Exhibit 7.4
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered into as
of January 3, 1996, by and among ▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED, a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, D.O.S. Ltd., a Bermuda corporation ("D.O.S. Ltd."), is to be
merged with a wholly-owned subsidiary ("Sub") of the Company (the "Merger")
pursuant to an Agreement and Plan of Merger dated as of January 3, 1996 among
the Company, Sub and D.O.S. Ltd. (the "Merger Agreement");
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company and its shareholders to improve its
capital structure by issuing shares of the Company's Common Stock, par value
$.01 per share ("Common Stock"), and warrants to purchase Common Stock, in
exchange for the outstanding shares of the Company's Redeemable Series A
Convertible Preferred Stock, par value $.01 per share ("Preferred Stock");
WHEREAS, the Company will issue to BHI, and BHI will acquire, on the
terms and subject to the conditions set forth herein, 1,500,000 shares (the
"Shares") of the Company's Common Stock and warrants (the "Warrants") to
purchase 1,250,000 shares of Common Stock (the Shares and the Warrants are
collectively referred to herein as the "Securities"), in exchange for the
100,000 shares of Preferred Stock held by BHI (the "BHI Preferred Stock").
NOW, THEREFORE, in consideration of and subject to the mutual
agreements, terms and conditions herein contained and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used herein without definitions shall have the
meanings assigned to such terms in the Merger Agreement.
ARTICLE II.
EXCHANGE OF SECURITIES
2.1 Exchange. At the Closing, the Company will issue, sell, transfer,
convey and deliver to BHI (i) the Shares as evidenced by the delivery of a
certificate or certificates evidencing the Shares in good delivery form and
(ii) the Warrants as evidenced by the delivery of the Warrant Certificate in
the form set forth on Appendix I, subject to the terms and conditions set
forth herein, in exchange (the "Exchange") for the delivery, conveyance and
transfer to the Company of the BHI Preferred Stock as evidenced by the
delivery of the share certificate or certificates representing such shares of
Preferred Stock, duly endorsed in blank for transfer, together with such other
documentation evidencing the transfer as may be reasonably requested by the
Company.
2.2 Suspension of Dividend. BHI agrees that the cash dividends
otherwise due and owing on March 31, June 30, September 30 and December 31,
1996 pursuant to Paragraph 2 of the Certificate of Designation of Series A
Convertible Preferred Stock of Tuboscope Corporation (the "Certificate of
Designation") shall not be due and owing; provided, that if the Exchange
contemplated in Section 2.1 hereof is not consummated for any reason, such
cash dividends shall be paid for all such periods, notwithstanding the
provisions of this paragraph, and any quarterly payments which may not have
been made owing to this paragraph shall be made at the time of the next
quarterly payment called for in the Certificate of Designation, together with
interest on such quarterly payments for the period from the date on which they
would otherwise have been due to the date of payment at an interest rate equal
to the prime rate as announced from time to time by Texas Commerce Bank
National Association.
2.3 Closing. The closing of the Exchange shall take place at the
Closing on the Closing Date. The Exchange shall be deemed to be made as of
the Effective Time.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company warrants and represents to BHI as follows:
3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted.
3.2 Authorization, Execution and Enforceability. The Company has full
power and authority to enter into this Agreement and the capacity and
authority to make the representations, warranties, covenants and agreements
herein. The execution, delivery and performance by the Company of this
Agreement have been duly and validly authorized and are within the corporate
powers of the Company. This Agreement has been duly executed and delivered by
the Company and constitutes its valid and binding agreement, enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors, and the effect of general principles of equity, including
without limitation concepts of materiality, reasonableness, good faith and
fair dealing and the possible unavailability of specific performance or
injunctive relief regardless of whether considered in a proceeding in equity
or at law. The Shares to be issued by the Company to BHI hereunder, as of the
Closing will be duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued
and fully paid and non-assessable. When executed by the Company and delivered
in accordance with their terms, the Warrants will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors, and the
effect of general principles of equity, including without limitation concepts
of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief regardless of
whether considered in a proceeding in equity or at law. The shares of Common
Stock reserved for issuance upon exercise of the Warrants will be as of the
Closing duly authorized and reserved for such purpose, and, if and when the
Warrants are exercised in accordance with the rights provided for therein, the
shares of Common Stock issuable upon such exercise will be validly issued,
fully paid and non-assessable, and the issuance of such shares will not be
subject to any preemptive or similar rights.
3.3 Capital Structure as of Closing Date. Except as contemplated by
this Agreement, the representations and warranties set forth in Section 3.2(b)
of the Merger Agreement will be true and correct as of the Closing Date,
except that to the extent such representations and warranties speak as of an
earlier date, they will be true and correct as of such earlier date.
3.4 Consents and Approvals; No Violations.
(a) No consent, action, approval or authorization of, or
registration, declaration or filing with, any governmental department,
commission, agency or other instrumentality or any other person or
entity is required to authorize, or is otherwise required in connection
with, the execution and delivery of this Agreement by the Company or its
performance of the terms hereof, including without limitation, the
issuance of the Shares and Warrants or the exercise of the Warrants, or
the validity or enforceability hereof or thereof against the Company as
to which the failure to obtain or make would have a Company Material
Adverse Effect (as defined below) or would materially adversely affect
the consummation of the transactions contemplated hereby, except for the
filing of a notification report by the Company and BHI under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration or termination of the applicable waiting
period with respect thereto. As used in this Agreement, "Company
Material Adverse Effect" shall mean any effect that is, individually or
in the aggregate, materially adverse to the business, operations,
assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole except for general
economic changes that may affect the industries of the Company or any of
its Subsidiaries generally.
(b) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit
under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company or
any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or Bylaws of the Company or any provision of the
comparable charter or organizational documents of any of its
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
or indenture applicable to the Company or any of its Subsidiaries, (iii)
any other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clause
(iii), any such conflicts, violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the
aggregate, would not have a Company Material Adverse Effect, materially
impair the ability of the Company to perform its obligations hereunder
or prevent the consummation of any of the transactions contemplated
hereby.
3.5 Form 10K and Proxy. The representations and warranties set forth
in Section 3.2(e) of the Merger Agreement are true and correct. The Company's
Annual Report on Form 10K for the year ended December 31, 1995 (the "Annual
Report") and the Proxy Statement related to the Company's meeting of
stockholders at which the Merger Agreement is to be considered (the "Proxy
Statement") will comply in all material respects with the requirements of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended, (as applicable) and the rules and regulations of the Securities
and Exchange Commission thereunder applicable, and neither the Annual Report,
as of the date it is filed, or the Proxy Statement, as of the Effective Time,
will contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.6 Antidilution Provisions. The issuance or exercise of the Warrants
granted hereunder will not cause an antidilution adjustment to the warrants
granted to SCF-III, L.P ("SCF") pursuant to that certain Subscription
Agreement and Warrant dated as of January 3, 1996 by and between the Company
and SCF.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BHI
BHI represents and warrants to the Company as follows:
4.1 Organization, Authorization, Execution and Enforceability. BHI is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware with power and authority to own, operate and
lease its properties and to carry on its business as now conducted. BHI has
full power and authority to enter into this Agreement and the capability and
authority to make the representations, warranties, covenants and agreements
herein. The execution, delivery and performance by BHI of this Agreement have
been duly and validly authorized and are within the corporate powers of BHI.
This Agreement has been duly executed and delivered by BHI and constitutes its
valid and binding agreement, enforceable in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors, and the effect
of general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief regardless of
whether considered in a proceeding in equity or at law.
4.2 Consents and Approvals. No consent, action, approval or authori-
zation of, or registration, declaration or filing with, any governmental
department, commission, agency or other instrumentality or any other person or
entity is required to authorize, or is otherwise required in connection with,
the execution and delivery of this Agreement by BHI or its performance of the
terms hereof, including without limitation, the transfer of the Preferred
Stock and the exchange of the Shares and the Warrants, or the validity or
enforceability hereof or thereof against BHI as to which the failure to obtain
or make would have a Company Material Adverse Effect or would materially
adversely affect the consummation of the transactions contemplated hereby,
except for the filing of a notification report by the Company and BHI under
the HSR Act and the expiration or termination of the applicable waiting period
with respect thereto.
4.3 Stock ownership.
(a) BHI is the lawful owner, of record and beneficially, of the
entire right title and interest in and to the BHI Preferred Stock, free
and clear of all Encumbrances, except such Encumbrances as may arise
under applicable federal and state securities laws and regulations. As
used in this Section 4.3, "Encumbrances" shall mean any claim, lien,
pledge, option, change, easement, security interest, mortgage, right of
way, encumbrance, restrictions, equities, reservation, adverse claims or
other similar right or interest of any nature created by, through or
under BHI or any of its affiliates.
(b) Delivery of the BHI Preferred Stock pursuant hereto will
vest good and marketable title in the Company, free and clear of all
Encumbrances.
4.4 Accredited Investor. BHI is an "accredited investor" as defined
in Rule 501 of Regulation D promulgated pursuant to the Securities Act of
1933, as amended.
ARTICLE V.
COVENANTS OF THE COMPANY
The Company further agrees, except as set forth in or contemplated by
this Agreement or as otherwise approved by BHI in writing, that:
5.1 Registration Rights.
(a) Reference is made to that certain Agreement for the Purchase
and Sale of the ▇▇▇▇▇ ▇▇▇▇▇▇ Tubular Services Eastern Hemisphere
Division of ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated dated as of October 1, 1991 by and
between the Company and BHI (the "Purchase Agreement"). BHI represents
and warrants that it is, as of the date of this Agreement, the sole
Holder of Registrable Securities (as such capitalized terms are defined
in the Purchase Agreement) and that the only registration rights BHI
has, as of the date hereof, with respect to equity securities of the
Company are as provided in the Purchase Agreement. The Company
represents and warrants that the Company has not granted any outstanding
registration rights or agreed to grant any registration rights to any
person or entity except for the registration rights to be granted
pursuant to Section 5.12 of the Merger Agreement and registration rights
granted under the Outstanding Registration Rights Agreements (as such
term is defined in Exhibit D to the Merger Agreement).
(b) If the Closing occurs, the Purchase Agreement shall
automatically be amended as follows:
(i) Section 1.1 of the Purchase Agreement shall be amended
to add the following definitions (except with respect to the
definition of Registrable Securities, which shall be substituted
for the definition in Section 1.1):
"DOS Registrable Securities" means the securities subject to
the registration rights to be provided by Buyer pursuant to
Section 5.12 of the Agreement and Plan of Merger dated as of
January 3, 1996 among the Buyer, Grow Acquisition Limited and
D.O.S. Ltd.
"Exchange Agreement" means the Exchange Agreement dated as
of January 3, 1996 by and among BHI and Buyer.
"Junior Registrable Securities" means the 1,500,000 shares
of Common Stock acquired pursuant to the Exchange Agreement and
the shares of Common Stock for which the Warrants are exercisable
and any Common Stock or other security of Buyer issued as a
dividend or other distribution with respect to, or in exchange
for, or in replacement of, such shares of Common Stock or the
Warrants. The rights of the Holders of Junior Registrable
Securities shall be subordinate to the rights of Holders of Senior
Registrable Securities and shall be subordinate to the rights of
the holders of DOS Registrable Securities and pari passu with
respect to all registration rights (other than registration rights
relating to the DOS Registrable Securities) granted by the Buyer
after October 1, 1991 unless otherwise expressly subordinated with
the written agreement of the Holders. Notwithstanding the
foregoing, if the Holders make a request for Registration pursuant
to Section 8.3 and request that all Registrable Securities be
included in such Registration then the Junior Registrable
Securities shall be, for purposes of such Registration, superior
to registration rights (other than registration rights relating
to the DOS Registrable Securities) granted by the Buyer after
October 1, 1991 and all such other registration rights (other than
registration rights relating to the DOS Registrable Securities)
shall rank subordinate to the rights of Holders of the Junior
Registrable Securities.
"Registrable Securities" means Senior Registrable Securities
and Junior Registrable Securities. Notwithstanding the foregoing,
any particular Registrable Security shall cease to be a
Registrable Security at such time as (i) it has been effectively
registered under the 1933 Act and sold or transferred in
accordance with the Registration statement covering it, (ii) it
has been distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the 1933 Act, or (iii) it
has been transferred and a new certificate or other evidence of
ownership for it has been delivered by or on behalf of the Buyer
and such certificate and the shares evidenced thereby are not
subject to any stop transfer order or similar restriction on
resale.
"Senior Registrable Securities" means the 1,686,047 shares
of Common Stock owned by BHI as of the date hereof and any Common
Stock or other security of Buyer issued as a dividend or other
distribution with respect to, or in exchange for, or in
replacement of, such shares of Common Stock. The rights of the
Holders of Senior Registrable Securities shall be senior to the
rights of Holders of Junior Registrable Securities and to the
rights of the holders of DOS Registrable Securities.
"Warrants" means those certain Warrants for the purchase of
an aggregate of 1,250,000 shares (subject to adjustment as
provided therein) of Common Stock issued to Buyer pursuant to the
Exchange Agreement.
(ii) A new sentence shall be added to the end of Section
8.3(b) as follows:
Notwithstanding the foregoing, the Buyer shall be
entitled to postpone for a reasonable period of time (not
exceeding 90 days) the filing (but not the preparation) of any
registration statement otherwise required to be prepared and filed
by it pursuant hereto if (i) at the time the Buyer receives a
request for such registration, the Buyer is in possession of
material non-public information that would be required to be
disclosed in a registration statement but that has not been and
will otherwise not be disclosed to the public and the Buyer deems
disclosure not to be in the best interests of the Buyer and its
stockholders (and the Buyer so notifies the Holders requesting a
Registration within 5 Business Days of such request), or (ii) the
Buyer determines (and the Buyer so notifies the Holders requesting
a Registration within 5 Business Days of such request) that in its
judgment, such registration and offering would materially
interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Buyer
that prior to such request the Board of Directors of the Buyer had
agreed by resolution to pursue.
(iii) The third and fourth sentences of Section 8.2(c) of
the Purchase Agreement shall be amended by deleting such sentences
and adding to the end of Section 8.2(c):
Notwithstanding any other provisions of this Section
8.2, if the underwriter determines that marketing factors require
a limitation on the amount of shares of Common Stock to be
Registered, then the underwriter may limit the amount of
Registrable Securities to be included in the Registration and
underwriting, and the amount of securities to be offered shall be
reduced first from the Common Stock being offered for the account
of persons or entities entitled to include Common Stock in such
offering and whose rights to include Common Stock in the offering
rank subordinate to the rights of the Holders of Junior
Registrable Securities and then, if the offering size shall
require further reduction, from the Common Stock being offered for
the account of the Holders of Junior Registrable Securities and
such other persons and entities entitled to include Common Stock
in such offering and whose rights to include such Common Stock
rank pari passu to the registration rights of the Holders of
Junior Registrable Securities (allocated pro rata in proportion to
their respective number of shares to be registered), and then, if
the offering size shall require further reduction, from the
Common Stock being offered for the account of the holders of DOS
Registrable Securities and such other persons or entities entitled
to include Common Stock in such offering and whose rights to
include Common Stock in the offering rank subordinate to the
rights of the Holders of Senior Registrable Securities and senior
to the rights of Junior Registrable Securities and then, if the
offering size shall require further reduction, from the Common
Stock being offered for the account of the Holders of Senior
Registrable Securities and such other persons and entities
entitled to include Common Stock in such offering and whose rights
to include such Common Stock rank pari passu to the registration
rights of the Holders of Senior Registrable Securities (allocated
pro rata in proportion to their respective number of shares to be
registered), to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters prior to
any reduction of the securities to be sold by the Company:
provided, however, that such limitation shall not exclude more
than 50% of the aggregate amount of the Senior Registrable
Securities of Holders sought to be registered by Holders in such
Registration; and provided, further, however the provisions of
this Section 8.2 are subject to the rights and obligations of
certain stockholders of the Buyer as set forth in the
Stockholders' Agreement.
(iv) A new Section 8.3(d) shall be added as follows:
Notwithstanding any other provisions of this Section
8.3, if any other person or entity participates in an underwritten
offering pursuant to this Section 8.3 and if the underwriter
determines that marketing factors require a limitation on the
amount of shares of Common Stock to be Registered, then the
underwriter may limit the amount of Registrable Securities to be
included in the Registration and underwriting, and the amount of
securities to be offered shall be reduced first from the Common
Stock being offered for the account of persons or entities
entitled to include Common Stock in such offering and whose rights
to include Common Stock in the offering rank subordinate to the
rights of the Holders of Junior Registrable Securities and then,
if the offering size shall require further reduction, from the
Common Stock being offered for the account of the Holders of
Junior Registrable Securities and such other persons and entities
entitled to include Common Stock in such offering and whose rights
to include such Common Stock rank pari passu to the registration
rights of the Holders of Junior Registrable Securities (allocated
pro rata in proportion to their respective number of shares to be
registered), and then, if the offering size shall require further
reduction, from the Common Stock being offered for the account of
the Company and the holders of DOS Registrable Securities and such
other persons or entities entitled to include Common Stock in such
offering and whose rights to include Common Stock in the offering
rank subordinate to the rights of the Holders of Senior
Registrable Securities and senior to the rights of Junior
Registrable Securities (in whatever proportion or order they have
agreed among themselves) and then, if the offering size shall
require further reduction, from the Common Stock being offered for
the account of the Holders of Senior Registrable Securities and
such other persons and entities entitled to include Common Stock
in such offering and whose rights to include such Common Stock
rank pari passu to the registration rights of the Holders of
Senior Registrable Securities (allocated pro rata in proportion to
their respective number of shares to be registered). If the
number of Junior Registrable Securities are limited as a result of
the application of the immediately preceding sentence or Section
8.3(c) with the result that less than 75% of the Registrable
Securities requested to be included in such Registration are
sold, then the number of Registrations that may be requested by
Holders under Section 8.3 shall be increased by one.
(v) A new Section 8.3(e) shall be added as follows:
Any written request or notice by a Holder pursuant to
Section 8.2 or 8.3 to include Registrable Securities in a
Registration must specify what portion of such Registrable
Securities that are proposed to be included in a Registration
constitute Senior Registrable Securities and what portion
constitute Junior Registrable Securities in order for such request
or notice to be effective.
5.2 Obtaining Consents. The Company will use its reasonable best
efforts to obtain, and to assist BHI in obtaining, all consents, resignations,
authorizations and approvals and making all filings necessary for the consum-
mation of the transactions contemplated by this Agreement, if any, required
under any applicable law or regulation.
5.3 Satisfaction of Closing Conditions. The Company shall use its
reasonable best efforts to satisfy the conditions to Closing set forth in
Article VII relating to the Company in an expeditious manner. The Company
shall not be required to institute or defend any action in any court or before
any administrative body or take action to divest or hold separate any assets
of it or any of its affiliates in connection with satisfying such conditions.
5.4 Delivery of Documents at Closing. At the Closing, subject to
satisfaction of the conditions set forth in Article VII, the Company shall
execute and deliver to BHI all documents required to be delivered by the
Company pursuant to Section 7.1.
ARTICLE VI.
COVENANTS OF BHI
BHI further agrees, except as set forth in or contemplated by this
Agreement or as otherwise approved by the Company in writing, as follows:
6.1 Obtaining Consents. BHI will use its reasonable best efforts to
obtain, and to assist the Company in obtaining, all consents, authorizations
and approvals and making all filings necessary for the consummation of the
transactions contemplated by this Agreement, if any, required under any
applicable law or regulation.
6.2 Satisfaction of Closing Conditions. BHI shall use its reasonable
best efforts to satisfy the conditions to Closing set forth in Article VII
relating to BHI in an expeditious manner. BHI shall not be required to
institute or defend any action in any court or before any administrative body
or take action to divest or hold separate any assets of it or any of its
affiliates in connection with satisfying such conditions.
6.3 Delivery of Documents at Closing. At the Closing, subject to
satisfaction of the conditions set forth in Article VII, BHI shall execute and
deliver to the Company the documents contemplated to be delivered by BHI
pursuant to Section 7.2.
6.4 Disposition of Securities. BHI agrees that it will not, until
December 31, 1997 (the period from the date of this Agreement to December 31,
1997, the "Lock-up Period"), offer to sell, contract to sell, or otherwise
sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any of the Shares, the Warrants or the Warrant
Shares. The foregoing restriction does not apply to (i) any Disposition that
may be effected in a tender or exchange offer made to all holders of a class
or series of the Company's securities, (ii) any Disposition, conversion or
exchange of the Shares or Warrant Shares for other securities, cash or
property in connection with a merger, consolidation, recapitalization,
redemption or other reclassification involving the Company or the Company's
securities, (iii) any Disposition in connection with a disposition or other
transfer of all or substantially all of the assets of BHI, provided the
transferee agrees to be bound by this Section 6.4 or (iv) any Disposition to
an affiliate of BHI that agrees to be bound by this Section 6.4. Such
restriction shall not apply to any securities BHI may hold as a result of any
transaction described in clause (i) or (ii) above following such transaction.
The foregoing restriction has been expressly agreed to preclude BHI, among
other things, from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
any of the Shares, the Warrants or the Warrant Shares during the Lock-up
Period, even if such shares would be disposed of by someone other than BHI.
Furthermore, BHI has also agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Shares except in compliance with this restriction. An exercise of the
Warrants shall not constitute a Disposition of the Shares, the Warrants or the
Warrant Shares.
ARTICLE VII.
CONDITIONS TO THE CLOSING;
TERMINATION, AMENDMENT AND WAIVER
7.1 Conditions to Obligation of BHI. The obligation of BHI to effect
the transactions contemplated by this Agreement is subject to the following
conditions:
(a) Representations and Warranties of the Company. Except as
contemplated by this Agreement, (i) the representations and warranties
of the Company hereunder shall be made again at the Closing and shall be
true in all material respects as of the Closing Date, except that to the
extent such representations and warranties speak as of an earlier date,
they will be true and correct as of such earlier date, (ii) the Company
shall have performed (or caused to have been performed) in all respects
all covenants required of it (and its subsidiaries) by this Agreement as
of the Closing and (iii) the Company shall have furnished BHI at the
Closing with a certificate of the President of the Company to such
effect.
(b) Third Party Consents and Approvals. The Company shall have
made all filings with, and obtained all required consents, approvals,
permits and authorizations in connection with the execution and
delivery of this Agreement and the transactions contemplated hereby from
any governmental entity except where the failure to obtain such
consents, approvals, permits and authorizations would not be reasonably
likely to result in a Company Material Adverse Effect (assuming the
transactions contemplated by this Agreement have taken place) or to
materially adversely affect the consummation of the transactions
contemplated hereby.
(c) Stock and Warrant Certificates. The Company shall have
delivered to BHI at the Closing one or more stock certificates
representing the Shares in good delivery form and certificates
representing the Warrants in the form set forth on Appendix I.
(d) Conditions Precedent to Merger. All of the conditions
precedent to the consummation of the Merger as set forth in Sections 6.1
and 6.3 of the Merger Agreement shall have been satisfied as of the
Closing Date; and all conditions precedent set forth in Section 6.2 of
the Merger Agreement shall have been satisfied or waived by the Company
as of the Closing Date, provided that any such waiver shall not be
materially adverse to BHI as a holder of Preferred Stock exchanging the
Preferred Stock for Securities.
7.2 Conditions to Obligations of the Company. In addition to the
satisfaction of the conditions referred to in subparagraph (b) of Section 7.1
hereof, the obligations of the Company to effect the transactions contemplated
by this Agreement shall be subject to the following conditions:
(a) Representations and Warranties of BHI. Except as
contemplated in this Agreement, (i) the representations and warranties
of BHI hereunder shall be made again at the Closing and shall be true in
all material respects as of the Closing Date, except that to the extent
such representations and warranties speak as of an earlier date, they
will be true and correct as of such earlier date, (ii) BHI shall have
performed in all material respects all covenants required of it by this
Agreement as of the Closing Date and (iii) BHI shall have furnished the
Company at the Closing with a certificate of one of its authorized
representatives to such effect.
(b) Delivery of BHI Preferred Stock. BHI shall have delivered
the share certificate or certificates representing the BHI Preferred
Stock, together with such other documentation evidencing the transfer as
may be reasonably requested by the Company as specified in Section 2.1
hereof.
(c) Conditions Precedent to Merger. All of the conditions
precedent to the consummation of the Merger as set forth in Sections
6.1, 6.2 and 6.3 of the Merger Agreement shall have been satisfied, or
waived by a party having the right to waive such condition under the
Merger Agreement, as of the Closing Date.
7.3 Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated herein may
be terminated at any time before the Closing as follows:
(a) Mutual Consent. By the mutual consent of the Company and
BHI.
(b) Expiration Date. By the Company or BHI if the Closing shall
not have occurred by December 31, 1996.
(c) Termination of Merger Agreement. By the Company or BHI if
the Merger Agreement shall have been terminated.
(d) Amendment of Merger Agreement. By BHI if an amendment or
modification of the Merger Agreement is made which is materially adverse
to BHI as a holder of Preferred Stock exchanging the Preferred Stock for
Securities.
7.4 Effect of Termination and Failure of Conditions. In the event of
termination of this Agreement as provided in Section 7.3, or of the failure of
a condition resulting in BHI, or the Company not performing its or their
obligations hereunder pursuant to the terms of Section 7.1 or 7.2, as the case
may be, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto with respect thereto except that
nothing herein shall relieve any party from liability for any breach hereof.
ARTICLE VIII.
MISCELLANEOUS
8.1 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of the Agreement.
8.2 Entire Agreement. This Agreement, the documents to be executed
hereunder, and the exhibits attached hereto constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties pertaining to the subject matter
hereof. Notwithstanding the foregoing, except as specifically provided in
this Agreement if the Closing occurs, the Purchase Agreement shall continue in
full force and effect, including specifically sections 8.11 and 8.12 of the
Purchase Agreement.
8.3 Waiver. At any time prior to the Closing, any party hereto may
(a) extend the time for the performance of any of the obligations or other
acts of any other party hereto or (b) 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 a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of
such party. The consummation of the transactions contemplated hereby shall not
be deemed a waiver of the right any party may have hereunder with respect to
any other party's representations, warranties, covenants or agreements
contained in or related to this Agreement being incorrect, untrue or breached.
8.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto. No supplement,
alteration or modification of this Agreement shall be binding unless executed
in writing by the parties hereto.
8.5 Further Actions. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as
may reasonably be requested by the other parties in order to consummate or
implement the transactions contemplated by this Agreement.
8.6 Assignment. Except as otherwise expressly provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the Company and BHI.
The Company may not assign or delegate any of its rights or duties hereunder,
without the prior written consent of BHI. BHI may not assign or delegate any
of its rights or duties hereunder without the prior written consent of the
Company, which consent shall not be unreasonably withheld; but in any event
BHI shall remain responsible for any assignee's performance. Any assignment
or delegation made without such consent shall be void.
8.7 Independent Covenants. The covenants contained herein are
independent and separate, and in the event that any provision contained herein
is declared invalid or illegal, the other provisions hereof shall not be
affected or impaired thereby and shall remain valid and enforceable.
8.8 Remedies and Certain Rights. In the event of a breach or
threatened breach by any party hereto of the provisions of this Agreement, any
other party hereto shall be entitled to specific performance.
8.9 Governing Law. This Agreement and the other documents delivered
pursuant hereto and the legal relations between the parties shall be governed
and construed in accordance with the laws of the State of Delaware, without
giving effect to principles of conflict of laws.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but
all of which together shall constitute one and the same instrument.
8.11 Withholding or Granting of Consent. Except as otherwise provided
in this Agreement, each party hereto may, with respect to any consent or
approval that it is entitled to grant pursuant to this Agreement or any other
document or instrument or agreement delivered or entered into pursuant hereto,
grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.
8.12 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address
or addresses as such person may subsequently designate by notice given
hereunder.
if to Tuboscope Vetco International:
Tuboscope Vetco International Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
if to ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated:
▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED
Date: By:
Name:
Title:
TUBOSCOPE VETCO INTERNATIONAL
CORPORATION
Date: By:
Name:
Title:
Appendix I
to Exchange Agreement
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
EXPIRING DECEMBER 31, 2000
No. __ 1,250,000 Shares
BY THIS WARRANT (this "Warrant"), Tuboscope Vetco International
Corporation, a Delaware corporation (the "Company"), certifies that, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, a Delaware corporation (along with
its registered assigns, the "Holder"), is entitled to subscribe for and
purchase from the Company, subject to the terms and conditions set forth
herein, at any time or from time to time prior to 5:00 p.m. (Houston, Texas
time) on December 31, 2000 (the "Expiration Date"), 1,250,000 (subject to
adjustment as set forth herein) fully paid and non-assessable shares (the
"Shares") of the Company's Common Stock, $0.01 par value per share (the
"Common Stock"), at a price equal to the exercise price per share, initially
$10.00 (subject to adjustment as set forth herein) per share (the "Exercise
Price").
1. Exercise of Warrant; Company Office. This Warrant may be
exercised at any time or from time to time prior to the Expiration Date as to
the entire number or any lesser number of whole shares of Common Stock, by the
surrender of this Warrant to the Company at its office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place as is designated in writing by the
Company pursuant to this Section 1, together with (a) a duly executed election
in substantially the form of Exhibit A attached hereto and made a part hereof
for all purposes, and (b) a wire transfer or a certified or bank cashier's
check payable to the order of the Company in an amount equal to the Exercise
Price multiplied by the number of shares of Common Stock covered by such
election. Notwithstanding the foregoing sentence, at any time that the
Current Market Price (as hereinafter defined) is greater than the Exercise
Price, the Holder may, at its option, exercise this Warrant at any time or
from time to time prior to the Expiration Date as to the entire number or any
lesser number of whole shares of Common Stock, by the surrender of this
Warrant to the Company at the location designated in the foregoing sentence
together with a duly executed election in substantially the form of Exhibit A
attached hereto and made a part hereof for all purposes and, in return
therefor, the Company shall deliver to the Holder that certain number of
shares of Common Stock that is determined by dividing (aa) the product of (1)
the number of shares of Common Stock covered by such election and (2) the
difference between the Current Market Price at the date of such exercise and
the Exercise Price in effect on the date of such exercise by (bb) the Current
Market Price at the date of such exercise. For so long as this Warrant is
outstanding, the Company shall continue to maintain an office in the State of
Texas where notices, presentations and demands in respect of this Warrant may
be made upon it and shall notify the Holder in writing at least 15 days before
changing the location of any such office.
2. Stock Ownership; Stock Certificates; Partial Exercise. Upon each
exercise of this Warrant, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise as of the
close of business on the day this Warrant is exercised, notwithstanding that
the stock transfer books of the Company shall then be closed or certificates
representing such shares shall not then have been actually delivered to the
Holder. As soon as possible after each such exercise of this Warrant, the
Company shall issue and deliver to the Holder a certificate or certificates
for the shares issuable upon such exercise issued in such denominations as may
be specified by Holder and registered in the name of the Holder or, subject to
Section 9, such other name or names as shall be designated in the Holder's
election to exercise. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the
balance of the shares subject to purchase hereunder on the terms and
conditions set forth herein (including all changes and adjustments that have
occurred hereunder). The Company will, at the time of each exercise of this
Warrant, upon the request of the Holder hereof, acknowledge in writing its
continuing obligation to afford to such Holder all rights to which such Holder
shall continue to be entitled after such exercise in accordance with the terms
of this Warrant; provided, however, that if the Holder of this Warrant shall
fail to make any such request, such failure shall not affect the continuing
obligation of the Company to afford such rights to such Holder.
3. Company Records; Transfer or Assignment of Warrant; Exchange of
Warrant. Any warrants issued in connection herewith or in substitution
herefor, upon complete or partial transfer, assignment or exercise (the
"Warrants") shall be numbered and shall be registered in the warrant register
of the Company (the "Warrant Register") as they are issued. The Company shall
treat the registered holder of any Warrant on the Warrant Register as the
owner in fact thereof for all purposes, except that if the Warrant is properly
transferred or assigned and notice of such transfer or assignment is given to
the Company, the Company shall treat the transferee or assignee as the owner
thereof for all purposes (or, if such transfer or assignment is properly made
in blank, the Company shall treat the bearer of this Warrant as the owner
thereof for all purposes). The Warrant shall be transferred by the Company
upon delivery thereof duly endorsed by the Holder or by his duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced if requested by the Company in
its reasonable discretion. The Company shall immediately register all
assignments and transfers in the Warrant Register and, upon any registration
of assignment or transfer, the Company shall deliver a new Warrant or Warrants
to the person or entity entitled thereto on the terms and conditions set forth
herein (including all changes and adjustments that have occurred hereunder).
A Warrant, if properly transferred or assigned, may be exercised by a
subsequent Holder without having a new Warrant issued. The Warrants may be
exchanged at the option of the Holder thereof for another Warrant, or other
Warrants, of different denominations and representing in the aggregate the
right to purchase the same number of shares of Common Stock on the terms and
conditions set forth herein (including all changes and adjustments that have
occurred hereunder) upon surrender to the Company or its duly authorized
agent. All provisions of this Section 3 shall be subject to Section 9.
4. Reserved Stock. The Company shall reserve and keep available at
all times solely for the purpose of providing for the exercise of this Warrant
the maximum number of shares of Common Stock as to which this Warrant may then
be exercised. All such shares shall be duly authorized and free of preemptive
rights and, when issued upon such exercise, shall be validly issued, fully
paid and non-assessable.
5. Certain Adjustments.
(a) Number of Shares; Exercise Price. The number of shares of Common
Stock which the Holder of this Warrant shall be entitled to receive upon each
exercise hereof shall be determined by multiplying the number of shares of
Common Stock which would otherwise (but for the provisions of this Section 5)
be issuable upon such exercise, as designated by the Holder hereof, by a
fraction of which (a) the numerator is $10.00 and (b) the denominator is the
Exercise Price in effect on the date of such exercise. The Exercise Price
shall be adjusted and readjusted from time to time as provided in this
Section 5 and, as so adjusted or readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by this Section 5.
(b) Issuance of Additional Shares of Common Stock or Certain
Convertible Securities. If after the date hereof the Company shall issue any
Common Stock other than Excluded Stock (as hereinafter defined) without
consideration or for a consideration per share less than the Current Market
Price in effect immediately prior to such issuance, the Exercise Price in
effect immediately prior to each such issuance shall immediately (except as
otherwise expressly provided below) be reduced to the price determined by
dividing (1) an amount equal to the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such issuance multiplied by the Current
Market Price in effect immediately prior to such issuance and (B) the consid-
eration, if any, received by the Company upon such issuance, by (2) the total
number of shares of Common Stock outstanding immediately after such issuance.
For the purposes of any adjustment of the Exercise Price
pursuant to this Section 5(b), the following provisions shall be
applicable:
(A) Cash. In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Company
shall be deemed to be the amount of the cash proceeds received by
the Company for such Common Stock before deducting therefrom any
discounts, commissions, taxes or other expenses allowed, paid or
incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the
issuance of Common Stock (otherwise than upon the conversion of
shares of capital stock or other securities of the Company) for a
consideration in whole or in part other than cash, including
securities acquired in exchange therefor (other than securities of
the Company that by their terms are exchangeable for such Common
Stock), the consideration other than cash shall be deemed to be
the fair value thereof as determined in good faith by the Board of
Directors of the Company and irrespective of any accounting
treatment; provided, that such fair value as determined by the
Board of Directors shall not exceed the aggregate Current Market
Price of the shares of Common Stock being issued as of the date on
which the Board of Directors authorizes the issuance of such
shares.
(C) Options and Convertible Securities. In the case of
the issuance of (i) options, warrants or other rights to purchase
or acquire Common Stock (whether or not at the time exercisable),
(ii) securities by their terms convertible into or exchangeable
for Common Stock (whether or not at the time so convertible or
exchangeable) or (iii) options, warrants or rights to purchase
such convertible or exchangeable securities (whether or not at the
time exercisable), other than in each case Excluded Stock:
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such
options, warrants or other rights to purchase or
acquire Common Stock shall be deemed to have been
issued at the time such options, warrants or rights
were issued and for a consideration equal to the
consideration (determined in the manner provided in
subclauses (A) and (B) above), if any, received by the
Company upon the issuance of such options, warrants or
rights plus the minimum purchase price provided in
such options, warrants or rights for the Common Stock
covered thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable
securities, or upon the exercise of options, warrants
or other rights to purchase or acquire such
convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be
deemed to have been issued at the time such securities
were issued or such options, warrants, or rights were
issued and for a consideration equal to the considera-
tion, if any, received by the Company for any such
securities and related options, warrants or rights
(excluding any cash received on account of accrued
interest or accrued dividends), plus the additional
consideration (determined in the manner provided in
subclauses (A) and (B) above), if any, to be received
by the Company upon the conversion or exchange of such
securities, or upon the exercise of any related
options, warrants or rights to purchase or acquire
such convertible or exchangeable securities and the
subsequent conversion or exchange thereof;
(3) on any change in the number of shares of
Common Stock deliverable upon exercise of any such
options, warrants or rights or conversion or exchange
of such convertible or exchangeable securities or any
change in the consideration to be received by the
Company upon such exercise, conversion or exchange,
including, but not limited to, a change resulting from
the anti-dilution provisions thereof, the Exercise
Price as then in effect shall forthwith be readjusted
to such Exercise Price as would have been obtained had
an adjustment been made upon the issuance of such
options, warrants or rights not exercised prior to
such change, or of such convertible or exchangeable
securities not converted or exchanged prior to such
change, upon the basis of such change;
(4) on the expiration or cancellation of any
such options, warrants or rights or the termination of
the right to convert or exchange such convertible or
exchangeable securities, if the Exercise Price shall
have been adjusted upon the issuance thereof, the
Exercise Price shall forthwith be readjusted to such
Exercise Price as would have been obtained had an
adjustment been made upon the issuance of such
options, warrants, rights or such convertible or
exchangeable securities on the basis of the issuance
of only the number of shares of Common Stock actually
issued upon the exercise of such options, warrants or
rights, or upon the conversion or exchange of such
convertible or exchangeable securities; and
(5) if the Exercise Price shall have been
adjusted upon the issuance of any such options,
warrants, rights or convertible or exchangeable
securities, no further adjustment of the Exercise
Price shall be made for the actual issuance of Common
Stock upon the exercise, conversion or exchange
thereof.
(D) Excluded Stock. "Excluded Stock" shall mean (1)
shares of Common Stock issued by the Company as a stock dividend
payable in shares of Common Stock, or upon any subdivision or
split-up of the outstanding shares of Common Stock for which an
adjustment to the Exercise Price is made pursuant to Section 5(c),
(2) options to acquire Common Stock and shares of Common Stock
issued or to be issued from time to time to directors, officers,
employees, consultants, advisors, independent contractors and
agents of the Company pursuant to stock option plans or other
employee benefit plans approved of by the Board of Directors, or
an authorized committee thereof, of the Company, (3) the shares of
Common Stock issued or issuable upon exercise of the Warrants or
any other warrants to purchase shares of Common Stock issued and
outstanding as of the date hereof and (4) shares of Common Stock
issued by the Company pursuant to an underwritten public offering
of Common Stock or pursuant to a public tender or exchange offer.
(c) Stock Dividends, Subdivisions, Reclassifications or Combinations.
If the Company shall (i) declare a dividend or make a distribution on its
Common Stock in shares of its Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
Holder of this Warrant who exercises this Warrant after such date shall be
entitled to receive the number of shares of Common Stock which he would have
owned or been entitled to receive had this Warrant been exercised immediately
prior to such date. Successive adjustments in the Exercise Price shall be
made whenever any event specified above shall occur.
(d) Other Distributions. In case the Company shall fix a record date
for the making of a distribution to all holders of shares of its Common Stock
(i) of shares of any class other than its Common Stock or (ii) of evidences of
indebtedness of the Company or any subsidiary or (iii) of other assets,
including cash, (excluding dividends or distributions referred to in Section
5(c) above and excluding any cash dividend or cash distribution if the per
share amount when combined with the per share amount of all cash dividends and
distributions paid by the Company on Common Stock during the 365-day period
ending on such record date (as adjusted to appropriately reflect any of the
events referred to in Section 5(c) or in this Section 5(d) and excluding cash
dividends or distributions for which an adjustment to the Exercise Price was
previously made pursuant to this Section 5(d)), does not exceed 10% of the
Current Market Price on such record date) or (iv) of rights or warrants
(excluding those referred to in Section 5(b) above), in each case the Exercise
Price in effect immediately prior thereto shall be reduced immediately
thereafter to the price determined by dividing (1) an amount equal to the
difference resulting from (x) the number of shares of Common Stock outstanding
on such record date multiplied by the Current Market Price on such record
date, less (y) the fair market value (as determined in good faith by the Board
of Directors) of said shares or evidences of indebtedness or assets or rights
or warrants to be so distributed, by (2) the number of shares of Common Stock
outstanding on such record date. Such adjustment shall be made successively
whenever such a record date is fixed. In the event that such distribution is
not so made, the Exercise Price then in effect shall be readjusted, effective
as of the date when the Board of Directors determines not to distribute such
shares, evidence of indebtedness, assets, rights or warrants, as the case may
be, to the Exercise Price which would then be in effect if such record date
had not been fixed.
(e) Other Dilutive Events. In case any event shall occur as to which
the provisions of this Section 5 are not strictly applicable but the failure
to make any adjustment relating thereto would not fairly protect the purchase
rights represented by this Warrant in accordance with the essential intent and
principles of this Section 5, then, in each such case, the Company shall
immediately make all adjustments necessary to preserve, without dilution, the
purchase rights represented by this Warrant on a basis consistent with the
intent and principles established in this Section 5 and shall also immediately
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company if they
satisfy such standard), which shall give their opinion that such adjustment,
if any, preserves, without dilution, the purchase rights represented by this
Warrant on a basis consistent with the intent and principles established in
this Section 5. Upon receipt of such opinion, the Company will immediately
deliver a copy thereof to the Holder of this Warrant. The Company shall not,
by amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith assist in carrying out all of such terms and in the taking
of all such actions as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant against dilution or other impairment.
Without limiting the generality of the foregoing, the Company (i) will not
permit the par value of any shares of stock receivable upon the exercise of
this Warrant to exceed the amount payable therefor upon such exercise,
(ii) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of stock on the exercise of the Warrants from time to time outstanding,
and (iii) will not take any action which results in any adjustment of the
Exercise Price if the total number of shares of Common Stock issuable after
such action upon the exercise of all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's certificate
of incorporation and available for the purpose of issuance upon such exercise.
(f) Size of Adjustment; Rounding. No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least one cent ($.01) in such price; provided, however, that any adjust-
ment which is thereby not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest one-hundredth of
a Share, as the case may be.
(g) Notice. Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to be sent
to the Holder, which notice shall be accompanied by an officer's certificate
setting forth the Exercise Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment and the computation
thereof. However, the failure by the Company to satisfy its obligations under
this Section 5(g) shall not in any manner affect or alter the rights of the
Holder under this Warrant.
(h) Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise of Warrants. If any fraction of a share would be issuable upon
the exercise of any Warrant (or specified portions thereof), the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
Current Market Price of such share of Common Stock on the date of exercise of
the Warrant.
(i) Current Market Price. The Current Market Price at any date shall
mean, in the event the Common Stock is publicly traded, the average of the
daily closing prices per share of Common Stock for 30 consecutive trading days
ending 3 trading days before such date (as adjusted for any stock dividend,
other dividend for which an adjustment to the Exercise Price would be required
pursuant to Section 5(d), split, combination or reclassification that took
effect during such 30 trading day period). The closing price for each day
shall be the last reported sale price regular way or, in case no such reported
sale takes place on such day, the average of the last closing bid and asked
prices regular way, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if not
listed or admitted to trading on any national securities exchange, the closing
sale price for such day reported by NASDAQ, if the Common Stock is traded
over-the-counter and quoted in the National Market System, or if the Common
Stock is so traded, but not so quoted, the average of the closing reported bid
and asked prices of the Common Stock as reported by NASDAQ or any comparable
system or, if the Common Stock is not listed on NASDAQ or any comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose. If the Common Stock is not
traded in such manner that the quotations referred to above are available for
the period required hereunder, the Current Market Price per share of Common
Stock shall be deemed to be the fair value per share of Common Stock as
determined by the Board of Directors of the Company in good faith and
irrespective of any accounting treatment.
(j) Treasury Stock. For the purposes of this Section 5, the sale or
other disposition of any Common Stock theretofore held in the Company's
treasury shall be deemed to be an issue thereof.
(k) Valid Issuance. All shares of Common Stock which may be issued
upon the exercise of this Warrant will upon issuance by the Company be duly
and validly issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof, and the Company shall
take no action which will cause a contrary result (including, without
limitation, any action which would cause the Exercise Price to be less than
the par value, if any, of the Common Stock).
6. Certain Corporate Events or Actions.
(a) Consolidation, Merger, Etc. In case of any consolidation with or
merger of the Company with or into another corporation or other entity (except
for a merger or consolidation in which the Company is the continuing
corporation other than as a subsidiary of another corporation or other
entity), or in case of any sale, lease or conveyance to another corporation or
other entity of the assets of the Company as an entirety or substantially as
an entirety, such successor, purchasing, leasing or receiving corporation or
other entity, as the case may be, shall, prior to and as a condition to the
occurrence of such event, (i) execute with the Holder an agreement providing
that the Holder shall have the right thereafter to receive upon exercise of
this Warrant the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such consolidation,
merger, sale, lease or conveyance by a holder of the number of shares of
Common Stock for which this Warrant might have been exercised immediately
prior to such consolidation, merger, sale, lease or conveyance (provided that,
if the holders of shares have the right to make an election with respect to
the kind or amount of securities, cash or other property receivable upon
consummation of such event, then the kind and amount of securities, cash or
other consideration receivable to the Holder upon consummation of such event
shall be deemed to be the kind and amount so receivable per share by a
plurality of the shares held by holders of such shares making such an
election) and (ii) make effective provision in its certificate of
incorporation or otherwise, if needed, in order to effect such agreement.
Such agreement shall provide for adjustments which shall be equivalent to the
adjustments in Section 5 and shall contain provisions equivalent to this
Section 6.
(b) Reclassification, Etc. In case of any reclassification or change
of the shares of Common Stock issuable upon exercise of this Warrant or in
case of any consolidation or merger of another corporation or other entity
with or into the Company in which the Company is the continuing corporation
(other than as a subsidiary of another corporation or other entity) and in
which there is a reclassification or change (including a change to the right
to receive cash or other property) of the shares of Common Stock, the Holder
shall have the right thereafter to receive upon exercise of this Warrant the
kind and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such reclassification, change,
consolidation or merger by a holder of the number of shares of Common Stock
into which this Warrant would have been exercisable immediately prior to such
reclassification, change, consolidation or merger (provided that, if the
holders of shares have the right to make an election with respect to the kind
or amount of securities, cash or other property receivable upon consummation
of such event, then the kind and amount of securities, cash or other
consideration receivable to the Holder upon consummation of such event shall
be deemed to be the kind and amount so receivable per share by a plurality of
the shares held by holders of such shares making such an election).
Thereafter, appropriate provision (as determined by the Board of Directors of
the Company in good faith) shall be made for adjustments which shall be
equivalent to the adjustments in Section 5. This Section 6(b) shall be
applicable to successive reclassifications, changes, consolidations or
mergers.
7. Certain Notices. In case at any time the Company shall propose or
have knowledge of any proposal:
(a) to pay any dividend or make any distribution on shares of Common
Stock or to fix a record date for the making of any such dividend or
distribution to holders of Common Stock; or
(b) to take, or fix a record date for, any action that would result in
any adjustment to the Exercise Price pursuant to Section 5; or
(c) to effect any reclassification or change of outstanding shares of
Common Stock, or consolidation or merger, or sale, lease or conveyance of
property, of the type addressed in Section 6; or
(d) to effect any voluntary or involuntary liquidation, dissolution or
winding-up of the Company;
then, and in any one or more of such cases, the Company shall give written
notice thereof to the Holder at least 30 days prior to the date on which
(i) the books of the Company shall close, or a record date shall be set, for
any such action described in Section 7(a) or (b) or (ii) such
reclassification, change, consolidation, merger, sale, lease, conveyance,
liquidation, dissolution or winding-up shall be effective, as the case may be.
8. Expenses. The Company shall pay all costs, fees, taxes (other
than any federal or state income or stock transfer taxes) and expenses payable
in connection with the preparation, issuance and delivery from time to time of
Warrants and of shares of Common Stock or other securities issued upon the
exercise of Warrants.
9. Restrictions on Transfer. The Holder, by its acceptance hereof,
represents and warrants that it is acquiring the Warrants and any Common Stock
issued upon the exercise of this Warrant for investment purposes, for its own
account, and not with an intent to sell or distribute the Warrants or any such
Common Stock except in compliance with applicable United States federal and
state securities law. Neither this Warrant nor any of the Common Stock issued
upon the exercise of this Warrant, nor any interest in either, may be sold,
assigned, pledged, hypothecated, encumbered or in any other manner transferred
or disposed of, in whole or in part, except in compliance with applicable
United States federal and state securities laws and the terms and conditions
hereof. The provisions of this Section 9 shall be binding upon all subsequent
holders of this Warrant, if any. This Warrant and the shares of Common Stock
or other securities issued upon exercise of this Warrant shall be subject to a
stop-transfer order and the certificate or certificates evidencing any such
shares or securities shall bear the following legend:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION. SUCH SECURITIES MAY NOT
BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT UPON SUCH
REGISTRATION OR UPON DELIVERY TO THE CORPORATION OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION STATING THAT
SUCH SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND LAWS."
10. Registration of Common Stock; Listing. If any shares of Common
Stock required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal
or state law before such shares may be issued upon exercise, the Company will,
at its expense and as expeditiously as possible, cause such shares to be duly
registered or approved, as the case may be. At any such time as Common Stock
is listed for trading, the Company will, at its expense, obtain promptly and
maintain the approval of all securities exchanges (including, for this
purpose, NASDAQ) on which the Common Stock is listed for trading for an
additional listing, upon official notice of issuance, of the shares of Common
Stock issuable upon exercise of the then outstanding Warrants and maintain the
listing of such shares after their issuance.
11. Availability of Information. The Company will comply with the
reporting requirements of Sections 13 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") (or, if the Company is not required
to so comply pursuant to the Exchange Act, it will make publicly available the
information specified by Rule 144(c)(2) under the Securities Act) and will
comply with all other public information reporting requirements of the
Securities and Exchange Commission (the "Commission") (including Rule 144
promulgated by the Commission under the Securities Act) from time to time in
effect and relating to the availability of an exemption from the Securities
Act for the sale of any restricted securities (as defined in the Securities
Act) or the sale of securities by affiliates (as defined in the Securities
Act). The Company will also cooperate with each holder of any restricted
securities in supplying such information as may be necessary for such holder
to complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act for the sale of any restricted securities or the sale
of securities by affiliates. The Company will furnish to each Holder of a
Warrant, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the Commission.
12. Loss, Theft, Etc. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Warrant and upon
surrender and cancellation of any Warrant if mutilated, the Company shall
execute and deliver to the Holder thereof a new Warrant in the form and
substance of the lost, stolen, destroyed or mutilated Warrant (including all
changes and adjustments that have occurred hereunder). In the event a bond
for security therefor is required, the cost of such bond shall be paid by the
Holder.
13. No Rights or Liabilities as a Stockholder. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof any
rights as a stockholder of the Company or as imposing any obligation upon such
Holder to purchase any securities or as imposing any liability upon such
Holder as a stockholder of the Company, whether such obligation or liability
is asserted by the Company or by creditors of the Company at law or in equity.
14. Governing Law. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
15. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that, to the extent permitted by
applicable law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16. Notices. All notices and other communications provided for herein
shall be delivered or mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed (a) if to any Holder of any Warrant, to
the address of such Holder as set forth in the Warrant Register or to such
other address as such Holder has notified the Company of in writing or (b) if
to the Company, to the address set forth in Section 1 or to such other address
as the Company has notified such Holder of pursuant to Section 1 and this
Section 16; provided, however, that the exercise of any Warrant shall be
effective in the manner provided in Section 1. All notices given pursuant to
this Warrant shall be deemed to be effective upon receipt thereof by the party
to whom such notice is addressed.
17. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. Any provision of this Warrant which shall be
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the Company waives any provision of law
which shall render any provision hereof prohibited or unenforceable in any
respect. The section and paragraph headings used in this Warrant are inserted
for convenience only and shall not be used for any interpretive purpose.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: _________________, 1996 TUBOSCOPE VETCO INTERNATIONAL
CORPORATION
[Corporate Seal] By:
Attest:
Secretary
EXHIBIT A TO WARRANT
To: TUBOSCOPE VETCO INTERNATIONAL CORPORATION
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to subscribe for
__________ shares of Common Stock covered by the within Warrant [and tenders
payment herewith in the amount of $____________] [and tenders no payment
herewith with respect to such shares of Common Stock covered by the within
Warrant and thus requests ____ shares of Common Stock (the quotient of (i) ___
shares covered by this exercise multiplied by $____) (the Current Market Price
at the date of this exercise minus the Exercise Price), divided by $_____ (the
Current Market Price at the date of this exercise)] in accordance with the
terms thereof, and requests that certificates for such shares in the following
denominations be issued in the name of, and delivered to, the person[s] at the
following address[es]:
Denominations:
(Print Address[es] and Social Security Number[s] or
Employer Identification Number[s] as applicable)
and, if said number of shares shall not be all the shares covered by the
within Warrant, that a new Warrant for the balance remaining of the shares
covered by the within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below:
Date: __________, ____ Name:
(Print)
(Signature)
Address: