STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT, dated as of October 14, 2009 by and among TGC Industries, Inc. a Texas corporation (and/or its nominee) (the “ Purchaser ”), Eagle Geophysical, Inc., a Delaware corporation and Eagle Geophysical Onshore, Inc., a Delaware corporation (each a “ Seller ” and collectively, the “ Sellers ”).

 

The Parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS & RULES OF CONSTRUCTION

 

Section 1.1   Definitions .  For purposes of this Agreement, the following terms shall have the meanings set forth below:

 

“ Agreement ” means this stock purchase agreement and any schedules or exhibits hereto.

 

“ Arrow Litigation ” means the litigation styled Arrow Geophysical Drilling, L.P., et al. v. Eagle Geophysical Onshore, Inc. et al. (Cause No. 09-06261) pending in the 191 st  Judicial District Court of Dallas County, Texas.

 

“ Assets ” means all the assets, properties, equipment, inventory and rights beneficially owned by Eagle Canada.

 

“ Authorization ” means, with respect to any Person, any order, permit, approval, waiver, licence or similar authorization of any Governmental Authority having jurisdiction over the Person.

 

“ Bankruptcy Case ” means the Chapter 11 case of Eagle Geophysical, Inc., Bankruptcy Case No. 09-33753-H5-11, pending in the Bankruptcy Court.

 

“ Bankruptcy Code ” means title 11 of the United States Code, as amended.

 

“ Bankruptcy Court ” means the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

 

“ Bankruptcy Rules ” mean the Federal Rules of Bankruptcy Procedure.

 

“ Bid Procedures Motion ” means the motion filed with the Bankruptcy Court seeking approval of (i) the Expense Reimbursement; (ii) the Break-Up Fee; and (iii) other bid procedures governing the sale of the Equity Interests.

 

“ Business ” means the business of providing seismic data and surveying services to the energy industry carried on by Eagle Canada and all matters and operations ancillary thereto.

 

“ Claim ” means any (i) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

 

 

“ Closing ” means the completion of the Transaction.

 

“ Closing Date ” means the date on which the Closing actually takes place.

 

“ Convertible Securities ” has the meaning set forth in Section 3.7.

 

“ Deposit ” has the meaning set forth in Section 2.2(a).

 

“ Eagle Canada ” means Eagle Geophysical Canada, Inc., carrying on business as Eagle Canada, Inc., a Delaware corporation.

 

“ Environmental Laws ” means all applicable Laws and agreements with Governmental Authority and all other statutory requirements relating to public health or the protection of the environment and all Authorizations, guidelines and policies issued pursuant to such Laws, agreements or statutory requirements.

 

“ Equity Interests ” means all of the issued and outstanding equity interests (including any preferred stock) in Eagle Canada.

 

“ Financial Statements ” means the select financial information of Eagle Canada dated as of June 30, 2009, the balance sheets and income statements of Eagle Canada for the period from January 1, 2004 to August 31, 2009, the accompanying cash flow projections and management forecasts and all notes thereto.

 

“ Governmental Authority ” means (i) any multinational, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the foregoing; or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of or in lieu of any of the above.

 

“ Hazardous Substance ” means any substance or material that is prohibited, controlled or regulated under any Environmental Laws including any sound, heat, vibration, radiation or other form of energy, contaminant, pollutant, dangerous substance, toxic substance, designated substance, controlled product, hazardous waste, subject waste, hazardous material, dangerous good or petroleum, its derivatives, by-products or other hydrocarbons.

 

“ Indebtedness ” means any of the following: (i) any indebtedness for borrowed money; (ii) any obligations evidenced by bonds, debentures, notes or other similar instruments; (iii) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current liabilities arising in the ordinary course of business; (iv) any obligations as lessee under capitalized leases; (v) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (vi) any obligations, contingent or otherwise, under acceptance credit, bankers’ acceptances, letters of credit or similar facilities; and (vii) any guaranty of any of the foregoing.

 

“ Laws ” means any and all applicable laws including all statutes, codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, ruling or awards, and general principles of common and civil law and equity, binding on or affecting the Person referred to in the context in which the word is used.

 

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“ Lien ” means charge against or interest in property to secure payment of a debt or performance of an obligation; including any mortgage, pledge, security interest, attachment, easement, restriction, encumbrance, lien (statutory or otherwise), option, tax, conditional sale agreement, right of first refusal or right of first offer (including any agreement to give any of the foregoing).

 

“ Material Adverse Effect ” means any effect or change on Eagle Canada, the Business or the Assets, in each case taken as a whole, that is or is reasonably likely to be materially adverse to: (i) the results of operations, condition (financial or otherwise), assets, properties, capital, liabilities (contingent or otherwise), prospects, cash flow, income, business or operations of Eagle Canada or the Business, in each case taken as a whole; or (ii) the ability of the Purchaser or Eagle Canada to continue to conduct the Business following Closing substantially in the manner as currently conducted.

 

“ Ordinary Course ” means, with respect to an action taken by a Person, that such action is consistent with the past practices of the Person and is taken in the ordinary course of the normal day-to-day operations of the Person.

 

“ Parties ” means the Sellers and the Purchaser and “Party” means any one of them.

 

“ Permitted Liens ” means liens for taxes, assessments or governmental charges or levies which are not delinquent and Liens registered/filed in the name of or on behalf of Woodbridge Ford Lincoln Ltd., Royal Bank of Canada, Universal Ford Lincoln Sales Ltd., and/or Tricor Lease & Finance Corp.

 

“ Person ” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, joint ventures, trusts, land trusts, business trusts, unincorporated organizations or other legal entities, regardless of whether they are governments, agencies or political subdivisions thereof.

 

“ Purchaser ” has the meaning set forth on the first page of this Agreement.

 

“ Purchaser’s Default ” means the breach by the Purchaser of a material covenant, condition or agreement in this Agreement or any other act or omission on the part of the Purchaser which prevents Closing from occurring.

 

“ Purchase Price ” has the meaning set forth in Section 2.1.

 

“ Representatives ” has the meaning set forth in Section 7.3.

 

“ Sale Motion ” means the motion filed with the Bankruptcy Court seeking approval of the Transaction and authorizing the Sellers to perform any and all actions necessary to consummate the Transaction, the form and substance of which shall be satisfactory to the Purchaser, acting reasonably.

 

“ Sale Order ” means the order approving the relief requested in the Sale Motion, the form and substance of which shall be satisfactory to the Purchaser, acting reasonably.

 

“ Sellers ” has the meaning set forth on the first page of this Agreement.

 

“ Tax ” or “ Taxes ” means all taxes, duties, fees, premiums, assessments, levies and other charges of any kind whatsoever imposed by any taxing or other Governmental Entity, together with all interest and penalties in respect thereof.

 

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“ Term Sheet ” means the amended term sheet dated September 21, 2009, by and between the Purchaser and the Sellers and concerning the purchase and sale of the Equity Interests.

 

“ Transaction ” means, individually and collectively, the sale of the Equity Interests and the other transactions contemplated by this Agreement.

 

“ Working Capital Loan ” has the meaning set forth in Section 5.8.

 

Section 1.2   Other Rules of Construction .

 

(a)            The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction will be applied against any Party.

 

(b)            Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, in each case as amended from time to time, unless the context requires otherwise.

 

(c)            The Parties intend that each representation, warranty and covenant contained herein will have independent significance.  If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached will not detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant.

 

(d)            When a reference is made in this Agreement to an Article, Section, Subsection, Schedule or Exhibit, such reference shall be to an Article, Section, Subsection, Schedule or Exhibit to this Agreement unless otherwise indicated.

 

(e)            The word “herein” and similar references mean, except where a specific Section or Article reference is expressly indicated, the entire Agreement rather than any specific Section or Article.

 

(f)             The words “include,” “includes” and “including” when used in this Agreement shall be deemed in each case to be followed by the words “without limitation.”

 

(g)            The table of contents and the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

(h)            As used herein, all pronouns shall include the masculine, feminine, neuter, singular and plural thereof whenever the context and facts require such construction.

 

(i)             All references in this Agreement to dollars, unless otherwise specifically indicated; are expressed in American currency.

 

(j)             For purposes of this Agreement, any reference to a document is to such document as it may be amended, supplemented or otherwise modified.

 

(k)            Any statement in this Agreement qualified by the expression “to the best of the Sellers’ knowledge and belief” or any similar expression shall be deemed to include an additional statement that it has been made after due and careful inquiry.

 

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ARTICLE II
PURCHASE AND SALE

 

Section 2.1   Purchase & Sale .  At the Closing, upon the terms and subject to the conditions of this Agreement, the Sellers shall sell, transfer and assign to the Purchaser, and the Purchaser shall purchase from the Sellers, the Equity Interests, free and clear of all Liens and/or Claims, pursuant to sections 363(f) of the Bankruptcy Code, for total consideration of $10,345,000, including the forgiveness of all amounts due under the Working Capital Loan (the “ Purchase Price ”).

 

Section 2.2   Deposit .

 

(a)            A deposit in the amount of $100,000 was delivered to the Sellers on September 14, 2009 and deposited to the IOLTA account of Porter & Hedges, L.L.P. in their capacity as bankruptcy counsel for the Sellers pursuant to the Term Sheet (the “ Deposit ”).

 

(b)            If Closing occurs on or prior to October 17, 2009, the Deposit, together with any interest accrued thereon (it being agreed and acknowledged that deposits to an IOLTA account do not earn interest), will be applied to the payment of the Purchase Price in accordance with Section 2.3(a).

 

(c)            If Closing does not occur on or prior to October 17, 2009 as a result of a Purchaser’s Default, the Deposit, together with any interest accrued thereon, will be forfeited to and paid to the Sellers.

 

(d)            If Closing does not occur on or prior to October 17, 2009 for any reason other than a Purchaser’s Default, the Deposit, together with any interest earned thereon, will be returned to the Purchaser at the Purchaser’s option.  If the Closing has not occurred because of a lack of Bankruptcy Court approval, the Purchaser may elect to extend the Closing hereunder and the Deposit shall continue to be held by the Sellers.

 

Section 2.3   Payment of Purchase Price .  At the Closing, the Purchase Price will be paid and satisfied by the Purchaser as follows:

 

(a)            the forgiveness of all amounts due under the Working Capital Loan;

 

(b)            the Deposit and all accrued interest thereon; and

 

(c)            the balance of the Purchase Price ($9,844,134) by way of cashier’s check, bank draft, wire transfer or other form of immediately available funds to the Sellers or their bankruptcy counsel, Porter & Hedges , L.L.P.

 

ARTICLE III
REPRESENTATIONS & WARRANTIES OF THE SELLERS

 

Each of the Sellers hereby jointly and severally represent and warrant to the Purchaser as follows:

 

Section 3.1   Existence and Qualification .  Each of the Sellers and Eagle Canada: (i) is duly organized and validly existing and in good standing under the Laws of its jurisdiction of incorporation, save and except that Eagle Geophysical, Inc. is not in good standing with the State of Delaware for the non-payment of pre-petition taxes of approximately $10,000; (ii) has full power and

 

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authority to own its property and to carry on business in each jurisdiction in which it operates (it being acknowledged and agreed that the Sellers are liquidating their assets in bankruptcy and have no operations); and (iii) is duly qualified, licensed or registered to carry on business in all jurisdictions where the nature of the property owned by it or the business carried on by it makes such qualification necessary and has full legal right under the Laws of all such jurisdictions to own its property and to carry on the business carried on by it (it being acknowledged and agreed that the Sellers are liquidating their assets in bankruptcy and have no operations).

 

Section 3.2   Due Execution, Delivery and Performance .  The execution, delivery and performance by the Sellers of this Agreement:

 

(a)            will be disclosed to the Bankruptcy Court in accordance with all applicable Laws and rules and has been duly authorized by all necessary corporate action on the part of the Sellers;

 

(b)            except for approval of the Bankruptcy Court, does not require consent of any other Person and does not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) require any consent or approval under, result in a breach of, default under or a violation of, or conflict with, or allow any other Person to exercise any rights under, any of the terms or provisions of any material contracts or instruments to which it is a party or pursuant to which Eagle Canada or the Equity Interests may be affected, other than those consents or approvals which have been obtained or will be obtained by the Sellers and/or Eagle Canada on or prior to Closing;

 

(c)            will not result in the violation of any Law by the Sellers;

 

(d)            will not result in a breach of, or cause the termination or revocation of, any Authorization held by Eagle Canada or necessary to Eagle Canada’s ownership of the Assets or the operation of the Business;

 

(e)            will not result in the termination or amendment of any material contract to which Eagle Canada is a party;

 

(f)             will not constitute a default by the Sellers or Eagle Canada under, or result in a violation of any judgment, order, writ, injunction or decree of any Governmental Authority; and

 

(g)            will not result in any right of termination or first refusal becoming effective or the imposition of a Lien, other than Permitted Liens, on any of the Equity Interests or the Assets.

 

Section 3.3   Authorizations .  Except for the approval of the Bankruptcy Court, there is, to the best of the Sellers’ knowledge and belief, no requirement to make any filing with, give any notice to, or obtain any Authorization of, any Governmental Authority as a condition to the lawful completion of the Transaction.  To the best of the Sellers’ knowledge and belief, Eagle Canada owns, holds, possesses and lawfully uses in the operation of the Business all Authorizations that are, in any manner, necessary for it to conduct the Business as presently or previously conducted or for the ownership and use of the Assets in compliance with all applicable Laws and each such Authorization is valid, subsisting and in good standing, and Eagle Canada is not in default or breach of any such Authorization and, to the best of the Sellers’ knowledge and belief, no proceeding is pending or threatened to revoke or limit any such Authorization.  To the best of the Sellers’ knowledge and belief, there are no grounds that would justify any Governmental Authority from amending, suspending, cancelling, revoking or invalidating any such Authorizations or any charge, administrative or monetary penalty, order or other proceeding against Eagle Canada or the Business.

 

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Section 3.4   Execution and Binding Obligation .  This Agreement has been duly executed and delivered by the Sellers and constitutes legal, valid and binding obligations of them enforceable against them in accordance with their respective terms subject only to any limitation under applicable Laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other similar Laws of general application affecting the enforcement of creditors’ rights; (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; and (iii) specific approval of the Bankruptcy Court.

 

Section 3.5   No Conflict .  Neither the execution and delivery of this Agreement, nor the consummation of the Transaction, shall to the best of the Sellers’ knowledge and belief:

 

(a)            directly or indirectly (with or without notice, lapse of time or both), conflict with, result in a breach or violation of, constitute a default, give rise to any right of termination, cancellation, acceleration, suspension or modification of any material obligation of Eagle Canada or loss of any material benefit to which Eagle Canada is entitled under, result in the imposition of any Lien on any of the material properties or assets of Eagle Canada under, or otherwise give rise to any right on the part of any Person to exercise any remedy or obtain any relief under (i) the organizational documents of the Eagle Canada, or any resolution adopted by the board of directors, board of managers or similar governing body of Eagle Canada; (ii) any material contract, lease, agreement or licence  to which the Sellers are a party, by which the Sellers are bound or to which any of their properties or assets are subject; or (iii) any Law, rule, regulation, order, decree or judgment applicable to Eagle Canada or any of its properties or assets; or

 

(b)            require any material consent, waiver, approval or other authorization of, give any notice to, or make any material filing or registration with, any Governmental Authority or other Person.

 

Section 3.6   Equity Interests .  At Closing, the Sellers will be the sole owner of the Equity Interests, which represents 100% of the issued and outstanding shares of Eagle Canada.  The Sellers hold valid and marketable title to the Equity Interests.  Pursuant to the order of the Bankruptcy Court, the Sellers will convey valid and marketable title to the Equity Interests, free and clear of all Liens, security interests, Claims or other encumbrances to the Purchaser at Closing.

 

Section 3.7   Pre-Emptive Rights .  At Closing, any agreement or option or any right or privilege (whether by law, pre-emptive right, contract or otherwise) capable of becoming an agreement, option, right or privilege, including, without limitation, any convertible security, warrant or convertible obligation of any nature, for the purchase, subscription, allotment or issuance of any of the unissued shares of Eagle Canada