46
(d) (1) it shall have been publicly disclosed or the Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph (d) as set forth in Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of the outstanding Common Shares
has been acquired by any person (including the Company or any of its
subsidiaries or affiliates) or group (as defined in Section 13(d)(3) under
the Exchange Act), (2) the Company Board or any committee thereof shall
have withdrawn, or shall have modified or amended in a manner adverse to
Parent or the Purchaser, the approval, adoption or recommendation, as the
case may be, of the Offer or the Merger Agreement, or approved or
recommended any other takeover proposal or other acquisition of Common
Shares other than the Offer and the Merger, (3) a third party shall have
entered into a definitive agreement or a written agreement in principle
with the Company with respect to the acquisition of a majority of the
Company's assets, a tender offer or exchange offer to be made to holders
of Common Shares or a merger, consolidation or other business combination
with or involving the Company or any of its subsidiaries, or (4) the
Company Board or any committee thereof shall have resolved to do any of
the foregoing; or
(e) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(f) any of the representations and warranties of the Company set
forth in the Merger Agreement, when read without any exception or
qualification as to materiality or Material Adverse Effect, shall not be
true and correct, as if such representations and warranties were made at
the time of such determination (except as to any such representation or
warranty which speaks as of a specific date, which must be untrue or
incorrect as of such specific date), except where the failure or failures
to be so true and correct would not, individually or in the aggregate,
reasonably be expected to (i) have a Material Adverse Effect, (ii) prevent
or materially delay the consummation of the Offer, or (iii) materially
increase the cost of the Offer to the Purchaser; or
(g) (1) the Company shall have failed to perform or to comply with
any of its obligations, covenants or agreements under the Merger Agreement
in any material respect or (2) any Management Stockholder shall have
failed to perform or to comply in any material respect with any of his
obligations, covenants or agreements under a Support Agreement; or
(h) any Consent set forth in Section 4.05 of the Company Disclosure
and identified thereon as a "required Consent" shall not have been filed
or obtained or shall not have occurred, as the case may be; or
(i) there shall have occurred, and continued to exist, (1) any
general suspension of, or limitation on prices for, trading in securities
on the New York Stock Exchange or in the NASDAQ National Market System,
(2) any decline of at least 25% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 Index from the
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47
close of business on the last trading day immediately preceding the date
of the Merger Agreement, (3) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (4) a
commencement of a war, armed hostilities or other national or
international crisis directly or indirectly involving the United States,
with the exception of any military action directed against the nation of
Iraq, or a material limitation (whether or not mandatory) by any
Governmental Entity on the extension of credit by banks or other lending
institutions, or (5) in the case of any of the foregoing clauses (1)
through (4) existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof.
The foregoing conditions (including those set forth in clauses (i) and
(ii) of the initial paragraph) are for the benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Parent or the Purchaser,
in whole or in part, at any time and from time to time in their reasonable
discretion, in each case, subject to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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