Exhibit 2
---------
SECURITIES PURCHASE AGREEMENT
among
Geokinetics Inc.,
Avista Capital Partners, L.P.,
Avista Capital Partners (Offshore), L.P.,
and
Levant America S.A.
Dated as of September 8, 2006,
Relating to:
Series B Senior Convertible Preferred Stock
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.............................2
1.1 Definitions.........................................................2
1.2 Computation of Time Periods.........................................6
1.3 Terms Generally.....................................................7
1.4 Accounting Terms....................................................7
SECTION 2. AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK................7
2.1 Authorization of Issue..............................................7
2.2 Sale and Purchase of the Preferred Stock............................7
2.3 Closing.............................................................7
2.4 Stock Certificates..................................................7
SECTION 3. CONDITIONS TO CLOSING........................................8
3.1 Representations and Warranties......................................8
3.2 Performance; No Default under Other Agreements......................8
3.3 Compliance Certificate..............................................8
3.4 Acquisition.........................................................8
3.5 Avista Facilities...................................................8
3.6 Material Adverse Effect.............................................9
3.7 Consents, Authorizations and Filings, Etc...........................9
3.8 Payment of Expenses.................................................9
3.9 Legal Opinion.......................................................9
3.10 Management Rights Agreement.........................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES..............................10
4.1 Due Organization; Power and Authority..............................10
4.2 Capitalization.....................................................10
4.3 Subsidiaries.......................................................11
4.4 Due Authorization, Execution and Delivery..........................11
4.5 Non-Contravention; Authorizations and Approvals....................11
4.6 Financial Statements; Securities Filings...........................12
4.7 Absence of Undisclosed Liabilities or Events.......................14
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4.8 No Actions or Proceedings..........................................14
4.9 Title to Properties................................................14
4.10 Intellectual Property Rights.......................................14
4.11 Taxes..............................................................16
4.12 Employee Benefit Plans.............................................17
4.13 Investment Company Act.............................................17
4.14 Insurance..........................................................17
4.15 Compliance with Laws; Permits; Environmental Liabilities...........18
4.16 Labor and Employment Matters.......................................19
4.17 Brokerage Fees.....................................................19
4.18 Solvency and Related Matters.......................................19
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE PURCHASERS...........................................19
5.1 Purchase for Investment............................................19
5.2 Access to Information..............................................20
5.3 Corporate Power; Authorization; Enforceability.....................20
5.4 No Actions or Proceedings..........................................20
SECTION 6. OTHER AFFIRMATIVE COVENANTS.................................21
6.1 Foreign Subsidiaries...............................................21
6.2 Foreign Subsidiaries...............................................21
6.3 Director Representation............................................21
SECTION 7. EXPENSES, INDEMNIFICATION AND CONTRIBUTION; TERMINATION.....21
7.1 Expenses...........................................................21
7.2 Indemnification....................................................22
7.3 Survival...........................................................22
7.4 Tax Treatment of Indemnification Payments..........................22
SECTION 8. MISCELLANEOUS...............................................22
8.1 Notices............................................................22
8.2 Benefit of Agreement and Assignments...............................23
8.3 No Waiver; Remedies Cumulative.....................................23
8.4 Amendments, Waivers and Consents...................................23
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8.5 Counterparts.......................................................23
8.6 Headings...........................................................23
8.7 Survival of Covenants and Indemnities..............................24
8.8 Governing Law; Submission to Jurisdiction; Venue...................24
8.9 Severability.......................................................24
8.10 Entirety...........................................................25
8.11 Survival of Representations and Warranties.........................25
8.12 Construction.......................................................25
8.13 Incorporation......................................................25
8.14 Non-Recourse.......................................................25
8.15 Further Assurances.................................................25
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EXHIBITS:
Exhibit A - Form of Certificate of Designation
Exhibit B - Form of Registration Rights Agreement
Exhibit C Form of Opinion
Exhibit D Form of Management Rights Agreement
SCHEDULES:
Schedule 2.2 - Information relating to the Purchasers
Schedule 4.2 - Primary and fully diluted ownership of Capital Stock
Schedule 4.3 - Company and Subsidiaries
Schedule 4.8 Actions or Proceedings
Schedule 4.10 - Intellectual Property
Schedule 4.12(a) - Employee Benefit Plans
Schedule 4.12(b) - Multi Employer Plans
Schedule 4.12(c) - Retiree Health and Life Benefits
Schedule 4.16 - Labor Matters
Schedule 4.17 - Brokerage Fees
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as
of August 8, 2006, among Geokinetics Inc. a Delaware corporation (the
"COMPANY"), Avista Capital Partners, L.P., a Delaware limited partnership
("AVISTA"), Avista Capital Partners (Offshore), L.P., a Delaware limited
partnership ("AVISTA OFFSHORE" and together with Avista the "AVISTA
PURCHASERS"), and Levant America, S.A., a Liberian corporation ("Levant and
together with the Avista Purchasers the "PURCHASERS").
RECITALS
WHEREAS, concurrently with the execution of this Agreement the
Company and the owners of all the capital stock of Grant Geophysical, Inc. (the
"ACQUIRED BUSINESS") have executed that certain Stock Purchase Agreement (the
"ACQUISITION AGREEMENT"), dated September 7, 2006, pursuant to which the Company
will acquire 100% of the issued and outstanding capital stock of the Acquired
Business (the "ACQUISITION");
WHEREAS, concurrently with the execution of this Agreement, for
the purposes of financing the Acquisition, Geokinetics Holdings, Inc., a
Delaware corporation and wholly-owned subsidiary of the Company, the Purchasers
and the Royal Bank of Canada have executed that certain Credit Agreement, dated
as of September 8, 2006 (the "SENIOR CREDIT AGREEMENT") and the Company and the
Purchasers have executed that certain Subordinated Credit Agreement dated as of
August __, 2006 (the "SUBORDINATED CREDIT AGREEMENT" and together with the
Senior Credit Agreement and the respective ancillary documents related thereto
the "AVISTA FACILITIES");
WHEREAS, in connection with the transactions contemplated hereby,
the Company desires to amend its Certificate of Incorporation, dated January 31,
1980, as amended (the "CHARTER"), in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), to create a new class of preferred stock
of the Company designated as The Series B Senior Convertible Preferred Stock,
par value $10.00 per share, having a liquidation preference of $250.00 per
share, (the "PREFERRED STOCK"), by filing a Certificate of Designation of the
Preferred Stock (the "CERTIFICATE OF DESIGNATION"), on the date hereof and in
the form attached hereto as Exhibit A, with the office of the Secretary of State
of the State of Delaware;
WHEREAS, on the terms and subject to the conditions hereinafter
set forth, for the purposes of financing the Acquisition, the Company desires to
issue and sell the Preferred Stock to Purchasers, and Purchasers desire to
purchase and acquire the Preferred Stock from the Company; and
WHEREAS, the Purchasers and the Company intend to enter into that
certain Registration Rights Agreement (as defined herein) which will set forth
certain registration rights with respect to the Preferred Stock.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
1.1 Definitions. As used herein, defined terms used herein which
are defined in the Senior Credit Agreement shall have, except where otherwise
expressly set forth herein, the same respective meanings as such defined terms
have in the Senior Credit Agreement, and in addition terms shall have the
meanings specified herein unless the context otherwise requires:
"ACCREDITED INVESTOR" means any Person that is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
"ACQUIRED BUSINESS" is defined in the recitals.
"ACQUISITION" is defined in the recitals.
"ACQUISITION AGREEMENT" is defined in the recitals.
"APPLICABLE LAW" means all laws, statutes, treaties, rules, codes
(including building codes), ordinances, regulations, certificates, orders and
licenses of, and interpretations by, any Governmental Authority and judgments,
decrees, injunctions, writs, permits, orders or like governmental action of any
Governmental Authority (including environmental laws and those pertaining to
health or safety) applicable to the Company or any of its Subsidiaries or any of
their property or operations.
"AUDIT DATE" is defined in Section 4.6(a).
"AVISTA FACILITIES" is defined in the recitals.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
or capital stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate or capital stock, (iii) in the case of a limited
liability company, membership units (whether common or preferred), (iv) in the
case of a partnership, partnership interests (whether general or limited) and
(v) any other equivalent ownership interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"CERTIFICATE OF DESIGNATION" is defined in the recitals.
"CHARTER" is defined in the recitals.
"CLOSING" is defined in Section 2.3.
"CLOSING DATE" is defined in Section 2.3.
"CLOSING PAYMENT" shall mean 2% of the Purchase Price.
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"CODE" means the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations promulgated thereunder.
"COMMON STOCK" is defined in Section 4.2.
"CONVERT SHARES" means the shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock.
"DGCL" is defined in the recitals.
"ENFORCEABILITY EXCEPTIONS" means, with respect to any specified
obligation, any limitations on the enforceability of such obligation due to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium, and other similar laws of general applicability
relating to or affecting creditors' rights or general equity principles
(including public policies) or except as rights to indemnification or
contribution may be limited by Federal, state, provincial or territorial
securities laws.
"ENVIRONMENTAL PERMITS" is defined in Section 4.15(b) (i).
"EXCHANGE ACT" is defined in Section 4.6(b).
"ERISA AFFILIATE" is defined in Section 4.12(b).
"FINANCIAL STATEMENTS" is defined in Section 4.6(a).
"FINANCING DOCUMENTS" means collectively, this Agreement, the
Certificate of Designation, the Registration Rights Agreement, the Senior Credit
Agreement and the Subordinated Credit Agreement, and all certificates,
instruments and other documents made or delivered in connection herewith and
therewith.
"HSR ACT" is defined in Section 3.7(a).
"INDEMNITEES" is defined in Section 7.2.
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), and
all patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, corporate names and domain names, together with all translations,
adaptations and combinations thereof and including all goodwill associated
therewith, (c) all copyrights and all applications, registrations and renewals
in connection therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all know-how, trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice (including ideas, research and development,
know-how, formulas, compositions and manufacturing and production process and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies and tangible
3
embodiments thereof (in whatever form or medium) and (i) all licenses and
agreements in connection therewith.
"IRS" means the Internal Revenue Service.
"LEGAL PROCEEDING" means any judicial, administrative or arbitral
actions, suits, mediation, investigation, inquiry, proceedings or claims
(including counterclaims) by or before a Governmental Authority.
"MATERIAL" means material in relation to the business, condition
(financial or otherwise), properties or results of operation of the Company and
its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect on the business, assets, liabilities, operations, prospects or condition
(financial or otherwise) or operating results of the Company and the
Subsidiaries, taken as a whole, (b) a material impairment of the ability of any
party to perform any of its obligations under any Financing Document to which it
is or will be a party or (c) a material impairment of any rights of or benefits
available to the Purchasers under any Financing Document.
"ORDER" means any order, injunction, judgment, doctrine, decree,
ruling, writ, assessment or arbitration award of a Governmental Authority.
"ORDINARY COURSE OF BUSINESS" means the ordinary and usual course
of day-to-day operations of the business of the Company and the Subsidiaries
through the date hereof consistent with past practice.
"PERMITS" means any approvals, authorizations, consents,
licenses, permits or certificates of a Governmental Authority.
"PERMITTED EXCEPTIONS" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies of
title insurance which have been delivered to Avista; (ii) statutory liens for
current Taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being diligently contested in good faith by
appropriate proceedings, provided an appropriate reserve has been established
therefor in the Financial Statements in accordance with GAAP; (iii) mechanics',
carriers', workers', and repairers' Liens arising or incurred in the Ordinary
Course of Business that are not material to the business, operations and
financial condition of the Company Property so encumbered and that are not
resulting from a breach, default or violation by the Company or any of the
Subsidiaries of any contract or law; (iv) zoning, entitlement and other land use
and environmental regulations by any Governmental Authority, provided that such
regulations have not been violated; and (v) liens and security interests created
or permitted by the senior most indebtedness of the Company or the Subsidiaries
in existence as of the Closing Date.
"PLAN" is defined in Section 4.12(a).
"PREFERRED STOCK" is defined in the recitals.
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"PROPERTY" is defined in Section 4.15(b)(iii).
"PURCHASE PRICE" is defined in Section 2.2.
"PURCHASERS" is defined in the preamble to this Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, among Company and the Purchasers, in the
form attached hereto as Exhibit B as amended, supplemented, restated or
otherwise modified from time to time.
"RESPONSIBLE OFFICER" means (i) with respect to the Company, the
chairman, the chief executive officer, the president, the chief operating
officer or the chief accounting officer thereof, and (ii) with respect to the
Company or any Subsidiary (other than the Company), any duly authorized officer
thereof.
"RULE 144" means Rule 144 under the Securities Act (or any
successor provision), as it may be amended from time to time.
"SEC" is defined in Section 4.6(b).
"SEC DOCUMENTS" is defined in Section 4.6(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR CREDIT AGREEMENT" is defined in the recitals.
"SOFTWARE" means any and all computer programs, whether in source
code or object code; databases and compilations, whether machine readable or
otherwise; descriptions, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing; and all documentation including
user manuals and other training documentation related to any of the foregoing.
"SOLVENT" means, with respect to any Person as of the date of any
determination, that on such date (a) such Person as of such date generally is
able to pay its debts and other liabilities, contingent obligations and other
commitments as they become absolute and mature in the normal course of business,
(b) such Person does not intend to, and does not believe that it will, Incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (c) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Closing Date. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed as the amount that, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"SUBSIDIARY" means any Person of which (i) a majority of the
outstanding share capital, voting securities or other equity interests are
5
owned, directly or indirectly, by the Company or (ii) the Company is entitled,
directly or indirectly, to appoint a majority of the board of directors, board
of managers or comparable body of such Person.
"SUBORDINATED CREDIT AGREEMENT" is defined in the recitals.
"TAX" or "TAXES" shall mean (i) any and all federal, state, local
or foreign taxes, charges, fees, imposts, levies or other assessments, including
all net income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever; (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any Taxing Authority in connection with
any item described in clause (i); and (iii) any liability in respect of any
items described in clauses (i) and/or (ii) payable by reason of Contract,
assumption, transferee liability, operation of law, Treasury Regulation section
1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar
provision under law) or otherwise.
"TAX RETURN" means any return, report or statement (whether
federal, state, local or foreign) required to be filed with respect to any Tax
(including any elections, declarations, schedules or attachments thereto, and
any amendment thereof) including any information return, claim for refund,
amended return or declaration of estimated Tax, and including, where permitted
or required, combined, consolidated or unitary returns for any group of entities
that includes the Company, any of the Subsidiaries, or any of their Affiliates.
"TAXING AUTHORITY" means the IRS and any other governmental
authority responsible for the administration of any Tax.
"TECHNOLOGY" means, collectively, designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, results of research and
development, Software, tools, data, inventions, apparatus, creations,
improvements, works of authorship and other similar materials, and all
recordings, graphs, drawings, reports, analyses, and other writings, and any
other embodiments of the above, in any form whether or not specifically listed
herein, and all related technology, that are used, incorporated, or embodied in
or displayed by any of the foregoing or used in the design, development,
reproduction, sale, marketing, maintenance or modification of any of the
foregoing
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Acquisition Agreement and all documents related to the Acquisition and the
Avista Facilities.
"TRANSACTIONS" means the Acquisition, and all other transactions
provided for in, or contemplated by, the Transaction Documents as being
transactions to be completed on the Closing Date or promptly thereafter.
1.2 Computation of Time Periods. For purposes of computation of
periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
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1.3 Terms Generally. Unless the context requires otherwise (a)
any definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, and (c) the word "including" shall
mean "including without limitation."
1.4 Accounting Terms. Accounting terms used but not otherwise
defined herein shall have the meanings provided, and be construed in accordance
with, GAAP.
SECTION 2
AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK
---------------------------------------------
2.1 Authorization of Issue. On or prior to the execution and
delivery of this Agreement: (i) the Company will authorize the issue and sale of
the Preferred Stock; and (ii) adopt and file the Certificate of Designations
with the Secretary of State of Delaware.
2.2 Sale and Purchase of the Preferred Stock. Subject to the
terms and conditions of this Agreement, the Company will issue and sell to each
of the Purchasers, and each of the Purchasers will purchase from the Company, at
the Closing provided for in Section 2.3, the Preferred Stock, for an aggregate
purchase price equal to $55,000,000 (the "PURCHASE Price"), in such proportions
and for the number of shares as set forth on Schedule 2.2. The Purchase Price
shall be paid by the Purchasers, allocated in such amounts as shall be
determined by Avista in its absolute discretion, via the following methods: (a)
a wire transfer of immediately available funds to an account designated by the
Company; and/or (b) an offset of some (if any) or all of the remaining principal
balance due to the Purchasers under the Subordinated Credit Agreement. To the
extent any interest is due to the Purchasers under the Subordinated Credit
Agreement, the Purchasers may elect to receive one additional share of Preferred
Stock in lieu of every $250.00 of such interest outstanding as of the Closing
Date or may elect to receive all of such interest in cash. At the Closing the
Company shall pay each Purchaser its proportionate share of the Closing Payment
as set forth on Schedule 2.2, via wire transfer of immediately available funds
pursuant to the instructions set forth on Schedule 2.2.
2.3 Closing. The sale and purchase of the Preferred Stock shall
occur at the offices of Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time, at a
closing (the "CLOSING") on the latter of (i) October 26, 2006 and (ii) the
earlier of (x) the first date upon which the Purchasers hold no Indebtedness of
the Company under the Senior Facility (whether as a result of prepayment,
assignment or otherwise) or (y) the second day following the day in which Avista
provides written notice to the Company of its desire to consummate the Closing.
The date upon which the Closing occurs shall be referred to herein as the
"CLOSING DATE".
2.4 Stock Certificates. At the Closing, the Company shall
deliver to the Purchasers duly endorsed certificates representing the Preferred
Stock with such number of shares allocated to each Purchaser as set forth on
Schedule 2.2.
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SECTION 3
CONDITIONS TO CLOSING
---------------------
Each Purchaser's obligation to purchase and pay for the Preferred
Stock to be purchased by it at the Closing is subject to the reasonable
satisfaction or waiver by it prior to or at the Closing of each of the
conditions specified below in this Section 3:
3.1 Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement that are qualified as to
materiality or Material Adverse Effect shall be true and correct and each of the
representations and warranties of the Company in this Agreement that are not so
qualified shall be true and correct in all material respects on or as of the
Closing Date as if made on and as of the Closing Date (unless stated to relate
to a specific earlier date, in which case such representations and warranties
qualified as to materiality or Material Adverse Effect shall be true and correct
and those not qualified shall be true and correct in all material respects as of
such earlier date).
3.2 Performance; No Default under Other Agreements. The Company
shall have performed and complied in all material respects with all agreements
and covenants contained herein required to be performed or complied with by it
prior to or at the Closing (or such compliance shall have been waived on terms
and conditions reasonably satisfactory to each Purchaser) and no default or
event of default shall have occurred and be continuing under any of the Avista
Facilities.
3.3 Compliance Certificate.
(a) Officers' Certificate. The Company shall have delivered to
each Avista an Officers' Certificate, dated as of the Closing Date, in a form
reasonably satisfactory to Avista, certifying as to Company's certificate of
incorporation and bylaws, the incumbency and signatures of certain officers of
the Company and other corporate proceedings of the Company relating to the
authorization, execution, delivery and performance of this Agreement and the
other Financing Documents to which the Company is a party and that the
conditions specified in Section 3 (other than Sections 3.3 and 3.4) have been
fulfilled, except as to matters which require the approval or satisfaction of
the Purchasers.
(b) Solvency Certification. The Company shall have delivered to
Avista a certificate from the chief financial officer of the Company, in form
reasonably satisfactory to Avista, certifying on behalf of the Company to the
effect that the Company and its Subsidiaries, on a consolidated basis are and,
immediately after giving effect to the Transactions, will be Solvent.
3.4 Acquisition. Prior to the Closing, (i) no provision of the
Acquisition Agreement shall have been waived, amended, supplemented or otherwise
modified in a manner materially adverse to the Purchasers without the written
consent of the Purchasers, and (ii) the Acquisition shall have been consummated
in conformity with the Acquisition Agreement.
3.5 Avista Facilities. The financing under the Avista Facilities
for the Acquisition shall have been consummated concurrently with the closing of
8
the Acquisition on the terms and conditions set forth in the Senior Credit
Agreement and the Subordinated Credit Agreement.
3.6 Material Adverse Effect. There shall not have occurred or
become known to the Purchasers any event, development or circumstance with
respect to the Company or its Subsidiaries since June 30, 2006 that has caused
or could reasonably be expected to cause a Material Adverse Effect.
3.7 Consents, Authorizations and Filings, Etc.
(a) All material governmental and third party approvals
necessary in connection with the Acquisition, the Financing Documents, and the
continuing operations of the Company and its Subsidiaries shall have been
obtained and be in full force and effect (including any required filings
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇") made with the Federal Trade Commission and the United States Department of
Justice), and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would restrain,
prevent or otherwise impose material adverse conditions on the Acquisition or
the financing thereof.
(b) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding instituted or entered or any statute or rule
proposed, enacted or promulgated by any Governmental Authority or any other
Person which, in the reasonable opinion of the Purchasers, individually or in
the aggregate, has or would reasonably be expected to have a Material Adverse
Effect or which seeks to enjoin or seek substantial damages against the Company
or its Subsidiaries or any of the Purchasers as a result of the Transactions,
including the issuance and sale of the Preferred Stock.
(c) The Board of Directors of the Company shall have granted all
necessary approvals to the transactions contemplated by this Agreement and the
conversion of the Preferred Stock into Convert Shares in order to satisfy DGCL
Section 203 with respect to such transactions.
3.8 Payment of Expenses. At the Closing, each Purchaser and one
counsel for the Avista Purchasers and one counsel for Levant shall have received
from the Company all other fees required to be paid, and, in accordance with
Section 7, all reasonable costs and expenses for which invoices have been
presented.
3.9 Legal Opinion. At the Closing, Chamberlain, Hrdlicka, White,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall have delivered to the Purchasers an opinion, dated as of
the Closing Date, in the form of Exhibit 3.9.
3.10 Management Rights Agreement. At the Closing, the Company
shall have delivered to Avista a Management Rights Agreement dated as of the
Closing Date, in the form of Exhibit 3.10.
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SECTION 4
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants (after giving effect to the
Acquisition) to the Purchasers that:
4.1 Due Organization; Power and Authority. The Company and each
domestic Subsidiary of the Company (a) is a corporation or a limited partnership
duly incorporated or formed, as the case may be, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
(b) is duly qualified as a foreign corporation or extra provincial partnership
or a foreign partnership, as the case may be, to transact business and is in
good standing in each jurisdiction in which such qualification is required, (c)
has full corporate or partnership, as the case may be, power and authority to
own, lease and operate its properties and to conduct its businesses as they are
currently conducted, and (d) has full corporate or partnership, as the case may
be, power and authority to enter into and perform its obligations under each of
the Financing Documents to which it is a party.
4.2 Capitalization. After giving effect to the Transactions, at
the Closing, (i) the authorized number of shares of Capital Stock of the Company
will consist only of 100,000,000 common shares (the "COMMON STOCK"), of which
53,736,426 shares have been issued and are outstanding, (ii) 2,500,000 preferred
shares, of which only the Preferred Stock sold to the Purchasers pursuant to
this Agreement will have been issued and outstanding as of the Closing Date, and
(iii) no shares of any class of the Capital Stock of the Company will be held by
the Company in its treasury or by the Company's Subsidiaries. Upon the
consummation of the Transactions, all of the issued and outstanding shares of
Capital Stock of the Company shall have been duly authorized and validly issued,
fully paid and nonassessable and shall be free of preemptive rights except as
set forth in the Certificate of Designation. Upon consummation of the
Transactions, except as set forth on Schedule 4.2 and other than the Preferred
Stock and employee stock options under the 2002 Incentive Plan of the Company,
there shall be no securities of the Company or any of its Subsidiaries that will
be convertible into or exchangeable for shares of any Capital Stock of the
Company or any of its Subsidiaries, and no options, Preferred Stock, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which will obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of Capital Stock of, or other interests in, the
Company or any of its Subsidiaries. Except as set forth on Schedule 4.2, upon
consummation of the Transactions, there shall be no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of Capital Stock of the Company or any of its Subsidiaries
and none of the Company or any of its Subsidiaries shall have any awards or
options outstanding under any stock option plans or agreements or any other
outstanding stock-related awards. As of the Closing Date and immediately after
the Closing, except as set forth on Schedule 4.2 and other than the Preferred
Stock, none of the Company or any of its Subsidiaries will have any obligation
to issue, transfer or sell any shares of Capital Stock of the Company or its
Subsidiaries. Except as set forth on Schedule 4.2, there are no voting trusts or
other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the holding, voting or disposing of
Capital Stock of the Company or any of its Subsidiaries. Except as set forth on
Schedule 4.2, none of the Company or any of its Subsidiaries has any outstanding
10
bonds, debentures, notes or other obligations or other securities that entitle
the holders thereof to vote with the shareholders of the Company or any of its
Subsidiaries on any matter or which are convertible into or exercisable for
securities having such a right to vote.
4.3 Subsidiaries. Schedule 4.3 correctly states, after giving
effect to the Transactions, (a) the name of each of the Company's direct and
indirect Subsidiaries, and (b) the name of each registered holder of each class
of outstanding Capital Stock or other securities of each of the Company's
respective direct and indirect Subsidiaries and the nature and number of such
securities held by such holder. Each issued and outstanding share of Capital
Stock of each direct and indirect Subsidiary of the Company (a) has been duly
authorized and validly issued and is fully paid and nonassessable and free of
preemptive rights and (b) except for any Equity Interests not owned directly or
indirectly by the Company as shown on Schedule 4.3 is owned by the Company,
directly or through its direct and indirect Subsidiaries, free and clear of any
Lien other than the liens established under the Financing Documents and other
Permitted Exceptions.
4.4 Due Authorization, Execution and Delivery.
(a) Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and, when duly executed and delivered by the
Purchasers in accordance with its terms, will constitute a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to the Enforceability Exceptions.
(b) Preferred Stock and the Convert Shares. The Preferred Stock
has been duly authorized and, when issued as provided herein, will be validly
issued, free of preemptive rights and free from all taxes, liens, charges and
security interests known to or created by the Company and no personal liability
will attach to the ownership thereof. When the Convert Shares are issued
pursuant to a conversion of the Preferred Stock, the Convert Shares will be
validly issued, fully paid and nonassessable, free of preemptive rights and free
from all taxes, liens, charges and security interests known to or created by the
Company and no personal liability will attach to the ownership thereof.
(c) Financing Documents. Each of the Financing Documents has
been duly authorized, executed and delivered by the Company and, when duly
executed and delivered by the other parties thereto in accordance with their
terms, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to the
Enforceability Exceptions.
4.5 Non-Contravention; Authorizations and Approvals. None of (a)
the execution and delivery by the Company or any Subsidiary of the Company of
any of the Financing Documents to which it is a party, (b) the performance by
any of them of their respective obligations thereunder, (c) the consummation of
the transactions contemplated thereby or (d) the issuance and delivery of the
Preferred Stock under the Financing Documents will: (i) violate, conflict with
or result in a breach of any provisions of the articles of incorporation or any
amendment thereto or bylaws (or comparable constituent or governing documents)
of the Company or any Subsidiary of the Company; (ii) violate, conflict with,
result in a breach of any provision of, constitute a default (or an event which,
with notice, lapse of time or both, would constitute a default) under, result in
11
the termination or in a right of termination of, accelerate the performance
required by or benefit obtainable under, result in the triggering of any payment
or other obligations (including any repurchase or repayment obligations)
pursuant to, result in the creation of any Lien upon any of the properties of
the Company or any Subsidiary of the Company under, or result in there being
declared void, voidable, subject to withdrawal, or without further binding
effect, any of the terms, conditions or provisions of any contract, except for
any such violations, conflicts, breaches, defaults, accelerations, terminations
or other matters which, in the aggregate, could not reasonably be expected to be
Material to the Company; (iii) require any consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Authority,
except for those consents, approvals, authorizations, declarations, filings or
registrations which have been obtained or made, or the failure of which to
obtain or make, in the aggregate, could not be reasonably expected to have a
Material Adverse Effect; or (iv) violate any Applicable Laws, except for
violations which, in the aggregate, could not reasonably be expected to be
Material to the Company.
4.6 Financial Statements; Securities Filings.
(a) The Company has heretofore furnished to the Purchaser its
consolidated balance sheets and related statements of income, stockholder's
equity and cash flows (the "FINANCIAL STATEMENTS") (i) as of and for the fiscal
year ended December 31, 2005 (the "AUDIT DATE"), audited by and accompanied by
the report of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., P.C., independent public accountants, and
(ii) as of and for the fiscal quarters ended March 31, 2006 and June 30, 2006,
and each month ended after June 30, 2006 and at least 30 days before the Closing
Date, each certified by its chief financial officer. Such Financial Statements
present fairly in all material respects the financial condition and results of
operations and cash flows of the Company and its Subsidiaries as of such dates
and for such periods. Such balance sheets and the notes thereto disclose all
material liabilities, direct or contingent, of the Company and its Subsidiaries
as of the dates thereof. Such Financial Statements were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise noted therein and, subject, in the case of unaudited financial
statements, to year-end audit adjustments and the absence of footnotes.
(b) The Company has heretofore delivered to each Purchaser its
unaudited pro forma consolidated balance sheet and related pro forma statements
of income, stockholder's equity and cash flows as of the fiscal quarter ended
June 30, 2006, prepared giving effect to the Transactions as if they had
occurred, with respect to such balance sheet, on such date and, with respect to
such other financial statements, on the first day of the four-fiscal quarter
period ending on such date. Such pro forma financial statements have been
prepared in good faith by the Company, based on the assumptions believed by the
Company on the Closing Date to be reasonable, are based in all material respects
on the information reasonably available to the Company as of the date of
delivery thereof, reflect in all material respects the adjustments required to
be made to give effect to the Transactions and present fairly in all material
respects on a pro forma basis the estimated consolidated financial position of
the Company and its Subsidiaries as of such date and for such period, assuming
that the Transactions had actually occurred at such date or at the beginning of
such period, as the case may be.
12
(c) The Company has filed with the Securities and Exchange
Commission (the "SEC") all forms, reports, schedules, statements, exhibits and
other documents required to be filed under the Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), or the Securities Act, (collectively, the "SEC
DOCUMENTS"). As of its filing date or, if amended, as of the date of the last
such amendment, each SEC Document fully complied with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. As of its filing
date, or, if amended, as of the date of the last such amendment, each SEC
Document filed pursuant to the Exchange Act did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. Each SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act, as
of the date such registration statement or amendment became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. None of the Subsidiaries is or has been required to file any
forms, reports or other documents with the SEC. All of the audited consolidated
financial statements and unaudited consolidated interim financial statements
included in the SEC Documents (i) have been prepared from, are in accordance
with and accurately reflect the books and records of the Company and its
consolidated Subsidiaries, (ii) fully comply with the applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto (including Regulation S-X), (iii) were prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto and except, in the case of the unaudited
interim statements, as may be permitted under the Exchange Act with respect to
Quarterly Reports on Form 10-Q and (iv) fairly present, in all material
respects, the consolidated financial position and the consolidated results of
operations and cash flows (subject, in the case of unaudited interim financial
statements, to normal year end adjustments) of the Company and its consolidated
Subsidiaries as of the dates and for the periods referred to therein. The
reports of the Company's independent auditors regarding the Company's
consolidated financial statements in the SEC filings have not been withdrawn,
supplemented or modified, and none of the Company or any of the Subsidiaries has
received any communication from its independent auditors concerning any such
withdrawal, supplement or modification.
(d) The Company's principal executive officer and its principal
financial officer have disclosed, based on their most recent evaluation, to the
Company's auditors and the audit committee of the Board of Directors of the
Company (i) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to record, process,
summarize and report financial data and have identified for the Company's
auditors any material weaknesses in internal controls and (ii) any fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company's internal controls.
(e) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to the Company, including the Subsidiaries,
is made known to the Company's principal executive officer and its principal
financial officer by others within those entities, and, to the knowledge of the
13
Company, such disclosure controls and procedures are effective in timely
alerting the Company's principal executive officer and its principal financial
officer to material information.
4.7 Absence of Undisclosed Liabilities or Events.
(a) Neither the Company nor any Subsidiary has any Indebtedness
or liabilities (whether or not required under GAAP to be reflected on a balance
sheet or the notes thereto) other than those (i) specifically reflected on and
fully reserved against in the Financial Statements, (ii) incurred in the
Ordinary Course of Business since the Audit Date or (iii) that are immaterial to
the Company or any Subsidiary.
(b) The Financing Documents, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made as of the date the same were made, not materially
misleading. Since the Audit Date, there has been no event, development or
circumstance that has caused or could reasonably be expected to cause a Material
Adverse Effect.
4.8 No Actions or Proceedings. Except as set forth on Schedule
4.8, there are no legal or governmental actions, suits or proceedings pending
or, to the Company's knowledge, threatened against or affecting the Company or
any Subsidiary of the Company, or any of their respective properties or assets
which, if adversely determined, in the aggregate, could reasonably be expected
to be Material to the Company. No Governmental Authority has notified the
Company or any Subsidiary of the Company in writing of an intention to conduct
any audit, investigation or other review with respect to the Company or any
Subsidiary of the Company.
4.9 Title to Properties. Each of the Company and each Subsidiary
of the Company has (a) good title to, or a valid and subsisting leasehold
interest in, all of its material real property and (b) good title to, or a valid
and subsisting leasehold interest in, all of its material equipment and other
personal property, in each case free and clear of all Liens, except Permitted
Exceptions.
4.10 Intellectual Property Rights.
(a) Except as set forth on Schedule 4.10, the Company and its
Subsidiaries own all right, title and interest in and to, or have valid and
continuing rights to use, sell and license, all Intellectual Property, Software
and other Technology used in the conduct of the business and operations of the
Company and its Subsidiaries as presently conducted and as currently proposed to
be conducted, free and clear of all Liens or obligations to others. All such
owned Intellectual Property is subsisting, and all necessary registration,
maintenance, renewal, and other relevant filing fees due through the date hereof
in connection therewith have been timely paid and all necessary documents and
certificates in connection therewith have been timely filed with the relevant
patent, copyright, trademark, or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
registered Intellectual Property in full force and effect. The business and
operations of the Company and its Subsidiaries, their Technology, their products
and services and the designing, development, manufacturing, reproduction, use,
marketing, sale, distribution, maintenance and modification of any of the
14
foregoing as presently performed and as currently contemplated to be performed
does not infringe upon, misappropriate or otherwise violate any Intellectual
Property of any third party. All of the material Intellectual Property owned by
the Company or any of its Subsidiaries is valid and enforceable.
(b) Except as set forth in Schedule 4.10, there is no action,
suit, proceeding, hearing, investigation, notice or complaint pending or, to the
Company's knowledge, threatened, by any third party before any court or tribunal
(including, without limitation, the United States Patent and Trademark Office or
equivalent authority anywhere in the world) relating to any of Company's or any
of its Subsidiaries' Intellectual Property or Technology, nor has any claim or
demand been made by any third party that (i) challenges the validity,
enforceability, use or exclusive ownership of any Intellectual Property or
Technology owned by the Company or any of its Subsidiaries or (ii) alleges any
infringement, misappropriation, violation, or unfair competition or trade
practices by the Company or any of its Subsidiaries of any Intellectual Property
or Technology of any third party, nor is the Company aware of any basis for any
such claim or demand.
(c) There are no agreements between the Company or any of its
Subsidiaries and any third party relating to any Intellectual Property of the
Company or any of its Subsidiaries or any third party under which there is, as
of the date of this Agreement, or, to the Company's knowledge, is expected, as
of the date of this Agreement, to be, any Material dispute regarding the scope
or performance of such agreement.
(d) None of the Company's or any of its Subsidiaries' Technology
or Intellectual Property are subject to any outstanding injunction, decree,
order, judgment, agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or any of its Subsidiaries or
affects the validity, use or enforceability of any such Technology or
Intellectual Property.
(e) The Company and the Subsidiaries have taken reasonable
measures to protect the confidentiality of all Material trade secrets owned by
the Company or any of its Subsidiaries that are material to their businesses as
currently conducted and as proposed to be conducted. The Company and its
Subsidiaries have executed valid written agreements with certain of their past
and present employees who have contributed to the development of Material
Technology and Intellectual Property pursuant to which such employees have
assigned to the Company or its Subsidiaries all their rights in and to all
Material Technology and Intellectual Property they may develop in the course of
their employment and agreed to hold all trade secrets and confidential
information of the Company and its Subsidiaries in confidence both during and
after their employment. The Company and its Subsidiaries have executed valid
written agreements with certain past and present consultants and independent
contractors who have been retained in connection with the development of
Material Technology and Intellectual Property by which the consultants and
independent contractors have assigned to the Company or its Subsidiaries all
their rights in and to such Material Technology and Intellectual Property and
agreed to hold all trade secrets and confidential information of the Company and
its Subsidiaries in confidence both during and after the term of their
engagements. No Material trade secrets or other Material confidential
information owned by the Company or any of its Subsidiaries that is material to
their businesses as currently conducted and as proposed to be conducted have
15
been disclosed or authorized to be disclosed by the Company or any of its
Subsidiaries to any of their employees or any third party other than pursuant to
a written non-disclosure or confidentiality agreement. To the knowledge of the
Company and its Subsidiaries, no employee, consultant or independent contractor
of the Company or any Subsidiary is, as a result of or in the course of such
employee's, consultant's or independent contractor's engagement by the Company
or any Subsidiary, in default or breach of any Material term of any employment
agreement, non-disclosure agreement, assignment of invention agreement or
similar agreement.
4.11 Taxes.
(a) (i) All Tax Returns required to be filed by or on behalf of
each of the Company, any Subsidiary and any affiliated group of which the
Company or any Subsidiary is or was a member have been duly and timely filed
with the appropriate Taxing Authority in all jurisdictions in which such Tax
Returns are required to be filed (after giving effect to any valid extensions of
time in which to make such filings), and all such Tax Returns are true, complete
and correct in all material respects; and (ii) all Taxes payable by or on behalf
of each of the Company, any Subsidiary and any affiliated group of which the
Company or any Subsidiary is or was a member have been fully and timely paid.
With respect to any period for which Tax Returns have not yet been filed or for
which Taxes are not yet due or owing, the Company has made due and sufficient
accruals for such Taxes in the Financial Statements and its books and records.
All required estimated Tax payments sufficient to avoid any underpayment
penalties or interest have been made by or on behalf of the Company and each
Subsidiary.
(b) The Company and each Subsidiary has complied in all material
respects with all applicable Laws relating to the payment and withholding of
Taxes and has duly and timely withheld and paid over to the appropriate Taxing
Authority all amounts required to be so withheld and paid under all applicable
Laws.
(c) All deficiencies asserted or assessments made as a result of
any examinations by any Taxing Authority of the Tax Returns of, or including,
the Company or any Subsidiary have been fully paid, and there are no other
audits or investigations by any Taxing Authority in progress, nor has the
Company or any of the Subsidiaries received any written notice from any Taxing
Authority that it intends to conduct such an audit or investigation. No issue
has been raised by a Taxing Authority in any prior examination of the Company or
any Subsidiary which, by application of the same or similar principles, could
reasonably be expected to result in a proposed deficiency for any subsequent
taxable period.
(d) There are no Liens for Taxes on any of the assets of the
Company or any of its Subsidiaries other than Liens for Taxes not yet due and
payable or which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided to the extent required by
GAAP.
(e) The Company is not a "United States Real Property Holding
Corporation" within the meaning of Section 897 of the Code.
16
(f) The Company and the Subsidiaries have disclosed on their
federal income Tax Returns all positions taken therein that could give rise to
substantial understatement of federal income tax within the meaning of Section
6662 of the Code.
4.12 Employee Benefit Plans.
(a) Schedule 4.12(a) lists all "employee benefit plans", within
the meaning of Section 3(3) of ERISA, and all other material employee benefit
plans, arrangements and policies with respect to employees or former employees
maintained by or contributed to by the Company or any of its Subsidiaries (each,
a "PLAN"). There has been no failure by any Plan to comply with the applicable
requirements of ERISA and the Code. There is no pending or, to the knowledge of
the Company, threatened, litigation relating to the Plans. None of the Company
or any of its Subsidiaries has engaged in a transaction with respect to any Plan
that could subject the Company or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA. The
Company is not aware, after due inquiry, of any item of non-compliance which
could reasonably be expected to result in the loss of Plan qualification or
tax-exempt status. To the knowledge of the Company, all required contributions
have been made in accordance with the provisions of each Plan.
(b) Within the past six years, no liability under Title IV of
ERISA has been incurred by the Company or any of its Subsidiaries with respect
to any ongoing, frozen or terminated "single-employer plan," within the meaning
of Section 4001(a)(15) of ERISA, or "multi employer plan," within the meaning of
Section 3(37) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan or multi-employer plan of any entity which is considered to
be a single employer with the Company or any of its Subsidiaries under Section
4001(b)(1) of ERISA or Section 414(b) or (c) of the Code (an "ERISA Affiliate").
Except as set forth on Schedule 4.12(b), none of the Company or any of its
Subsidiaries has contributed to a "multi employer plan," within the meaning of
Section 3(37) of ERISA, at any time after June 30, 1997.
(c) Except as set forth on Schedule 4.12(c), neither the Company nor any of its
Subsidiaries has any material obligations for retiree health and life benefits
under any Plan, except as required by Applicable Law.
4.13 Investment Company Act. Neither the Company nor any of its
Subsidiaries is or, immediately after receipt of payment for the Preferred Stock
and the consummation of the other Transactions, will be (a) an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended.
4.14 Insurance. The Company and the Subsidiaries of the Company
are insured with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate for their businesses including, but
not limited to, policies covering real and personal property owned or leased by
the Company and the Subsidiaries of the Company against theft, damage,
destruction and acts of vandalism.
17
4.15 Compliance with Laws; Permits; Environmental Liabilities.
(a) Each of the Company and the Subsidiaries of the Company is
in compliance, in all Material respects with all Applicable Laws and has all
Permits Material to and necessary in, the conduct of its business as currently
conducted and all such Permits are in full force and effect. No violations have
been recorded in respect of any such Permits, and no proceeding is pending or,
to the knowledge of the Company, threatened to revoke or limit any Permit.
Neither the Company nor any Subsidiary is subject to any Order, and neither the
Company nor any Subsidiary is in breach or violation of any Order. Neither the
Company nor any Subsidiary is engaged in any legal action to recover monies due
it or for damages sustained by it. There are no Legal Proceedings pending or, to
the knowledge of the Company or the Subsidiaries, threatened against the Company
or to which the Company is otherwise a party relating to this Agreement or, any
Financing Document or the transactions contemplated hereby or thereby.
(b) With regard to each of the following, except any matters
that in the aggregate, could not reasonably be expected to be Material to the
Company:
(i) Each of the Company and each Subsidiary of the Company
is currently in Material compliance with all Environmental Laws, has
obtained and is currently in Material compliance with all permits,
licenses, registrations and consents which are required with respect to any
of its facilities or operations under any applicable Environmental Laws
(the "ENVIRONMENTAL PERMITS"), and all such Environmental Permits are in
full force and effect;
(ii) None of the Company or any Subsidiaries of the Company
has received any written notice of any claims, civil, criminal or
administrative actions, suits, hearings, investigations, or proceedings
which are pending or, to its knowledge, threatened against it, in each
case, on the basis of, any Environmental Liability, or indicating that such
Person is or may be a potentially responsible party or otherwise liable
under Environmental Laws in connection with any location which has
experienced the release or threatened release of any Hazardous Materials;
(iii) To the knowledge of the Company, Hazardous Materials
have not been transported or disposed of from any real property owned,
leased or operated by the Company or any Subsidiary of the Company
("PROPERTY") in violation of, or in a manner or to a location which could
give rise to liability under any Environmental Law, nor have any Hazardous
Materials been generated, treated, stored or disposed of at, on or under
any Property in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Laws;
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the Company,
threatened, under any Environmental Laws to which the Company or any
Subsidiary of the Company is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
18
under any Environmental Laws with respect to the Company and any Subsidiary
of the Company; and
(v) To the knowledge of the Company, there has been no
release or threat of release of Hazardous Materials at or from the
Properties, or arising from or related to the operations of the Company or
any Subsidiary of the Company, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.
4.16 Labor and Employment Matters. Except as set forth on
Schedule 4.16, (i) none of the Company or any of its Subsidiaries is a party to,
or bound by, any collective bargaining agreement or other contracts with a labor
union or labor organization; and (ii) there is no (A) Material unfair labor
practice, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or its Subsidiaries, (B) to the knowledge of the Company or
its Subsidiaries, activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries, or
(C) lockout, strike, slowdown, work stoppage or, to the knowledge of the Company
or its Subsidiaries, written threat thereof by or with respect to any such
employees.
4.17 Brokerage Fees. Except as set forth on Schedule 4.17, none
of the Company or any Subsidiary of the Company has paid, or is obligated to
pay, to any Person any brokerage or finder's fees in connection with the
transactions contemplated hereby or by any other Transaction Documents.
4.18 Solvency and Related Matters. Prior to and immediately
following the Closing, the Company will be Solvent after giving effect to (A)
the Transactions and (B) any other transactions contemplated by the Company on
or after such date which would be taken into account in determining whether any
of the transactions contemplated hereby are invalid or illegal under, in
violation of, or can be set aside or give rise to any award or damages,
sanctions or other liability against any of the Purchasers or any of their
Affiliates or representatives under applicable bankruptcy, fraudulent
conveyance, fraudulent transfer or other Applicable Laws.
SECTION 5.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PURCHASERS
------------------------------------------------------------
Each Purchaser, severally and not jointly, represents and
warrants to the Company as of the date hereof as follows:
5.1 Purchase for Investment.
(a) Such Purchaser is acquiring the Preferred Stock for its own
account, for investment purposes only and not with a view to any distribution
thereof within the meaning of the Securities Act.
(b) Such Purchaser understands that the Preferred Stock has not
been and, except as provided in the Registration Rights Agreement with respect
19
to the Convert Shares, will not be registered under the Securities Act or any
state or other securities law, that the Preferred Stock is being issued by the
Company in transactions exempt from the registration requirements of the
Securities Act, that it must hold the Preferred Stock indefinitely and not offer
or sell the Preferred Stock except pursuant to effective registration statements
under the Securities Act or pursuant to applicable exemptions from registration
under the Securities Act and in compliance with applicable State laws.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) Such Purchaser did not employ any broker or finder in
connection with the transactions contemplated in this Agreement and no fees or
commissions are payable to the Purchasers except as otherwise provided for in
this Agreement.
(e) Such Purchaser is an Accredited Investor.
(f) The source of funds to be used by such Purchaser to pay the
purchase price of the Preferred Stock purchased by such Purchaser hereunder does
not include assets of any employee benefit plan (other than a plan exempt from
the coverage of ERISA) or plan or any other entity the assets of which consist
of "plan assets" of employee benefit plans or plans as defined in Department of
Labor regulation Section 2510.3-101. As used in this Section 5.1(f), the term
"employee benefit plan" shall have the meaning assigned to such term in Section
3 of ERISA, and the term "plan" shall have the meaning assigned thereto in
Section 4975(e)(1) of the Code.
5.2 Access to Information. Such Purchaser has been furnished
with or has had access to the information it has requested from the Company and
its Subsidiaries and has had an opportunity to discuss with the management of
the Company and its Subsidiaries the business and financial affairs of the
Company and its Subsidiaries, and has generally such knowledge and experience in
business and financial matters and with respect to investments in securities of
privately held companies so as to enable it to understand and evaluate the risks
of such investment and form an investment decision with respect thereto, and is
capable of bearing the economic risks of such investment.
5.3 Corporate Power; Authorization; Enforceability. The
execution, delivery and performance of this Agreement and the other Financing
Documents to which such Purchaser is a party are within its corporate or limited
partnership, as the case may be, power and authority and have been duly
authorized by all necessary action of such Purchaser, do not conflict with or
result in a breach of or violate any of such Purchaser's governing documents or
any contract to which such Purchaser is a party or by which its assets are bound
or any Applicable Laws and constitute legal, valid and binding agreements of
such Purchaser enforceable against it in accordance with their respective terms,
subject to the Enforceability Exceptions.
5.4 No Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to any Purchaser's
knowledge, threatened against or affecting such Purchaser, or any of their
20
respective properties or assets which, if adversely determined, in the
aggregate, could reasonably be expected to materially and adversely affect the
ability of such Purchaser to consummate any of the transactions contemplated by
the Financing Documents.
SECTION 6
OTHER AFFIRMATIVE COVENANTS
---------------------------
6.1 Foreign Subsidiaries. As soon as practical after the
Closing, the Company shall take such necessary action so that each foreign
Subsidiary of the Company (a) is duly incorporated or formed, as the case may
be, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (b) is duly qualified to transact business and is
in good standing in each jurisdiction in which such qualification is required,
(c) has full power and authority to own, lease and operate its properties and to
conduct its businesses as they are currently conducted, and (d) has full power
and authority to enter into and perform its obligations under each of the
Financing Documents to which it is a party.
6.2 Director Representation. At such time as the Avista
Purchasers do not hold of record a sufficient number of shares of Preferred
Stock (without the vote of any other stockholder) to elect a director to the
Board of Directors of the Company to represent the holders of Preferred Stock as
a separate class pursuant to the terms of the Certificate of Designation, the
Board of Directors shall nominate and slate for election at each of the
Company's annual meetings of stockholders one director designated by Avista if
the Avista Purchasers hold a number of shares of Common Stock and/or Preferred
Stock (calculated assuming the conversion of any Preferred Stock held by the
Avista Purchasers into Common Stock) equal to or greater than (i) 10% of the
then outstanding Common Stock or (ii) 25% of the Common Stock the Avista
Purchasers are entitled to upon conversion of the Preferred Stock purchased by
the Avista Purchasers pursuant to this Agreement.
SECTION 7
EXPENSES, INDEMNIFICATION AND CONTRIBUTION; TERMINATION
-------------------------------------------------------
7.1 Expenses. The Company will, upon Closing, after presentation
of a reasonable summary invoice therefore, reimburse the Purchasers for all
reasonable expense (including reasonable and documented attorney's and
accountant's fees and disbursements) incurred by the Purchasers in connection
with the transactions contemplated by this Agreement and the other Financing
Documents and in connection with any amendments, waivers or consents under or in
respect of this Agreement or the other Financing Documents (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the Purchaser's reasonable and documented out-of-pocket expenses in
connection with the Purchaser's examinations and appraisals of the Company's
properties, books and records; (b) the reasonable and documented out-of-pocket
costs and expenses incurred in enforcing, defending or declaring (or determining
whether or how to enforce, defend or declare) any rights or remedies under this
Agreement or the other Financing Documents or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the other Financing Documents; and any fees incurred by the
Purchasers in connection with any governmental consents or filings (including
21
any fees incurred in connection with any HSR Act filing). The Company will pay,
and will hold the Purchasers harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders in relation to the
Transactions.
7.2 Indemnification. The Company shall indemnify and hold
harmless the Purchasers and each of their respective Affiliates, partners,
stockholders, members, directors, agents, employees and controlling persons
(collectively, the "INDEMNITEES") from and against any and all actual losses,
claims, damages or liabilities to any such Indemnitee in connection with or as a
result of any misrepresentation or breach of warranty, covenant or agreement
made or to be performed by the Company pursuant to this Agreement.
7.3 Survival. The obligations of the Company and the Guarantors
under this Section 7 will survive the payment or transfer of any Preferred
Stock, the enforcement, amendment or waiver of any provision of this Agreement
and the termination of this Agreement.
7.4 Tax Treatment of Indemnification Payments. Any
indemnification payment pursuant to this Agreement shall be treated for federal,
state, local and foreign Tax purposes as an adjustment to the Purchase Price.
SECTION 8
MISCELLANEOUS
-------------
8.1 Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the day following the day (except if not a
Business Day then the next Business Day) on which the same has been delivered
prepaid to a reputable national overnight air courier service or (d) the third
Business Day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective parties at the
address set forth below, or at such other address as such party may specify by
written notice to the other party hereto:
(a) if to a Purchaser or its nominee, to the Purchaser or its
nominee at the address specified for such communications in Schedule 2.2, with a
copy to Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq., or at such other address as the Purchaser
or its nominee shall have specified to the Company in writing;
(b) if to the Company, to Geokinetics Inc., ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a copy to
Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. Spring, III, Esq.
22
8.2 Benefit of Agreement and Assignments.
(a) Nothing in this Agreement or any other Financing Document,
express or implied, shall give to any Person other than the parties hereto or
thereto (not including successors or assigns) any benefit or any legal or
equitable right, remedy or claim under this Agreement.
(b) No party hereto may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the other
parties hereto; provided, however, that the Purchasers may assign the rights to
purchase all or any portion of the Preferred Stock allocated to such Purchaser
pursuant to Schedule 2.2 to any, direct or indirect, wholly owned subsidiary of
such Purchaser, subject to the ability of such subsidiary to make the
representations and warranties set forth in Section 5, and each such Person
shall be entitled to the full benefit of this Agreement as if such Person were a
Purchaser hereunder.
8.3 No Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto in exercising any right, power or privilege hereunder
and no course of dealing between the Company and any other party shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under the Certificate of Designation preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies provided herein
and in the Certificate of Designation are cumulative and not exclusive of any
rights or remedies that the parties would otherwise have. No notice to or demand
on the Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the other parties hereto to any other or further action in any
circumstances without notice or demand.
8.4 Amendments, Waivers and Consents. This Agreement may be
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively), with the written consent of the Company and the
other parties hereto. No amendment or waiver of this Agreement will extend to or
affect any obligation, covenant, agreement not expressly amended or waived or
thereby impair any right consequent thereon. As used herein, the term this
"Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended, supplemented or modified.
8.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto. For the purposes of the Closing, signatures transmitted via
telecopy (or other facsimile device) will be accepted as original signatures if
the sender on the same day sends a manually executed signature page by a
recognized overnight delivery service (charges prepaid).
8.6 Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
23
8.7 Survival of Covenants and Indemnities. All covenants and
indemnities set forth herein shall survive the execution and delivery of this
Agreement, the issuance of the Preferred Stock and Convert Shares and, except as
otherwise expressly provided herein with respect to covenants and any other
obligations hereunder.
8.8 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS AGREEMENT AND THE SECURITIES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by
any Purchaser in order to enforce any right or remedy under this Agreement or
the Preferred Stock, the Company hereby consents and will submit, and will cause
its Subsidiaries to submit, to the jurisdiction of any state or federal court of
competent jurisdiction sitting within the area comprising the Southern District
of New York on the date of this Agreement. The Company hereby irrevocably waives
any objection, including, but not limited to, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or litigation in
such jurisdiction. The Company further agrees that it shall not, and shall cause
its Subsidiaries not to, bring any action, proceeding or litigation arising out
of this Agreement or the Preferred Stock in any state or federal court other
than any state or federal court of competent jurisdiction sitting within the
area comprising the Southern District of New York on the date of this Agreement.
(c) The Company irrevocably consents to the service of process
of any of the aforementioned courts in any such action, proceeding or litigation
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Company at its address set forth in Section 8.1, such service to
become effective thirty (30) days after such mailing.
(d) Nothing herein shall affect the right of any Purchaser to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
If service of process is made on a designated agent it should be made by either
(i) personal delivery or (ii) mailing a copy of summons and complaint to the
agent via registered or certified mail, return receipt requested.
(e) THE COMPANY AND EACH PURCHASER HEREBY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS AGREEMENT OR THE PREFERRED STOCK.
8.9 Severability. If any provision of this Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable to the extent of such illegality, invalidity or unenforceability
and the remaining provisions shall remain in full force and effect and shall be
24
construed without giving effect to the illegal, invalid or unenforceable
provisions.
8.10 Entirety. This Agreement together with the other Financing
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Financing Documents or the transactions contemplated herein or
therein.
8.11 Survival of Representations and Warranties. All
representations and warranties made by the Company herein shall survive the
execution and delivery of this Agreement, the issuance and transfer of all or
any portion of the Preferred Stock and the issuance of the Convert Shares in
accordance with the Certificate of Designation, and any other obligations
hereunder, regardless of any investigation made at any time by or on behalf of
the Purchasers.
8.12 Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person, whether or not expressly specified in such provision.
8.13 Incorporation. All Exhibits and Schedules attached hereto
are incorporated as part of this Agreement as if fully set forth herein.
8.14 Non-Recourse. Except as explicitly provided in this
Agreement, no past, present or future director, officer, employee, incorporator,
member, partner, stockholder, affiliate, agent, attorney or representative of
the Company or the Purchasers shall in such capacity have any liability for any
obligations or liabilities of the Company or any Purchaser, respectively, under
this Agreement or for any claim (under tort or contract law) based on, in
respective of, or by reason of, the transactions contemplated hereby.
8.15 Further Assurances. Each of the parties hereto shall, upon
reasonable request of any other party hereto, do, make and execute all such
documents, acts, matters and things as may be reasonably required in order to
give effect to the Transactions contemplated hereby.
25
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
GEOKINETICS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
26
AVISTA CAPITAL PARTNERS, L.P.
By: AVISTA CAPITAL PARTNERS GP, LLC,
its general partner
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇
General Counsel
AVISTA CAPITAL PARTNERS (OFFSHORE),
L.P.
By: AVISTA CAPITAL PARTNERS GP, LLC,
its general partner
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇
General Counsel
27
LEVANT AMERICA S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Attorney-in-Fact
28
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATION
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
FORM OF OPINION
EXHIBIT D
FORM OF MANAGEMENT RIGHTS AGREEMENT
Geokinetics Inc., a Delaware corporation (the "PORTFOLIO COMPANY"), hereby
agrees that as of the date hereof, Avista Capital Partners, L.P., a Delaware
limited partnership (the "PARTNERSHIP"), shall have the following rights so long
as it owns any equity interests in the Portfolio Company:
(i) The right to receive prior notice of all material corporate actions of the
Portfolio Company and its subsidiaries and the right to consult with the
Portfolio Company and its subsidiaries with respect to such actions;
(ii) the right to visit and inspect any of the offices and properties of the
Portfolio Company and its subsidiaries and inspect and copy the books and
records of the Portfolio Company and its subsidiaries, at such times as the
Partnership or its designated representative shall reasonably request;
(iii) the right to consult with appropriate officers and directors of the
Portfolio Company and each of its subsidiaries routinely and at such times as
reasonably requested by the Partnership with respect to matters relating to the
business, finances, accounts and affairs of the Portfolio Company and its
subsidiaries; and
(iv) such information and consultation rights or other assistance as the
Partnership may require to preserve its qualification as a venture capital
operating company (as defined in the U.S. Department of Labor Plan Asset
Regulation, 29 C.F.R. ss. 2510.3-101) including, but not limited to, by reason
of the Partnership's interest in the Portfolio Company qualifying as a venture
capital investment (as defined in the U.S. Department of Labor Plan Asset
Regulation, 29 C.F.R. ss. 2510.3-101).
The Portfolio Company acknowledges and agrees that the Partnership may exercise
its rights under this agreement through its general partner or such other person
designated by the Partnership, in each case acting on behalf of the Partnership.
Dated: _______________, 2006.
-------------------------------
Geokinetics Inc.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Agreed and Accepted:
-------------------------------
Avista Capital Partners, L.P.
By: Avista Capital Partners GP, LLC,
its general partner
By:
-----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇
General Counsel
Schedule 2.2
INFORMATION RELATING TO PURCHASERS
------------------------------------------- -----------------------------------------------------
Purchaser Name and Address Aggregate purchase amount of Preferred Stock
-----------------------------------------------------
Shares of Preferred Stock Allocation of the
Closing Payment
-------------------------- --------------------------
------------------------------------------- -----------------------------------------------------
Avista Capital Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 187,500 $937,500
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------- -------------------------- --------------------------
Avista Capital Partners (Offshore), L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 12,500 $62,500
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------- -------------------------- --------------------------
Levant America S.A.
c/o Byzantine Maritime Corporation 20,000 $100,000
8, Korytsas and Grammou Streets
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
Colonial Navigation Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------------- -------------------------- --------------------------
------------------------------------------- -------------------------- --------------------------
Total 220,000 $1,100,000
------------------------------------------- -------------------------- --------------------------
INFORMATION RELATING TO PURCHASERS
PAYMENTS TO AVISTA CAPITAL PARTNERS, L.P. SHOULD BE WIRED AS FOLLOWS:
JPMorgan Private Bank
ABA # 021 000 021
Private Bank Division
Credit Account T & I #▇▇▇-▇▇-▇▇▇
Account Number - ▇▇▇▇▇▇▇▇▇
For Account of: AVISTA CAPITAL HOLDINGS, L.P.
PAYMENTS TO AVISTA CAPITAL PARTNERS (OFFSHORE), L.P. SHOULD BE WIRED AS
FOLLOWS:
JPMorgan Private Bank
ABA # 021 000 021
Private Bank Division
Credit Account T & I #▇▇▇-▇▇-▇▇▇
Account Number - ▇▇▇▇▇▇▇▇▇
For Account of: AVISTA CAPITAL HOLDINGS, L.P.
PAYMENTS TO LEVANT AMERICA, S.A. SHOULD BE WIRED AS FOLLOWS:
The Bank of New York
ABA: ▇▇▇▇▇▇▇▇▇
Swift Code: ▇▇▇▇▇▇▇▇
For Account of: Jefferies & Co., Inc.
Account Number: ▇▇▇-▇-▇▇▇▇▇▇
F/F/C: Levant America S.A.
Account Number: 970-04275
Schedule 4.2
Primary and fully diluted ownership of Capital Stock
Shareholder Number of Shares % of Total
Common [___]
Stock
[Management Options] %
Total 100%
Schedule 4.3
Company and Subsidiaries
Schedule 4.8
Actions or Proceedings
Schedule 4.10
Intellectual Property
Schedule 4.12(a)
Employee Benefit Plans
Schedule 4.12(b)
Multi Employer Plans
Schedule 4.12(c)
Retiree Health and Life Benefits
Schedule 4.16
Labor Matters
Schedule 4.17
Brokerage Fees