SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 8, 1998
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3-D GEOPHYSICAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-99240 13-3841601
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8226 Park Meadows Drive, Littleton, Colorado 80124
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 858-0500
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(Former name or former address, if changed since last report.)
The Exhibit Index appears on Page 6
Page 1 of pages.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
3-D Geophysical, Inc. (the "Company"), Western Atlas Inc. ("Western")
and WAI Acquisition Corp. have entered into an Agreement and Plan of Merger,
dated as of March 8, 1998 (the "Merger Agreement"), pursuant to which the
Company will become a wholly-owned subsidiary of Western (the "Merger"). The
Merger Agreement, which was unanimously approved by the Company's Board of
Directors, provides that WAI Acquisition Corp. will commence a tender offer for
any and all outstanding shares of the Company's common stock at a purchase price
of $9.65 per share in cash, no later than five business days from the date of
the Merger Agreement and, following successful completion of the tender offer,
WAI Acquisition Corp. will merge with and into the Company and each remaining
outstanding share of the Company's common stock will be converted into the right
to receive $9.65 in cash.
In the event that less than 90% of the shares are tendered, the Company
has agreed to call a special meeting of stockholders to vote on the Merger, in
which case the Merger will be consummated upon the vote in favor of the Merger
by stockholders holding a majority of the outstanding shares of common stock.
The tender offer is subject to the satisfaction of a number of customary
conditions including among others, expiration of all waiting periods under the
Hart-Scott Rodino Antitrust Improvements Act. The Merger Agreement may be
terminated by the Company if, prior to the purchase of shares of common stock by
Western, the Company's Board of Directors approves an alternative transaction on
terms which a majority of the members of the Company's Board of Directors have
determined, in good faith and on a reasonable basis and as otherwise provided in
the Merger Agreement, to be more favorable to the Company and its stockholders
from a financial point of view than the transaction contemplated by the Merger
Agreement.
In connection with the Merger Agreement, the Company has entered into
an amendment, dated as of March 6, 1998 (the "Amendment"), to the Rights
Agreement, dated as of July 17, 1997, between the Company and American
Securities Transfer & Trust, Inc. (the "Rights Agreement") to amend the defined
term "Acquiring Person" to provide that neither Western nor WAI Acquisition
Corp. will become "Acquiring Persons" as a result of any of the transactions
contemplated by the Merger Agreement. Also in connection with the Merger
Agreement, each of the Company's executive officers and directors has entered
into a Support Agreement pursuant to which they have agreed to tender any shares
of the Company's common stock owned by them to Western and to vote such shares
in favor of the Merger and Joel Friedman, the Company's Chairman,
Page 2 of pages.
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and Luis Ferran, Executive Vice President and President of the Company's Mexican
subsidiary, Geoevaluaciones, S.A. de C.V., have each entered into four-year
Consulting and Non-Compete Agreements under which they will receive aggregate
compensation of $1,000,000 and $500,000, respectively
The information set forth in the Merger Agreement and the Amendment,
attached hereto as Exhibits 2.1 and 2.2, respectively, is incorporated herein by
reference.
Page 3 of pages.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
Not required.
(b) Pro Forma Financial Information.
Not required.
(c) Exhibits.
2.1 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.
2.2 First Amendment, dated as of March 6, 1998,
to the Rights Agreement, dated as of July
17, 1997, between 3-D Geophysical, Inc. and
American Securities Transfer & Trust, Inc.
Page 4 of pages.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
3-D GEOPHYSICAL, INC.
By:/s/ Joel Friedman
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Name: Joel Friedman
Title: Chairman
Date: March 9, 1998
Page 5 of pages.
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EXHIBIT INDEX
Exhibit Page
2.1 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.
2.2 First Amendment, dated as of March 6, 1998, to the Rights Agreement,
dated as of July 17, 1997, between 3-D Geophysical, Inc. and American
Securities Transfer & Trust, Inc.
Page 6 of pages.
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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 1.01 The Offer................................................... 2
SECTION 1.02 Company Actions............................................. 4
SECTION 1.03 Directors................................................... 5
ARTICLE II
THE MERGER
SECTION 2.01 The Merger....................................................6
SECTION 2.02 Effective Time 7
SECTION 2.03 Effects of the Merger 7
SECTION 2.04 Certificate of Incorporation and
By-Laws of the Surviving Corporation 7
SECTION 2.05 Directors 7
SECTION 2.06 Officers 7
SECTION 2.07 Conversion of Common Shares 7
SECTION 2.08 Conversion of Purchaser Common Stock........................ 8
SECTION 2.09 Options; Stock Plans........................................ 8
SECTION 2.10 Stockholders' Meeting....................................... 9
SECTION 2.11 Merger Without Meeting of Stockholders...................... 9
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares.......................................... 10
SECTION 3.02 Payment for Common Shares.................................. 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification;
Subsidiaries................................... 12
SECTION 4.02 Charter; By-Laws and Rights Agreement...................... 13
SECTION 4.03 Capitalization; Subsidiaries............................... 13
SECTION 4.04 Authority.................................................. 14
SECTION 4.05 No Conflict; Required Filings
and Consents.............................................. 15
SECTION 4.06 SEC Reports and Financial Statements....................... 16
SECTION 4.07 Environmental Matters...................................... 18
SECTION 4.08 Compliance with Applicable Laws............................ 20
SECTION 4.09 Change of Control.......................................... 20
SECTION 4.10 Litigation................................................. 21
SECTION 4.11 Information................................................ 21
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SECTION 4.12 Certain Approvals.......................................... 22
SECTION 4.13 Employee Benefit Plans..................................... 22
SECTION 4.14 Intellectual Property...................................... 25
SECTION 4.15 Taxes...................................................... 27
SECTION 4.16 Absence of Certain Changes................................. 28
SECTION 4.17 Labor Matters.............................................. 28
SECTION 4.18 Rights Agreement........................................... 28
SECTION 4.19 Condition of Assets........................................ 29
SECTION 4.20 Brokers.................................................... 29
SECTION 4.21 Opinion of Financial Advisor............................... 29
SECTION 4.22 Employees.................................................. 29
SECTION 4.23 Customers.................................................. 30
SECTION 4.24 Material Contracts......................................... 30
SECTION 4.25 Affiliated Transactions.................................... 31
SECTION 4.26 Omission of Material Facts................................. 31
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
SECTION 5.01 Organization and Qualification............................. 32
SECTION 5.02 Authority.................................................. 32
SECTION 5.03 No Conflict; Required Filings
and Consents............................................. 33
SECTION 5.04 Information................................................ 33
SECTION 5.05 Financing.................................................. 34
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company......................... 34
SECTION 6.02 Access to Information...................................... 38
SECTION 6.03 Efforts.................................................... 38
SECTION 6.04 Public Announcements....................................... 39
SECTION 6.05 Employee Benefit Arrangements.............................. 39
SECTION 6.06 Indemnification............................................ 40
SECTION 6.07 Notification of Certain Matters............................ 41
SECTION 6.08 Rights Agreement........................................... 42
SECTION 6.09 State Takeover Laws........................................ 42
SECTION 6.10 No Solicitation............................................ 42
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions................................................. 43
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination................................................ 44
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SECTION 8.02 Effect of Termination...................................... 46
SECTION 8.03 Fees and Expenses.......................................... 46
SECTION 8.04 Amendment.................................................. 47
SECTION 8.05 Extension; Waiver.......................................... 47
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and
Warranties..................................... 48
SECTION 9.02 Entire Agreement; Assignment............................... 48
SECTION 9.03 Validity................................................... 48
SECTION 9.04 Notices.................................................... 48
SECTION 9.05 Governing Law.............................................. 49
SECTION 9.06 Descriptive Headings....................................... 49
SECTION 9.07 Counterparts............................................... 50
SECTION 9.08 Parties in Interest........................................ 50
SECTION 9.09 Certain Definitions........................................ 50
SECTION 9.10 Specific Performance....................................... 50
Signatures................................................................ 51
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 $.0l 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
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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;
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 1.01 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
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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. Parent and
Purchaser shall comply with the obligations respecting prompt payment pursuant
to Rule 14e-l(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 1.02 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
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"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 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 1.02(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
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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 1.03 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.
(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-i thereunder. The Company shall promptly take all actions required pursuant
to such Section and
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Rule in order to fulfill its obligations under this Section 1.03 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 1.03. 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 1.03 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 2.01 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 2.02 Effective Time. As soon as practicable after the
satisfaction of the conditions set forth in Sections 7.01(a) and 7.01(b), but
subject to Sections 7.01(c) and 7.01(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 2.03 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
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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.
SECTION 2.04 Certificate of Incorporation and ByLaws 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 6.06 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.O5 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 2.06 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 2.07 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 $9.65 in
cash (the "Merger Price"), payable to the holder thereof, without interest
thereon, upon surrender of the certificate formerly representing such Common
Share.
SECTION 2.08 Conversion of Purchaser Common Stock. The Purchaser has
outstanding 1,000 shares of common stock, par value
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$.0l 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 $.0l 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 nonassessable share of common stock, par value
$.0l per share, of the Surviving Corporation.
SECTION 2.09 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
payment therefor except as otherwise provided in this Section 2.09. Immediately
prior to the Effective Time, all Options (whether vested or unvested) which are
listed in Section 4.03 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
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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 Common 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 3.01 Dissenting Shares. Notwithstanding Section 2.07, 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
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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 3.02 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 2.07. 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 2.07.
(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 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
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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.
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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:
SECTION 4.01 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 4.02 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 4.03 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 $.0l per share (the "Preferred Stock"), of which
100,000 shares
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are designated Series A Junior Participating Preferred Stock, par value $.0l 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 4.03 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 outstanding 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 4.03 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
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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 4.03 of the Company Disclosure Schedule. Set forth in Section
4.03 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 4.04 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.
SECTION 4.05 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
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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 4.05(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 4.05(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 4.05(b) of the Company Disclosure Schedule, as are re-
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quired under foreign laws except in the case of clause (iv) for filings,
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 4.06 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).
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(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 4.06(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.
SECTION 4.07 Environmental Matters.
(a) Except as set forth in Section 4.07 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
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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 4.07(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.
(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
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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.
SECTION 4.08 Compliance with Applicable Laws. Except with respect to
Environmental Laws which are covered in Section 4.07, 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 4.07, the op- erations 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).
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SECTION 4.09 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 4.09 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 4.07, 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 the respective times filed with
the SEC or other Governmental Entity and, in addition, in the case of the Proxy
Statement, at the date
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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(i) 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;
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(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 amendments 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,
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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 (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
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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
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.
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(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, knowhow, 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
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respect to, or otherwise to enforce rights with respect to, any Intellectual
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)(1),
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
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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.
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 6.01 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
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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 advisers in connection
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
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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, 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
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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 5.01 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
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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 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 5.02 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 5.03 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
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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.
SECTION 5.04 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 5.05 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 6.01 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
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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 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 6.01(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
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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 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
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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
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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;
(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 6.01.
SECTION 6.02 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 6.03 Efforts.
(a) Subject to the terms and conditions provided herein, each of the
Company, Parent and the Purchaser shall, and
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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 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 6.04 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.O5 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
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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 than the rights of the holders of Options to receive the
Cash Payment, if any, in cancellation and settlement thereof.
SECTION 6.06 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
6.06(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
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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 6.06(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 6.06(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 6.06, 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 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 6.06. Parent shall not settle
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any claim, action, suit, proceeding or investigation unless the Indemnified
Party shall be fully released and discharged.
SECTION 6.07 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 6.08 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 6.09 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
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facilitate, or furnish or disclose nonpublic information in furtherance of, any
inquiries or the making of any proposal with respect to 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 Proposal 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 7.01 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:
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(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.
(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 8.01 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 1.01 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 8.01(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
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to this Section 8.01(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 8.01(e) shall not
be effective unless and until the Company shall have paid to Parent the
Termination Fee (as defined in Section 8.03(b));
(f) by Parent if the Company breaches its covenant in Section 6.08;
(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
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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 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, 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 8.02 and Section 8.03, which shall survive any such termination.
Nothing contained in this Section 8.02 or elsewhere in this Agreement shall
relieve any party from liability for any breach of this Agreement.
SECTION 8.03 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
8.01(e), (f), (g), or (h) or pursuant to Section 8.01(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 termination pay Parent
(except in the case of termination pursuant to Section 8.01(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 8.01(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
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8.01(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 8.04 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 1.03 shall be
made only in accordance with Section 1.03(c).
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(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 9.01 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 6.05(a) and 6.06 shall survive the Effective Time
indefinitely (except to the extent a shorter period of time is explicitly
specified therein).
SECTION 9.02 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 9.03 Validity. The invalidity or unenforce-ability 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 9.04 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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<PAGE>
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 9.05 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 9.06 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 9.07 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 9.08 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 6.05(a) and 6.06, 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 9.09 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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<PAGE>
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 C. White
---------------------
Name: Richard C. White
Title: Senior Vice President
WAI ACQUISITION CORP.
By:/s/ Richard C. White
---------------------
Name: Richard C. White
Title: Vice President
3-D GEOPHYSICAL, INC.
By:/s/ Joel Friedman
-----------------
Name: Joel Friedman
Title: Chairman
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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)
<PAGE>
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
(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
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<PAGE>
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 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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<PAGE>
Annex II
SUPPORT AGREEMENT (this "Agreement"), dated as of March __, 1998, by
and between Western Atlas Inc., a Delaware corporation ("Parent"), and
________________ ("Seller").
WHEREAS, concurrently herewith, Parent, WAI Acquisition Corp. (the
"Purchaser"), a Delaware corporation and a subsidiary of Parent, and 3-D
Geophysical, Inc. (the "Company"), a Delaware corporation, are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement",
which term shall not include any amendment to such Agreement which decreases the
Offer Price or changes the form of consideration payable in the Offer, unless
Seller consents to the inclusion of such amendment in such term). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement), pursuant to which the Purchaser agrees to make a tender offer
(the "Offer") for all outstanding shares of common stock, par value $.0l per
share (the "Shares"), of the Company, at $9.65 per share (the "Offer Price") net
to the seller in cash, to be followed by a merger (the "Merger") of the
Purchaser with and into the Company;
WHEREAS, as of the date hereof, Seller beneficially owns directly
_________________ Shares (the "Owned Shares");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement and make the Offer, Parent and the Purchaser have required that Seller
agree, and Seller hereby agrees, (i) to tender pursuant to the Offer the Owned
Shares, together with any Shares acquired after the date hereof and prior to the
termination of the Offer, whether upon the exercise of options, conversion of
convertible securities or otherwise (collectively, the "Tender Shares") on the
terms and subject to the conditions provided for in this Agreement and (ii) to
enter into the other agreements set forth herein; and
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Tender and Vote.
1.1 Tender. Seller hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), pursuant to and in accordance with the
terms of the Offer, as soon as practicable after commencement of the Offer but
in no
<PAGE>
event later than five business days after the date of commencement of the Offer,
the Tender Shares by physical delivery of the certificates therefor and to not
withdraw such Tender Shares, except following termination of this Agreement
pursuant to Section 2 hereof. Seller hereby acknowledges and agrees that
Parent's and the Purchaser's obligation to accept for payment and pay for the
Tender Shares is subject to the terms and conditions of the Offer. Seller hereby
permits Parent and the Purchaser to publish and disclose in the Offer Documents
and, if approval of the Company's stockholders is required under applicable law,
the Proxy Statement (including all documents and schedules filed with the
Securities and Exchange Commission) his identity and ownership of the Tender
Shares and the nature of his commitments, arrangements and understandings under
this Agreement.
1.2 Voting. Seller hereby agrees that, during the time this Agreement
is in effect, at any meeting of the shareholders of the Company, however called,
Seller shall (a) vote the Tender Shares in favor of the Merger; (b) vote the
Tender Shares against any action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement; and (c) vote the Tender Shares against
any action or agreement (other than the Merger Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone or
attempt to discourage the Merger or the Offer, including, but not limited to:
(i) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or any of its subsidiaries;
(ii) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries or a reorganization, recapitalization or liquidation of the
Company and its subsidiaries; (iii) any change in the management or board of
directors of the Company, except as otherwise agreed to in writing by the
Purchaser; (iv) any material change in the present capitalization or dividend
policy of the Company; or (v) any other material change in the Company's
corporate structure or business. Seller hereby revokes any proxy previously
granted by him with respect to the Tender Shares.
1.3 Grant of Irrevocable Proxy; Appointment of Proxy.
(i) Seller hereby irrevocably grants to, and appoints, William H.
Flores and James E. Brasher, or either of them, in their respective capacities
as officers or directors of Parent, and any individual who shall hereafter
succeed to any such office or directorship of Parent, and each of them
individually, Seller's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Seller, to vote the
Tender Shares in favor of the Merger and other transactions contemplated by the
Merger Agreement, against any
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<PAGE>
Acquisition Transaction and otherwise as contemplated by Section 1.2.
(ii) Seller represents that any proxies heretofore given in respect of
the Tender Shares are not irrevocable, and that any such proxies are hereby
revoked.
(iii) Seller understands and acknowledges that Parent is entering into
the Merger Agreement in reliance upon Seller's execution and delivery of this
Agreement. Seller hereby affirms that the irrevocable proxy set forth in this
Section 1.3 is given in connection with the execution of the Merger Agreement,
and that such irrevocable proxy is given to secure the performance of the duties
of Seller under this Agreement. Seller hereby further affirms that the
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the Delaware General Corporation Law.
1.4 No Inconsistent Arrangements. Seller hereby covenants and agrees
that, except as contemplated by this Agreement and the Merger Agreement, it
shall not (i) transfer (which term shall include, without limitation, any sale,
gift, pledge or other disposition), or consent to any transfer of, any or all of
the Tender Shares or any interest therein, (ii) enter into any contract, option
or other agreement or understanding with respect to any transfer of any or all
of the Tender Shares or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to the Tender
Shares, (iv) deposit the Tender Shares into a voting trust or enter into a
voting agreement or arrangement with respect to the Tender Shares or (v) take
any other action that would in any way restrict, limit or interfere with the
performance of his obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement or which would make any representation or warranty of
Seller hereunder untrue or incorrect.
1.5 No Solicitation. Seller hereby agrees that Seller shall not, and
shall not permit or authorize any of his affiliates, representatives or agents
to, directly or indirectly, encourage, solicit, explore, participate in or
initiate discussions or negotiations with, or provide or disclose any
information to, any corporation, partnership, person or other entity or group
(other than Parent, the Purchaser or any of their affiliates or representatives)
concerning any Acquisition Transaction or enter into any agreement, arrangement
or understanding requiring the Company to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated
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<PAGE>
by the Merger Agreement. Seller will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Transaction. From and after the execution of this Agreement,
Seller shall immediately advise Parent in writing of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations or proposals relating to
an Acquisition Transaction, identify the offeror and furnish to Parent a copy of
any such proposal or inquiry, if it is in writing, or a written summary of any
oral proposal or inquiry relating to an Acquisition Transaction. Seller shall
promptly advise Parent in writing of any development relating to such proposal,
including the results of any discussions or negotiations with respect thereto.
Any action taken by the Company or any member of the Board of Directors of the
Company including, if applicable, Seller acting in such capacity, in accordance
with the proviso to the second sentence of Section 6.10(a) of the Merger
Agreement shall be deemed not to violate this Section 1.5.
1.6 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, Seller hereby agrees to use all reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Seller shall promptly consult with Parent and provide
any necessary information and material with respect to all filings made by
Seller with any Governmental Entity in connection with this Agreement and the
Merger Agreement and the transactions contemplated hereby and thereby.
1.7 Waiver of Appraisal Rights. Seller hereby waives any rights of
appraisal or rights to dissent from the Merger that he may have.
2. Expiration. This Agreement and Seller's obligation to tender
provided hereto shall terminate on the earlier of the payment for the Shares
pursuant to the Offer and the termination of the Merger Agreement in accordance
with its terms.
3. Representation and Warranties.
Seller hereby represents and warrants to Parent as follows:
(a) Title. Seller has good and valid title to the Tender Shares,
free and clear of any lien, pledge, charge, encumbrance or claim of
whatever nature and, upon the purchase of the Tender Shares by the
Purchaser, Seller will deliver good and valid title to
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<PAGE>
the Tender Shares, free and clear of any lien, charge, encumbrance or
claim of whatever nature.
(b) Ownership of Shares. On the date hereof, the Owned Shares are
owned of record or beneficially by Seller and, on the date hereof, the
Owned Shares constitute all of the Shares owned of record or
beneficially by Seller. Seller has sole voting power and sole power of
disposition with respect to all of the Owned Shares, with no
restrictions, subject to applicable federal securities laws, on
Seller's rights of disposition pertaining thereto.
(c) Power; Binding Agreement. Seller has the legal capacity,
power and authority to enter into and perform all of his obligations
under this Agreement. The execution, delivery and performance of this
Agreement by Seller will not violate any other agreement to which
Seller is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly
and validly executed and delivered by Seller and constitutes a valid
and binding agreement of Seller, enforceable against Seller in
accordance with its terms.
(d) No Conflicts. Other than in connection with or in compliance
with the provisions of the Exchange Act and the HSR Act, no
authorization, consent or approval of, or filing with, any court or
any public body or authority is necessary for the consummation by
Seller of the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
constitute a breach, violation or default (or any event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration under, or
result in the creation of any lien, encumbrance, pledge, charge or
claim upon any of the properties or assets of Seller under, any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which Seller is a party or by which his properties
or assets are bound.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection
with the
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<PAGE>
transactions contemplated hereby based upon arrangements made by or on
behalf of Seller.
4. Additional Shares. Seller hereby agrees, while this Agreement is in
effect, to promptly notify Parent of the number of any new Shares acquired by
Seller, if any, after the date hereof.
5. Further Assurances. From time to time, at the Parent's request and
without further consideration, Seller shall execute and deliver such additional
documents and take all such further action as may be reasonably necessary or
desirable to consummate and make effective the transactions contemplated by
Section 1 of this Agreement.
6. Miscellaneous.
6.1 Non-Survival. The representations and warranties made herein shall
terminate upon Seller's sale of the Tender Shares to the Purchaser in the Offer,
other than Seller's representation and warranty in Section 3.2(a), which shall
survive the sale of the Tender Shares and the termination of this Agreement
following such sale.
6.2 Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise, provided that Parent may
assign its rights and obligations hereunder to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
6.3 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
6.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by hand
delivery, telegram, telex or telecopy or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
If to Seller:
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<PAGE>
copy to Seller's Counsel:
If to Parent:
Western Atlas Inc.
10205 Westheimer Road
Houston, Texas 77042-3115
Attention: James E. Brasher, Esq.
Fax: (713) 266-1717
copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Daniel A. Neff, Esq.
Fax: (212) 403-2000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
6.5 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.
6.6 Specific Performance. Seller recognizes and acknowledges that a
breach by him of any covenants or agreements contained in this Agreement will
cause Parent to sustain damages for which it would not have an adequate remedy
at law for money damages, and therefore Seller agrees that in the event of any
such breach Parent shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
6.7 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which shall
constitute one and the same Agreement.
6.8 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and
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<PAGE>
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
6.9 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
IN WITNESS WHEREOF, Parent and Seller have caused this Agreement to be
duly executed as of the day and year first above written.
WESTERN ATLAS INC.
By:_____________________
Name:_______________
Title:______________
SELLER
Name:_____________
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<PAGE>
Annex III
CONSULTING AND NON-COMPETE AGREEMENT
AGREEMENT, dated as of March , 1998, by and between Western Atlas Inc.,
a Delaware corporation (the "Parent"), Friedman Enterprises Inc., a New York
corporation ("FEI") and Joel Friedman (the "Consultant").
WHEREAS, the Consultant is the Chairman of the Board of Directors of
3-D Geophysical, Inc., a Delaware corporation, (collectively with its
subsidiaries, the "Company");
WHEREAS, the Parent has entered into an Agreement and Plan of Merger
with the Company and WAI Acquisition Corp., dated as of March ___, 1998 (the
"Merger Agreement");
WHEREAS, the Consultant will terminate employment with the Company
effec- tive as of the "Effective Time" (as defined in the Merger Agreement) of
the merger contemplated by the Merger Agreement (the "Merger"); and
WHEREAS, the Consultant is the President and sole shareholder of FEI;
and
WHEREAS, the Parent desires to provide for the Consultant to perform
services for the Parent and the Company following the Merger and FEI desires to
make Consultant avail- able to perform such services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the Parent and the
Consultant hereby agree as follows:
1. Consulting Services. Subject to the effectiveness of the Merger, the
Consultant hereby agrees to provide such consulting services to the Parent and
to the Company as the President of the Western Geophysical Division of Western
Atlas International, Inc. or his designee shall reasonably request for not more
than __ hours per month. Such consulting services may be rendered in New York,
New York, or at any other mutually agreeable place. FEI hereby agrees to make
Consultant available to provide such service.
2. Term. The period of consultancy under this Agreement shall be for a
period commencing on the Effective Time and ending on the fourth anniversary of
the Effective Time (the "Term").
3. Consulting Fee. The Parent shall pay to FEI, in consideration of the
consulting services, a consulting fee (the "Consulting Fee") at an annual rate
of $_______ payable in substantially equal monthly installments during the Term.
<PAGE>
4. Expenses. The Parent will reimburse FEI for all authorized
reasonable and necessary out-of-pocket expenses incurred by the Consultant in
the performance of his duties hereunder upon the presentation of appropriate
documentation. Such expenses shall be submitted to Parent, at P.O. Box 1407,
Houston, TX 77251-1407, Att: J. Perez, on Parent's standard expense report forms
in accordance with Parent's expense reimbursement policy in effect from time to
time during the Term.
5. Termination of Consultancy. The Consultant's consultancy hereunder
shall terminate prior to the scheduled end of the Term upon the first to occur
of:
(a) the death of the Consultant; or
(b) the Consultant's illness, disability or incapacity ("Disability")
that prevents the Consultant from performing his duties hereunder for sixty (60)
consecutive days, or for any sixty (60) days within any one hundred and eighty
(180) day period, and the provision of written notice of such termination to the
Consultant; or
(c) written notice by the Parent to the Consultant of termination of
the Consultant's consultancy by the Parent for "Cause," which shall include,
without limitation, (i) the failure of the Consultant to perform his duties
hereunder after at least 30 days' written notice thereof specifying such failure
and the Consultant's failure to remedy same within such 30-day period; (ii) any
act of illegality, dishonesty, moral turpitude, or fraud in connection with the
Consultant's consultancy; (iii) any course of action by the Consultant which is
materially detrimental to the business of the Parent or any of its affiliates
(including without limitation any violation of Sections 7, 8 or 9 of this
Agreement); or (iv) the commission by the Consultant of any felony; or
(d) written notice by the Parent to the Consultant of termination of
the Consultant's consultancy without Cause; or
(e) written notice by the Consultant to the Parent of termination of
his consul- tancy.
The date of termination of the Consultant's consultancy shall be the date
written notice is given or such later date (within thirty (30) days following
such notice) specified in the written notice.
6. Termination Payments. In the event of the termination of the
Consultant's consultancy pursuant to Section 5, the Parent shall make the
payments to FEI set forth below and have no further obligation to the Consultant
or FEI hereunder.
(a) In the event of the termination of the Consultant's consultancy by
the Parent for Cause pursuant to Section 5(c) of this Agreement or the
termination of the Consultant's consultancy by the Consultant pursuant to
Section 5(e) of this Agreement, the
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<PAGE>
Parent shall pay to FEI the Consulting Fee previously earned but not paid as of
the date of termination.
(b) In the event of the termination of the Consultant's consultancy by
the Parent without Cause (and not for death or Disability) pursuant to Section
5(d) of this Agreement, the Parent shall continue to pay FEI the full Consulting
Fee contemplated by Section 3 of this Agreement in monthly installments through
the scheduled end of the Term, subject to the Consultant's and FEI's compliance
with Sections 7, 8 and 9 of this Agreement.
(c) In the event of the Consultant's death or termination for
Disability pursuant to Section 5(b) of this Agreement during the Term, the
Parent shall continue to pay to FEI the Consulting Fee contemplated by Section 3
in monthly installments for the lesser of (i) six months following such date of
termination or (ii) the number of months remaining in the Term, subject to the
Consultant's and FEI's compliance with Section 7, 8 and 9 of this Agreement.
7. Covenant Not to Compete. During the Tenn and until the later of (a)
12 months after the Consultant's termination of consultancy with the Parent for
any reason or (b) the end of the scheduled Term (the "Noncompetition Period"),
the Consultant will not, directly or indirectly (whether as sole proprietor,
partner or venturer, stockholder, director, officer, employee or consultant or
in any other capacity as principal or agent or through any person, subsidiary or
employee acting as nominee or agent):
(a) Conduct or engage in or have an interest in or be associated with
any person, firm, association, partnership, corporation or other entity which
conducts or engages in the business of seismic data acquisition or data
processing (the "Business"), which are the primary businesses of the Company;
(b) Take any action, directly or indirectly, to finance, guarantee or
provide any other material assistance to any person, firm, association,
partnership, corporation or other entity which conducts or engages in the
Business;
(c) Influence or attempt to influence any person, firm, association,
partnership, corporation or other entity which is a contracting party with the
Parent at any time during the Noncompetition Period to terminate any agreement
with the Parent except to the extent the Consultant is acting on behalf, and at
the direction, of the Parent in good faith;
(d) Hire or attempt to hire for employment any person who is employed
by the Parent or attempt to influence any such person to terminate employment
with the Parent, except to the extent the Consultant is acting on behalf, and at
the direction, of the Parent in good faith; or
(e) Call on, solicit or take away as a client or customer or attempt to
call on, solicit or take away as a client or customer any person, firm,
association, partnership,
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<PAGE>
corporation or other entity that is or was a client or customer of the Parent,
including actively sought prospective customers, during the Term or the
Consultant's prior employment with the Company.
The restrictive provisions of this Agreement shall not prohibit the
Consultant from having an equity interest in the securities of any corporation
engaged in the Business, which securities are listed on a recognized securities
exchange or traded in the over-the-counter market to the extent that such
interest does not exceed 3% of the value or voting power of such corporation and
does not constitute control of such corporation. For purposes of this Section 7
and Sections 8 and 9 of this Agreement, the term "Parent" shall include the
Parent and the Company, and each of their affiliates, and the term "Consultant"
shall include the Consultant and FEI.
8. Confidential Information; Ownership Rights. (a) The Consultant
acknowledges and agrees that all nonpublic information concerning the Parent's
business including, without limitation, information relating to its products,
customer lists, pricing, trade secrets, patents, business methods, financial and
cost data, business plans and strategies (collectively, the "Confidential
Information") is and shall remain the property of the Parent. The Consultant
recognizes and agrees that all of the Confidential Information, whether
developed by the Consultant or made available to the Consultant, other than
information that is generally known to the public, is a unique asset of the
business of the Parent the disclosure of which would be damaging to the Parent.
Accordingly, the Consultant agrees to hold such Confidential Information in a
fiduciary capacity for the benefit of the Parent. The Consultant agrees that he
will not at any time during or after the Consultant's consultancy with the
Parent for any reason, directly or indirectly, disclose to any person any
Confidential Information of the Parent, other than information that is already
known to the public, except as may be required in the ordinary course of
business of the Parent or as may be required by law. Promptly upon the
termination of this Agreement for any reason, the Consultant agrees to return to
the Parent any and all documents, memoranda, drawings, notes and other papers
and items (including all copies thereof, whether electronic or otherwise)
embodying any Confidential Information of the Parent which are in the possession
or control of the Consultant. Information concerning the Parent's business that
becomes public as a result of the Consultant's breach of this Section 8 shall be
treated as Confidential Information under this Section 8.
(b) The Consultant hereby assigns to the Parent all right, title and
interest in and to any ideas, inventions, original works or authorship,
developments, improvements or trade secrets with respect to the Business which
the Consultant solely or jointly has conceived or reduced to practice, or will
conceive or reduce to practice, or cause to be conceived or reduced to practice,
during the Term or his prior employment with the Company. All original works or
authorship which are made by Consultant (solely or jointly with others) within
the scope of Consultants services hereunder or for the Company and which are
protectable by copyright are "works made for hire," as that term is defined in
the United States Copyright Act.
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<PAGE>
9. Disparagement. During the Term and thereafter, the Consultant agrees
not to (a) criticize, denigrate or speak adversely of, or (b) disclose negative
information about, the operations, management or performance of the Parent or
about any director, officer, employee or agent of the Parent, except as may be
required by law.
10. Breach of Certain Provisions. The Consultant acknowledges that a
violation on the Consultant's part of any of the covenants contained in Sections
7, 8 or 9 of this Agreement would cause immeasurable and irreparable damage to
the Parent and the Company. Accordingly, the Consultant agrees that the Parent
shall be entitled to injunctive relief in any court of competent jurisdiction
for any actual or threatened violation of any such covenant in addition to any
other remedies it may have. The Consultant agrees that in the event that any
court of competent jurisdiction shall finally hold that any provision of Section
7, 8 or 9 hereof is void or constitutes an unreasonable restriction against the
Consultant, the provisions of such Section shall not be rendered void but shall
apply to such extent as such court may determine constitutes a reasonable
restriction under the circumstances. Sections 7, 8 and 9 shall survive the
termination of this Agreement.
11. Independent Contractor. Nothing herein shall be construed to create
an employer-employee, agency, master and servant or joint venture relationship
or other association between the Parent or the Company and FEI or the
Consultant, and the Consultant shall not be deemed to be an employee of the
Parent or the Company for any purpose, including without limitation for the
purpose of participating in any employee benefit plan of the Parent or the
Company. The Consultant agrees that he is an independent contractor and will not
hold himself out to be an employee of the Parent or the Company. FEI and the
Consultant shall perform all services under this Agreement as, and shall remain,
independent contractors. All persons performing or assisting FEI or the
Consultant with any part of the services under this Agreement for the Company or
the Parent shall be employees or agents of FEI. FEI's employees and personnel
are not employees, agents or representatives of the Company or the Parent, or
their shareholders, affiliates or co-venturers, notwithstanding that any such
employees or personnel may be construed to be borrowed servants of the Company
or the Parent at any time or from time to time. FEI shall not hold its employees
or personnel out as employees, representatives or agents of the Company or the
Parent or make any representations to create such impression. The Consultant,
FEI, and its employees and personnel shall have no authority, express or
implied, to make any contract or agreement for, or on behalf of, or otherwise
commit the Company or the Parent, or their shareholders, affiliates or
coventurers to any contract, commitment, obligation, or liability binding on the
Company or the Parent, and the Parent and the Company do not assume any
responsibility for proposals, guarantees, or contracts entered into by FEI or
the Consultant with others.
12. Risk of Loss. The Consultant assumes all risk of personal injury or
death to himself and all risk of damage to or loss of personal property
furnished by the Consultant in connection with the services to be performed by
the Consultant under this Agreement. The Consultant will abide by the safety and
security regulations of the Parent and the Company while
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<PAGE>
on the respective properties of the Parent and the Company.
13. Warranty. The Consultant and FEI warrant that entering into this
Agreement and performance of services hereunder will not conflict with any
obligation of the Consultant arising under any other contract or by operation of
law. The Consultant warrants that he has the right to disclose all information
transmitted to the Parent or the Company pursuant to this Agreement, and that
the services to be performed by the Consultant under this Agreement do not
violate or in any way infringe upon the rights of third parties, including
property, contractual, employment, trade secrets, proprietary information, and
nondisclosure rights, or any trademark, copyright or patent rights, and that
Consultant will not enter into any agreements or arrangements with third persons
that would result in the performance of such services violating or infringing
the rights of such persons.
14. Assignment. This agreement is a contract for the personal services
of the Consultant, and neither FEI nor the Consultant may assign this Agreement
or subcontract any services without first obtaining the written consent of the
Parent. The Parent may assign this Agreement to any subsidiary or affiliated
company or to any third party together with the business to which it pertains.
15. Governing Law. This Agreement is governed by, and is to be
construed and enforced in accordance with, the laws of the State of Delaware.
If, under such law, any portion of this Agreement is at any time deemed to be in
conflict with any applicable statute, rule, regulation or ordinance, such
portion shall be deemed to be modified or altered to conform thereto or, if that
is not possible, to be omitted from this Agreement; and the invalidity of any
such portion shall not affect the force, effect and validity of the remaining
portion hereof. The parties agree that all actions or proceedings initiated by
any party hereto and arising directly or indirectly out of this Agreement which
are brought pursuant to judicial proceedings shall be litigated in the State
courts of Delaware.
16. Notices. All notices hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex or telecopy, or by mail (registered or certified mail
postage prepaid, return receipt requested) or by any courier service, such as
Federal Express, providing proof of delivery. All communications hereunder shall
be delivered to the respective parties at the following addresses:
If to the Parent, to:
Western Atlas Inc.
10205 Westheimer Road
Houston, Texas 77042-3115
Attention: General Counsel
Fax: 713-266-1717
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<PAGE>
If to the Consultant, to:
Joel Friedman
11 Reimer Road
Scarsdale, NY 10583
If to FEI, to:
11 Reimer Road
Scarsdale, NY 10583
Attention: Joel Friedman
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
17. Miscellaneous. The Consultant shall terminate from employment with
the Company as of the Effective Time. This Agreement constitutes the entire
understanding between the Parent and the Consultant and FEI relating to the
consulting services to be rendered by the Consultant to the Parent and the
Company and cancels all prior written and oral agreements and understandings
with respect to the subject matter of this Agreement between the Company and the
Consultant, and the Consultant hereby waives any further payments, under the
Employment Agreement, dated February 1, 1996, between the Company and the
Consultant, and any severance payments under any plan or agreement. This
Agreement may be amended only by a subsequent written agreement of the parties
hereto. This Agreement shall be binding upon and shall inure to the benefit of
FEI, its successors and permitted assigns, and the Consultant, his heirs,
executors, administrators, beneficiaries and permitted assigns and shall be
binding upon and shall inure to the benefit of the Parent and its successors and
permitted assigns.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the year and day first above written.
WESTERN ATLAS INC.
By:_________________________
____________________________
Joel Friedman
FRIEDMAN ENTERPRISES INC.
By:_________________________
Joel Friedman, President
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<PAGE>
Annex IV
CONSULTING AND NON-COMPETE AGREEMENT
AGREEMENT, dated as of March ___, 1998, by and between Western Atlas
Inc., a Delaware corporation (the "Parent"), and Luis H. Ferran Arroyo (the
"Consultant").
WHEREAS, the Consultant is the Executive Vice President for Latin
American Operations of 3-D Geophysical, Inc., a Delaware corporation,
(collectively with its subsidiaries, the "Company");
WHEREAS, the Parent has entered into an Agreement and Plan of Merger
with the Company and WAI Acquisition Corp., dated as of March ___, 1998 (the
"Merger Agreement");
WHEREAS, the Consultant will terminate employment with the Company
effec- tive as of the "Effective Time" (as defined in the Merger Agreement) of
the merger contemplated by the Merger Agreement (the "Merger"); and
WHEREAS, the Parent desires to provide for the Consultant to perform
services for the Parent and the Company following the Merger.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the Parent and the
Consultant hereby agree as follows:
1. Consulting Services. Subject to the effectiveness of the Merger, the
Consultant hereby agrees to provide such consulting services to the Parent and
to the Company as the President of the Western Geophysical Division of Western
Atlas International, Inc. or his designee shall reasonably request, including
without limitation consulting services with respect to Petroleos Mexicanos, for
not more than __ hours per month. Such consulting services may be rendered in
person at the corporate offices of the Parent or the Company or one of their
affiliates, or at any other mutually agreeable place.
2. Term. The period of consultancy under this Agreement shall be for a
period commencing on the Effective Time and ending on the fourth anniversary of
the Effective Time (the "Term").
3. Consulting Fee. The Parent shall pay to the Consultant, in
consideration of his consulting services, a consulting fee (the "Consulting
Fee") at an annual rate of $_______ payable in substantially equal monthly
installments during the Term.
<PAGE>
4. Expenses. The Parent will reimburse the Consultant for all
authorized reasonable and necessary out-of-pocket expenses incurred by him in
the performance of his duties hereunder upon the presentation of appropriate
documentation. Such expenses shall be submitted to Parent, at P.O. Box 1407,
Houston, TX 77251-1407, Att: J. Perez, on Parent's standard expense report forms
in accordance with Parent's expense reimbursement policy in effect from time to
time during the Term.
5. Termination of Consultancy. The Consultant's consultancy hereunder
shall terminate prior to the scheduled end of the Term upon the first to occur
of:
(a) the death of the Consultant; or
(b) the Consultant's illness, disability or incapacity ("Disability")
that prevents the Consultant from performing his duties hereunder for sixty (60)
consecutive days, or for any sixty (60) days within any one hundred and eighty
(180) day period, and the provision of written notice of such termination to the
Consultant; or
(c) written notice by the Parent to the Consultant of termination of
the Consultant's consultancy by the Parent for "Cause," which shall include,
without limitation, (i) the failure of the Consultant to perform his duties
hereunder after at least 30 days' written notice thereof specifying such failure
and the Consultant's failure to remedy same within such 30-day period; (ii) any
act of illegality, dishonesty, moral turpitude, or fraud in connection with the
Consultant's consultancy; (iii) any course of action by the Consultant which is
materially detrimental to the business of the Parent or any of its affiliates
(including without limitation any violation of Sections 7, 8 or 9 of this
Agreement); or (iv) the commission by the Consultant of any felony; or
(d) written notice by the Parent to the Consultant of termination of
the Consultant's consultancy without Cause; or
(e) written notice by the Consultant to the Parent of termination of
his consul- tancy.
The date of termination of the Consultant's consultancy shall be the date
written notice is given or such later date (within thirty (30) days following
such notice) specified in the written notice.
6. Termination Payments. In the event of the termination of the
Consultant's consultancy pursuant to Section 5, the Parent shall make the
payments to the Consultant set forth below and have no further obligation to the
Consultant hereunder.
(a) In the event of the termination of the Consultant's consultancy by
the Parent for Cause pursuant to Section 5(c) of this Agreement or the
termination of the Consultant's consultancy by the Consultant pursuant to
Section 5(e) of this Agreement, the
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<PAGE>
Parent shall pay the Consultant the Consulting Fee previously earned but not
paid as of the date of termination.
(b) In the event of the termination of the Consultant's consultancy by
the Parent without Cause (and not for Disability) pursuant to Section 5(d) of
this Agreement, the Parent shall continue to pay the Consultant the full
Consulting Fee contemplated by Section 3 of this Agreement in monthly
installments through the scheduled end of the Term, subject to the Consultant's
compliance with Sections 7, 8 and 9 of this Agreement.
(c) In the event of the Consultant's death or termination for
Disability pursuant to Section 5(b) of this Agreement during the Term, the
Parent shall continue to pay to Consultant (or to his estate or beneficiary in
the event of his death) the Consulting Fee contemplated by Section 3 in monthly
installments for the lesser of (i) six months following such date of termination
or (ii) the number of months remaining in the Term, subject to, in the event of
termination for Disability, the Consultant's compliance with Sections 7, 8 and 9
of this Agreement. 7. Covenant Not to Compete. During the Term and until the
later of (a) 12 months after the Consultant's termination of consultancy with
the Parent for any reason or (b) the end of the scheduled Term (the
"Noncompetition Period"), the Consultant will not, directly or indirectly
(whether as sole proprietor, partner or venturer, stock, holder, director,
officer, employee or consultant or in any other capacity as principal or agent
or through any person, subsidiary or employee acting as nominee or agent):
(a) Conduct or engage in or have an interest in or be associated with
any person, firm, association, partnership, corporation or other entity which
conducts or engages in the business of seismic data acquisition or data
processing (the "Business"), which are the primary businesses of the Company;
(b) Take any action, directly or indirectly, to finance, guarantee or
provide any other material assistance to any person, firm, association,
partnership, corporation or other entity which conducts or engages in the
Business;
(c) Influence or attempt to influence any person, firm, association,
partnership, corporation or other entity which is a contracting party with the
Parent at any time during the Noncompetition Period to terminate any agreement
with the Parent except to the extent the Consultant is acting on behalf, and at
the direction, of the Parent in good faith;
(d) Hire or attempt to hire for employment any person who is employed
by the Parent or attempt to influence any such person to terminate employment
with the Parent, except to the extent the Consultant is acting on behalf, and at
the direction, of the Parent in good faith; or
(e) Call on, solicit or take away as a client or customer or attempt to
call on,
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<PAGE>
solicit or take away as a client or customer any person, firm, association,
partnership, corporation or other entity that is or was a client or customer of
the Parent, including actively sought prospective customers, during the Term or
the Consultant's prior employment with the Company.
The restrictive provisions of this Agreement shall not prohibit the
Consultant from having an equity interest in the securities of any corporation
engaged in the Business, which securities are listed on a recognized securities
exchange or traded in the over-the-counter market to the extent that such
interest does not exceed 1% of the value or voting power of such corporation and
does not constitute control of such corporation. For purposes of this Section 7
and Sections 8 and 9 of this Agreement, the term "Parent" shall include the
Parent and the Company, and each of their affiliates.
8. Confidential Information; Ownership Rights. (a) The Consultant
acknowledges and agrees that all nonpublic information concerning the Parent's
business including, without limitation, information relating to its products,
customer lists, pricing, trade secrets, patents, business methods, financial and
cost data, business plans and strategies (collectively, the "Confidential
Information") is and shall remain the property of the Parent. The Consultant
recognizes and agrees that all of the Confidential Information, whether
developed by the Consultant or made available to the Consultant, other than
information that is generally known to the public, is a unique asset of the
business of the Parent, the disclosure of which would be damaging to the Parent.
Accordingly, the Consultant agrees to hold such Confidential Information in a
fiduciary capacity for the benefit of the Parent. The Consultant agrees that he
will not at any time during or after the Consultant's consultancy with the
Parent for any reason, directly or indirectly, disclose to any person any
Confidential Information of the Parent, other than information that is already
known to the public, except as may be required in the ordinary course of
business of the Parent or as may be required by law. Promptly upon the
termination of this Agreement for any reason, the Consultant agrees to return to
the Parent any and all documents, memoranda, drawings, notes and other papers
and items (including all copies thereof, whether electronic or otherwise)
embodying any Confidential Information of the Parent which are in the possession
or control of the Consultant. Information concerning the Parent's business that
becomes public as a result of the Consultant's breach of this Section 8 shall be
treated as Confidential Information under this Section 8.
(b) The Consultant hereby assigns to the Parent all right, title and
interest in and to any ideas, inventions, original works or authorship,
developments, improvements or trade secrets with respect to the Business which
the Consultant solely or jointly has conceived or reduced to practice, or will
conceive or reduce to practice, or cause to be conceived or reduced to practice,
during the Term or his prior employment with the Company. All original works or
authorship which are made by Consultant (solely or jointly with others) within
the scope of Consultant's services hereunder or for the Company and which are
protectable by copyright are "works made for hire," as that term is defined in
the United States Copyright Act.
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<PAGE>
9. Disparagement. During the Term and thereafter, the Consultant agrees
not to (a) criticize, denigrate or speak adversely of, or (b) disclose negative
information about, the operations, management or performance of the Parent or
about any director, officer, employee or agent of the Parent, except as may be
required by law.
10. Breach of Certain Provisions. The Consultant acknowledges that a
violation on the Consultant's part of any of the covenants contained in Sections
7, 8 or 9 of this Agreement would cause immeasurable and irreparable damage to
the Parent and the Company. Accordingly, the Consultant agrees that the Parent
shall be entitled to injunctive relief in any court of competent jurisdiction
for any actual or threatened violation of any such covenant in addition to any
other remedies it may have. The Consultant agrees that in the event that any
court of competent jurisdiction shall finally hold that any provision of Section
7, 8 or 9 hereof is void or constitutes an unreasonable restriction against the
Consultant, the provisions of such Section shall not be rendered void but shall
apply to such extent as such court may determine constitutes a reasonable
restriction under the circumstances. Sections 7, 8 and 9 shall survive the
termination of this Agreement.
11. Independent Contractor. Nothing herein shall be construed to create
an employer-employee, agency, master and servant or joint venture relationship
or other association between the Parent or the Company and the Consultant, and
the Consultant shall not be deemed to be an employee of the Parent or the
Company for any purpose, including without limitation for the purpose of
participating in any employee benefit plan of the Parent or the Company. The
Consultant agrees that he will not hold himself out to be an employee of the
Parent or the Company. The Consultant shall perform all services under this
Agreement as, and shall remain, an independent contractor. The Consultant shall
have no authority, express or implied, to make any contract or agreement for, or
on behalf of, or otherwise commit the Company or the Parent, or their
shareholders, affiliates or coventurers to any contract, commitment, obligation,
or liability binding on the Company or the Parent, and the Parent and the
Company do not assume any responsibility for proposals, guarantees, or contracts
entered into by the Consultant with others.
12. Risk of Loss. The Consultant assumes all risk of personal injury or
death to himself and all risk of damage to or loss of personal property
furnished by the Consultant in connection with the services to be performed by
the Consultant under this Agreement. The Consultant will abide by the safety and
security regulations of the Parent and the Company while on the respective
properties of the Parent and the Company.
13. Warranty. The Consultant warrants that entering into this Agreement
and performance of service hereunder will not conflict with any obligation of
the Consultant arising under any other contract or by operation of law. The
Consultant warrants that he has the right to disclose all information
transmitted to the Parent or the Company under this Agreement, and that the
services to be performed by the Consultant under this Agreement do not violate
or in any way infringe upon the rights of third parties, including property,
contractual, employment,
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<PAGE>
trade secrets, proprietary information, and nondisclosure rights, or any
trademark, copyright or patent rights, and that Consultant will not enter into
any agreements or arrangements with third persons that would result in the
performance of such services violating or infringing the rights of such persons.
14. Assignment. This agreement is a contract for the personal services
of the Consultant, and the Consultant may not assign this Agreement or
subcontract any services without first obtaining the written consent of the
Parent. The Parent may assign this Agreement to any subsidiary or affiliated
company or to any third party together with the business to which it pertains.
15. Governing Law. This Agreement is governed by, and is to be
construed and enforced in accordance with, the laws of the State of Delaware.
If, under such law, any portion of this Agreement is at any time deemed to be in
conflict with any applicable statute, rule, regulation or ordinance, such
portion shall be deemed to be modified or altered to conform thereto or, if that
is not possible, to be omitted from this Agreement; and the invalidity of any
such portion shall not affect the force, effect and validity of the remaining
portion hereof. The parties agree that all actions or proceedings initiated by
any party hereto and arising directly or indirectly out of this Agreement which
are brought pursuant to judicial proceedings shall be litigated in the State
courts of Delaware.
16. Notices. All notices hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex or telecopy, or by mail (registered or certified mail,
postage prepaid, return receipt requested) or by any courier service, such as
Federal Express, providing proof of delivery. All communications hereunder shall
be delivered to the respective parties at the following addresses:
If to the Parent, to:
Western Atlas Inc.
10205 Westheimer Road
P.O. Box 1407
Houston, Texas 77251
Attention: General Counsel
Houston, Texas 77042-3115
Attention: General Counsel
Fax: 713-266-1717
If to the Consultant, to:
Luis H. Ferran Arroyo
Avenida La Malinche No. 320
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<PAGE>
Colonia Colinas del Basques
Deleg, Tialplan, Mexico, D.F
Fax: (525) 532-5700
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
17. Miscellaneous. The Consultant shall terminate from employment with
the Company as of the Effective Time. This Agreement constitutes the entire
understanding between the Parent and the Consultant relating to the consulting
services to be rendered by the Consultant to the Parent and the Company and
cancels all prior written and oral agreements and understandings with respect to
the subject matter of this Agreement between the Company and the Consultant, and
the Consultant hereby waives any further payments under the Employment
Agreement, dated February 1, 1996, between the Company and the Consultant, and
any severance payments under any plan or agreement. This Agreement may be
amended only by a subsequent written agreement of the Consultant and the Parent.
This Agreement shall be binding upon and shall inure to the benefit of the
Consultant, his heirs, executors, administrators, beneficiaries and permitted
assigns and shall be binding upon and shall inure to the benefit of the Parent
and its successors and permitted assigns.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the year and day first above written.
WESTERN ATLAS INC.
By:______________________
_________________________
Luis H. Ferran Arroyo
- 8 -
FIRST AMENDMENT
TO
RIGHTS AGREEMENT
FIRST AMENDMENT dated as of March 6, 1998 ("this Amendment") between
3-D Geophysical, Inc., a Delaware corporation (the "Company"), and American
Securities Transfer & Trust, Inc., as Rights Agent.
WHEREAS, the above-mentioned parties have previously entered into that
certain Rights Agreement dated as of July 17, 1997 (the "Rights Agreement")
governing certain preferred stock purchase rights (the "Rights") of the
Company's stockholders;
WHEREAS, the Company proposes to enter into an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of March 8, 1998, by and among the
Company, Western Atlas Inc., a Delaware corporation ("Parent"), and WAI
Acquisition Corp., a Delaware corporation and a subsidiary of Parent ("WAI"),
whereby WAI will make a tender offer (the "Tender Offer") to purchase all
outstanding shares of Common Stock of the Company for cash and upon consummation
of the Tender Offer WAI will merge with and into the Company (the "Merger") upon
the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, upon the execution and delivery of the Merger Agreement,
certain directors and officers of the Company will simultaneously enter into and
deliver, support agreements (each a "Support Agreement") in substantially the
form attached to the Merger Agreement as Annex II;
WHEREAS, the Board of Directors deems it desirable and in the best
interests of its stockholders that the transactions contemplated by the Merger
Agreement be consummated;
WHEREAS, Section 4.18 of the Merger Agreement provides that prior to
the Effective Time (as defined in the Merger Agreement), the Company shall amend
the Rights Agreement (without redeeming the Rights) so that none of the
transaction contemplated by the Merger Agreement 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, WAI
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).
WHEREAS, such parties wish to amend the Rights Agreement in the manner
set forth below.
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given them in the Rights Agreement, and each reference
in the Rights Agreement to "this Agreement," "hereof," "herein," "hereunder" or
"hereby" and each other similar reference shall be deemed to refer to the Rights
Agreement as amended hereby. All references to the Rights Agreement in any other
agreement between or among any of the parties hereto relating to the
transactions contemplated by the Rights Agreement shall be deemed to refer to
the Rights Agreement as amended hereby.
2. The definition of "Acquiring Person" in Section 1 is hereby amended
by adding the following provision to the end of paragraph (a)(i) of such
definition:
"and neither Parent nor WAI shall become an Acquiring Person by reason
or as a result of the execution or delivery of any Support Agreement or the
Merger Agreement or the consummation of the Tender Offer or of the Merger or any
other transaction contemplated by the Merger Agreement."
3. The definition of "Distribution Date" in Section 1 is hereby amended
by adding the following provision to the end of such definition:
"; PROVIDED THAT no Distribution Date shall occur by reason or as a
result of the execution or delivery of any Support Agreement or the Merger
Agreement or the consummation of the Tender Offer or Merger or any other
transaction contemplated by the Merger Agreement."
4. The following definitions are hereby added to Section 1:
""Merger" means the merger of WAI with and into the Company upon the
terms and conditions set forth in the Merger Agreement."
""Merger Agreement" means the Agreement and Plan of Merger, dated as of
March 8, among the Company, WAI and Parent."
""Parent" means Western Atlas Inc., a Delaware corporation."
""Support Agreement" means the Support Agreement in the form of Annex
II to the Merger Agreement, dated as of the date of the Merger Agreement and
executed by certain directors and officers of the Company."
""Tender Offer" means the offer by WAI to purchase all of the
outstanding shares of Common Stock (including the Right associated with each
share of Common Stock) pursuant to Article I of the Merger Agreement.
""WAI" means WAI Acquisition Corp., a Delaware corporation and a
direct, wholly owned subsidiary of Parent."
2
<PAGE>
5. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Delaware applicable to contracts made and
performed entirely in Delaware.
6. This Amendment may be signed in any number of counterparts, each of
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
7. Except as expressly amended hereby, the Rights Agreement shall
remain in full force and effect.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
3-D GEOPHYSICAL, INC.
Attest:
/s/ John M. Wilkie, Jr. By: /s/ Joel Friedman
- ----------------------- -----------------
Name: Joel Friedman
Title: Chairman
AMERICAN SECURITIES TRANSFER
& TRUST, INC.
Attest:
/s/ Kimberly Hammond By: /s/ Kellie Gwinn
- -------------------- ----------------
Name: Kellie Gwinn
Title: Senior Vice President
4
