<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________
Commission File Number 0-26710
CORE LABORATORIES N.V.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
THE NETHERLANDS NOT APPLICABLE
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HERENGRACHT 424
1017 BZ AMSTERDAM
THE NETHERLANDS NOT APPLICABLE
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (31-20) 420-3191
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of common shares of the Registrant, par value NLG .03 per share,
outstanding at August 6, 1999 was 29,771,790.
===============================================================================
<PAGE> 2
CORE LABORATORIES N.V.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at June 30, 1999 and December 31, 1998 ........................ 1
Consolidated Statements of Operations for the Three Months Ended
June 30, 1999 and 1998................................................................. 2
Consolidated Statements of Operations for the Six Months Ended
June 30, 1999 and 1998................................................................. 3
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 1998................................................................. 4
Notes to Consolidated Financial Statements ................................................. 5
Item 2-- Management's Discussion and Analysis of Financial Condition and Results of
Operations ........................................................................ 10
Item 3-- Quantitative and Qualitative Disclosures of Market Risk................................ 14
Part II -- Other Information
Item 1-- Legal Proceedings...................................................................... 15
Item 2-- Changes in Securities.................................................................. 15
Item 3-- Defaults Upon Senior Securities........................................................ 15
Item 4-- Submission of Matters to a Vote of Security Holders ................................... 15
Item 5-- Other Information...................................................................... 16
Item 6-- Exhibits and Reports on Form 8-K....................................................... 18
Signature ....................................................................................... 19
</TABLE>
ii
<PAGE> 3
CORE LABORATORIES N.V.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................ $ 10,905 $ 8,166
Accounts receivable, net ............................................. 81,532 84,288
Inventories .......................................................... 28,476 18,860
Prepaid expenses ..................................................... 10,789 9,935
Deferred income tax asset ............................................ 5,256 5,192
------------ ------------
Total current assets ............................................. 136,958 126,441
PROPERTY, PLANT AND EQUIPMENT ............................................. 88,747 88,009
Less-- accumulated depreciation ...................................... (23,017) (19,818)
------------ ------------
65,730 68,191
INTANGIBLES AND GOODWILL, net ............................................. 148,148 149,487
OTHER LONG-TERM ASSETS .................................................... 3,931 4,489
------------ ------------
Total assets ..................................................... $ 354,767 $ 348,608
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ................................. $ 18,426 $ 18,355
Accounts payable ..................................................... 14,587 18,528
Other current liabilities ............................................ 21,180 24,338
------------ ------------
Total current liabilities ........................................ 54,193 61,221
LONG-TERM DEBT ............................................................ 83,311 68,238
MINORITY INTEREST ......................................................... 931 1,078
LONG-TERM LEASE OBLIGATIONS ............................................... 99 154
OTHER LONG-TERM LIABILITIES ............................................... 21,515 20,949
SHAREHOLDERS' EQUITY:
Preference shares, NLG .03 par value; 3,000,000 shares authorized,
no shares issued or outstanding .................................. -- --
Common shares, NLG .03 par value; 30,000,000 shares authorized,
29,570,288 and 29,298,419 issued and outstanding
at June 30, 1999 and December 31, 1998, respectively ............. 497 496
Additional paid-in capital ........................................... 153,252 152,178
Retained earnings .................................................... 40,969 44,294
------------ ------------
Total shareholders' equity ....................................... 194,718 196,968
------------ ------------
Total liabilities and shareholders' equity ................. $ 354,767 $ 348,608
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE> 4
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------------------
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
SERVICES ........................................................ $ 56,947 $ 65,097
SALES ........................................................... 15,347 4,585
------------ ------------
72,294 69,682
OPERATING EXPENSES:
Costs of services .......................................... 49,298 50,114
Costs of sales ............................................. 10,171 3,638
General and administrative expenses ........................ 2,964 2,010
Depreciation and amortization .............................. 4,359 3,465
Other (income) expense, net ................................ (606) 399
------------ ------------
66,186 59,626
INCOME FROM CONTINUING OPERATIONS BEFORE INTEREST
EXPENSE AND INCOME TAX EXPENSE ............................. 6,108 10,056
INTEREST EXPENSE ................................................ 1,799 1,447
------------ ------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAX EXPENSE ............................................... 4,309 8,609
INCOME TAX EXPENSE .............................................. 1,422 2,583
------------ ------------
INCOME FROM CONTINUING OPERATIONS ............................... 2,887 6,026
LOSS ON DISPOSITION OF DISCONTINUED OPERATIONS, net of tax
benefit of $1,446 .......................................... -- (3,374)
------------ ------------
NET INCOME ...................................................... $ 2,887 $ 2,652
============ ============
PER SHARE DATA:
Income from continuing operations .......................... $ 0.10 $ 0.23
Loss on sale of discontinued operations .................... -- (0.13)
------------ ------------
BASIC EARNINGS PER SHARE ................................... $ 0.10 $ 0.10
============ ============
WEIGHTED AVERAGE BASIC COMMON SHARES
OUTSTANDING .......................................... 29,413,806 25,768,348
============ ============
Income from continuing operations .......................... $ 0.10 $ 0.23
Loss on sale of discontinued operations .................... -- (0.13)
------------ ------------
DILUTED EARNINGS PER SHARE ................................. $ 0.10 $ 0.10
============ ============
WEIGHTED AVERAGE DILUTED COMMON SHARES
OUTSTANDING .......................................... 29,997,569 26,775,487
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE> 5
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
SERVICES ............................................................. $ 107,516 $ 123,380
SALES ................................................................ 28,909 8,763
------------ ------------
136,425 132,143
OPERATING EXPENSES:
Costs of services ............................................... 94,239 97,219
Costs of sales .................................................. 19,654 7,065
General and administrative expenses ............................. 5,711 3,892
Depreciation and amortization ................................... 8,837 6,888
Non-recurring charges (Note 5) .................................. 10,670 --
Other (income) expense, net ..................................... (1,104) 350
------------ ------------
138,007 115,414
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST
EXPENSE AND INCOME TAX EXPENSE .................................. (1,582) 16,729
INTEREST EXPENSE ..................................................... 3,381 2,827
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAX EXPENSE .................................................... (4,963) 13,902
INCOME TAX EXPENSE (BENEFIT) ........................................ (1,638) 4,171
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS ............................. (3,325) 9,731
LOSS FROM DISCONTINUED OPERATIONS, net of tax benefit of $93
in 1998 ......................................................... -- (217)
LOSS ON DISPOSITION OF DISCONTINUED OPERATIONS, net of tax
benefit of $1,446 ............................................... -- (3,374)
------------ ------------
NET INCOME (LOSS) .................................................... $ (3,325) $ 6,140
============ ============
PER SHARE DATA:
Income (loss) from continuing operations ........................ $ (0.11) $ 0.38
Loss from discontinued operations ............................... -- (0.01)
Loss on disposition of discontinued operations .................. -- (0.14)
------------ ------------
BASIC EARNINGS (LOSS) PER SHARE ................................. $ (0.11) $ 0.24
============ ============
WEIGHTED AVERAGE BASIC COMMON SHARES OUTSTANDING ................ 29,383,003 25,709,542
============ ============
Income (loss) from continuing operations ........................ $ (0.11) $ 0.38
Loss from discontinued operations ............................... -- (0.01)
Loss on disposition of discontinued operations .................. -- (0.13)
------------ ------------
DILUTED EARNINGS (LOSS) PER SHARE ............................... $ (0.11) $ 0.24
============ ============
WEIGHTED AVERAGE DILUTED COMMON SHARES
OUTSTANDING ............................................... 30,125,083 25,701,550
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE> 6
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................... $ (3,325) $ 6,140
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Loss on sale of discontinued operations ..................... -- 4,820
Depreciation and amortization ............................... 8,837 6,888
(Gain) loss on sale of fixed assets ......................... 6 (329)
Foreign currency exchange gain .............................. (456) --
Changes in assets and liabilities:
Decrease (increase) in accounts receivable .................. 2,778 (2,751)
Increase in inventories ..................................... (4,372) (2,675)
Increase in prepaid expenses ................................ (854) (2,484)
Decrease in accounts payable ................................ (3,941) (534)
Increase (decrease) in other accrued expenses ............... 496 (3,128)
Increase (decrease) in other long-term liabilities .......... 780 (7,596)
Other ....................................................... (3,938) (4,007)
------------ ------------
Net cash used in operating activities .................. (3,989) (5,656)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................................ (9,897) (7,797)
Proceeds from sale of fixed assets .............................. 583 615
Sale of discontinued operations ................................. -- 4,114
------------ ------------
Net cash used in investing activities ....................... (9,314) (3,068)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt ...................................... (6,473) (3,823)
Borrowings under long-term debt ................................. 22,032 6,995
Exercise of stock options ....................................... 595 1,493
Other ........................................................... (112) (245)
------------ ------------
Net cash provided by financing activities ................... 16,042 4,420
------------ ------------
NET CHANGE IN CASH ................................................... 2,739 (4,304)
CASH, beginning of period ............................................ 8,166 12,720
------------ ------------
CASH, end of period .................................................. $ 10,905 $ 8,416
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 7
CORE LABORATORIES N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements include the
accounts of Core Laboratories N.V. and its subsidiaries (the "Company"), and
have been prepared in accordance with United States generally accepted
accounting principles for interim financial information using the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. Balance sheet information as of December 31, 1998, was
derived from the 1998 annual audited financial statements. Certain 1998 items
have been reclassified to conform with the 1999 presentation. For further
information, reference is made to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-K filed with the Securities
and Exchange Commission on March 31, 1999.
RECENT PRONOUNCEMENTS
The Company adopted SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information" in 1998, which changes the way the Company
reports information about its operating segments. See Footnote 6 for additional
information.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", was issued. SFAS No. 133 was subsequently amended by SFAS
No. 137, which delayed its effective date. As a result, SFAS No. 133 will be
effective for fiscal years beginning after June 15, 2000, and establishes
accounting and reporting standards for derivative instruments (including certain
derivative instruments embedded in other contracts). Adoption of SFAS No. 133 is
not expected to have a material effect on the Company's financial position or
operational results.
5
<PAGE> 8
2. INVENTORIES
Inventories consist primarily of items held for sale or services provided
to customers. Inventories are stated at the lower of cost (includes direct
material, labor and overhead) or estimated realizable value. A summary of
inventories is as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
Parts and materials..................................................... $ 9,628 $ 6,524
Work-in-process......................................................... 5,352 1,873
Finished Goods.......................................................... 13,496 10,463
----------- -----------
Total ......................................................... $ 28,476 $ 18,860
=========== ===========
</TABLE>
3. INTANGIBLES AND GOODWILL
Intangibles and goodwill are amortized using the straight-line method over
their estimated useful lives, which range from 5 to 40 years. Intangibles
include patents, trademarks, service marks and trade names. Goodwill represents
the excess purchase price over the fair market value of net assets acquired for
acquisitions accounted for as purchases. The Company continually evaluates
whether subsequent events or circumstances have occurred that indicate the
remaining useful life of intangibles and goodwill may warrant revision or that
the remaining balance of intangibles and goodwill may not be recoverable by
determining whether the carrying amount of the intangible assets can be
recovered through projected undiscounted future cash flows over the remaining
amortization period.
4. LONG-TERM DEBT
Long-term debt at June 30, 1999 and December 31, 1998 is summarized in the
following table (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
Credit Facility with a bank group:
$70,154 term loan facility .............. $ 63,430 $ 70,154
$55,000 revolving debt facility ......... 37,000 15,000
Loan Notes .................................. 1,043 1,073
Other indebtedness .......................... 264 366
------------ ------------
Total debt ......................... 101,737 86,593
Less-- current maturities ............... 18,426 18,355
------------ ------------
Total long-term debt ........... $ 83,311 $ 68,238
============ ============
</TABLE>
In May 1997, the Company entered into a Credit Facility which provides for
(i) a term loan of $55 million, (ii) a term loan denominated in British pounds
having a U.S. dollar equivalency of
6
<PAGE> 9
$15 million, (iii) a committed revolving debt facility of $50 million, and (iv)
a Netherlands guilder denominated revolving debt facility with U.S. dollar
equivalency of $5 million. At June 30, 1999, approximately $18 million was
available for borrowing under the revolving debt facility. Loans under the
Credit Facility will generally bear interest from LIBOR plus 0.75% to a maximum
of LIBOR plus 1.75%. The term loan is being repaid on a quarterly basis, with
the final payment due on June 30, 2002. The revolving debt facilities require
interest payments only, until maturity on June 30, 2002. The terms of the Credit
Facility will require the Company to meet certain financial covenants, including
certain minimum equity and cash flow tests. Management believes that the Company
is in compliance with all such covenants contained in its credit agreements. All
of the Company's material subsidiaries are guarantors or co-borrowers under the
Credit Facility.
As part of the purchase of Scott Pickford plc in March 1997, the Company
issued unsecured loan notes as an alternative to the cash consideration paid for
the outstanding shares of Scott Pickford plc. The loan notes bear interest
payable semi-annually, at the rate of LIBOR less 1.0% per annum. Holders of the
loan notes have the right to redeem the loan notes at par on each interest
payment date. Unless previously redeemed or purchased, the loan notes will be
redeemed at par on June 30, 2002.
5. NON-RECURRING CHARGES
In the first quarter of 1999, the Company recorded certain non-recurring
charges of approximately $3.7 million relating to the termination of the
proposed GeoScience Corp. transaction. The Company also recorded non-recurring
charges related to asset write-downs, expenses for personnel reductions,
facility-related expenses and other charges, totaling approximately $6.9
million. These charges are included in "Non-recurring charges" in the
accompanying consolidated financial statements of operations.
6. SEGMENT REPORTING
The Company's business units have been aggregated into three reportable
segments which provide products and services used for optimizing reservoir
performance and maximizing hydrocarbon recovery from new and existing fields.
o Reservoir Description: Encompasses the petrophysical
characterization of petroleum reservoir rock and the phase
behavior relationships of reservoir fluids and gases.
o Production Enhancement: Includes field applications of
proprietary technologies to maximize the efficiency and
effectiveness of well completions, perforations, stimulations,
and production.
o Reservoir Management: Combines and integrates data sets from
reservoir description and production enhancement services to
maximize daily hydrocarbon production and recovery from a well or
field.
7
<PAGE> 10
SEGMENT EARNINGS
The Company's operations are managed primarily in three separate segments
due to the different technologies and marketing strategies each segment utilizes
and requires. Results of these segments are presented below following the same
accounting policies as used to prepare the Consolidated Balance Sheet and
Statement of Operations. The Company evaluates performance based on income or
loss from operations before income tax, interest, and other non-operating income
(expense). Summarized financial information concerning the Company's segments is
shown in the following table. Items included in "Corporate and Other" represent
those items that are individually insignificant or that are not directly related
to a particular segment, but benefit the Company as a whole.
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE
REVENUES TAXES AND INTEREST
THREE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
---------------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
(In thousands)
<S> <C> <C> <C> <C>
Reservoir Description $ 45,656 $ 46,197 $ 4,460 $ 9,680
Production Enhancement 15,345 5,955 2,511 1,445
Reservoir Management 9,672 15,987 (1,798) (937)
-------------- -------------- -------------- --------------
Total Business Segments 70,673 68,139 5,173 10,188
Corporate and Other 1,621 1,543 935 (132)
-------------- -------------- -------------- --------------
Consolidated $ 72,294 $ 69,682 $ 6,108 $ 10,056
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE
REVENUES TAXES AND INTEREST
SIX MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
(In thousands)
<S> <C> <C> <C> <C>
Reservoir Description $ 86,269 $ 89,969 $ (69) $ 15,022
Production Enhancement 29,696 12,718 4,164 3,241
Reservoir Management 17,542 26,664 (986) (1,979)
-------------- -------------- -------------- --------------
Total Business Segments 133,507 129,351 3,109 16,284
Corporate and Other 2,918 2,792 (4,691) 445
-------------- -------------- -------------- --------------
Consolidated $ 136,425 $ 132,143 $ (1,582) $ 16,729
============== ============== ============== ==============
</TABLE>
8
<PAGE> 11
8. SUBSEQUENT EVENTS
Coherence Technologies Company Acquisition
On July 1, 1999, the Company acquired all of the outstanding shares of
Coherence Technology Company, Inc. ("CTC"), a private company with executive
offices in Houston. CTC provides specialized seismic data processing and
interpretation services and is exclusively licensed by BP Amoco to provide its
patented coherency technology to the worldwide petroleum industry. The Company
issued approximately 194,000 shares in the transaction which will be accounted
for as a pooling-of-interests. As part of the transaction, the Company assumed
approximately $1 million in CTC bank debt and issued approximately 140,000
shares to a lender as debt repayment.
Disposition of Environmental Testing Operation
On July 15, 1999, the Company signed a letter of intent to sell the assets
of its Environmental Testing business to Severn Trent Laboratories Inc.
Reservoirs Inc. Acquisition
On July 26, 1999, the Company signed an agreement to acquire all of the
outstanding shares of Reservoirs, Inc. ("Reservoirs"), a private company based
in Houston, Texas. Reservoirs provides reservoir description services to the oil
industry and is a recognized leader in the geology and petrophysics of deepwater
reservoirs. The Company issued approximately 300,000 shares in a transaction
that will be accounted for using the purchase method of accounting.
Credit Facility Amendment
In July 1999, the Company amended its Credit Facility. The amended
agreement increased the revolving debt facility limit from $55.0 million to
$100.0 million. The $55.0 million term loan and the $15.0 million term loan
denominated in British Pounds were repaid in full. The revolving debt facilities
require interest payments only, until maturity in June 2004. Loans under the
amended Credit Facility generally bear interest from LIBOR plus 1.25% to a
maximum rate of LIBOR plus 1.75%.
Private Placement of Senior Notes
In July 1999, the Company issued Senior Notes for $75.0 million bearing
average interest of 8.16%. The notes require annual principal payments beginning
in July 2005 and continuing through July 2011.
9
<PAGE> 12
CORE LABORATORIES N.V.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
Certain matters discussed herein may contain forward-looking statements
that are subject to risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the following: the continued expansion of
services is dependent upon the Company's ability to continue to develop or
acquire new and useful technology; the improvement of margins is subject to the
risk that anticipated synergies of existing and recently acquired businesses and
future acquisitions will not be realized; the Company's dependence on one
industry segment, oil and gas; the risks and uncertainties attendant to adverse
industry, economic, and financial market conditions, including stock prices,
interest rates and credit availability; and competition in the Company's
markets. Should one or more of these risks or uncertainties materialize and
should any of the underlying assumptions prove incorrect, actual results of
current and future operations may vary materially from those anticipated.
GENERAL
Core Laboratories N.V. was established in 1936 and is one of the world's
leading providers of proprietary and patented reservoir description, production
enhancement and reservoir management services for optimizing reservoir
performance and maximizing hydrocarbon recovery from new and existing fields.
The Company's customers include major, national, and independent oil and gas
producers. In addition, the Company manufactures and sells petroleum reservoir
rock and fluid analysis instrumentation and other integrated systems which
complement its services operations. Core Laboratories currently operates over 70
facilities in over 50 countries and has approximately 3,500 employees.
10
<PAGE> 13
RECENT DEVELOPMENTS
NON-RECURRING CHARGE
In the first quarter of 1999, the Company recorded certain non-recurring
charges of approximately $3.7 million relating to the termination of the
proposed GeoScience Corp. transaction. The Company also recorded non-recurring
charges related to asset write-downs, expenses for personnel reductions,
facility-related expenses and other charges, totaling approximately $6.9
million. These charges are included in "Non-recurring charges" in the
accompanying consolidated financial statements of operations.
COHERENCE TECHNOLOGIES COMPANY ACQUISITION
On July 1, 1999, the Company acquired all of the outstanding shares of
Coherence Technology Company, Inc. ("CTC"), a private company with executive
offices in Houston. CTC provides specialized seismic data processing and
interpretation services and is exclusively licensed by BP Amoco to provide its
patented coherency technology to the worldwide petroleum industry. The Company
issued approximately 194,000 shares in a transaction that will be accounted for
as a pooling-of-interests. In addition, the Company assumed approximately $1
million in CTC bank debt and issued approximately 140,000 shares to a lender as
debt repayment.
DISPOSITION OF ENVIRONMENTAL TESTING OPERATION
On July 15, 1999, the Company signed a letter of intent to sell the
assets of its Environmental Testing business to Severn Trent Laboratories Inc.
RESERVOIRS INC. ACQUISITION
On July 26, 1999, the Company signed an agreement to acquire all of the
outstanding shares of Reservoirs, Inc. ("Reservoirs"), a private company based
in Houston, Texas. Reservoirs provides reservoir description services to the oil
industry and is a recognized leader in the geology and petrophysics of deepwater
reservoirs. The Company issued approximately 300,000 shares in a transaction
that will be accounted for using the purchase method of accounting.
CREDIT FACILITY AMENDMENT
In July 1999, the Company amended its Credit Facility. The amended
agreement increased the revolving debt facility limit from $55.0 million to
$100.0 million. The $55.0 million term loan and the $15.0 million term loan
denominated in British Pounds were repaid in full. The revolving debt facilities
require interest payments only, until maturity in June 2004. Loans under the
amended Credit Facility generally bear interest from LIBOR plus 1.25% to a
maximum rate of LIBOR plus 1.75%.
PRIVATE PLACEMENT OF SENIOR NOTES
In July 1999, the Company issued Senior Notes for $75.0 million bearing
average interest of 8.16%. The notes require annual principal payments beginning
in July 2005 and continuing through July 2011.
11
<PAGE> 14
RESULTS OF OPERATIONS
The following table sets forth certain percentage relationships based on
the Company's consolidated income statements for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
PERCENTAGE OF PERCENTAGE OF
TOTAL REVENUE TOTAL REVENUE
--------------------------- ---------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Services .............................................. 78.8% 93.4% 78.8% 93.4%
Sales ................................................. 21.2 6.6 21.2 6.6
---------- ---------- ---------- ----------
100.0 100.0 100.0 100.0
Operating expenses:
Cost of services ................................. 86.6* 77.0* 87.7* 78.8*
Cost of sales .................................... 66.3* 79.3* 68.0* 80.6*
General and administrative expenses .............. 4.1 2.9 4.2 2.9
Depreciation and amortization .................... 6.0 5.0 6.5 5.2
Non-recurring charges ............................ -- -- 7.8 --
Other income (expense), net ...................... (0.8) 0.6 (0.8) 0.3
Income (loss) from continuing operations before
interest expense and income tax expense ............. 8.4 14.4 (1.2) 12.7
Interest expense ...................................... 2.5 2.1 2.4 2.1
---------- ---------- ---------- ----------
Income (loss) from continuing operations before
income tax expense .................................. 5.9 12.3 (3.6) 10.6
Income tax expense (benefit) .......................... 2.0 3.7 (1.2) 3.2
---------- ---------- ---------- ----------
Income (loss) from continuing operations .............. 3.9% 8.6% (2.4)% 7.4%
========== ========== ========== ==========
</TABLE>
* Percentage based on applicable segment revenue, and not total revenue.
Total revenue for the second quarter 1999 was $72.3 million, an increase
from $69.7 million in the same period last year. Total revenue for the six
months ended June 30, 1999 was up $4.3 million to $136.4 million. The increases
were due to increased demand for the Company's production related products and
services and the inclusion of revenues from recent acquisitions.
Cost of services as a percentage of service revenue for the three and six
months ended June 30, 1999 increased compared to the corresponding periods in
1998. The increase is due to fixed costs being higher than required to address
the capital expenditures of the Company's clients.
Cost of sales as a percentage of sales revenue for three and six months
ended June 30, 1999 decreased compared to the corresponding periods in 1998 due
to an increase in higher margin product sales.
12
<PAGE> 15
General and administrative expenses for the three and six months ended June
30, 1999 increased $1.0 million and $1.8 million respectively, as compared to
the corresponding periods in 1998. The increases were primarily a result of
increased personnel costs attributable to the Company's growth.
Depreciation and amortization expense for the three and six month periods
ended June 30, 1999 increased $0.9 and $1.9 million, respectively, as compared
to a year ago, primarily due to the inclusion of depreciation and amortization
from the Company's recent acquisitions.
Non-recurring charges of $10.7 million were expensed in the six months
ended June 30, 1999. The expenses were related to asset write-downs, personnel
reductions, and other expenses including those related to the termination of the
GeoScience Corp. transaction.
Interest expense for the three months ended June 30, 1999 increased
approximately $0.4 million as compared to 1998. For the six months ended June
30, 1999, interest expense increased $0.6 million as compared to 1998. These
increases were primarily due to additional borrowings used to refinance a
portion of the debt of the recent acquisitions.
The Company's effective income tax rate was approximately 33% for the three
months and six months ended June 30, 1999 as compared to 30.0% for three months
and six months ended June 30, 1998. The increase was principally due to the
higher effective tax rates of the jurisdictions in which the recent acquisitions
operate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for working capital, capital
expenditures and acquisitions. For the six month period ended June 30, 1999, the
Company had operating cash flow of $(4.0) million as compared to $(5.7) million
for the corresponding period in 1998. Management believes the Company's internal
and external sources of cash will provide the necessary funds with which to meet
its expected obligations.
The Company expects to fund future acquisitions primarily through a
combination of working capital, cash flow from operations, bank borrowings
(including the Credit Facility), and issuances of additional equity. Although
the Credit Facility imposes certain limitations on the incurrence of additional
indebtedness, in general the Company will be permitted to assume, among other
things, indebtedness of acquired businesses, subject to compliance with the
financial covenants of the Credit Facility.
13
<PAGE> 16
CORE LABORATORIES N.V.
QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
There has been no material change in the Company's position regarding
quantitative and qualitative disclosures of market risk from that disclosed
in the Company's 1998 form 10-K.
14
<PAGE> 17
CORE LABORATORIES N.V.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company may from time to time be subject to legal proceedings and
claims that arise in the ordinary course of its business. Management believes
that the outcome of these legal actions will not have a material adverse effect
upon the consolidated financial position or future results of operations of the
Company.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Stockholders voting at the Annual Meeting on May 27, 1999, and by proxy,
elected eight members (each, a "Supervisory Director") to the Board of
Supervisory Directors of the Company (the "Supervisory Board"), consisting of
(i) David M. Demshur; (ii) Timothy J. Probert; (iii) Jacobus Schouten, as Class
I Supervisory Directors, (i) Bob G. Agnew; (ii) Joseph R. Perna; (iii) James A.
Read, as Class II Supervisory Directors and (i) Richard L. Bergmark; (ii)
Stephen D. Weinroth, as Class III Supervisory Directors, to serve until the
annual meeting of shareholders in 1999, 2000 and 2001, respectively, and until
their successors shall have been duly elected and qualified.
The vote tabulation for the individual Directors was as follows:
<TABLE>
<CAPTION>
Director Shares for Shares Withheld
-------- ---------- ---------------
<S> <C> <C>
David M. Demshur 24,997,877 94,646
Timothy J. Probert 25,007,869 84,654
Jacobus Schouten 25,007,869 84,654
Bob G. Agnew 25,007,869 84,654
Joseph R. Perna 25,007,869 84,654
James A. Read 24,853,641 236,882
Richard L. Bergmark 25,007,869 84,654
Steven D. Weinroth 25,007,869 84,654
</TABLE>
15
<PAGE> 18
Voting stockholders also confirmed the Dutch Statutory Annual Accounts for
the year ended December 31, 1998. The proposal was approved by 25,048,745 votes
for, 20,053 against, with 23,725 abstentions.
Voting shareholders approved the extension of the authority of the
Management Board of the Company to repurchase up to 10% of the outstanding share
capital of the Company until November 26, 2000, at a price not more than USD 200
per share. The proposal was approved by 25,035,483 votes for, 31,254 votes
against with 25,786 abstentions.
Voting shareholders approved the extension of the authority of the
Supervisory Board to limit or to exclude the preemptive right of holders of
common shares of the Company until May 26, 2004. The proposal was approved by
20,422,640 votes for, 4,616,947 against with 52,936 abstentions.
Voting shareholders approved the extension of the authority of the
Supervisory Board to issue and/or to grant rights (including options to
purchase) on common and/or preferred shares of the Company until May 26, 2004.
The proposal was approved by 20,374,300 votes for, 4,676,692 against with 41,531
abstentions.
Voting shareholders ratified and approved the appointment of Arthur
Andersen LLP as the Company's independent public auditor for the fiscal year
ending December 31, 1999. The proposal was approved by 25,044,368 votes for,
26,985 votes against and 21,170 abstentions.
ITEM 5. OTHER INFORMATION.
YEAR 2000 READINESS
The Company has numerous technology systems that are managed on a
decentralized basis. The Company's Year 2000 readiness efforts are therefore
being undertaken on a company wide basis but with centralized oversight. Each
facility is responsible for developing and implementing a plan to minimize the
risk of a significant negative impact on its operations.
The Company has identified four phases to achieve a state of readiness: (i)
identification, (ii) remediation, (iii) implementation and testing, and, (iv)
reassessment. As of December 31, 1998, the identification phase of assessing all
systems that could be affected by Year 2000 date sensitive software or embedded
technology was substantially complete. Remediation and/or implementation of
compliant systems is expected to be completed by the third quarter of 1999.
Reassessment will continue constantly throughout the process.
The Company has relationships with various third parties who must also be
Year 2000 ready. These third parties provide (or receive) resources and services
to (or from) the Company and include organizations with which the Company
exchanges information. Third parties include vendors of hardware, software and
information services; providers of infrastructure services such as voice and
data communications; investors, customers; manufacturing suppliers; distribution
channels; non-consolidated entities; and joint venture partners. Third parties
differ from internal systems in that the company exercises less, or no, control
over Year 2000 readiness. The Company has developed a plan
16
<PAGE> 19
to assess and attempt to mitigate the risks associated with the potential
failure of third parties to achieve Year 2000 readiness. This plan includes the
following activities: (i) identify and clarify third party dependencies; (ii)
research and analyze Year 2000 readiness for critical third parties; and (iii)
test critical hardware and software products and electronic interfaces. As of
December 31, 1998, all phases of this process were substantially complete,
however, due to the various stages of third parties Year 2000 readiness, the
Company's testing activities will extend into 1999.
The Company has commenced contingency planning to reduce the risk of Year
2000 related business failures. The contingency plans, which address both
internal systems and third party relationships, include the following
activities: (i) evaluate the consequences of failure of business processes with
significant exposure to Year 2000 risk; (ii) determine the probability of a Year
2000 related failure for those processes that have a high consequence of
failure; (iii) develop an action plan to complete contingency plans for those
processes that rank high in both consequence and probability of failure; and
(iv) complete the applicable action plans. The Company has substantially
completed evaluation activities and is proceeding with the subsequent
activities. The Company expects to substantially complete all
contingency-planning activities by September 30, 1999.
Based on its plans to make internal systems ready for Year 2000, to deal
with third party relationships, and to develop contingency actions, the Company
believes that it will experience, at most, isolated and minor disruptions of
business processes following the turn of the century. Such disruptions are not
expected to have a material effect on the Company's future results of
operations, liquidity, or financial condition. However, due to the magnitude and
complexity of this project, risks and uncertainties exist and the Company is not
able to predict a reasonable worst case scenario. If conversion of the Company's
internal systems is not completed on a timely basis (due to non-performance by
significant third-party vendors, lack of qualified personnel to perform the Year
2000 work, or other unforeseen circumstances in completing the Company's plans),
or if critical third parties fail to achieve Year 2000 readiness on a timely
basis, the Year 2000 issues could have a material adverse impact on the
Company's operations following the turn of the century.
As of June 30, 1999, the Company has incurred and expensed approximately
$0.3 million (pretax) in 1999 related to Year 2000 readiness.
17
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE FROM THE
EXHIBIT NO. EXHIBIT TITLE FOLLOWING DOCUMENTS
- ----------- ------------- -------------------
<S> <C> <C>
10.1 Core Laboratories Supplemental Executive Retirement Plan for John D. Denson Filed Herewith
effective January 1, 1999.
10.2 Core Laboratories Supplemental Executive Retirement Plan for Monty L. Davis Filed Herewith
effective January 1, 1999.
10.3 Amendment to Core Laboratories Supplemental Executive Retirement Plan filed Filed Herewith
January 1, 1998, effective July 29, 1999.
10.4 Agreement and Plan of Merger among Core Laboratories N.V., Core Colorado Filed Herewith
Acquisition, Inc., Coherence Technology Company, Inc. and the Stockholders
of Coherence Technology Company, Inc. dated as of June 9, 1999.
10.5 Agreement and Plan of Merger among Core Laboratories N.V., Core Acquisition Filed Herewith
Subsidiary, Inc., Reservoirs, Inc. and the Stockholders of Reservoirs, Inc.
dated as of July 26, 1999.
10.6 Amendment to Amended and Restated Credit Agreement among Core Laboratories Filed Herewith
N.V., Core Laboratories, Inc., Core Laboratories (U.K.) Limited, Bankers
Trust Company, NationsBank N.A. and the Bank Group, dated as of July 22,
1999.
10.7 Note and Guarantee Agreement by Core Laboratories, Inc. for Guaranteed Filed Herewith
Senior Notes, Series A, and Guaranteed Senior Notes, Series B, dated as of
July 22, 1999.
27.1 Financial Data Schedule Filed Herewith
</TABLE>
(b) Reports on Form 8-K.
None
18
<PAGE> 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Core Laboratories N.V., has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CORE LABORATORIES N.V.
by: Core Laboratories International B.V.
Dated: August 16, 1999 By: /s/ RANDALL D. KEYS
------------------------
Randall D. Keys
Chief Financial Officer
19
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE FROM THE
EXHIBIT NO. EXHIBIT TITLE FOLLOWING DOCUMENTS
- ----------- ------------- -------------------
<S> <C> <C>
10.1 Core Laboratories Supplemental Executive Retirement Plan for John D. Denson Filed Herewith
effective January 1, 1999.
10.2 Core Laboratories Supplemental Executive Retirement Plan for Monty L. Davis Filed Herewith
effective January 1, 1999
10.3 Amendment to Core Laboratories Supplemental Executive Retirement Plan filed Filed Herewith
January 1, 1998, effective July 29, 1999.
10.4 Agreement and Plan of Merger among Core Laboratories N.V., Core Colorado Filed Herewith
Acquisition, Inc., Coherence Technology Company, Inc. and the Stockholders
of Coherence Technology Company, Inc. dated as of June 9, 1999.
10.5 Agreement and Plan of Merger among Core Laboratories N.V., Core Acquisition Filed Herewith
Subsidiary, Inc., Reservoirs, Inc. and the Stockholders of Reservoirs, Inc.
dated as of July 26, 1999.
10.6 Amendment to Amended and Restated Credit Agreement among Core Laboratories Filed Herewith
N.V., Core Laboratories, Inc., Core Laboratories (U.K.) Limited, Bankers
Trust Company, NationsBank N.A. and the Bank Group, dated as of July 22,
1999.
10.7 Note and Guarantee Agreement by Core Laboratories, Inc. for Guaranteed Filed Herewith
Senior Notes, Series A, and Guaranteed Senior Notes, Series B, dated as of
July 22, 1999.
27.1 Financial Data Schedule Filed Herewith
</TABLE>
<PAGE> 1
EXHIBIT 10.1
CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR
JOHN D. DENSON
EFFECTIVE DATE: JANUARY 1, 1999
<PAGE> 2
CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN and deferred compensation
agreement is made and entered into by and between Core Laboratories N.V. (the
"Company") and John D. Denson ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed as general counsel by one or
more members of the Company Group (as such term is hereinafter defined); and
WHEREAS, the services of Executive as an employee of the Company Group
have been substantial and meritorious; and
WHEREAS, the Company desires to recognize the value to the Company of
past and present services of Executive and to reward Executive for his
contributions to the success and growth of the Company and to encourage
Executive to remain in the employment of the Company Group through the use of
additional but deferred compensation;
NOW, THEREFORE, the Company hereby adopts this CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the "Plan"), effective as of January 1,
1999, and the Company and Executive agree as follows:
I.
DEFINITIONS
1.1 DEFINITIONS. Where the following words and phrases appear in the
Plan, they shall have the meanings set forth below, unless their context clearly
indicates to the contrary.
(1) ANNIVERSARY DATE: Each anniversary of Executive's Retirement Date.
(2) BOARD: The Board of Supervisory Directors of the Company.
(3) CAUSE: A determination by the Committee that "cause" (as such term is
defined in Executive's employment agreement, if any, with a member of
the Company Group) exists for the termination of the employment
relationship; provided, however, that if Executive does not have such
an employment agreement, or Executive's employment agreement does not
define the term "cause," then "Cause" shall mean a determination by the
Committee that Executive (i) has engaged in gross negligence or willful
misconduct in the performance of his duties with respect to the Company
Group, (ii) has been convicted of a felony or a misdemeanor involving
moral turpitude (which, through lapse of time or otherwise, is not
subject to appeal), (iii) has willfully refused without proper legal
reason to perform his duties and responsibilities to the Company Group
faithfully and to the best of his abilities, (iv) has materially
breached any material provision of a written employment agreement or
corporate
<PAGE> 3
policy or code of conduct established by any member of the Company
Group, or (v) has willfully engaged in conduct that he knows or
should know is materially injurious to the Company Group; and provided,
further, that, for purposes of clause (iv) of the preceding proviso, a
material breach of a material provision of a written employment
agreement or corporate policy or code of conduct shall include, but not
be limited to, any breach that results in termination of Executive's
employment.
(4) CHANGE IN CONTROL: The purchase or other acquisition by any person,
entity, or group of persons, within the meaning of section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Act"),
or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of more than
twenty percent (20%) of either the outstanding shares of common stock
or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally, or the approval by the
stockholders of the Company of a reorganization, merger, or
consolidation, in each case, with respect to which persons who were
stockholders of the Company immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more than
eighty percent (80%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged, or
consolidated Company's then outstanding securities, or a liquidation or
dissolution of the Company, or of the sale of all or substantially all
of the Company's assets.
(5) CODE: The Internal Revenue Code of 1986, as amended.
(6) COMPANY: Core Laboratories N.V.
(7) COMPANY GROUP: The Company and any subsidiary or affiliate of the
Company designated from time to time by the Committee in its
discretion. As of the Effective Date, the Company Group shall consist
solely of the Company and Core Laboratories, Inc.
(8) COMMITTEE: The Compensation Committee of the Board.
(9) COMPENSATION: For each Plan Year, the total of all amounts paid by the
Company Group to or for the benefit of Executive for services rendered
or labor performed for the Company Group while Executive is an employee
of the Company Group, to the extent such amounts are required to be
reported on Executive's federal income tax withholding statement (Form
W-2 or its subsequent equivalent), but adjusted to include (i) elective
deferrals under Code sections 125 and 402(e)(3) and (ii) deferrals by
the Executive under a non-qualified deferred compensation plan
maintained by the Company Group.
(10) DATE OF HIRE: August 10, 1992.
(11) DEATH BENEFIT: A benefit calculated under Section 3.2 and paid in
accordance with Article III.
-2-
<PAGE> 4
(12) DESIGNATED BENEFICIARY: Executive's beneficiary or beneficiaries
determined in accordance with Section 8.1.
(13) EFFECTIVE DATE: January 1, 1999.
(14) EXECUTIVE: John D. Denson.
(15) FINAL AVERAGE PAY: The average of Executive's annual Compensation for
the five consecutive Plan Years (or, if shorter, all consecutive Plan
Years) immediately preceding the Plan Year in which occurs the earlier
of (i) the termination of Executive's employment with the Company Group
or (ii) the death of Executive; provided, however, that in the event of
a Change in Control prior to the termination of Executive's employment
with the Company Group, "Final Average Pay" shall be the greater of (i)
the average of Executive's annual Compensation for the five consecutive
Plan Years (or, if shorter, all consecutive Plan Years) immediately
preceding the Plan Year in which occurs the Change in Control or (ii)
the average of Executive's annual Compensation for the five consecutive
Plan Years (or, if shorter, all consecutive Plan Years) immediately
preceding the Plan Year in which occurs the earlier of (1) the
termination of Executive's employment with the Company Group or (2) the
death of Executive.
(16) INSOLVENT: The Company either (i) is unable to pay its debts as they
become due or (ii) is subject to a pending proceeding as a debtor under
the United States Bankruptcy Code (or any successor federal statute).
(17) PLAN: This Core Laboratories Supplemental Executive Retirement Plan.
(18) PLAN YEAR: The twelve-consecutive month period commencing January 1 of
each year.
(19) RETIREMENT BENEFIT: A benefit calculated under Section 2.2 and paid in
accordance with Article II.
(20) RETIREMENT DATE: The later of (i) the first date after the Effective
Date on which Executive is no longer employed by the Company Group or
any affiliate of the Company Group or (ii) the date Executive attains
the age of sixty-five.
(21) TRUST: The trust, if any, established under the Trust Agreement.
(22) TRUST AGREEMENT: The agreement, if any, entered into between the
Company and the Trustee pursuant to Section 6.2.
(23) TRUSTEE: An independent third party that may be granted corporate
trustee powers under state law and which has been appointed by the
Board to be the trustee qualified and acting under the Trust Agreement
at any time.
(24) VESTED INTEREST: The percentage of Executive's Plan benefit, which is
vested and nonforfeitable, as determined under Article IV.
-3-
<PAGE> 5
(25) YEARS OF ACCRUAL SERVICE: The total of all completed months of
Executive's employment with the Company Group commencing on his Date of
Hire and ending (i) for purposes of calculating Executive's Retirement
Benefit, on the first date after the Effective Date on which Executive
is not employed by the Company Group and (ii) for purposes of
calculating Executive's Death Benefit, on the date of Executive's
death, in either case divided by twelve.
(26) YEARS OF VESTING SERVICE: The total of all completed months of
Executive's employment with the Company Group commencing on the
Effective Date, and ending on the earlier of (i) the first date after
the Effective Date on which Executive is not employed by the Company
Group or (ii) the date of Executive's death, in either case divided by
twelve.
1.2 NUMBER AND GENDER. Whenever appropriate herein, words used in the
singular shall be considered to include the plural, and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing herein, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are included
solely for convenience, and, if there is any conflict between such headings and
the text of this Plan, the text shall control.
II.
RETIREMENT BENEFIT
2.1 ENTITLEMENT TO RETIREMENT BENEFIT. Executive shall be entitled to
receive a Retirement Benefit, calculated in accordance with Section 2.2, upon
his Retirement Date.
2.2 RETIREMENT BENEFIT. Executive's "Retirement Benefit" shall be an
annual payment equal to his Vested Interest in 2% of Executive's Final Average
Pay, multiplied by Executive's Years of Accrual Service (not to exceed 25
years); provided, however, that if an event occurs that results in Executive
obtaining a 100% Vested Interest pursuant to Section 4.3, then Executive's
Retirement Benefit shall be no less than an annual payment equal to his Vested
Interest in $150,000.
2.3 COMMENCEMENT AND DURATION OF RETIREMENT BENEFIT PAYMENTS.
Executive's Retirement Benefit shall be paid to Executive once each calendar
year during his lifetime. The first such annual payment shall be paid to
Executive as soon as administratively practicable after Executive's Retirement
Date, and each subsequent annual payment shall be paid as soon as
administratively practicable after each Anniversary Date thereafter until the
date of Executive's death. Except as provided in Section 2.4, all payments of
Executive's Retirement Benefit shall cease upon the death of Executive.
2.4 DEATH ON OR AFTER RETIREMENT DATE. If Executive dies on or after
his Retirement Date and prior to receiving fifteen annual installment payments
of his Retirement Benefit, then no Death Benefit shall be payable, but
Executive's Retirement Benefit shall be paid, or continue to be paid, to
Executive's Designated Beneficiary in annual installments at the same time and
in the same
-4-
<PAGE> 6
amount as such Retirement Benefit would have been paid to Executive had
Executive's death not occurred, and such Retirement Benefit installments shall
continue through the Anniversary Date upon which Executive would have received
the fifteenth Retirement Benefit installment. In the event of the death of a
Designated Beneficiary prior to the payment of the fifteenth Retirement Benefit
installment, such Designated Beneficiary's share of any remaining installments
of Executive's Retirement Benefit shall be paid to such Designated Beneficiary's
estate at the same time, in the same amount, and for the same period of time
such Retirement Benefit would have been paid to such Designated Beneficiary had
his or her death not occurred. All payments of deceased Executive's Retirement
Benefit pursuant to this Section shall cease upon the date of payment of what
would have been the deceased Executive's fifteenth Retirement Benefit
installment.
2.5 CODE SECTION 162(m) LIMITATION. The preceding Sections of this
Article notwithstanding, no Retirement Benefit shall be paid to the extent such
payment, when added to all other remuneration provided to Executive by the
Company or any affiliate, would result in any such amount being nondeductible
under section 162(m) of the Code, and the payment of any such Retirement Benefit
shall be deferred to the first subsequent year in which such payment may be both
paid and fully deductible by the Company. In the event payment of a Retirement
Benefit is deferred pursuant to this Section, such deferral shall not affect the
time of payment or amount of any other installment of Executive's Retirement
Benefit, unless such other payment is itself deferred pursuant to this Section.
III.
DEATH BENEFIT
3.1 ENTITLEMENT TO DEATH BENEFIT. If Executive dies prior to his
Retirement Date, a Death Benefit, calculated in accordance with Section 3.2,
shall be paid under this Article III. If Executive dies on or after his
Retirement Date, no Death Benefit shall be paid under the Plan, but Executive's
Retirement Benefit shall cease or be paid in accordance with Section 2.4.
3.2 DEATH BENEFIT. Executive's Death Benefit shall be an annual payment
equal to Executive's Vested Interest in the greater of (1) or (2) below:
(1) 2% of Executive's Final Average Pay, multiplied by
Executive's Years of Accrual Service (not to exceed 25 years);
or
(2) $150,000.
3.3 COMMENCEMENT AND DURATION OF DEATH BENEFIT. If Executive dies prior
to his Retirement Date, then Executive's Death Benefit shall be paid to his
Designated Beneficiary once each year for fifteen years. The first such annual
payment shall be paid to Executive's Designated Beneficiary as soon as
administratively practicable after Executive's death, and each subsequent annual
payment shall be paid to Executive's Designated Beneficiary on each anniversary
of Executive's death until the payment of fifteen annual Death Benefit payments.
In the event of the death of a Designated Beneficiary prior to the payment of
fifteen Death Benefit installments, such Designated Beneficiary's share of any
remaining installments of Executive's Death Benefit shall be
-5-
<PAGE> 7
paid to such Designated Beneficiary's estate at the same time, in the same
amount, and for the same period of time such Death Benefit would have been paid
to such Designated Beneficiary had his or her death not occurred. All payments
of Executive's Death Benefit pursuant to this Section shall cease upon the
payment of the fifteenth installment of such Death Benefit.
IV.
VESTING AND FORFEITURE
4.1 VESTED INTEREST. Except as provided in Sections 4.2, 4.3, and 4.4,
Executive shall acquire a Vested Interest in his Plan benefit according to the
following schedule:
<TABLE>
<CAPTION>
Years of Vesting Service Vested Interest
------------------------ ---------------
<S> <C>
Less than 5 0%
5 or more 100%
</TABLE>
4.2 ACCELERATED VESTING UPON DEATH. Section 4.1 notwithstanding, in the
event of Executive's death while he is employed by the Company Group, Executive
shall acquire a 100% Vested Interest in his Plan benefit.
4.3 ACCELERATED VESTING IN CONNECTION WITH A CHANGE IN CONTROL. Section
4.1 notwithstanding, Executive shall acquire a 100% Vested Interest in his Plan
benefit upon (1) the occurrence of a Change in Control while Executive is
employed by the Company Group, (2) the involuntary termination of Executive's
employment with the Company Group by a member of the Company Group for a reason
other than Cause within the six-month period ending on the date a Change in
Control occurs, or (3) the termination or amendment of the Plan in a manner that
is to the detriment of Executive (or anyone who would be entitled to benefits
hereunder upon the death of Executive) without Executive's consent if the
adoption date or effective date of such termination or amendment occurs within
the six-month period ending on the date a Change in Control occurs.
4.4 FORFEITURE UPON TERMINATION FOR CAUSE. In the event Executive's
employment with the Company Group or any affiliate is terminated for Cause, all
benefits payable under the Plan to Executive or his Designated Beneficiary shall
be forfeited, and neither Executive nor his Designated Beneficiary shall be
entitled to receive, or continue to receive, any benefit under the Plan.
V.
ADMINISTRATION OF PLAN
5.1 COMMITTEE ADMINISTRATION. The plan shall be administered by the
Committee. The Committee shall supervise the administration of the Plan
according to the terms and provisions hereof and shall have the sole
discretionary authority and all of the powers necessary to accomplish these
purposes, including, without limitation, the sole discretionary authority to
interpret and construe all Plan terms and to make all factual determinations
associated with the Plan. All such interpretations, constructions, and
determinations shall be final and binding upon Executive and all other persons.
No member of the Committee shall be liable to Executive or any other person for
any
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<PAGE> 8
action taken or omitted in connection with the administration of the Plan unless
attributable to his own willful misconduct or lack of good faith.
5.2 COMMITTEE APPOINTMENT, REMOVAL. Each member of the Committee shall
be appointed and removed by and in the sole discretion of the Board and shall
serve in accordance with applicable rules and procedures of the Board and the
Committee.
VI.
UNFUNDED NATURE OF PLAN
6.1 "TOP HAT" PLAN. The Plan is intended to constitute an unfunded,
unsecured plan of deferred compensation for a select group of management or
highly compensated employees of the Company Group. Further, it is the intention
of the Company that the Plan be unfunded for purposes of the Code and Title I of
the Employee Retirement Income Security Act of 1974, as amended. The Plan
constitutes a mere promise by the Company to make benefit payments in the
future. Plan benefits hereunder provided are to be paid out of the Company's
general assets, and Executive shall have the status of, and shall have no better
status than, a general unsecured creditor of the Company.
6.2 DISCRETIONARY ESTABLISHMENT OF RABBI TRUST. The Board, in its sole
discretion, may select the Trustee, establish the Trust, and enter into the
Trust Agreement with the Trustee. Any such Trust established by the Board, and
any assets held by such Trust to assist the Company in meeting its obligations
under the Plan, shall conform in all material respects to the terms of the model
rabbi trust set forth in Revenue Procedure 92-64, 1992-2 C.B. 422. The Company
may transfer money and/or other property to the Trustee, and the Trustee shall
pay Plan benefits to Executive and his beneficiaries out of the Trust assets if
such benefits are not paid by the Company. In the event the Trust is
established, the Company shall remain the owner of all assets in the Trust, and
the assets shall be subject to the claims of Company creditors in the event (and
only in the event) the Company ever becomes Insolvent. Neither Executive nor any
beneficiary of Executive shall have any preferred claim to, any security
interest in, or any beneficial ownership interest in any assets of the Trust.
6.3 INSOLVENCY OF COMPANY. The Board and the Chief Executive Officer of
the Company shall each have the duty to inform the Trustee in writing if the
Company becomes Insolvent. Such notice given under the preceding sentence by any
one party shall satisfy each party's duty to give notice. When so informed, the
Trustee shall suspend any payments to Executive or his Designated Beneficiary,
as applicable, and hold the assets for the benefit of the Company's general
creditors and shall determine within the period specified in the Trust
Agreement, or, in the absence of a specified period, within a reasonable period
of time, whether the Company is Insolvent. If the Trustee determines that the
Company is not Insolvent, the Trustee shall (1) resume payments to Executive or
his Designated Beneficiary, as applicable, and (2) make a payment to Executive
or his Designated Beneficiary, as applicable, as soon as administratively
feasible after such determination, in an aggregate amount equal to the
difference between the payments that would have been made to such individual(s)
by the Trustee but for this Section 6.3 and the aggregate payments actually made
to such individual(s) by the Company pursuant to the Plan during any such period
of discontinuance (plus interest on such amount calculated at the prime rate as
reported in The Wall
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<PAGE> 9
Street Journal as of the date of such discontinuance from
the time that such payment or payments were due until their actual payment).
VII.
AMENDMENT AND TERMINATION
7.1 AMENDMENT. The Board may, in its discretion, amend the Plan, in
whole or in part, at any time; provided, however, that no amendment shall be
made that would reduce the vested accrued benefit of Executive as of the later
of the adoption date or effective date of such amendment.
7.2 TERMINATION. The Board may, in its discretion, terminate the Plan,
in whole or in part, at any time. In the event the Plan is terminated,
notwithstanding any other provision of the Plan, the Board, in its discretion,
may pay Executive his payable but unpaid vested accrued Retirement Benefit (or,
in the case of Executive's death, Executive's Designated Beneficiary any payable
but unpaid Death Benefit or Retirement Benefit) either in accordance with
Article II or III, as applicable, or in any other manner the Board deems
appropriate, including, without limitation, a lump sum payment of the actuarial
equivalent present value of such unpaid Retirement Benefit or Death Benefit,
actuarially reduced to take into account any earlier time of payment. In
determining actuarial equivalency for purposes of the preceding sentence,
reasonable actuarial assumptions shall be used, and the actuarial calculation
shall be made by an actuary selected by and in the discretion of the Board and
agreed to by Executive or his Designated Beneficiary, as applicable.
VIII.
MISCELLANEOUS
8.1 DESIGNATION OF BENEFICIARIES. Executive shall have the right to
designate the beneficiary or beneficiaries to receive payment of his benefit in
the event of his death. Each such designation shall be made in writing filed
with the Committee by Executive. Any such designation may be changed at any time
by Executive by execution and filing of a new designation in accordance with
this Section. If no beneficiary designation is on file with the Committee at the
time of the death of Executive or if such designation is not effective for any
reason as determined by the Committee, the designated beneficiary or
beneficiaries to receive such death benefit shall be as follows:
(1) If Executive leaves a surviving spouse, his designated
beneficiary shall be such surviving spouse; and
(2) If Executive leaves no surviving spouse, his designated
beneficiary shall be (A) Executive's executor or administrator or (B)
his heirs at law if there is no administration of Executive's estate.
Notwithstanding the preceding provisions of this Section and to the extent not
prohibited by state or federal law, if Executive is divorced from his spouse and
at the time of his death is not remarried to the person from whom he was
divorced, any designation of such divorced spouse as his beneficiary under the
Plan filed prior to the divorce shall be null and void unless the contrary is
expressly stated in writing filed with the Committee by Executive. The interest
of such divorced
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<PAGE> 10
spouse failing hereunder shall vest in the persons specified in the preceding
provisions of this Section as if such divorced spouse was not designated as a
beneficiary by Executive.
8.2 NO ASSIGNMENT OR ALIENATION. The interest of Executive in the Plan
or of his Designated Beneficiary hereunder may not be anticipated, sold,
transferred, assigned, or encumbered in any manner, either voluntarily or
involuntarily, and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be null and void. The benefits
provided hereunder shall not be liable for, or subject to the debts, contracts,
liabilities, engagements, or torts of, any person to whom such benefits are
payable, nor shall they be subject to garnishment, attachment, or other legal or
equitable process, nor shall they be an asset of the bankrupt's estate in
bankruptcy.
8.3 NO CONTRACT OF EMPLOYMENT. Nothing contained in the Plan or in the
adoption of the Plan shall confer on Executive the right to continued employment
with the Company Group or any affiliate or affect in any way the right of the
Company Group to terminate the employment or services of Executive at any time.
Nothing contained in the Plan shall be construed to affect the provisions of any
other plan maintained by the Company Group or shall prevent the Company Group
from adopting or continuing in effect other or additional compensation
arrangements affecting Executive.
8.4 BINDING EFFECT. The Plan shall be binding upon, and inure to the
benefit of, the Company, its successors, and assigns, and Executive and his
respective heirs, executors, administrators, and legal representatives.
8.5 SEVERABILITY. In case any provision of the Plan is determined by a
court of competent jurisdiction to be illegal, invalid, or unenforceable for any
reason, such illegal, invalid, or unenforceable provision shall not affect the
remaining provisions of the Plan, and the Plan shall be construed and enforced
as if such illegal, invalid, or unenforceable provision had not been included
therein.
8.6 JURISDICTION. Except to the extent federal law applies and preempts
state law, the Plan shall be construed, enforced, and administered according to
the laws of the state of Texas, excluding any conflict-of-law rule or principle
that might refer construction of the Plan to the laws of another state or
country. In the event of litigation relating to the Plan, such litigation shall
be brought in state or federal court residing in Houston, Harris County, Texas,
and the Company and Executive (or persons claiming rights of or through
Executive) irrevocably appoints the Secretary of State for the state of Texas as
agent for receipt of service of process in connection with such litigation.
8.7 WITHHOLDING. All benefit payments provided for hereunder shall be
subject to applicable withholding and other deductions as shall be required
under applicable local, state, or federal law.
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<PAGE> 11
EXECUTED on this _____ day of ______________________, 1999.
CORE LABORATORIES N.V.
By:
Jacobus Schouten
Managing Director of
Core Laboratories International B.V. which
is the sole managing director of Core
Laboratories N.V.
JOHN D. DENSON
-----------------------------------------
<PAGE> 1
EXHIBIT 10.2
CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR
MONTY L. DAVIS
EFFECTIVE DATE: JANUARY 1, 1999
<PAGE> 2
CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN and deferred compensation
agreement is made and entered into by and between Core Laboratories N.V. (the
"Company") and Monty L. Davis ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed as Chief Operating Officer and
Senior Vice President by one or more members of the Company Group (as such term
is hereinafter defined); and
WHEREAS, the services of Executive as an employee of the Company Group
have been substantial and meritorious; and
WHEREAS, the Company desires to recognize the value to the Company of
past and present services of Executive and to reward Executive for his
contributions to the success and growth of the Company and to encourage
Executive to remain in the employment of the Company Group through the use of
additional but deferred compensation;
NOW, THEREFORE, the Company hereby adopts this CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the "Plan"), effective as of January 1,
1999, and the Company and Executive agree as follows:
I.
DEFINITIONS
1.1 DEFINITIONS. Where the following words and phrases appear in the
Plan, they shall have the meanings set forth below, unless their context clearly
indicates to the contrary.
(1) ANNIVERSARY DATE: Each anniversary of Executive's Retirement Date.
(2) BOARD: The Board of Supervisory Directors of the Company.
(3) CAUSE: A determination by the Committee that "cause" (as such term is
defined in Executive's employment agreement, if any, with a member of
the Company Group) exists for the termination of the employment
relationship; provided, however, that if Executive does not have such
an employment agreement, or Executive's employment agreement does not
define the term "cause," then "Cause" shall mean a determination by the
Committee that Executive (i) has engaged in gross negligence or willful
misconduct in the performance of his duties with respect to the Company
Group, (ii) has been convicted of a felony or a misdemeanor involving
moral turpitude (which, through lapse of time or otherwise, is not
subject to appeal), (iii) has willfully refused without proper legal
reason to perform his duties and responsibilities to the Company Group
faithfully and to the best of his abilities, (iv) has materially
breached any material provision of a written employment agreement or
corporate
<PAGE> 3
policy or code of conduct established by any member of the Company
Group, or (v) has willfully engaged in conduct that he knows or
should know is materially injurious to the Company Group; and provided,
further, that, for purposes of clause (iv) of the preceding proviso, a
material breach of a material provision of a written employment
agreement or corporate policy or code of conduct shall include, but not
be limited to, any breach that results in termination of Executive's
employment.
(4) CHANGE IN CONTROL: The purchase or other acquisition by any person,
entity, or group of persons, within the meaning of section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Act"),
or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of more than
twenty percent (20%) of either the outstanding shares of common stock
or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally, or the approval by the
stockholders of the Company of a reorganization, merger, or
consolidation, in each case, with respect to which persons who were
stockholders of the Company immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more than
eighty percent (80%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged, or
consolidated Company's then outstanding securities, or a liquidation or
dissolution of the Company, or of the sale of all or substantially all
of the Company's assets.
(5) CODE: The Internal Revenue Code of 1986, as amended.
(6) COMPANY: Core Laboratories N.V.
(7) COMPANY GROUP: The Company and any subsidiary or affiliate of the
Company designated from time to time by the Committee in its
discretion. As of the Effective Date, the Company Group shall consist
solely of the Company and Core Laboratories, Inc.
(8) COMMITTEE: The Compensation Committee of the Board.
(9) COMPENSATION: For each Plan Year, the total of all amounts paid by the
Company Group to or for the benefit of Executive for services rendered
or labor performed for the Company Group while Executive is an employee
of the Company Group, to the extent such amounts are required to be
reported on Executive's federal income tax withholding statement (Form
W-2 or its subsequent equivalent), but adjusted to include (i) elective
deferrals under Code sections 125 and 402(e)(3) and (ii) deferrals by
the Executive under a non-qualified deferred compensation plan
maintained by the Company Group.
(10) DATE OF HIRE: April 1, 1998.
(11) DEATH BENEFIT: A benefit calculated under Section 3.2 and paid in
accordance with Article III.
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<PAGE> 4
(12) DESIGNATED BENEFICIARY: Executive's beneficiary or beneficiaries
determined in accordance with Section 8.1.
(13) EFFECTIVE DATE: January 1, 1999.
(14) EXECUTIVE: Monty L. Davis.
(15) FINAL AVERAGE PAY: The average of Executive's annual Compensation for
the five consecutive Plan Years (or, if shorter, all consecutive Plan
Years) immediately preceding the Plan Year in which occurs the earlier
of (i) the termination of Executive's employment with the Company Group
or (ii) the death of Executive; provided, however, that in the event of
a Change in Control prior to the termination of Executive's employment
with the Company Group, "Final Average Pay" shall be the greater of (i)
the average of Executive's annual Compensation for the five consecutive
Plan Years (or, if shorter, all consecutive Plan Years) immediately
preceding the Plan Year in which occurs the Change in Control or (ii)
the average of Executive's annual Compensation for the five consecutive
Plan Years (or, if shorter, all consecutive Plan Years) immediately
preceding the Plan Year in which occurs the earlier of (1) the
termination of Executive's employment with the Company Group or (2) the
death of Executive.
(16) INSOLVENT: The Company either (i) is unable to pay its debts as they
become due or (ii) is subject to a pending proceeding as a debtor under
the United States Bankruptcy Code (or any successor federal statute).
(17) PLAN: This Core Laboratories Supplemental Executive Retirement Plan.
(18) PLAN YEAR: The twelve-consecutive month period commencing January 1 of
each year.
(19) RETIREMENT BENEFIT: A benefit calculated under Section 2.2 and paid in
accordance with Article II.
(20) RETIREMENT DATE: The later of (i) the first date after the Effective
Date on which Executive is no longer employed by the Company Group or
any affiliate of the Company Group or (ii) the date Executive attains
the age of sixty-five.
(21) TRUST: The trust, if any, established under the Trust Agreement.
(22) TRUST AGREEMENT: The agreement, if any, entered into between the
Company and the Trustee pursuant to Section 6.2.
(23) TRUSTEE: An independent third party that may be granted corporate
trustee powers under state law and which has been appointed by the
Board to be the trustee qualified and acting under the Trust Agreement
at any time.
(24) VESTED INTEREST: The percentage of Executive's Plan benefit, which is
vested and nonforfeitable, as determined under Article IV.
-3-
<PAGE> 5
(25) YEARS OF ACCRUAL SERVICE: The total of all completed months of
Executive's employment with (i) the Company Group commencing on his
Date of Hire and (ii) Dresser Industries, Inc. and Western Atlas, Inc.
for periods prior to his Date of Hire (which totals 193 months prior to
his Date of Hire), and ending (1) for purposes of calculating
Executive's Retirement Benefit, on the first date after the Effective
Date on which Executive is not employed by the Company Group and (2)
for purposes of calculating Executive's Death Benefit, on the date of
Executive's death, in either case divided by twelve.
(26) YEARS OF VESTING SERVICE: The total of all completed months of
Executive's employment with the Company Group commencing on the
Effective Date, and ending on the earlier of (i) the first date after
the Effective Date on which Executive is not employed by the Company
Group or (ii) the date of Executive's death, in either case divided by
twelve.
1.2 NUMBER AND GENDER. Whenever appropriate herein, words used in the
singular shall be considered to include the plural, and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing herein, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are included
solely for convenience, and, if there is any conflict between such headings and
the text of this Plan, the text shall control.
II.
RETIREMENT BENEFIT
2.1 ENTITLEMENT TO RETIREMENT BENEFIT. Executive shall be entitled to
receive a Retirement Benefit, calculated in accordance with Section 2.2, upon
his Retirement Date.
2.2 RETIREMENT BENEFIT. Executive's "Retirement Benefit" shall be an
annual payment equal to his Vested Interest in 2% of Executive's Final Average
Pay, multiplied by Executive's Years of Accrual Service (not to exceed 25
years); provided, however, that if an event occurs that results in Executive
obtaining a 100% Vested Interest pursuant to Section 4.3, then Executive's
Retirement Benefit shall be no less than an annual payment equal to his Vested
Interest in $150,000.
2.3 COMMENCEMENT AND DURATION OF RETIREMENT BENEFIT PAYMENTS.
Executive's Retirement Benefit shall be paid to Executive once each calendar
year during his lifetime. The first such annual payment shall be paid to
Executive as soon as administratively practicable after Executive's Retirement
Date, and each subsequent annual payment shall be paid as soon as
administratively practicable after each Anniversary Date thereafter until the
date of Executive's death. Except as provided in Section 2.4, all payments of
Executive's Retirement Benefit shall cease upon the death of Executive.
2.4 DEATH ON OR AFTER RETIREMENT DATE. If Executive dies on or after
his Retirement Date and prior to receiving fifteen annual installment payments
of his Retirement Benefit, then no
-4-
<PAGE> 6
Death Benefit shall be payable, but Executive's Retirement Benefit shall be
paid, or continue to be paid, to Executive's Designated Beneficiary in annual
installments at the same time and in the same amount as such Retirement Benefit
would have been paid to Executive had Executive's death not occurred, and such
Retirement Benefit installments shall continue through the Anniversary Date upon
which Executive would have received the fifteenth Retirement Benefit
installment. In the event of the death of a Designated Beneficiary prior to the
payment of the fifteenth Retirement Benefit installment, such Designated
Beneficiary's share of any remaining installments of Executive's Retirement
Benefit shall be paid to such Designated Beneficiary's estate at the same time,
in the same amount, and for the same period of time such Retirement Benefit
would have been paid to such Designated Beneficiary had his or her death not
occurred. All payments of deceased Executive's Retirement Benefit pursuant to
this Section shall cease upon the date of payment of what would have been the
deceased Executive's fifteenth Retirement Benefit installment.
2.5 CODE SECTION 162(M) LIMITATION. The preceding Sections of this
Article notwithstanding, no Retirement Benefit shall be paid to the extent such
payment, when added to all other remuneration provided to Executive by the
Company or any affiliate, would result in any such amount being nondeductible
under section 162(m) of the Code, and the payment of any such Retirement Benefit
shall be deferred to the first subsequent year in which such payment may be both
paid and fully deductible by the Company. In the event payment of a Retirement
Benefit is deferred pursuant to this Section, such deferral shall not affect the
time of payment or amount of any other installment of Executive's Retirement
Benefit, unless such other payment is itself deferred pursuant to this Section.
III.
DEATH BENEFIT
3.1 ENTITLEMENT TO DEATH BENEFIT. If Executive dies prior to his
Retirement Date, a Death Benefit, calculated in accordance with Section 3.2,
shall be paid under this Article III. If Executive dies on or after his
Retirement Date, no Death Benefit shall be paid under the Plan, but Executive's
Retirement Benefit shall cease or be paid in accordance with Section 2.4.
3.2 DEATH BENEFIT. Executive's Death Benefit shall be an annual payment
equal to Executive's Vested Interest in the greater of (1) or (2) below:
(1) 2% of Executive's Final Average Pay, multiplied by
Executive's Years of Accrual Service (not to exceed 25 years);
or
(2) $150,000.
3.3 COMMENCEMENT AND DURATION OF DEATH BENEFIT. If Executive dies prior
to his Retirement Date, then Executive's Death Benefit shall be paid to his
Designated Beneficiary once each year for fifteen years. The first such annual
payment shall be paid to Executive's Designated Beneficiary as soon as
administratively practicable after Executive's death, and each subsequent annual
payment shall be paid to Executive's Designated Beneficiary on each anniversary
of Executive's death until the payment of fifteen annual Death Benefit payments.
In the event of the
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<PAGE> 7
death of a Designated Beneficiary prior to the payment of fifteen Death Benefit
installments, such Designated Beneficiary's share of any remaining installments
of Executive's Death Benefit shall be paid to such Designated Beneficiary's
estate at the same time, in the same amount, and for the same period of time
such Death Benefit would have been paid to such Designated Beneficiary had his
or her death not occurred. All payments of Executive's Death Benefit pursuant to
this Section shall cease upon the payment of the fifteenth installment of such
Death Benefit.
IV.
VESTING AND FORFEITURE
4.1 VESTED INTEREST. Except as provided in Sections 4.2, 4.3, and 4.4,
Executive shall acquire a Vested Interest in his Plan benefit according to the
following schedule:
<TABLE>
<CAPTION>
Years of Vesting Service Vested Interest
------------------------ ---------------
<S> <C>
Less than 5 0%
5 or more 100%
</TABLE>
4.2 ACCELERATED VESTING UPON DEATH. Section 4.1 notwithstanding, in the
event of Executive's death while he is employed by the Company Group, Executive
shall acquire a 100% Vested Interest in his Plan benefit.
4.3 ACCELERATED VESTING IN CONNECTION WITH A CHANGE IN CONTROL. Section
4.1 notwithstanding, Executive shall acquire a 100% Vested Interest in his Plan
benefit upon (1) the occurrence of a Change in Control while Executive is
employed by the Company Group, (2) the involuntary termination of Executive's
employment with the Company Group by a member of the Company Group for a reason
other than Cause within the six-month period ending on the date a Change in
Control occurs, or (3) the termination or amendment of the Plan in a manner that
is to the detriment of Executive (or anyone who would be entitled to benefits
hereunder upon the death of Executive) without Executive's consent if the
adoption date or effective date of such termination or amendment occurs within
the six-month period ending on the date a Change in Control occurs.
4.4 FORFEITURE UPON TERMINATION FOR CAUSE. In the event Executive's
employment with the Company Group or any affiliate is terminated for Cause, all
benefits payable under the Plan to Executive or his Designated Beneficiary shall
be forfeited, and neither Executive nor his Designated Beneficiary shall be
entitled to receive, or continue to receive, any benefit under the Plan.
V.
ADMINISTRATION OF PLAN
5.1 COMMITTEE ADMINISTRATION. The plan shall be administered by the
Committee. The Committee shall supervise the administration of the Plan
according to the terms and provisions hereof and shall have the sole
discretionary authority and all of the powers necessary to accomplish these
purposes, including, without limitation, the sole discretionary authority to
interpret and construe all Plan terms and to make all factual determinations
associated with the Plan. All such
-6-
<PAGE> 8
interpretations, constructions, and determinations shall be final and binding
upon Executive and all other persons. No member of the Committee shall be liable
to Executive or any other person for any action taken or omitted in connection
with the administration of the Plan unless attributable to his own willful
misconduct or lack of good faith.
5.2 COMMITTEE APPOINTMENT, REMOVAL. Each member of the Committee shall
be appointed and removed by and in the sole discretion of the Board and shall
serve in accordance with applicable rules and procedures of the Board and the
Committee.
VI.
UNFUNDED NATURE OF PLAN
6.1 "TOP HAT" PLAN. The Plan is intended to constitute an unfunded,
unsecured plan of deferred compensation for a select group of management or
highly compensated employees of the Company Group. Further, it is the intention
of the Company that the Plan be unfunded for purposes of the Code and Title I of
the Employee Retirement Income Security Act of 1974, as amended. The Plan
constitutes a mere promise by the Company to make benefit payments in the
future. Plan benefits hereunder provided are to be paid out of the Company's
general assets, and Executive shall have the status of, and shall have no better
status than, a general unsecured creditor of the Company.
6.2 DISCRETIONARY ESTABLISHMENT OF RABBI TRUST. The Board, in its sole
discretion, may select the Trustee, establish the Trust, and enter into the
Trust Agreement with the Trustee. Any such Trust established by the Board, and
any assets held by such Trust to assist the Company in meeting its obligations
under the Plan, shall conform in all material respects to the terms of the model
rabbi trust set forth in Revenue Procedure 92-64, 1992-2 C.B. 422. The Company
may transfer money and/or other property to the Trustee, and the Trustee shall
pay Plan benefits to Executive and his beneficiaries out of the Trust assets if
such benefits are not paid by the Company. In the event the Trust is
established, the Company shall remain the owner of all assets in the Trust, and
the assets shall be subject to the claims of Company creditors in the event (and
only in the event) the Company ever becomes Insolvent. Neither Executive nor any
beneficiary of Executive shall have any preferred claim to, any security
interest in, or any beneficial ownership interest in any assets of the Trust.
6.3 INSOLVENCY OF COMPANY. The Board and the Chief Executive Officer of
the Company shall each have the duty to inform the Trustee in writing if the
Company becomes Insolvent. Such notice given under the preceding sentence by any
one party shall satisfy each party's duty to give notice. When so informed, the
Trustee shall suspend any payments to Executive or his Designated Beneficiary,
as applicable, and hold the assets for the benefit of the Company's general
creditors and shall determine within the period specified in the Trust
Agreement, or, in the absence of a specified period, within a reasonable period
of time, whether the Company is Insolvent. If the Trustee determines that the
Company is not Insolvent, the Trustee shall (1) resume payments to Executive or
his Designated Beneficiary, as applicable, and (2) make a payment to Executive
or his Designated Beneficiary, as applicable, as soon as administratively
feasible after such determination, in an aggregate amount equal to the
difference between the payments that would have been made to such individual(s)
by the Trustee but for this Section 6.3 and the aggregate payments actually made
to such individual(s) by the Company pursuant to the Plan during any such period
of
-7-
<PAGE> 9
discontinuance (plus interest on such amount calculated at the prime rate as
reported in The Wall Street Journal as of the date of such discontinuance from
the time that such payment or payments were due until their actual payment).
VII.
AMENDMENT AND TERMINATION
7.1 AMENDMENT. The Board may, in its discretion, amend the Plan, in
whole or in part, at any time; provided, however, that no amendment shall be
made that would reduce the vested accrued benefit of Executive as of the later
of the adoption date or effective date of such amendment.
7.2 TERMINATION. The Board may, in its discretion, terminate the Plan,
in whole or in part, at any time. In the event the Plan is terminated,
notwithstanding any other provision of the Plan, the Board, in its discretion,
may pay Executive his payable but unpaid vested accrued Retirement Benefit (or,
in the case of Executive's death, Executive's Designated Beneficiary any payable
but unpaid Death Benefit or Retirement Benefit) either in accordance with
Article II or III, as applicable, or in any other manner the Board deems
appropriate, including, without limitation, a lump sum payment of the actuarial
equivalent present value of such unpaid Retirement Benefit or Death Benefit,
actuarially reduced to take into account any earlier time of payment. In
determining actuarial equivalency for purposes of the preceding sentence,
reasonable actuarial assumptions shall be used, and the actuarial calculation
shall be made by an actuary selected by and in the discretion of the Board and
agreed to by Executive or his Designated Beneficiary, as applicable.
VIII.
MISCELLANEOUS
8.1 DESIGNATION OF BENEFICIARIES. Executive shall have the right to
designate the beneficiary or beneficiaries to receive payment of his benefit in
the event of his death. Each such designation shall be made in writing filed
with the Committee by Executive. Any such designation may be changed at any time
by Executive by execution and filing of a new designation in accordance with
this Section. If no beneficiary designation is on file with the Committee at the
time of the death of Executive or if such designation is not effective for any
reason as determined by the Committee, the designated beneficiary or
beneficiaries to receive such death benefit shall be as follows:
(1) If Executive leaves a surviving spouse, his designated
beneficiary shall be such surviving spouse; and
(2) If Executive leaves no surviving spouse, his designated
beneficiary shall be (A) Executive's executor or
administrator or (B) his heirs at law if there is no
administration of Executive's estate.
Notwithstanding the preceding provisions of this Section and to the extent not
prohibited by state or federal law, if Executive is divorced from his spouse and
at the time of his death is not remarried to the person from whom he was
divorced, any designation of such divorced spouse as his beneficiary under the
Plan filed prior to the divorce shall be null and void unless the contrary is
-8-
<PAGE> 10
expressly stated in writing filed with the Committee by Executive. The interest
of such divorced spouse failing hereunder shall vest in the persons specified in
the preceding provisions of this Section as if such divorced spouse was not
designated as a beneficiary by Executive.
8.2 NO ASSIGNMENT OR ALIENATION. The interest of Executive in the Plan
or of his Designated Beneficiary hereunder may not be anticipated, sold,
transferred, assigned, or encumbered in any manner, either voluntarily or
involuntarily, and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be null and void. The benefits
provided hereunder shall not be liable for, or subject to the debts, contracts,
liabilities, engagements, or torts of, any person to whom such benefits are
payable, nor shall they be subject to garnishment, attachment, or other legal or
equitable process, nor shall they be an asset of the bankrupt's estate in
bankruptcy.
8.3 NO CONTRACT OF EMPLOYMENT. Nothing contained in the Plan or in the
adoption of the Plan shall confer on Executive the right to continued employment
with the Company Group or any affiliate or affect in any way the right of the
Company Group to terminate the employment or services of Executive at any time.
Nothing contained in the Plan shall be construed to affect the provisions of any
other plan maintained by the Company Group or shall prevent the Company Group
from adopting or continuing in effect other or additional compensation
arrangements affecting Executive.
8.4 BINDING EFFECT. The Plan shall be binding upon, and inure to the
benefit of, the Company, its successors, and assigns, and Executive and his
respective heirs, executors, administrators, and legal representatives.
8.5 SEVERABILITY. In case any provision of the Plan is determined by a
court of competent jurisdiction to be illegal, invalid, or unenforceable for any
reason, such illegal, invalid, or unenforceable provision shall not affect the
remaining provisions of the Plan, and the Plan shall be construed and enforced
as if such illegal, invalid, or unenforceable provision had not been included
therein.
8.6 JURISDICTION. Except to the extent federal law applies and preempts
state law, the Plan shall be construed, enforced, and administered according to
the laws of the state of Texas, excluding any conflict-of-law rule or principle
that might refer construction of the Plan to the laws of another state or
country. In the event of litigation relating to the Plan, such litigation shall
be brought in state or federal court residing in Houston, Harris County, Texas,
and the Company and Executive (or persons claiming rights of or through
Executive) irrevocably appoints the Secretary of State for the state of Texas as
agent for receipt of service of process in connection with such litigation.
8.7 WITHHOLDING. All benefit payments provided for hereunder shall be
subject to applicable withholding and other deductions as shall be required
under applicable local, state, or federal law.
-9-
<PAGE> 11
EXECUTED on this _____ day of ______________________, 1999.
CORE LABORATORIES N.V.
By:
Jacobus Schouten
Managing Director of
Core Laboratories International B.V. which
is the sole managing director of Core
Laboratories N.V.
MONTY L. DAVIS
------------------------------------------------
-10-
<PAGE> 1
EXHIBIT 10.3
FIRST AMENDMENT TO
CORE LABORATORIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, CORE LABORATORIES N.V. and its participating affiliates (the
"Company") has heretofore adopted the CORE LABORATORIES SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN (the "Plan") for the benefit of certain employees and
independent directors of the Company; and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
July 29, 1999:
1. The following new Section 1.1(6A) shall be added immediately after
Section 1.1(6) of the Plan:
"(6A) DESIGNATED BENEFICIARY: A Participant's beneficiary or
beneficiaries determined in accordance with Section 1.5."
2. Section 1.1(13) of the Plan shall be deleted and the following shall
be substituted therefor:
"(13) INTENTIONALLY OMITTED."
3. The following new Section 1.5 shall be added immediately after
Section 1.4 of the Plan:
"1.5 Each Participant shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the
event of his death. Each such designation shall be made in writing
filed with the Committee by the Participant. Any such designation may
be changed at any time by such Participant by execution and filing of a
new designation in accordance with this Section. If no beneficiary
designation is on file with the Committee at the time of the death of
the Participant or if such designation is not effective for any reason
as determined by the Committee, the designated beneficiary or
beneficiaries to receive such death benefit shall be as follows:
(1) If a Participant leaves a surviving spouse, his designated
beneficiary shall be such surviving spouse; and
(2) If a Participant leaves no surviving spouse, his designated
beneficiary shall be (A) such Participant's executor or
administrator or (B) his heirs at law if there is no administration
of such Participant's estate.
<PAGE> 2
Notwithstanding the preceding provisions of this Section and to the
extent not prohibited by state or federal law, if a Participant is
divorced from his spouse and at the time of his death is not remarried
to the person from whom he was divorced, any designation of such
divorced spouse as his beneficiary under the Plan filed prior to the
divorce shall be null and void unless the contrary is expressly stated
in writing filed with the Committee by the Participant. The interest of
such divorced spouse failing hereunder shall vest in the persons
specified in the preceding provisions of this Section as if such
divorced spouse was not designated as a beneficiary by the
Participant."
4. Section 4.2 of the Plan shall be deleted and the following shall be
substituted therefor:
"4.2 In the event a Participant dies on or after his Retirement Date
and prior to receiving fifteen annual installment payments of his
Retirement Benefit, such Participant's Retirement Benefit shall be
paid, or continue to be paid, to his Designated Beneficiary in annual
installments at the same time and in the same amount as such Retirement
Benefit would have been paid to such Participant had his death not
occurred, and such Retirement Benefit installments shall continue
through the Anniversary Date upon which such deceased Participant would
have received the fifteenth Retirement Benefit installment. In the
event of the death of a Participant's Designated Beneficiary prior to
the payment of the fifteenth Retirement Benefit installment, such
Designated Beneficiary's share of any remaining installments of such
Participant's Retirement Benefit shall be paid to such Designated
Beneficiary's estate at the same time, in the same amount, and for the
same period of time such Retirement Benefit would have been paid to
such Designated Beneficiary had his or her death not occurred. All
payments of a deceased Participant's Retirement Benefit pursuant to
this Section 4.2 shall cease upon the date of payment of what would
have been the deceased Participant's fifteenth Retirement Benefit
installment."
5. The term "Surviving Spouse" shall be deleted in each place such term
appears in Sections 4.3 and 5.4 of the Plan, and the term "Designated
Beneficiary" shall be substituted therefor in each such place.
6. Sections 5.2 and 5.3 of the Plan shall be deleted and the following
shall be substituted therefor:
"5.2 In the event a Participant (other than Stephen D. Weinroth)
dies prior to his Retirement Date, a Death Benefit shall be paid to
such Participant's Designated Beneficiary pursuant to this Section 5.2.
The Death Benefit shall consist of fifteen annual lump sum payments of
-2-
<PAGE> 3
$225,000 each. The initial payment of such Participant's Death Benefit
shall be paid to his Designated Beneficiary as soon as administratively
practicable after such Participant's death, and a payment of $225,000
shall be paid to such Designated Beneficiary on each of the fourteen
subsequent anniversaries of the Participant's death thereafter. In the
event of the death of a Designated Beneficiary prior to the payment of
fifteen Death Benefit installments, such Designated Beneficiary's share
of any remaining installments of the Participant's Death Benefit shall
be paid to such Designated Beneficiary's estate at the same time, in
the same amount, and for the same period of time such Death Benefit
would have been paid to such Designated Beneficiary had his or her
death not occurred. All Death Benefit payments pursuant to this Section
5.2 shall cease upon the payment of the fifteenth annual installment of
such Death Benefit.
5.3 In the event that Participant Stephen D. Weinroth dies prior to
his Retirement Date, a Death Benefit shall be paid to his Designated
Beneficiary pursuant to this Section 5.3. The Death Benefit shall
consist of fifteen annual lump sum payments of $225,000 each. The
initial payment of such Participant's Death Benefit shall be paid to
his Designated Beneficiary on (or as soon as administratively
practicable after) the date that would have been such deceased
Participant's Retirement Date, and a payment of $225,000 shall be paid
to such Designated Beneficiary on each of the fourteen subsequent
Anniversary Dates thereafter. In the event of the death of a Designated
Beneficiary prior to the payment of fifteen Death Benefit installments
pursuant to this Section 5.3, such Designated Beneficiary's share of
any remaining installments of the Participant's Death Benefit shall be
paid to such Designated Beneficiary's estate at the same time, in the
same amount, and for the same period of time such Death Benefit would
have been paid to such Designated Beneficiary had his or her death not
occurred. All Death Benefit payments pursuant to this Section 5.3 shall
cease upon the payment of the fifteenth annual installment of such
Death Benefit."
7. Section 6.2 of the Plan shall be deleted and the following shall be
substituted therefor:
"6.2 In the event a Participant's services or employment with the
Company is terminated for Cause, all benefits payable under the Plan to
such Participant or to his Designated Beneficiary shall be forfeited,
and neither the Participant nor any Designated Beneficiary of the
Participant shall be entitled to receive any benefit under the Plan."
8. The term "Surviving Spouses" shall be deleted in each place such
term appears in Section 8.3 of the Plan, and the term "Designated Beneficiaries"
shall be substituted therefor in each such place.
9. The parenthetical in the second sentence of Section 9.2 of the Plan
shall be deleted and the following shall be substituted therefor:
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<PAGE> 4
"(or, in the case of a deceased Participant, such Participant's
Designated Beneficiary any payable but unpaid Death Benefit or
Retirement Benefit)"
10. As amended hereby, the Plan is specifically ratified and
reaffirmed.
EXECUTED on this _____ day of ______________________, 1999.
CORE LABORATORIES N.V.
BY:
------------------------------
NAME:
-------------------------
TITLE:
------------------------
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<PAGE> 1
EXHIBIT 10.4
AGREEMENT AND PLAN OF MERGER
AMONG
CORE LABORATORIES N.V.,
CORE COLORADO ACQUISITION, INC.,
COHERENCE TECHNOLOGY COMPANY, INC.
AND
THE STOCKHOLDERS OF
COHERENCE TECHNOLOGY COMPANY, INC.
JUNE 9, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
THE MERGER
<S> <C> <C>
1.01 THE MERGER ..............................................................................................2
1.02 EFFECTIVE TIME ..........................................................................................2
1.03 EFFECT OF THE MERGER ....................................................................................2
1.04 ARTICLES OF INCORPORATION; BYLAWS .......................................................................2
1.05 DIRECTORS AND OFFICERS ..................................................................................2
1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES ....................................3
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES ....................................................5
1.08 NO FRACTIONAL SHARES ....................................................................................6
1.09 AGREEMENT TO VOTE SHARES ................................................................................6
1.10 WITHHOLDING .............................................................................................7
1.11 CLOSING .................................................................................................7
1.12 ACTIONS AT CLOSING ......................................................................................7
1.13 STOCK TRANSFER BOOKS ....................................................................................7
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION ..............................................................7
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES ............................................................8
2.02 ORGANIZATIONAL DOCUMENTS ................................................................................8
2.03 CAPITALIZATION ..........................................................................................9
2.04 AUTHORITY ..............................................................................................10
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .............................................................10
2.06 PERMITS; COMPLIANCE ....................................................................................11
2.07 FINANCIAL STATEMENTS ...................................................................................12
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS ...................................................................12
2.09 LITIGATION .............................................................................................13
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS ..................................................................13
2.11 TAXES ..................................................................................................16
2.12 POOLING; TAX MATTERS ...................................................................................17
2.13 AFFILIATES .............................................................................................18
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
2.14 CERTAIN BUSINESS PRACTICES .............................................................................18
2.15 ENVIRONMENTAL ..........................................................................................18
2.16 UNDISCLOSED LIABILITIES ................................................................................19
2.17 CERTAIN AGREEMENTS .....................................................................................19
2.18 CONTRACTS AND COMMITMENTS ..............................................................................19
2.19 AFFILIATE INTERESTS ....................................................................................20
2.20 INTELLECTUAL PROPERTY ..................................................................................20
2.21 BP AMOCO AGREEMENT .....................................................................................21
2.22 BROKERS ................................................................................................22
2.23 INSURANCE ..............................................................................................22
2.24 PROPERTIES .............................................................................................22
2.25 GOOD TITLE .............................................................................................23
2.26 CERTAIN SECURITIES LAW MATTERS .........................................................................23
2.27 AUTHORIZATION AND VALIDITY OF AGREEMENT ................................................................25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
3.01 ORGANIZATION AND QUALIFICATION .........................................................................25
3.02 CAPITALIZATION .........................................................................................25
3.03 AUTHORITY ..............................................................................................26
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .............................................................26
3.05 REPORTS; FINANCIAL STATEMENTS ..........................................................................27
3.06 BROKERS ................................................................................................28
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT ...................................................................................28
4.02 NEGATIVE COVENANTS .....................................................................................28
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY ...................................................................29
5.02 NEGATIVE COVENANTS OF THE COMPANY ......................................................................30
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VI
COVENANTS OF ACQUIROR
<S> <C> <C>
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR ......................................................................33
6.02 NEGATIVE COVENANTS OF ACQUIROR .........................................................................33
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 NOTIFICATION OF CERTAIN MATTERS ........................................................................34
7.02 ACCESS AND INFORMATION .................................................................................34
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS ..................................................................35
7.04 AFFILIATES; POOLING ....................................................................................36
7.05 PUBLIC ANNOUNCEMENTS ...................................................................................37
7.06 EXPENSES ...............................................................................................37
7.07 EMPLOYEES OF COMPANY ...................................................................................37
7.08 TAX-FREE REORGANIZATION ................................................................................38
7.09 INFORMATION FOR TAX RETURNS ............................................................................38
7.10 NO HEDGING TRANSACTIONS ................................................................................38
7.11 TERMINATED LEASES ......................................................................................39
7.12 PULSONIC ACQUISITION ...................................................................................39
7.13 PULSONIC NIGERIA LIMITED................................................................................40
7.14 INDEMNIFICATION OF DIRECTORS AND OFFICERS...............................................................40
7.15 GUARANTEES..............................................................................................40
7.16 MORRIS SHARES...........................................................................................40
ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL .............................................................................................41
8.02 NO EXHAUSTION OF REMEDIES ..............................................................................41
8.03 DEFENSE OF THIRD PARTY CLAIMS ..........................................................................42
8.04 PAYMENT; ARBITRATION ...................................................................................43
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES ..............................................................44
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES ......................................45
8.07 SUBROGATION ............................................................................................45
8.08 CLAIM OF FRAUD..........................................................................................45
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE IX
CONDITIONS
<S> <C> <C>
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES ..........................................46
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY .....................................................48
ARTICLE X
MISCELLANEOUS
10.01 TERMINATION ............................................................................................50
10.02 EFFECT OF TERMINATION ..................................................................................50
10.03 WAIVER AND AMENDMENT ...................................................................................51
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES ............................................................51
10.05 ASSIGNMENT .............................................................................................51
10.06 CERTAIN DEFINITIONS ....................................................................................51
10.07 NOTICES ................................................................................................53
10.08 GOVERNING LAW ..........................................................................................55
10.09 SEVERABILITY ...........................................................................................55
10.10 COUNTERPARTS ...........................................................................................55
10.11 HEADINGS ...............................................................................................55
</TABLE>
EXHIBITS
Exhibit A -- Escrow Agreement
Exhibit B -- Appointment of Shareholders' Representative
Exhibit C -- Form of Company Affiliates' Letter
Exhibit D -- Form of Employment Contract
Exhibit E -- Form of Promissory Note
-iv-
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of June 9, 1999 by and among Core Laboratories N.V., a
Netherlands limited liability company ("Acquiror"), Core Colorado Acquisition,
Inc., a Colorado corporation with its principal place of business in Houston,
Texas and a wholly owned subsidiary of Core ("Acquisition Sub"), Coherence
Technology Company, Inc., a Colorado corporation (the "Company"), and the
stockholders of the Company set forth on the signature pages hereto
(collectively, the "Shareholders"). Acquiror and Acquisition Sub are sometimes
collectively referred to herein as the "Acquiror Companies."
RECITALS
The Shareholders own, beneficially and of record, all of the
outstanding capital stock of the Company.
Acquisition Sub, upon the terms and subject to the conditions of this
Agreement and in accordance with the Colorado Business Corporation Act (the
"CBCA"), will merge with and into the Company (the "Merger").
The Board of Directors of the Company has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of the
Company and is fair to, and in the best interests of, the Company and the
Shareholders and has approved and adopted this Agreement and the transactions
contemplated hereby, and recommended approval and adoption of this Agreement and
the Merger by the Shareholders.
This Agreement and the Merger have been approved and adopted by the
requisite vote of the Shareholders and of the sole shareholder of Acquisition
Sub as required by the CBCA.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
The Merger is intended to be treated as a "pooling of interests" for
financial accounting purposes under United States generally accepted accounting
principles ("GAAP").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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<PAGE> 7
ARTICLE I
THE MERGER
1.01 THE MERGER . Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the CBCA, at the Effective Time
(as defined in Section 1.02 of this Agreement), Acquisition Sub shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Acquisition Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"). The name of
the Surviving Corporation shall be "Coherence Technology Company, Inc."
1.02 EFFECTIVE TIME . As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article IX of this
Agreement, but no earlier than July 1, 1999, the parties hereto shall cause the
Merger to be consummated by filing Articles of Merger with the Secretary of
State of the State of Colorado, in such form as required by, and executed in
accordance with the relevant provisions of, the CBCA (the date and time of the
effectiveness of such filing being the "Effective Time").
1.03 EFFECT OF THE MERGER . At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the CBCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property and assets of
Acquisition Sub and the Company shall vest in the Surviving Corporation, and all
obligations and liabilities of Acquisition Sub and the Company shall become the
obligations and liabilities of the Surviving Corporation.
1.04 ARTICLES OF INCORPORATION; BYLAWS . At the Effective Time, the
Articles of Incorporation and the Bylaws of the Surviving Corporation shall be
amended and restated to adopt the Articles of Incorporation and Bylaws of the
Acquisition Sub, as in effect immediately prior to the Effective Time, except
that Article I of the Articles of Incorporation thereof shall be amended to read
"The name of the corporation is Coherence Technology Company, Inc." and the
Bylaws shall be amended so as to reflect that the name of the Surviving
Corporation has been changed to Coherence Technology Company, Inc.
1.05 DIRECTORS AND OFFICERS . The directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Acquisition Sub immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
-2-
<PAGE> 8
1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF
SECURITIES . At the Effective Time, by virtue of the Merger and without any
action on the part of the Acquiror Companies, the Company or the holders of any
of the Company's securities:
(a) Subject to the other provisions of this Article I, each
share of the Company's common stock, par value $0.001 per share
("Company Stock"), issued and outstanding immediately prior to the
Effective Time (excluding any Company Stock described in Section
1.06(c) of this Agreement), shall be converted into 0.138915 shares of
duly authorized, validly issued, fully paid and nonassessable common
shares, par value NLG 0.03 per share ("Acquiror Shares"), of Acquiror
(the "Exchange Ratio"), subject to the escrow of a portion of such
shares pursuant to the terms and conditions set forth herein. At the
Effective Time, Acquiror will cause to be delivered to, and directly
deposited with, Bankers Trust Company or another national bank
acceptable to the Company and Acquiror (the "Escrow Agent"), in escrow
for the account and future potential benefit of certain Shareholders, a
stock certificate representing 10% of the Acquiror Shares, which
certificate shall be registered as follows: "Bankers Trust Company,
f/b/o Certain Former Shareholders of the Common Stock of Coherence
Technology Company, Inc." All such Acquiror Shares so delivered to the
Escrow Agent, together with all subsequent stock dividends or
distributions of other Acquiror Shares received in respect of such
shares while deposited with the Escrow Agent shall be referred to as
"Escrow Shares." A pro rata number of the Escrow Shares (determined on
the basis of the respective ownership interests of each Shareholder of
Company Stock immediately prior to the Effective Time, subject to
adjustments by the Escrow Agent to eliminate fractional shares) shall
be subtracted from the number of Acquiror Shares each Shareholder of
Company Stock at the Effective Time is entitled to receive pursuant to
the Merger. The Escrow Shares shall be held by the Escrow Agent
pursuant to the terms and conditions of an Escrow Agreement
substantially in the form attached hereto as Exhibit A (the "Escrow
Agreement") between Acquiror, Acquisition Sub, the Company and Dirk
McDermott (the "Shareholders' Representative"). The Shareholders will
appoint Dirk McDermott as a Shareholders' Representative pursuant to,
and he shall have the rights and obligations set forth in, the
Appointment of Shareholders' Representative, substantially in the form
attached hereto as Exhibit B (the "Appointment"). The Escrow Agreement
and the Appointment shall authorize the Shareholders' Representative to
control the disposition of such Escrow Shares pursuant to the terms of
the Escrow Agreement. The Shareholders' Representative shall have no
personal liability as a result of any actions taken in such position
(i) to Acquiror or Acquisition Sub, or (ii) to any holder of Company
Stock at the Effective Time, in either case with respect to the
disposition of the Escrow Shares or any other action taken by him as
the Shareholders' Representative, unless such actions constitute gross
negligence or willful misconduct by the Shareholders' Representative.
The number of Acquiror Shares each Shareholder shall
-3-
<PAGE> 9
be entitled to receive at the Effective Time and the number of Escrow
Shares attributable to such Shareholder shall be as set forth on
Schedule 1.06(a) to this Agreement.
(b) As a result of their conversion pursuant to Section
1.06(a) of this Agreement, all shares of Company Stock shall cease to
be outstanding and shall automatically be canceled and retired, and
each certificate ("Certificate") previously evidencing Company Stock
outstanding immediately prior to the Effective Time (other than any
Company Stock described in Section 1.06(c) of this Agreement)
("Converted Shares") shall thereafter represent that number of Acquiror
Shares determined pursuant to the Exchange Ratio, rounded up or down to
the nearest whole share (the "Acquisition Consideration"). The holders
of Certificates previously evidencing Converted Shares shall cease to
have any rights with respect to such Converted Shares except the right
to receive the Acquisition Consideration and as otherwise provided
herein or by applicable federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws"). Such Certificates
previously evidencing Converted Shares shall be exchanged for
certificates evidencing whole shares of Acquiror Shares upon the
surrender of such Certificates in accordance with the provisions of
Section 1.07 of this Agreement. No fractional shares of Acquiror Shares
shall be issued.
(c) Notwithstanding any provision of this Agreement to the
contrary, each share of Company Stock held in the treasury of the
Company and each share of Company Stock or other capital stock of the
Company owned by Acquiror or any direct or indirect wholly owned
subsidiary of Acquiror or of the Company immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(d) In the event that on or after the date of this Agreement,
Acquiror shall establish a record date prior to the Effective Date for
all its shareholders entitled to receive any securities, rights or
property of Acquiror (other than regular dividends), by reason of the
issuance of rights or options to purchase its securities, stock
dividends or distribution, or any stock split or reverse stock split,
or if there shall occur any capital reorganization of Acquiror or
reclassification of its capital stock or such other similar transaction
which will not be adequately reflected in the number of Acquiror Shares
which will constitute the Acquisition Consideration, such number of
Acquiror Shares shall be fairly and proportionately adjusted to prevent
dilution, and to fully and completely carry out the intent of the
parties as contemplated by this Agreement.
(e) Each share of common stock, no par value per share, of
Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par
value $0.001 per share, of the Surviving Corporation.
-4-
<PAGE> 10
(f) Each option to purchase Company Stock outstanding
immediately prior to the Effective Time (collectively, the "Company
Options") (which include all outstanding options granted under the
Company's 1997 Stock Option Plan (the "1997 Stock Option Plan") and any
outstanding options granted to Patrick G. Keenan, Daniel S. Morris,
Devon K. Dowell, and Vasudhaven Sudhakar pursuant to their individual
Employee Stock Option Agreement ("Founders Options")), shall, without
further action on the part of any holder thereof (herein, an
"optionholder") except to the extent herein provided, be assumed by
Acquiror and become an option to purchase that number of Acquiror
Shares determined by multiplying the number of shares of Company Stock
subject to such Company Option immediately prior to the Effective Time
by the Exchange Ratio, at an exercise price per Acquiror Share equal to
the exercise price per share of such Company Option divided by the
Exchange Ratio. If the foregoing calculation results in an assumed
Company Option being exercisable for a fraction of an Acquiror Share,
then the number of Acquiror Shares subject to such option shall be
rounded down to the nearest whole number of shares, and the total
exercise price for the option will be reduced by the exercise price of
the fractional share. The term, exercisability, vesting schedule, and
all other terms and conditions of the Company Options shall otherwise
be unchanged by the provisions of this Section 1.06(f) and such options
shall operate in accordance with their terms. The 1997 Stock Option
Plan, each outstanding Company Option granted thereunder, and the
Founders Options shall be assumed as of the Effective Time by Acquiror
with such amendments thereto as may be required to reflect such
assumption by the Acquiror in accordance herewith as a result of the
Merger.
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES .
(a) Exchange Procedures. Promptly after the Effective Time,
Acquiror shall deliver to each record holder of Company Stock at the Effective
Time a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to Acquiror and shall be in such form and contain
such other provisions as the Company and Acquiror shall agree) (the "Letter of
Transmittal"). Upon surrender of a Certificate for cancellation to the Acquiror,
together with such Letter of Transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole Acquiror Shares that such holder has the right
to receive pursuant to the provisions of this Article I, less the Escrow Shares
attributable to such holder that will be issued and deposited with the Escrow
Agent for the account of such holder, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Stock
that is not registered in the transfer records of the Company, a certificate
evidencing the proper number of Acquiror Shares may be issued to the transferee
if the Certificate evidencing the Company Stock shall be surrendered to the
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<PAGE> 11
Acquiror, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered for exchange in accordance with the provisions of this
Section 1.07(a), each Certificate theretofore representing Converted Shares
(other than shares of Company Stock to be canceled pursuant to Section 1.06(c)
of this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the Acquisition Consideration as set forth in
this Agreement. If any holder of Converted Shares shall be unable to surrender
such holder's Certificates because such Certificates have been lost or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond in form and substance and with surety reasonably satisfactory to Acquiror.
No interest shall be paid on any Acquisition Consideration payable to former
holders of Converted Shares.
(b) Distributions with Respect to Acquiror Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Acquiror Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the Acquiror
Shares evidenced thereby, and no Acquisition Consideration shall be paid to any
such holder until the holder of such Certificate shall surrender such
Certificate. Subject to applicable Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates evidencing
whole Acquiror Shares issued in exchange therefor, without interest, (i)
promptly following the surrender of such Certificate, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole Acquiror Shares and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender payable with respect to such whole Acquiror Shares.
1.08 NO FRACTIONAL SHARES. Notwithstanding anything herein to the
contrary, no certificates or scrip evidencing fractional Acquiror Shares shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights as a
shareholder of Acquiror.
1.09 AGREEMENT TO VOTE SHARES. At any meeting of the Shareholders with
respect to any of the following, and at any adjournment thereof, and with
respect to any consent solicited with respect to any of the following, each
Shareholder who is a party to this Agreement hereby agrees to vote such
Shareholder's Company Stock (i) in favor of approval of the Merger and any
matter which could reasonably be expected to facilitate the Merger and (ii)
against approval of any proposal made in opposition to or in competition with
the Merger, against any merger, consolidation, sale of assets, reorganization or
recapitalization with any party, against any liquidation or winding up of the
Company and against any other matter which would, or could reasonably be
expected to, prohibit or discourage the Merger.
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1.10 WITHHOLDING. Acquiror (or any affiliate thereof) shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Converted Shares such amounts
as Acquiror (or any affiliate thereof) is required to deduct and withhold with
respect to the making of such payment under the Code (as hereinafter defined),
or any other provision of federal, state, local or foreign tax law. To the
extent that amounts are so withheld by Acquiror, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of the Converted Shares in respect of which such deduction and
withholding was made by Acquiror.
1.11 CLOSING. The Closing shall take place at the offices of Vinson &
Elkins L.L.P., 1001 Fannin Street, 3600 First City Tower, Houston, Texas
77002-6760, at (a) 10:00 a.m., local time, effective as of July 1, 1999, or (b)
if the conditions set forth in Article IX of this Agreement have not been
satisfied or waived on or before July 1, 1999, at 10:00 a.m., local time, on the
second business day following the date on which the conditions set forth in
Article IX of this Agreement have been satisfied or waived or (c) at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing, the parties hereto shall cause the Articles of Merger to be filed with
the Secretary of State of the State of Colorado.
1.12 ACTIONS AT CLOSING. At the Closing, (a) the Company and the
Shareholders shall deliver to the Acquiror Companies the various certificates,
instruments and documents referred to in Section 9.01 of this Agreement, (b) the
Acquiror Companies shall deliver to the Company and the Shareholders the various
certificates, instruments and documents referred to in Section 9.02 of this
Agreement, and (c) the parties shall file with the Secretary of State of the
State of Colorado the Articles of Merger.
1.13 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of shares of Company Stock thereafter on the records of the
Company.
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION. Acquiror and the
Company shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible on or
after July 1, 1999. If, at any time after the Effective Time, any such further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company or
Acquisition Sub, such corporations shall direct their respective officers and
directors to take all such lawful and necessary action.
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<PAGE> 13
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each of the Shareholders of the Company, jointly and
severally, hereby represent and warrant to Acquiror, as of the date hereof and
at the Closing Date, that:
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company is a
corporation whose ownership is represented solely by the Company Stock, and the
Company is duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation or organization. Except as set forth in
Section 2.01 of the Company Disclosure Schedule (as hereinafter defined), each
of the Company's subsidiaries (as such term is defined in Section 10.06 herein)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, and each of the
Company and its subsidiaries has all requisite power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing could not
reasonably be expected to have a Company Material Adverse Effect. The term
"Company Material Adverse Effect" as used in this Agreement shall mean any
change or effect that would be materially adverse to the financial condition,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, at the time of such change or effect. Section
2.01 of the Disclosure Schedule delivered by the Company to Acquiror
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule") sets forth, as of the date of this Agreement and will as of the
Closing Date be amended or supplemented as necessary, a true and complete list
of all the Company's directly or indirectly owned subsidiaries, together with
the jurisdiction of incorporation or organization of each subsidiary and the
percentage of each subsidiary's outstanding capital stock or other equity
interests owned by the Company or another subsidiary of the Company.
2.02 ORGANIZATIONAL DOCUMENTS. The Company has heretofore furnished to
Acquiror complete and correct copies of the Articles of Incorporation and the
Bylaws (or equivalent organizational documents), in each case as amended or
restated to the date hereof, of the Company and each of its subsidiaries.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws (or equivalent
organizational documents).
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<PAGE> 14
2.03 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, par value $0.001 per share. As of the date of
this Agreement, 1,239,790 shares of Common Stock are issued and outstanding. As
of the date of this Agreement, there are no shares of Common Stock held by the
Company in its treasury, and 284,560 shares of Common Stock are reserved for
issuance under existing stock option plans or agreements, including the Company
Options, of which options for 251,660 shares of Common Stock have been granted
and are outstanding. Each of the issued shares of capital stock of, or other
equity interests in, each of the Company and its subsidiaries is duly
authorized, validly issued and, in the case of shares of capital stock, fully
paid and nonassessable, and has not been issued in violation of (nor are any of
the authorized shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries subject to) any preemptive or similar rights
created by statute, the Articles of Incorporation or Bylaws (or the equivalent
organizational documents) of the Company or any of its subsidiaries, or except
as set forth in Section 2.03(a) of the Company Disclosure Schedule, any
agreement to which the Company or any of its subsidiaries is a party or is
bound, and, except as set forth in Section 2.03(a) of the Company Disclosure
Schedule, all such issued shares or other equity interests owned by the Company
or a subsidiary of the Company are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations on the Company's or
such subsidiaries' voting rights, charges or other encumbrances of any nature
whatsoever.
(b) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into or exchangeable or
exercisable for securities having the right to vote) on any matters on which
shareholders may vote ("Company Voting Debt") are issued or outstanding.
(c) Except as set forth in Section 2.03(c) of the Company
Disclosure Schedule, there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which the Company or any of its subsidiaries is a party relating to the
issued or unissued capital stock or other equity interests of the Company or any
of its subsidiaries or obligating the Company or any of its subsidiaries to
grant, issue or sell any shares of capital stock, Company Voting Debt or other
equity interests of the Company or any of its subsidiaries. Except as set forth
in Section 2.03(c) of the Company Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries (i) to
repurchase, redeem or otherwise acquire any shares of capital stock or other
securities of the Company or the capital stock or other equity interests of any
subsidiary of the Company or (ii) (other than advances to wholly owned
subsidiaries in the ordinary course of business) to provide funds to, or to make
any investment in (in the form of a loan, capital
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<PAGE> 15
contribution or otherwise), or to provide any guarantee with respect to the
obligations of, any subsidiary of the Company or any other person, including any
of the Shareholders. Except (i) as set forth in Section 2.03(c) of the Company
Disclosure Schedule or (ii) for subsidiaries of the Company set forth in Section
2.01 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries (x) directly or indirectly owns, (y) has agreed to purchase or
otherwise acquire or (z) holds any interest convertible into or exchangeable or
exercisable for, any capital stock or other equity interest of any corporation,
partnership, joint venture or other business association or entity. Except as
set forth in Section 2.03(c) of the Company Disclosure Schedule or for any
agreements, arrangements or commitments between the Company and its wholly owned
subsidiaries or between such wholly owned subsidiaries, there are no agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any person is or may be entitled to receive any payment based on, or
calculated in accordance with, the revenues or earnings of the Company or any of
its subsidiaries. Except as set forth in Section 2.03(c) of the Company
Disclosure Schedule, there are no voting trusts, proxies or other agreements or
understandings to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound with respect to the voting
of any shares of capital stock or other equity interests of the Company or any
of its subsidiaries.
2.04 AUTHORITY. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by each of the Acquiror Companies, constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated by the
exceptions to Section 2.05(b) are obtained or made and except as disclosed in
Section 2.05(a) of the Company Disclosure Schedule, the execution and delivery
of this Agreement by the Company does not, and the performance by the Company of
its obligations hereunder, including consummation of the transactions
contemplated hereby, will not (i) conflict with or violate the Articles of
Incorporation or Bylaws, or the equivalent organizational documents, in each
case as amended or restated, of the Company or any of its subsidiaries, (ii)
conflict with or violate any federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws") in effect as of
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<PAGE> 16
the date of this Agreement, or any judgment, order or decree applicable to the
Company or any of its subsidiaries or by or to which any of their respective
properties is bound or subject or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by or to which the Company or any of its subsidiaries or any of their
respective properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance by the Company of its obligations
hereunder, including consummation of the transactions contemplated hereby, will
not, require the Company to obtain any consent, license, permit, waiver,
approval, authorization or order of, or to make any filing with or notification
to, any governmental or regulatory authority, federal, state, local or foreign
(collectively, "Governmental Entity"), except (i) the filing of Articles of
Merger with the Secretary of State of the State of Colorado, (ii) where the
failure to obtain such consents, licenses, permits, waivers, approvals,
authorizations or orders, or to make such filings or notifications could not
reasonably be expected to cause a Company Material Adverse Effect or to prevent
the Company from performing its obligations under this Agreement and (iii) as
disclosed in Section 2.05(b) of the Company Disclosure Schedule.
2.06 PERMITS; COMPLIANCE. Except as disclosed in Section 2.06 of the
Company Disclosure Schedule, each of the Company and its subsidiaries is in
possession of all (i) franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, identification and
registration numbers, approvals and orders necessary to own, lease and operate
its properties and to carry on its business as it is now being conducted
(collectively, the "Company Permits"). Section 2.06 of the Company Disclosure
Schedule sets forth a list of each of the Company Permits and the jurisdiction
issuing the same, all of which are in good standing and not subject to
meritorious challenge. Section 2.06 of the Company Disclosure Schedule also sets
forth, as of the date of this Agreement, all actions, proceedings,
investigations or surveys pending or, to the knowledge of the Company or the
Shareholders, threatened against the Company or any of its subsidiaries that
could reasonably be expected to result in the loss, suspension or revocation of
a Company Permit. Except as set forth in Section 2.06 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
in default under or in violation of , and none of them has received, since
December 31, 1998, from any Governmental Entity any written notice with respect
to any conflict with, default under or violation of, (i) any Law applicable to
the Company or any of its subsidiaries or by or to which any of their respective
properties is bound or subject, (ii) any judgment, order or decree
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<PAGE> 17
applicable to the Company or any of its subsidiaries or by or to which any of
their respective properties is bound or subject, or (iii) any of the Company
Permits.
2.07 FINANCIAL STATEMENTS. The Company has provided Acquiror with
true, correct and complete copies of its audited consolidated balance sheet,
income statement and statement of cash flows for the fiscal years ended December
31, 1996, 1997, and 1998 and an unaudited consolidated balance sheet, income
statement and statement of cash flows for the three (3) months ended March 31,
1999 (collectively, the "Company Financial Statements"). Each of the Company
Financial Statements (including, in each case, any related notes thereto) (a)
has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved in compliance with SEC reporting requirements
(except (i) to the extent disclosed therein or required by changes in GAAP, and
(ii) as may be indicated in the notes thereto), and (b) fairly present the
consolidated financial position of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated (subject, in the case of unaudited consolidated
financial statements for interim periods, to adjustments, consisting only of
normal, recurring accruals, necessary to present fairly such results of
operations and cash flows, and except for the absence of notes to the financial
statements).
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as set forth in Section 2.08 of the Company Disclosure
Schedule, since December 31, 1998, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice and there has not been: (i) any damage,
destruction or loss with respect to any assets of the Company or any of its
subsidiaries that, whether or not covered by insurance, would constitute a
Company Material Adverse Effect; (ii) any change by the Company or its
subsidiaries in their significant accounting policies; (iii) except for
dividends by a wholly owned subsidiary of the Company to the Company or to
another wholly owned subsidiary of the Company, any declaration, setting aside
or payment of any dividends or distributions in respect of shares of Company
Stock or the shares of stock of, or other equity interests in, any subsidiary of
the Company or any redemption, purchase or other acquisition of any of the
Company's securities or any of the securities of any subsidiary of the Company;
(iv) any material increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, performance awards (including, without limitation,
the granting of stock appreciation rights or restricted stock awards), stock
purchase or other employee benefit plan, or any increase in the compensation
payable or to become payable to any of the directors or officers of the Company
or the employees of the Company and its subsidiaries as a group; or (v) any
other Company Material Adverse Effect.
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2.09 LITIGATION. Except as disclosed in Section 2.09 of the Company
Disclosure Schedule, there is no claim, action, suit, litigation, proceeding,
arbitration or investigation of any kind, at law or in equity (including actions
or proceedings seeking injunctive relief), pending or, to the knowledge of the
Company or any of the Shareholders, threatened against the Company or any of its
subsidiaries or any properties or rights of the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries is subject to
any executory judgment, order, writ, injunction, decree or award of any
Governmental Entity, including without limitation any cease and desist order and
any consent decree, settlement agreement or other similar agreement with any
Governmental Entity.
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Each Benefit Plan (as hereinafter defined) is listed in
Section 2.10(a) of the Company's Disclosure Schedule. The Company has delivered
or made available to Acquiror a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service (the "IRS")
for each Benefit Plan for which a Form 5500 is required to be filed, (ii) such
Benefit Plan and all amendments thereto, (iii) each trust agreement, if any,
relating to such Benefit Plan, (iv) the most recent summary plan description for
each Benefit Plan for which a summary plan description is required, and (v) the
most recent determination letter, if any, issued by the IRS with respect to any
Benefit Plan qualified under section 401 of the Code. "Benefit Plans" shall mean
any employee pension benefit plan (whether or not insured), as defined in
Section 3(2) of Employee Retirement and Income Security Act of 1974, as amended
("ERISA"), any employee welfare benefit plan (whether or not insured) as defined
in Section 3(1) of ERISA, any plans that would be employee pension benefit plans
or employee welfare benefit plans if they were subject to ERISA, such as foreign
plans and plans for directors, any stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock, or other stock plan or
agreement (whether qualified or nonqualified), and any bonus, supplemental
income, deferred compensation or incentive compensation plan or agreement
sponsored, maintained, or contributed to by the Company or any of its
subsidiaries for the benefit of any of the present or former directors,
officers, employees, agents, consultants, or other similar representatives
providing services to or for the Company or any of its subsidiaries in
connection with such services or any such plans which have been so sponsored,
maintained, or contributed to within six years prior to the date of this
Agreement; provided, however, that such term shall not include (x) routine
employment policies and procedures developed and applied in the ordinary course
of business and consistent with past practice, including wage, vacation,
holiday, and sick or other leave policies, (y) workers compensation insurance,
and (z) directors and officers liability insurance.
(b) With respect to each Benefit Plan, no event has occurred
and there exists no condition or set of circumstances in connection with which
the Company or any of its
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<PAGE> 19
subsidiaries could be subject to any liability under the terms of such Benefit
Plan, ERISA, the Code, or any other applicable Law.
(c) Each Benefit Plan intended to be qualified under section
401 of the Code (i) satisfies in form the requirements of such section except to
the extent amendments are not required by Law to be made until a date after the
Closing Date, (ii) has received a favorable determination letter from the IRS
regarding such qualified status, (iii) has not, since receipt of the most recent
favorable determination letter, been amended, except for amendments for which
the period for requesting a favorable determination letter has not expired, and
(iv) has not been operated in a way that would adversely affect its qualified
status.
(d) There has been no termination or partial termination of
any Benefit Plan within the meaning of section 411(d)(3) of the Code.
(e) There are no actions, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of the Company, threatened
against, or with respect to, any Benefit Plan or its assets.
(f) There is no matter pending (other than routine
qualification determination filings) with respect to any Benefit Plan before the
IRS, the United States Department of Labor or other governmental authority.
(g) All contributions required to be made to Benefit Plans
pursuant to their terms and the provisions of ERISA, the Code, or any other
applicable Law have been timely made, are current to the date of this Agreement
and will be current as of the Closing.
(h) There are no collective bargaining or other labor union
contracts to which the Company or its subsidiaries is a party applicable to
persons employed by the Company or its subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. There
is no pending or, to the knowledge of the Company or the Shareholders,
threatened labor dispute, strike or work stoppage against the Company or any of
its subsidiaries. None of the Company, any of its subsidiaries or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of the Company or
its subsidiaries that could reasonably be expected to have a Company Material
Adverse Effect, and there is no pending or, to the knowledge of the Company or
any of the Shareholders, threatened charge or complaint against the Company or
any of its subsidiaries by the National Labor Relations Board or any comparable
state agency or any other governmental agency.
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<PAGE> 20
(i) Section 2.10(i) of the Company Disclosure Schedule
contains true and correct (i) copies of all employment agreements to which the
Company or any of its subsidiaries is a party; (ii) listings of all officers of
the Company who have executed a non-competition agreement with the Company or
any of its subsidiaries; (iii) copies of all severance agreements, programs and
policies of the Company or any of its subsidiaries with or relating to its, or
any of its subsidiaries, employees; and (iv) summary descriptions of all plans,
programs, agreements and other arrangements of the Company or any of its
subsidiaries with or relating to its, or any of its subsidiaries, employees.
Except as set forth in Section 2.10(i) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries will owe a severance payment or
similar obligation to any of their respective employees, officers or directors
as a result of the Merger or the other transactions contemplated by this
Agreement, and none of such persons will be entitled to severance payments or
other benefits as a result of the Merger or the other transactions contemplated
by this Agreement in the event of the subsequent termination of their
employment.
(j) No Benefit Plan provides retiree medical or retiree life
insurance benefits, and neither the Company nor any of its subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide life
insurance or medical benefits upon retirement or termination of employment of
employees, other than as required by the provisions of Sections 601 through 608
of ERISA and section 4980B of the Code.
(k) Neither the Company nor any corporation, trade, business
or entity under common control with the Company, within the meaning of section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA ("Commonly
Controlled Entity"), contributes to or has an obligation to contribute to, and
has not within six years prior to the date of this Agreement contributed to or
had an obligation to contribute to, (i) a plan subject to Section 412 of the
Code or Section 302 of ERISA, (ii) a multi-employer plan within the meaning of
Section 3(37) of ERISA or (iii) a plan subject to Title IV of ERISA.
(l) Except as disclosed in Section 2.10(l) of the Company
Disclosure Schedule, neither the Company nor any Commonly Controlled Entity has
maintained a Benefit Plan which provides for the purchase of common stock of the
Company.
(m) The Company has not taken any of the following or other
similar actions since March 31, 1997; the acceleration of vesting, waiving of
performance criteria or the adjustment of awards or any other actions permitted
upon a change in control of the Company with respect to any of the Benefit Plans
or any of the plans, programs, agreements, policies or other arrangements
described in Section 2.10(i) of this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) require the Company to make a larger contribution to, or pay greater
benefits or provide other
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<PAGE> 21
rights under, any Benefit Plan or any plan, program, agreement, policy or other
arrangement described in Section 2.10(i) of this Agreement than it otherwise
would, whether or not some other subsequent action or event would be required to
cause such payment or provision to be triggered, or (ii) create or give rise to
any additional vested rights or service credits under any Benefit Plan or any
plan, program, agreement, policy or other arrangement described in Section
2.10(i) of this Agreement.
(n) In connection with the consummation of the transactions
contemplated by this Agreement, no payments of money or other property,
acceleration of benefits, or provision of other rights have been or will be made
hereunder, under any agreement contemplated herein, or under any Benefit Plans
or any of the programs, agreements, policies, or other arrangements described in
Section 2.10(i) of the Company Disclosure Schedule that would be reasonably
likely to be nondeductible under section 280G of the Code, whether or not some
other subsequent action or event would be required to cause such payment,
acceleration, or provision to be triggered.
2.11 TAXES. Except as set forth in Section 2.11 of the Company
Disclosure Schedule,
(a) (i) All returns and reports of or with respect to any Tax
which is required to be filed with respect to the Company or any its
subsidiaries on or prior to the date hereof ("Tax Return") have been duly and
timely filed, (ii) all items of income, gain, loss, deduction and credit or
other items required to be included in each such Tax Return have been so
included and all information provided in each such Tax Return is true, correct
and complete in all respects (including, without limitation, documentation
relating to any reportable item of income, deduction, gain, loss or credit
maintained by the Company), (iii) all Taxes required to be paid with respect to
the period covered by each such Tax Return have been timely paid in full, (iv)
all withholding Tax requirements imposed on or with respect to the Company or
any of its subsidiaries have been satisfied in all respects, and (v) no penalty,
interest or other charge is or will become due with respect to the late filing
of any such Tax Return or late payment of any such Tax.
(b) There is no claim against the Company or any of its
subsidiaries for any amount of Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax Return of or
with respect to the Company or any of its subsidiaries other than those
disclosed (and to which are attached true and complete copies of all audit or
similar reports) in Section 2.11 of the Company Disclosure Schedule.
(c) The total amounts set up as liabilities for current and
deferred Taxes in the Company Financial Statements are sufficient to cover the
payment of all Taxes, whether or not
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assessed or disputed, which are, or are hereafter found to be, or to have been,
due by or with respect to the Company and any of its subsidiaries up to and
through the periods covered thereby.
(d) Except for statutory liens for current Taxes not yet due,
no liens for Taxes exist upon any of the assets of the Company or any of its
subsidiaries.
(e) None of the transactions contemplated by this Agreement
will result in any Tax liability or the recognition of any item of income or
gain to the Company or any of its subsidiaries.
(f) Neither the Company nor any of its subsidiaries has made
an election under section 341(f) of the Code.
2.12 POOLING; TAX MATTERS . None of the Company, its affiliates or the
Shareholders has taken or agreed to take any action that would prevent (a) the
Merger from being treated for financial accounting purposes as a "pooling of
interests" in accordance with GAAP and the rules, regulations and
interpretations (the "Regulations") of the Securities and Exchange Commission
(the "Commission") or (b) the Merger from constituting a reorganization within
the meaning of section 368(a) of the Code. Without limiting the generality of
the foregoing:
(a) Prior to and in connection with the Merger, (i) none of
the Company Common Stock has been or will be redeemed, (ii) no
extraordinary distribution has been or will be made with respect to
Company Common Stock, and (iii) none of the Company Common Stock has
been or will be acquired by any person related (as defined in Treas.
Reg. Section 1.368-1(e)(3) without regard to Section
1.368-1(e)(3)(i)(A)) to the Company.
(b) The Company and the Shareholders of the Company will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(c) There is no intercompany indebtedness existing between the
Company and the Acquiror or between the Company and Acquisition Sub
that was issued, acquired, or will be settled at a discount.
(d) The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) The Company is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of section 368(a)(3)(A) of
the Code.
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<PAGE> 23
2.13 AFFILIATES. Section 2.13 of the Company Disclosure Schedule
identifies all persons who, to the knowledge of the Company, may be deemed to be
affiliates of the Company within the meaning of that term as used in Rule 145
promulgated pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), including, without limitation, all directors and executive officers of
the Company.
2.14 CERTAIN BUSINESS PRACTICES. None of the Company, any of its
subsidiaries or any directors, officers, agents or employees of the Company or
any of its subsidiaries (in their capacities as such) has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful purposes, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment.
2.15 ENVIRONMENTAL. Except as set forth in Section 2.15 of the Company
Disclosure Schedule, the Company and each of its subsidiaries is in compliance
with all laws, rules, regulations, orders, judgments, decrees and other legal
requirements, foreign and domestic, relating to the prevention of pollution and
the protection of the environment, including, without limitation, all such legal
requirements pertaining to human health and safety (collectively, "Environmental
Laws"). Except as set forth in Section 2.15 of the Company Disclosure Schedule,
there is no physical condition existing on any property ever owned or operated
(as defined under 42 U.S.C. Section 9601(20) by the Company or any of its
subsidiaries nor are there any physical conditions existing on any other
property that may have been impacted by the operations of the Company or any of
its subsidiaries that could give rise to any remedial obligation under any
Environmental Laws or that could result in any liability to any third party
claiming damage to person or property as a result or consequence of such
physical conditions. Except as set forth in Section 2.15 of the Company
Disclosure Schedule, none of the Company or any of its subsidiaries (i) has
caused or permitted its businesses, properties or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce, or process any Hazardous Substance (as defined below) except in
compliance with all Environmental Laws, and (ii) has caused or permitted the
Release (as defined below) of any Hazardous Substance on or off the site of any
property of the Company or any of its subsidiaries that could give rise to any
liability. Except as set forth in Section 2.15 of the Company Disclosure
Schedule, there are no underground storage tanks on, under, or about any
property of the Company or any of its subsidiaries, and to the knowledge of the
Company and the Shareholders, no underground storage tanks were previously
located on such properties. The Company has not received any written or oral
notice or other communications from any Governmental Entity or other third party
relating to (i) Hazardous Substances or remediation
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<PAGE> 24
thereof, (ii) alleged liability of or enforcement against any person or entity
pursuant to any Environmental Law, or (iii) any actual or planned administrative
or judicial proceedings in connection with any of the foregoing. The term
"Hazardous Substance" shall mean, without limitation, any hazardous waste, as
defined by 42 U.S.C. 6903(5), any hazardous substance, as defined by 42 U.S.C.
9601(14), any pollutant or contaminant, as defined by 42 U.S.C. 9601(33),
asbestos or asbestos-containing materials, polychlorinated biphenyls, radon,
crude oil or derivatives thereof, petroleum products, and all other toxic
substances, hazardous materials or chemical substances regulated by any
Environmental Law. The term "Release" shall have the meaning set forth in 42
U.S.C. 9601(22).
2.16 UNDISCLOSED LIABILITIES.
(a) Section 2.16(a) of the Company Disclosure Schedule lists
any and all liabilities or obligations and the amounts thereof of the Company or
any of its subsidiaries, of any nature whatsoever. Except as set forth in
Section 2.16(a) of the Company Disclosure Schedule, none of the Company or any
of its subsidiaries has any liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Neither the Company nor any of the Shareholders knows of any basis for the
assertion against the Company or any of its subsidiaries of any liability or
obligation not excepted by Section 2.16(a) of the Company Disclosure Schedule.
(b) Except as set forth on Section 2.16(b) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries owes, is
indebted to or has any liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, and whether due or to become due, to any of
the Shareholders, except for the rights of a shareholder set forth in the
Company's Articles of Incorporation or by law. Neither the Company nor any of
the Shareholders knows of any basis for the assertion against the Company or any
of its subsidiaries of any liability or obligation to any Shareholder.
2.17 CERTAIN AGREEMENTS. Except as set forth in Section 2.17 of the
Company Disclosure Schedule, none of the Company or any of its subsidiaries is a
party to, or bound by, any contract, agreement or organizational document which
purports to restrict, by virtue of a noncompetition, territorial exclusivity or
other provision covering such subject matter, the scope of the business or
operations of any of the Company or any of its subsidiaries geographically or
otherwise.
2.18 CONTRACTS AND COMMITMENTS. Section 2.18 of the Company Disclosure
Schedule sets forth (i) a list of each contract or commitment to which the
Company or any of its subsidiaries is a party or by which its or their property
is bound that involves consideration or other expenditure in excess of $10,000
or performance over a period of more than twelve (12)
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<PAGE> 25
months or that is otherwise material to the business or operations of the
Company and its subsidiaries, taken as a whole ("Material Contracts"); (ii) a
list of all real or personal property leases to which any of the Company or any
of its subsidiaries is a party ("Leases"); (iii) a list of guarantees or
agreements to indemnify or be contingently liable for the payment or performance
by any person or business entity to which any of the Company or any of its
subsidiaries is a party other than Guarantees and agreements for indemnity
entered into in the ordinary course of business ("Guarantees"); and (iv) a list
of contracts or other formal or informal understandings between the Company or
any of its subsidiaries and any of its officers, directors, employees,
consultants, agents or shareholders (or any of such shareholders' family members
or affiliates) ("Affiliate Agreements"). True and complete copies of each
Material Contract, Leases, Guarantee and Affiliate Agreement has been furnished
to Acquiror prior to the date hereof. Except as specifically disclosed in
Section 2.18 of the Company Disclosure Schedule, each of the Material Contracts,
Leases, Guarantees and Affiliate Agreements constitutes the valid and legally
binding obligation of the parties thereto and is in full force and effect
without default on the part of the Company or any other party thereto.
2.19 AFFILIATE INTERESTS. None of the Shareholders nor any employee,
consultant, officer or director, or former shareholder, employee, consultant,
officer or director, of the Company or any of its subsidiaries has any interest,
direct or indirect, in any property, tangible, or intangible, including, without
limitation, patents, trade secrets, other confidential business information,
trademarks, service marks or trade names used in or pertaining to the business
of the Company or any of its subsidiaries, except for the normal rights of a
shareholder and as set forth in Section 2.19 of the Company Disclosure Schedule.
2.20 INTELLECTUAL PROPERTY. (a) Set forth on Schedule 2.20 is a
correct and complete description of all Intellectual Property Rights owned by or
registered in the name of the Company or any of its subsidiaries or to which the
Company or its subsidiaries has any rights. The Company or its subsidiaries owns
all rights, title and interest in and to such Intellectual Property Rights, free
and clear of any liens, encumbrances or any claims of any other party,
including, without limitation, any licensing, honoraria, use, royalty or similar
fees. Furthermore, the Company or its subsidiaries owns all Intellectual
Property Rights necessary or desirable for the conduct of its business and the
Intellectual Property Rights owned by the Company or its subsidiaries cover the
products and services offered by it in the conduct of its business. None of the
Intellectual Property Rights of the Company are invalid or unenforceable as
against third parties. No product or service offered or used by and no
Intellectual Property Right owned or used by the Company or its subsidiaries
infringes or has infringed any rights of any other person arising under the
intellectual property rights of any country. No person or entity has asserted
any such claim of infringement and neither the Company nor any of its
subsidiaries has received any written or oral notice of any claim of such
infringement or has a basis to believe that any such infringement exists or has
existed in the past. Neither the
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<PAGE> 26
Company nor any of its subsidiaries is subject to any limitation on its use of
any such product, service or Intellectual Property Rights by way of any order,
decree of court, judgment or otherwise.
(b) The execution, delivery and performance of this Agreement
by the Company, and the consummation of the transactions contemplated hereby,
will not breach, violate, or conflict with any instrument or agreement governing
any Intellectual Property Rights that relate directly or indirectly to the
Company's or any of its subsidiaries' business, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any
Intellectual Property Rights used in or necessary for conduct of the business,
or in any way impair the right of Acquiror Companies to use, sell, license or
dispose of, or to bring any action for the infringement of, any Intellectual
Property Rights that relate directly or indirectly to the business or any
portion thereof. At Closing, Acquiror Companies will acquire or succeed to all
rights of the Company or any of its subsidiaries in any Intellectual Property
Rights currently used by or anticipated to be used by it in the conduct of its
business and Acquiror Companies will be able to exercise the Intellectual
Property Rights attendant to such products and services currently or anticipated
to be offered by the Company or any of its subsidiaries in the conduct of its
business to the same extent as prior to Closing. Furthermore, the Company and
its subsidiaries, if any, have no knowledge of any infringement by any other
person or any Intellectual Property Rights currently used by or anticipated to
be used by it in the conduct of its business. The Intellectual Property Rights
listed on Schedule 2.20 or used in or necessary to the conduct of the business
are not the subject of any pending litigation, arbitration, interference or
other proceeding. The Company and its subsidiaries, if any, have taken all
precautions that are necessary or appropriate to obtain, maintain, safeguard,
and protect its Intellectual Property Rights, including, where applicable,
maintaining the confidentiality of their trade secrets and confidential
information, registering and maintaining their trademarks and service marks,
filing and maintaining United States and foreign letters patent, and registering
copyrights and providing required copyright and other notices of Intellectual
Property Rights, and none of the registrations or patents were obtained through
inequitable conduct or fraud on the issuing agency. Except as set forth on
Schedule 2.20, all working requirements and all fees, annuities, royalties, and
other payment which are due on or before the Closing in connection with any
Intellectual Property Rights listed in Schedule 2.20 or used in or necessary to
the conduct of the business have been met or paid.
2.21 BP AMOCO AGREEMENT.
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<PAGE> 27
(a) The Company has received the written consent from BP Amoco
("BP Amoco") to the assignment (or change of control of the Company) of a
license agreement entitled "License Agreement Between Amoco Corporation and
Coherence Technology Company for Seismic Coherency Software" (the "BP Amoco
License") to the Acquiror Companies under certain terms and conditions. The
terms of such consent or assignment must be mutually agreeable to BP Amoco and
to Acquiror Companies, in their sole discretion.
(b) Any costs, damages, liabilities, obligations or amounts
due (including attorney fees) in excess of $455,892.39 as of April 30, 1999
necessary to cure any defaults under the BP Amoco License and to obtain the
assignment or consent as set forth in (a) above shall be a claim against the
Escrow Shares, and such claim shall not be subject to the $75,000 threshold set
forth in Section 8.06.
2.22 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of the Shareholders.
2.23 INSURANCE. Section 2.23 of the Company Disclosure Schedule sets
forth a list of all policies of insurance currently in effect relating to the
business or operations of the Company and its subsidiaries (true and complete
copies of which have been furnished to Acquiror). Such insurance policies are in
full force and effect. The Company and each of its subsidiaries are presently
insured, and since its inception have been insured, against such risks as
companies engaged in the same or substantially similar business would, in
accordance with good business practice, customarily be insured. Except as set
forth in Section 2.23 of the Company Disclosure Schedule, the policies of
general liability, malpractice or professional liability, fire, theft and other
insurance maintained with respect to the operations, assets or businesses of the
Company and its subsidiaries provide adequate coverage against loss. The Company
or its subsidiaries have given in a timely manner to their insurers all notices
required to be given under such insurance policies with respect to all claims
and actions covered by insurance, and no insurer has denied coverage of any such
claims or actions or reserved it rights in respect of or rejected any of such
claims. None of the Company or any of its subsidiaries has received any notice
or other communication from any such insurer canceling or materially amending
any of such insurance policies, and no such cancellation is pending or
threatened. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not cause such insurance policies to
lapse, terminate or be canceled and will not result in any party thereto having
the right to terminate or cancel such insurance policies.
2.24 PROPERTIES. Except as set forth in Section 2.24 of the Company
Disclosure Schedule, the Company and its subsidiaries have good and marketable
title, free and clear of all
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liens to all their properties and assets whether tangible or intangible, real,
personal or mixed, reflected in the Company Financial Statements as being owned
by the Company and its subsidiaries, as of the date thereof, other than (i) any
properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such Company Financial Statements,
(ii) liens disclosed in the notes to such financial statements and (iii)
statutory liens for current Taxes not yet due. All buildings, and all fixtures,
equipment and other property and assets held under leases or subleases by the
Company or any of its subsidiaries, are held under valid instruments enforceable
in accordance with their respective terms, subject to applicable Laws of
bankruptcy, insolvency or similar Laws relating to creditors' rights generally
and to general principles of equity (whether applied in a proceeding in law or
equity). All of the Company's and its subsidiaries' equipment in regular use has
been reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
2.25 GOOD TITLE. Each of the Shareholders is the sole record and
beneficial owner of, and has good and valid title to, the number of shares of
Company Stock set forth opposite such Shareholder's name on Schedule 1.06(a) to
this Agreement, free and clear of all liens, claims, encumbrances, options,
voting trusts or agreements, proxies or other claims or charges of any nature
whatsoever (other than resulting from this Agreement).
2.26 CERTAIN SECURITIES LAW MATTERS.
(a) Each of the Shareholders receiving Acquiror Shares, either
alone or with his purchaser representative as defined in Rule 501(h) under the
Securities Act, if any, has substantial experience in evaluating and investing
in private placement transactions so that such Shareholder is capable of
evaluating the merits and risks of its investment in the Acquiror Shares. Each
of the Shareholders receiving Acquiror Shares, by reason of such Shareholder's
business or financial experience, either alone or with his purchaser
representative as defined in Section 501(h) under the Securities Act, if any,
has the capacity to protect such Shareholder's own interests in connection with
the acquisition of the Acquiror Shares hereunder. Each of the Shareholders
receiving Acquiror Shares who has designated himself, herself or itself, as the
case may be, as an "accredited investor" on the signature page hereto is an
"accredited investor" as defined in Rule 501 of Regulation D promulgated
pursuant to the Securities Act. Acquiror has provided each of the Shareholders
or his purchaser representative, if any, with copies of the Acquiror SEC Reports
(as such term is defined in Section 3.05, as well as certain financial and other
information on the Acquiror). Each of the Shareholders receiving Acquiror Shares
or his purchaser representative, if any, is familiar with the business and
financial condition, properties, operations and prospects of Acquiror and has
had an opportunity to discuss Acquiror's business and financial condition,
properties, operations and prospects with Acquiror's management. Each of the
Shareholders receiving Acquiror Shares or his purchaser representative, if any,
has also had an opportunity to ask questions of officers of Acquiror, which
questions were answered to
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<PAGE> 29
such Shareholder's satisfaction. Each of the Shareholders receiving Acquiror
Shares understands that such discussion was intended to describe certain aspects
of Acquiror's business and financial condition, properties, operations and
prospects, but were not a thorough or exhaustive description.
(b) Each of the Shareholders receiving Acquiror Shares
understands that the Acquiror Shares may be "restricted securities" under the
applicable federal securities laws and that the Securities Act and the rules of
the Commission provide in substance that such Shareholder may dispose of the
Acquiror Shares only pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and each Shareholder receiving
Acquiror Shares further understands that, and in this section below, Acquiror
has no obligation or intention to register the Acquiror Shares, or to take
action so as to permit sales pursuant to the Securities Act (including Rule 144)
thereunder which permits limited resales of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the issue, the resale occurring not
less than one (1) year after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in
transactions with a "market maker" and the number of shares being sold not
exceeding specified limitations. Accordingly, such Shareholder understands that
under the Commission's rules, such Shareholder may dispose of the Acquiror
Shares in transactions which are exempt from registration under the Securities
Act. As a consequence of all of the foregoing, each Shareholder who is receiving
Acquiror Shares understands that such Shareholder must bear the economic risk of
the investment in the Acquiror Shares for an indefinite period of time.
Notwithstanding the foregoing, Acquiror agrees that the legends set forth on the
certificates representing the Acquiror Shares shall be removed by delivery of
substitute certificates without such legend, if such legend is not required for
purposes of the Securities Act or this Agreement. It is agreed that such
restrictive legends and related stop orders will be removed if (i) Acquiror has
received either a written opinion of counsel, which such counsel and opinion
shall be reasonably satisfactory to Acquiror, or a "no action" letter obtained
from the Commission, to the effect that the Acquiror Shares subject thereto may
be transferred free of the restrictions imposed by Rules 144 or 145, or (ii) in
the event of a sale of the Acquiror Shares which has been registered under the
Securities Act or made in conformity with the provisions of Rules 144 or 145.
(c) Each of the Shareholders who is receiving Acquiror Shares
acknowledges and agrees that such Shareholder is not relying upon Acquiror or
the Company or their respective officers, directors, employees or agents as to
the merits of their investment decisions or any investigation of the Acquiror,
including, without limitation, as to the United States federal income tax or any
other tax consequences to such Shareholder of the transactions contemplated by
this Agreement. As to all such tax consequences, such Shareholder hereby agrees
and
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<PAGE> 30
represents that such Shareholder has consulted with such Shareholder's own legal
and tax advisors to the extent that such Shareholder has deemed such
consultation necessary or appropriate, that such Shareholder is making such
Shareholder's own determination as to what the tax consequences of the
transactions contemplated hereby will be to such Shareholder and that neither
Acquiror nor the Company is making any representation, express or implied, as to
any such tax consequences.
2.27 AUTHORIZATION AND VALIDITY OF AGREEMENT . Each of the Shareholders
has the full power, legal right, capacity and authority to enter into, execute
and deliver this Agreement and to carry out and perform the transactions
contemplated hereby. This Agreement constitutes a valid and binding obligation
of such Shareholder, enforceable against such Shareholder in accordance with its
terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company and the
Shareholders that:
3.01 ORGANIZATION AND QUALIFICATION. Acquiror is a limited liability
company duly organized, validly existing and in good standing under the laws of
the Netherlands, and Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Colorado. Each of
the Acquiror Companies has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of the business conducted by it or the ownership or leasing
of its properties makes such qualification necessary, other than where the
failure to be so duly qualified and in good standing could not reasonably be
expected to have an Acquiror Material Adverse Effect. The term "Acquiror
Material Adverse Effect" as used in this Agreement shall mean any change or
effect that would be materially adverse to the financial condition, results of
operations, business or prospects of Acquiror and its subsidiaries, taken as a
whole, at the time of such change or effect.
3.02 CAPITALIZATION.
(a) The authorized capital stock of Acquiror consists of (i)
100,000,000 Acquiror Shares, of which, as of June 1, 1999 (A) 29,414,784 are
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights created by statute, Acquiror's Articles of
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<PAGE> 31
Association or Bylaws (or the equivalent organizational documents) as amended or
restated (collectively, the "Acquiror Organizational Documents") or any
agreement to which Acquiror is a party or is bound; (B) no shares are held in
the treasury of Acquiror and (C) 1,785,000 shares are reserved for future
issuance pursuant to stock option plans of Acquiror and (ii) 3,000,000
Preference Shares, par value NLG 0.03, none of which were issued or outstanding.
The authorized capital stock of Acquisition Sub consists of 1,000 shares of
common stock, no par value per share, of which, as of the date hereof, 100
shares are issued and outstanding. All of the issued and outstanding capital
stock of Acquisition Sub is owned by Acquiror.
(b) The Acquiror Shares to be issued pursuant to the Merger
will be when issued duly authorized, validly issued, fully paid and
nonassessable. None of the Acquiror Shares to be issued will, when issued, (i)
have been issued in violation of (and shall not be subject to) any preemptive or
similar rights created by statute, the Acquiror Organizational Documents or any
agreement to which Acquiror is bound, including any options, warrants or other
rights, agreement, arrangements or commitments of any character to which
Acquiror is a party and (ii) be owned free and clear of all security interests,
liens, claims, pledges, agreements, limitations on Acquiror's voting rights,
charges or other encumbrances of any nature whatsoever.
3.03 AUTHORITY. Each of the Acquiror Companies has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Acquiror Companies
and the performance by each of the Acquiror Companies of its obligations
hereunder, including the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of either of the Acquiror Companies are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of the Acquiror Companies and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes the legal, valid and
binding obligation of each of the Acquiror Companies enforceable against the
Acquiror Companies in accordance with its terms.
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated by the
exceptions to Section 3.04(b) are obtained or made and except as otherwise
disclosed in Section 3.04(a) of the Disclosure Schedule delivered by Acquiror to
the Company contemporaneously with the execution and delivery of this Agreement
(the "Acquiror Disclosure Schedule"), the execution and delivery of this
Agreement by the Acquiror Companies does not, and performance of their
respective obligations hereunder, including the consummation of the transactions
contemplated hereby, will
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not (i) conflict with or violate the Acquiror Organizational Documents or the
Articles of Incorporation or Bylaws of Acquisition Sub, as amended or restated,
(ii) conflict with or violate any Laws in effect as of the date of this
Agreement or any judgment, order or decree applicable to Acquiror or any of
Acquiror's subsidiaries or by or to which any of their properties is bound or
subject or (iii) result in any breach of or constitute a default under (or an
event that with or without notice or lapse of time or both would become a
default), or give to others any rights of termination, amendment, acceleration
or cancellation of, or require payment under, or result in the creation of a
lien or encumbrance on any of the properties or assets of Acquiror or any of
Acquiror's subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Acquiror or any of Acquiror's subsidiaries is a party or by
or to which Acquiror or any of Acquiror's subsidiaries or any of their
respective properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Acquiror Companies does not, and the performance of this Agreement by the
Acquiror Companies, including the consummation of the transactions contemplated
hereby, will not require Acquiror or Acquisition Sub to obtain any consent,
license, permit, waiver approval, authorization or order of, or to make any
filing with or notification to, any Governmental Entities, except (i) for the
filing of Articles of Merger with the Secretary of State of the State of
Colorado, (ii) the applicable requirements of the HSR Act or the Exchange Act,
(iii) the applicable requirements of the New York Stock Exchange ("NYSE"), (iv)
where the failure to obtain such consents, licenses, permits, waivers,
approvals, authorizations or orders, or to make such filings or notifications
could not reasonably be expected to have an Acquiror Material Adverse Effect or
prevent Acquiror or Acquisition Sub from performing their respective obligations
under this Agreement and (v) as disclosed in Section 3.04(b) of the Acquiror
Disclosure Schedule.
3.05 REPORTS; FINANCIAL STATEMENTS.
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(a) Since December 31, 1998, Acquiror has filed all forms,
reports, statements and other documents required to be filed with the
Commission, including without limitation (i) all Annual Reports on Form 10-K,
(ii) all Quarterly Reports on Form 10-Q, (iii) all proxy statements relating to
meetings of shareholders (whether annual or special), (iv) all Current Reports
on Form 8-K and (v) all other reports, schedules, registration statements or
other documents (collectively referred to as the "Acquiror SEC Reports"). The
Acquiror SEC Reports were prepared in all material respects in accordance with
the requirements of applicable Law (including the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder applicable to the Acquiror SEC Reports) and the Acquiror SEC Reports
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the historical consolidated financial statements
(including, in each case, any related notes thereto) contained in the Acquiror
SEC Reports (i) have been prepared in accordance with the published rules and
regulations of the Commission and GAAP applied on a consistent basis throughout
the periods involved (except (A) to the extent disclosed therein or required by
changes in GAAP, (B) as may be indicated in the notes thereto and (C) in the
case of the unaudited financial statements, as permitted by the rules and
regulations of the Commission) and (ii) fairly present the consolidated
financial position of Acquiror and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for the
periods indicated (subject, in the case of unaudited consolidated financial
statements for interim periods, to adjustments, consisting only of normal,
recurring accruals, necessary to present fairly such results of operations and
cash flows).
3.06 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT. Each of the Shareholders covenants and
agrees that, prior to the Closing Date, such Shareholder will take all
commercially reasonable actions necessary to ensure that the Company complies
with Articles V and VII hereof.
4.02 NEGATIVE COVENANTS. Each of the Shareholders covenants and agrees
that from the dated of this Agreement until the Effective Time, such Shareholder
will not:
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(a) take any action that reasonably could be expected to
result in (i) any of the representations and warranties of such
Shareholder and the Company set forth in Article II hereof becoming
untrue or (ii) any of the conditions set forth in Article IX hereof not
being satisfied; or
(b) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or
that may reasonably be expected to lead to, any Competing Transaction
(as hereinafter defined), or enter into discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to, or endorse, any Competing
Transaction, or authorize or permit any agent, investment banker,
financial advisor, attorney, accountant or other representative
retained by such Shareholder to take any such action, and such
Shareholder shall promptly notify Acquiror of all relevant terms of any
such inquiries or proposals received by such Shareholder or by any such
agent, investment banker, financial advisor, attorney, accountant or
other representative relating to any of such matters and if such
inquiry or proposal is in writing, such Shareholder shall promptly
deliver or cause to be delivered to Acquiror a copy of such inquiry or
proposal. For purposes of this Agreement, "Competing Transaction" shall
mean any merger, consolidation, share exchange, business combination or
similar transaction involving the Company or any of its subsidiaries or
the acquisition in any manner, directly or indirectly, of a material
interest in any voting securities of, or a material equity interest in
a substantial portion of the assets of, the Company or any of its
subsidiaries, other than the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY . The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Acquiror
(which consent shall not be unreasonably withheld), the Company will and will
cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
consistent with past practices;
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its rights and franchises,
retain the services of its respective
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officers and key employees and maintain its relationships with its
respective customers and suppliers;
(c) maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice;
(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained;
(e) ensure that the cash on hand at the Company shall not be
less than as reflected on the March 31, 1999 consolidated balance sheet
and the aggregate outstanding balance of long-term and short-term debt
(exceeding the promissory note pursuant to Section 7.17, if any) shall
not be greater than as reflected on the March 31, 1999 consolidated
balance sheet; and
(f) use its best efforts to ensure that the Shareholders'
Representative shall execute and deliver the Escrow Agreement prior to
the Closing Date.
5.02 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Acquiror,
from the date of this Agreement until the Effective Time, the Company will not
do, and will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become
payable to any director or executive officer; (ii) increase the
compensation payable or pay bonuses to employees of the Company other
than in the ordinary course of business, (iii) grant any severance or
termination pay (other than pursuant to the normal severance practices
of the Company or its subsidiaries as in effect on the date of this
Agreement) to, or enter into any employment or severance agreement
with, any director, officer or employee; (iv) except as set forth in
Section 2.10(a) of the Company Disclosure Schedule, establish, adopt or
enter into any Benefit Plan or (v) except as may be required by
applicable Law or as set forth in Section 2.10(a) of the Company
Disclosure Schedule, amend, or take any other actions (including,
without limitation, the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions permitted
upon a "change in control" (as defined in the respective plans of the
Company), with respect to any of the Benefit Plans or any of the plans,
programs, agreements, policies or other arrangements described in
Section 2.10(a) of this Agreement;
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(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock or
other equity interests, except dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the
Company;
(c) (i) except as described in Section 2.03(c) of the Company
Disclosure Schedule, redeem, purchase or otherwise acquire any shares
of its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or
its subsidiaries' capital stock (other than any such acquisition
directly from any wholly owned subsidiary of the Company in exchange
for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or
its subsidiaries' capital stock or any such securities or obligations;
(ii) effect any reorganization or recapitalization of the Company or
any of its subsidiaries; or (iii) split, combine or reclassify any of
its or its subsidiaries' capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its or its subsidiaries' capital stock;
(d) (i) except as set forth in Section 2.03(a) hereof or as
described in Section 2.03(c) of the Company Disclosure Schedule, issue
(whether upon original issue or out of treasury), sell, grant, award,
deliver or limit the voting rights of any shares of any class of its or
its subsidiaries' capital stock, any securities convertible into or
exercisable or exchangeable for any such shares, or any rights,
warrants or options to acquire, any such shares; (ii) amend or
otherwise modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms materially more favorable
to the holders thereof; or (iii) take any action to accelerate the
vesting of any of the stock options;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any
other person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business and consistent with past
practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets or any
assets of any of its subsidiaries, except for pledges or dispositions
of assets in the ordinary course of business and consistent with past
practice;
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(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or
that may reasonably be expected to lead to, any Competing Transaction,
or enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to, or endorse, any Competing Transaction, or authorize or permit
any of the officers, directors, employees or agents of the Company or
any of its subsidiaries or any agent, investment banker, financial
advisor, attorney, accountant or other representative retained by the
Company or any of the Company's subsidiaries to take any such action,
and the Company shall promptly notify Acquiror or promptly provide
Acquiror with a copy of all relevant terms of any such inquiries or
proposals received by the Company or any of its subsidiaries or by any
such officer, director, employee, agent, investment banker, financial
advisor, attorney, accountant or other representative relating to any
of such matters and if such inquiry or proposal is in writing, the
Company shall promptly deliver or cause to be delivered to Acquiror a
copy of such inquiry or proposal (provided that nothing in this Section
5.02(i) shall prevent the Company or any such persons from taking any
such action if failure to do so would be reasonably likely to
constitute a breach of its fiduciary duty or a violation of law);
(h) release any third party from its obligations under any
existing standstill agreement or arrangement relating to a Competing
Transaction or otherwise under any confidentiality or other similar
agreement relating to information material to the Company or any of its
subsidiaries;
(i) propose to adopt any amendments to its Articles of
Incorporation or its Bylaws that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement;
(j) (i) change any of its significant accounting policies or
(ii) make or rescind any express or deemed election relating to Taxes,
settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to Taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year
ending December 31, 1997, except, in the case of clause (i) or clause
(ii), as may be required by Law or GAAP;
(k) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument or under any financing lease, whether pursuant to a
sale-and-leaseback transaction or otherwise, except in the ordinary
course of business consistent with past practice;
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(l) enter into any material arrangement, agreement or contract
with any third party (other than in the ordinary course of business);
or
(m) agree in writing or otherwise to do any of the foregoing.
ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR. Acquiror hereby covenants and
agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by the Company and the
Shareholders, Acquiror will:
(a) use all reasonable efforts to preserve substantially
intact its business organization;
(b) maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice; and
(c) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
6.02 NEGATIVE COVENANTS OF ACQUIROR. Except as expressly contemplated
by this Agreement or otherwise consented to in writing by the Company and the
Shareholders, from the date of this Agreement until the Effective Time, Acquiror
will not do any of the following:
(a) amend any of the material terms or provisions of the
Acquiror Shares;
(b) knowingly take any action that would result in a failure
to maintain the listing of the Acquiror Shares on the New York Stock
Exchange;
(c) propose to adopt any amendments to the Acquiror
Organizational Documents that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement; or
(d) agree in writing or otherwise to do any of the foregoing.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 NOTIFICATION OF CERTAIN MATTERS. The Company and each of the
Shareholders shall give prompt notice to Acquiror, and Acquiror shall give
prompt notice to the Company, orally and in writing, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of the party giving such notice contained
in this Agreement to be untrue or inaccurate at any time from the date hereof to
the Effective Time, (ii) any material failure of the party giving such notice to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such person hereunder within the time specified therefor and
(iii) any change or event having, or which, insofar as can be reasonably
foreseen, could have, a material adverse effect on the financial condition,
results of operations, business or prospects of Acquiror or the Company.
7.02 ACCESS AND INFORMATION. Between the date hereof and the Closing
Date:
(a) The Company shall, and shall cause its subsidiaries to,
(i) afford to Acquiror and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Acquiror Representatives") access
during ordinary business hours and at other reasonable times, upon
reasonable prior notice, to the officers, employees, accountants,
agents, properties, offices and other facilities of the Company and its
subsidiaries and to the books and records thereof and (ii) furnish
promptly to Acquiror and the Acquiror Representatives such information
concerning the business, properties, contracts, records and personnel
of the Company and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be
reasonably requested, from time to time, by Acquiror or the Acquiror
Representatives.
(b) Notwithstanding the foregoing provisions of this Section
7.02, the Company shall not be required to grant access or furnish
information to the Acquiror Representatives to the extent that such
access or the furnishing of such information is prohibited by Law or
contract. No investigation by the Acquiror Representatives made
heretofore or hereafter shall affect the representations and warranties
of the Company that are contained herein and each such representation
and warranty shall survive such investigation.
(c) The Acquiror shall hold in confidence and not disclose,
except on a "need to know" basis to its respective Acquiror
Representatives, all nonpublic information received from the Company
("Confidential Information") until such time as such Confidential
Information is otherwise publicly available and, if this Agreement is
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terminated, Acquiror will deliver to the Company all documents, work
papers and other materials (including copies) obtained by such party or
on its behalf from another party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution
hereof. The foregoing obligations of confidentiality and nondisclosure
shall be effective for a period of two (2) years after such
termination; provided, however, that such obligation shall terminate at
the Closing.
(d) In the event that the Acquiror, or anyone to whom it
supplies Confidential Information, receives a request to disclose all
or any part of the Confidential Information under the terms of a
subpoena or order issued by a Governmental Entity, Acquiror agrees (i)
to notify the Company immediately of the existence, terms and
circumstances surrounding such request, (ii) to consult with the
Company on the advisability of taking legally available steps to resist
or narrow such request, and (iii) if disclosure of such Confidential
Information is required to prevent Acquiror from being held in contempt
or subject to other penalty, to furnish only such portion of the
Confidential Information as the Acquiror is legally compelled to
disclose and to exercise its best efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to the
disclosed Confidential Information.
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company and Acquiror shall each use, and shall cause
each of their respective subsidiaries to use, and each of the Shareholders shall
use, all reasonable efforts promptly (i) to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) to obtain from any
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained by the Company, Acquiror or any
of the Shareholders, respectively, or any of the Company's or Acquiror's
respective subsidiaries, in connection with the authorization, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, (iii) to make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (A) the Securities Act and the Exchange Act and
the rules and regulations thereunder, and any other applicable federal or state
securities laws and (B) any other applicable Law; provided that Acquiror and the
Company shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the nonfiling
party and its advisors prior to filing and, if requested, shall accept all
reasonable additions, deletions or changes suggested in connection therewith.
The Company and Acquiror shall furnish all information required for any
application or other filing to be made pursuant to the rules and
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regulations of any applicable Law in connection with the transactions
contemplated by this Agreement.
(b) Acquiror, the Company and each of the Shareholders agree,
and Acquiror and the Company shall cause each of their respective subsidiaries,
to cooperate and to use all reasonable efforts to contest and resist any action,
including legislative, administrative or judicial action, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) (an "Order") that is in effect and
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement, including, without
limitation, by reasonably pursuing all available avenues of administrative and
judicial appeal and all available legislative action. Acquiror, the Company and
each of the Shareholders also agree to take any and all reasonable actions,
including, without limitation, the disposition of assets or the withdrawal from
doing business in particular jurisdictions, required by regulatory authorities
as a condition to the granting of any approvals required in order to permit the
consummation of the Merger or as may be required to avoid, lift, vacate or
reverse any legislative or judicial action that would otherwise cause any
condition to the Merger not to be satisfied; provided, however, that in no event
shall any party take, or be required to take, any action that could reasonably
be expected to have a Company Material Adverse Effect or an Acquiror Material
Adverse Effect.
(c) The Company, Acquiror and each of the Shareholders shall
each promptly give (or shall cause their respective subsidiaries to give) any
notices regarding the Merger, this Agreement or the transactions contemplated
hereby to third parties required by Law or by any contract, license, lease or
other agreement to which such person is a party or by which such person is
bound, and use (and cause its subsidiaries to use) all reasonable efforts to
obtain any third party consents (i) necessary, proper or advisable to consummate
the transactions contemplated by this Agreement, (ii) otherwise required under
any contracts, licenses, leases or other agreements in connection with the
consummation of the transactions contemplated by this Agreement or (iii)
required to prevent a Company Material Adverse Effect or an Acquiror Material
Adverse Effect, respectively, from occurring after the Effective Time.
(d) If any party shall fail to obtain any third party consent
described in subsection (c)(i) above, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon the Company and Acquiror, their
respective subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
7.04 AFFILIATES; POOLING. The Company shall use all reasonable efforts
to obtain and deliver to Acquiror an executed letter agreement, substantially in
the form of Exhibit C hereto (the "Company Affiliates' Letter"), from (i) each
person identified as an affiliate of the Company
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in Section 2.13 of the Company Disclosure Schedule on the Closing Date, (ii) any
person who may be deemed to have become an affiliate of the Company after the
date of this Agreement and on or prior to the Effective Time as soon as
practicable after such person attains such status and (iii) any person whose
agreement thereto may be deemed reasonably necessary by Acquiror to sustain the
Merger's status as a "pooling of interest" for financial accounting purposes (a
"Pooling Transaction").
7.05 PUBLIC ANNOUNCEMENTS. Acquiror and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation;
provided, however, that a party may, without consulting with the other party,
issue such a press release or make such a public statement if required by
applicable Law or the rules of the NYSE or a national securities exchange if
such party has used commercially reasonable efforts to consult with the other
party but has been unable to do so in a timely manner.
7.06 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. Notwithstanding the foregoing and subject to Article
VIII, the Shareholders shall not be responsible for the costs and expenses of
the Company in connection with this Agreement or the transactions of the Company
contemplated herein. Any such costs, expenses or fees of the Company not paid by
the Company prior to the Closing will continue to be the obligations of the
Surviving Corporation upon consummation of the Merger.
7.07 EMPLOYEES OF COMPANY.
(a) As soon as reasonably practicable after the Effective
Time, but in any event not later than January 1, 2000, Acquiror shall provide
employee benefit plans and arrangements to employees of the Company and its
subsidiaries that are substantially similar to the employee benefit plans and
arrangements of Acquiror for similarly situated employees of the Acquiror as
then in effect.
(b) The Company acknowledges that any benefits plans of the
Acquiror that may be provided to the employees of the Company after the
Effective Time may be substantially different from those provided such employees
of the Company prior to the Merger.
(c) The employees of Company and its subsidiaries shall be
credited for their actual years of service with the Company for purposes of
eligibility, vesting and benefit accrual under all benefit plans provided by
Acquiror in accordance with this Section 7.07, including, but
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not limited to, vacation, severance, retirement and disability plans, but
excluding any defined benefit plans.
(d) Such employee benefits under any medical plan provided by
Acquiror in accordance with this Section 7.07 shall not be subject to any
exclusions for any pre-existing conditions to the extent such exclusions did not
apply under the Company's medical plan, and credit shall be received for any
deductibles or out-of-pocket amounts previously paid by employees of the Company
and its subsidiaries for the current plan year under the medical plan maintained
by the Company.
(e) Nothing in this Agreement is intended to confer upon any
employee of the Company or its subsidiaries retained by Acquiror after Closing
("Retained Employees") any right to continued employment after evaluation by
Acquiror and its affiliates of their employment needs at any time after the
Closing.
(f) Notwithstanding any provision in this Agreement to the
contrary, Acquiror expressly reserves the right to amend, modify, or terminate
any benefit plan, program or policy established or maintained by Acquiror or any
of its affiliates (including, without limitation, the Company or its
subsidiaries) for the benefit of the Retained Employees.
7.08 TAX-FREE REORGANIZATION. Subject to the terms and conditions
hereof, Acquiror and the Company shall each use its best efforts to cause the
Merger to be treated as a reorganization within the meaning of section 368(a) of
the Code. After the Closing, Acquiror shall cause the Surviving Corporation to
comply with all applicable reporting requirements under section 367(a) of the
Code and U.S. Treasury Regulations issued thereunder.
7.09 INFORMATION FOR TAX RETURNS. From and after the Closing, the
Acquiror Companies shall cooperate with the Shareholders by providing and
granting access to the Shareholders, promptly upon request, to such records,
documents and other information regarding the Company and its subsidiaries as
the Shareholders may reasonably request from time to time, in connection with
the preparation or audit of any Tax Returns of any of the Company, its
subsidiaries or the Shareholders, and for audits, disputes, refund claims, or
litigation or other proceedings relating thereto or any other permissible
matter, it being understood that the Shareholders shall be entitled to make
copies of any such books, documents or information as shall be reasonably
necessary.
7.10 NO HEDGING TRANSACTIONS. The Shareholders acknowledge that the
entering into of or participation in hedging or other derivative transactions
that include Common Stock, or derivatives thereof, of the Acquiror may have an
effect in the overall market for Common Stock of the Acquiror and, further, that
Acquiror has a policy restricting executives and affiliates from
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engaging or participating in such transactions. Accordingly, the Shareholders
who become employees or affiliates of Acquiror agree that they will not, during
the time they are employees or affiliates of Acquiror, enter into any hedging or
similar transaction (whether through use of a forward contract, swap agreement,
option or other instrument) that in any way involves Common Stock of Acquiror or
any derivatives thereof without the prior written consent of Acquiror in its
sole discretion.
7.11 TERMINATED LEASES. Prior to the Closing, the Company shall take
all actions necessary to terminate and obtain a written release of any
obligation or liability as a result of such lease or the termination as required
herein, for the following leasehold interests: (i) facilities in Dallas, Texas
located at 3010 LBJ Freeway, Suite 600, Dallas, Texas, 75234, and (ii)
facilities known as the second floor offices in Houston, Texas located at 1155
Dairy Ashford, Suite 280, Houston, Texas, 77079 (collectively, the "Terminated
Leases").
7.12 PULSONIC ACQUISITION.
(a) At or simultaneously with the Closing, Acquiror shall
purchase the outstanding capital stock of CTC Pulsonic, Inc. held by
Hugh Stanfield, by causing Coherence Technology (Canada) Ltd., to
contribute its remaining debt obligation with respect to the Share
Purchase Agreement between and among Pulsonic Corporation (renamed CTC
Pulsonic, Inc.), the selling shareholders thereof, and the Company
dated October 10, 1997, together with all amendments thereto (the
"Pulsonic Agreement") to the Surviving Corporation. Upon receipt of
such debt, the Surviving Corporation shall contribute the debt up to
Acquiror who shall satisfy such debt by paying to Hugh Stanfield (and
the selling shareholders pursuant to the Pulsonic Agreement) (i)
$186,832.66 in cash or immediately available funds on the date of
execution of this Agreement, plus interest at 9% per annum from June 1,
1999 to the date of the wire transfer of funds to Hugh Stanfield and
(ii) issuance on the Closing Date of Acquiror Shares equivalent to US
$2,000,000 in value (such number of Acquiror Shares to be determined by
the average closing price for the three trading days immediately
preceding June 9, 1999 for Acquiror Shares) and subject to the same
restrictions on the Acquiror Shares to be issued pursuant to Article I
herein, except for any requirement to escrow shares.
(b) Prior to the Closing, Hugh Stanfield shall obtain a
written release on behalf of all of the selling shareholders of CTC
Pulsonic, Inc., f/k/a Pulsonic Corporation as defined in the Pulsonic
Agreement of any further obligations or liabilities to such selling
shareholders by the Company pursuant or related to the Pulsonic
Agreement (such release to be in a form acceptable to Acquiror in its
sole discretion).
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(c) The amendment to the Share Purchase Agreement to reflect
the above transaction shall be executed by the appropriate parties on
or before June 9, 1999.
7.13 PULSONIC NIGERIA LIMITED.
(a) At or simultaneously with the Closing, the Company shall
own 80% of the capital of Pulsonic Nigeria Limited free and clear of
all liens, claims and encumbrances.
(b) In order to acquire any non-company Pulsonic Nigeria
Limited capital as set forth in (a) above, the Company shall have
purchased the required capital at a total acquisition cost not to
exceed the sum of $40,000.
7.14 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Acquiror and the
Company agree that the indemnification obligations set forth in the Articles of
Incorporation and Bylaws of the Company, in each case as of the date of this
Agreement, shall survive the Merger and after the Effective Time any amendment,
repeal or other modification of the Articles of Incorporation or Bylaws shall
not adversely affect the rights thereunder of the individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company
or its subsidiaries.
7.15 GUARANTEES. As of the Closing, Acquiror and the Surviving
Corporation shall, jointly and severally, indemnify and hold harmless Alex
Cranberg and Susan Morrice from and against any liabilities, claims, demands,
judgments, losses, costs or expenses incurred (including reasonable attorneys
fees) that such individuals may sustain or incur as a result of the obligations
that result from or arise out of or relate to their personal guaranty after the
Closing Date with respect to the lease between the Company and CCA Financial
Inc. for certain computer equipment. It is the intent of Acquiror Companies to
replace such guarantees, if necessary, with the guaranty of the Acquiror
Companies.
7.16 MORRIS SHARES. Dan Morris agrees to sell immediately prior to
Closing all of his Company Stock to Acquiror for the cash equivalent of the
value of the number of Acquiror Shares that he would have been entitled to
receive pursuant to Article I, less 10% to be escrowed pursuant to the Escrow
Agreement. The value of the Acquiror Shares shall be determined based on the
average closing price per share of Acquiror Common Stock for the three trading
days immediately preceding May 31, 1999 multiplied by the number of Acquiror
Shares Mr. Morris would have been entitled to receive but for this Section 7.16.
Such cash shall be payable by check of the Acquiror or on the Acquiror's behalf
or in immediately available funds, at the option of Acquiror. Dan Morris shall
not be entitled to be issued shares of Acquiror pursuant to Article I of this
Agreement.
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7.17 WORKING CAPITAL ADVANCES. From and after the execution of this
Agreement until the earlier of: (i) the Effective Time, or (ii) the termination
of this Agreement, Acquiror shall provide Company with working capital as may be
reasonably required by Company to satisfy the Company's liabilities set forth in
Disclosure Schedule 2.16(a) or in the ordinary course of its business in
exchange for notes payable by Company, together with interest at an annual rate
of 8% and with a maturity date of July 31, 1999; provided that, any such notes
shall become immediately due and payable to Acquiror in the event of a
termination of this Agreement. The Note or Notes shall be substantially in the
form of Exhibit E attached hereto.
ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL. Subject to the terms and conditions of this Article
VIII, the Shareholders agree, jointly and severally, to indemnify, defend and
hold harmless Acquiror and its directors, officers, employees, consultants,
affiliates and controlling persons (collectively, and including the Company and
its subsidiaries after the Effective Time, the "Acquiror Indemnified Parties" or
an "Acquiror Indemnified Party"), from and against all Claims asserted against,
resulting from, imposed upon or incurred by Acquiror or any other Acquiror
Indemnified Party, directly or indirectly, by reason of, arising out of, or
resulting from (a) the inaccuracy or breach of any representation or warranty of
the Company or any of the Shareholders contained in or made pursuant to this
Agreement or (b) the breach of any covenant or agreement of the Company or any
of the Shareholders contained in or made pursuant to this Agreement. As used in
this Article VIII, the term "Claim" shall include (i) all debts, liabilities and
obligations, (ii) all losses, damages, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys' fees and expenses), and (iii)
all demands, claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments, whether or
not ultimately determined to be valid.
8.02 NO EXHAUSTION OF REMEDIES. The Shareholders acknowledge that
their obligation under Section 8.01 of this Agreement is independent of the
obligations of the Company pursuant to this Agreement, and that the Shareholders
waive any right to require the Acquiror Indemnified Parties to (i) proceed
against the Company; or (ii) pursue any other remedy whatsoever in the power of
the Acquiror Indemnified Parties. It is agreed among the parties hereto that the
obligations of the Shareholders to the Acquiror Indemnified Parties pursuant to
Article VIII, including any indemnification claims or payments made pursuant
thereto, be satisfied solely through and pursuant to the Escrow Agreement and
this Article VIII which, notwithstanding anything herein to the contrary, shall
be the sole and exclusive right and remedy
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of the Acquiror Indemnified Parties with respect to such matters in clauses (a)
and (b) of Section 8.01, except for any claim of fraud.
8.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the Shareholders
to indemnify the Acquiror Indemnified Parties under this Article VIII with
respect to Claims relating to or arising from third parties (a "Third Party
Claim") shall be subject to the following terms and conditions:
(a) Notice and Defense. The Acquiror Indemnified Party will
give the other party or parties (whether one or more, the "Indemnifying
Party") prompt written notice (including all documents and other
nonprivileged information in the Acquiror Indemnified Party's
possession related thereto) of any such Third Party Claim containing a
reasonable description of the nature of the Third Party Claim, an
estimate of the amount of damages attributable thereto to the extent
determinable and the basis of the Acquiror Indemnified Party's request
for indemnification under this Agreement, and the Indemnifying Party
may undertake the defense thereof by representatives chosen by it upon
written notice to the Acquiror Indemnified Party provided within 20
days of receiving notice of such Third Party Claim (or sooner if the
nature of the Third Party Claim so requires). Failure of the Acquiror
Indemnified Party to give such notice shall not affect the Indemnifying
Party's duty or obligations under this Article VIII, except to the
extent the Indemnifying Party is materially prejudiced thereby. The
Acquiror Indemnified Party shall make available to the Indemnifying
Party or its representatives all records and other materials required
by the Indemnifying Party and in the possession or under the control of
the Acquiror Indemnified Party, for the use of the Indemnifying Party
and its representatives in defending any such claim, and shall in other
respects give reasonable and prompt cooperation in such defense.
(b) Failure to Defend. If the Indemnifying Party, within 20
days after notice of any such Third Party Claim (or sooner if the
nature of any Third Party Claim so requires), fails to undertake the
defense of such Third Party Claim actively and in good faith, then the
Acquiror Indemnified Party will have the right to undertake the
defense, compromise or settlement of such Third Party Claim, or consent
to the entry of a judgment with respect thereto.
(c) Acquiror Indemnified Party's Rights. Anything in this
Article VIII to the contrary notwithstanding, (i) if there is a
reasonable probability that the Third Party Claim may adversely affect
the Acquiror Indemnified Party other than as a result of money damages
or other money payments in an aggregate amount of less than $75,000,
the Acquiror Indemnified Party shall have the right to defend,
compromise or settle such Third Party Claim (provided that the Acquiror
Indemnified Party shall not settle such
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Third Party Claim or consent to any judgment without first obtaining
the consent of the Indemnifying Party, which shall not be unreasonably
withheld), provided that, Acquiror agrees to discuss the status of such
matters with the Indemnifying Party at such times as the Indemnifying
Party may reasonably request, upon reasonable prior notice, and (ii)
the Indemnifying Party shall not without the written consent of the
Acquiror Indemnified Party, settle or compromise any Third Party Claim
or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff
to the Acquiror Indemnified Party of an unconditional release from all
liability in respect of such Third Party Claim.
8.04 PAYMENT; ARBITRATION. Upon the occurrence of a Claim (other than
a Third Party Claim) for which indemnification is believed to be due hereunder,
the Indemnified Party shall provide notice of such Claim to the Indemnifying
Party, stating in specific terms the circumstances giving rise to the Claim,
specifying the amount of the Claim and making a request for any payment then
believed due. Any Claim shall be conclusive against the Indemnifying Party in
all respects 30 days after receipt by the Indemnifying Party of such notice,
unless within such period the Indemnifying Party sends the Indemnified Party a
notice disputing the propriety of the Claim. Such notice of dispute shall
describe the basis for such objection and the amount of the Claim as to which
the Indemnifying Party does not believe should be subject to indemnification.
Upon receipt of any such notice of dispute, both the Indemnified Party and the
Indemnifying Party shall use all reasonable efforts to cooperate and arrive at a
mutually acceptable resolution of such dispute within the next 30 days. If a
mutually acceptable resolution cannot be reached between the Indemnified Party
and the Indemnifying Party with such 30-day period, either party may submit the
dispute for resolution by binding arbitration pursuant to the provisions of this
Section 8.04. If a party elects to submit such matter to arbitration, such party
shall provide notice to the other party of its election to do so, and the
parties shall attempt to appoint a single arbitrator. If the parties are unable
within 10 days after receipt of the notice to agree on a single arbitrator, then
each party shall appoint one arbitrator, and the two arbitrators so appointed
shall name a third arbitrator within a period of 10 days after their nomination.
If the two arbitrators fail to appoint a third arbitrator within such 10-day
period, a third arbitrator shall be appointed pursuant to the then existing
Commercial Arbitration Rules (the "Rules") of the American Arbitration
Association. In all respects, such panel and the arbitration proceeding shall be
governed by the Rules, and the place of arbitration shall be in a city mutually
selected by the Indemnifying Party and the Acquiror Indemnified Party (or, if no
city can be mutually agreed upon within 10 days, then in Houston, Texas). If it
is finally determined that all or a portion of such Claim amount is owed to the
Indemnified Party, then such Claim amount shall be satisfied in accordance with
Section 8.05 of this Agreement and the Acquiror Indemnified Party shall be
entitled to recovery of all expenses, including reasonable attorneys' fees,
incurred in connection with enforcing its rights under this Article VIII.
Judgment upon the award resulting from arbitration may be entered in any court
having jurisdiction for direct enforcement, or any
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application may be made to a court for a judicial acceptance of the award and an
order of enforcement, as the case may be.
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES.
(a) After the Effective Time and except for any Claim for
fraud subject to Section 8.08 shall not be so limited, the indemnification
obligations of the Shareholders under Section 8.01 of this Agreement shall be
satisfied solely from payments of the Escrow Shares by delivery to the Acquiror
Indemnified Party entitled to indemnification hereunder.
(b) Pursuant to the provisions of the Escrow Agreement, if the
Shareholders are determined to owe a Claim amount pursuant to the procedures set
forth in Section 8.04, then the amount due the Acquiror Indemnified Party
hereunder shall be satisfied by the delivery to the Acquiror Indemnified Party
pursuant to the Escrow Agreement of Escrow Shares equal in value to the amount
of the Claim to be satisfied, and the Claim shall be deemed paid and satisfied
upon receipt by the Acquiror Indemnified Party of certificates representing such
number of Escrow Shares duly endorsed for transfer to the Indemnified Party. The
per share value of the Escrow Shares for purposes of this Article VIII and the
Escrow Agreement with respect to a particular Claim shall be the Market Value
(as defined herein) of the Escrow Shares. The "Market Value" of an Escrow Share
shall be the actual closing trading price at the end of business on the Closing
Date (regardless of the actual trading price for the Common Stock), with
appropriate adjustment to take into account any stock split, reverse stock
split, stock dividend, recapitalization, stock exchanges or other similar
capital adjustments with respect (including by reason of merger, consolidation
or other business combination involving Acquiror) to the Escrow Shares. The
Market Value of the Additional Corpus (as such term is defined in the Escrow
Agreement) shall be determined by mutual agreement of the Shareholders'
Representative and the Acquiror. In the event that such parties cannot in good
faith agree on the market value of the Additional Corpus, the matter shall be
settled by binding arbitration in accordance with the procedures set forth
herein, except for any claims of fraud.
(c) The Shareholders' Representative shall have the power and
authority to make all decisions with regard to the settlement of Claims brought
pursuant to Section 8.01 of this Agreement from the Escrow Shares. If the
Shareholders' Representative is unable or unwilling to carry out his duties as
Shareholders' Representative, then the Shareholder who beneficially held the
next highest number of shares of Company Stock immediately prior to the
Effective Time (unless such Shareholder is then employed or serves as a director
of Acquiror or its affiliates), shall be designated and appointed as the
Shareholders' Representative, and shall assume all of the powers and duties of
the Shareholders' Representative under the Agreement and the Escrow Agreement.
If any successor Shareholders' Representative becomes unable or unwilling to
carry out his duties as Shareholders' Representative, his replacement shall be
the
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Shareholder who beneficially held next highest number of shares of Company Stock
immediately prior to the Effective Time.
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties, covenants and agreements of the Company and
the Shareholders in this Agreement or made pursuant hereto shall survive the
Closing, and any investigation thereof, until (a) in the event the transaction
is a pooling transaction, the first to occur of (i) the issuance of the first
audit report following the Closing Date of the consolidated financial statements
of Acquiror which includes the Surviving Corporation or (ii) the first
anniversary of the Closing Date, or (b) in the event the transaction is not a
pooling transaction, the second anniversary of the Closing Date and, the
Shareholders shall have no liability under this Article VIII unless written
notice of a Claim is provided within such period. After the Effective Time, the
Acquiror Indemnified Parties shall not be entitled to indemnification for Claims
from the Escrow Shares except to the extent the aggregate amount for all claims
exceeds $75,000. Once such threshold is satisfied, the Shareholders, subject to
the other limitations in this Article VIII, shall be liable for all Claims of
the Acquiror Indemnified Parties in excess thereof. After the Effective Time,
all Claims by the Acquiror Indemnified Parties pursuant to this Agreement shall
be limited to the Escrow Shares, except for any claim of fraud subject to
Section 8.08.
8.07 SUBROGATION. Upon payment in full of any Third Party Claim or
other Claim, the Indemnifying Party shall be subrogated to the extent of such
payment to the rights of the Acquiror Indemnified Parties against any person
with respect to the subject matter and to the extent only of the Third Party
Claim or other Claim.
8.08 CLAIM OF FRAUD. In the event that the Company is found to have
perpetrated a fraud that has caused damages to or has resulted in a loss by the
Acquiror Companies, each Shareholder shall be liable to the Acquiror Companies
for such damage or loss up to, in the aggregate, the amount of such
Shareholder's Acquiror Shares (including Escrow Shares), or the equivalent value
thereof, together with all accretions, dividends or stock splits; provided,
however, that (i) if such Shareholder had actual knowledge that such action by
the Company was fraudulent or false or (ii) such Shareholder perpetrated a fraud
with actual knowledge by the Shareholder that caused damages to or has resulted
in a loss by the Acquiror Companies, the liability of the Shareholder shall not
be limited as therein provided. The parties understand and agree that a loss or
claim by the Acquiror Indemnified Parties against a Shareholder based on a fraud
by such Shareholder, whether with or without actual knowledge, with respect to
the representations or warranties or matters set forth in Sections 2.25, 2.26 or
2.27 as it relates to such Shareholder is not limited as set forth in this
Section 8.08. The term "actual knowledge" of the Shareholder shall not include
mere reckless disregard and/or the mere failure to investigate the truth or
accuracy of a representation or warranty regarding the Company. It is not
intended
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that a Shareholder have liability to the Acquiror Indemnified Parties for fraud
related claims pursuant to this Section 8.08 in the absence of either (i) or
(ii) above.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES .
The obligation of the Acquiror Companies to effect the transactions contemplated
hereby on the Closing Date shall be subject to the satisfaction at or prior to
the Closing Date of the following conditions, any or all of which may be waived
by Acquiror, in whole or in part, to the extent permitted by applicable law:
(a) The representations and warranties of the Company and each
of the Shareholders contained in this Agreement shall be true and
correct in all material respects (without duplication of any
materiality exception contained in any individual representation and
warranty) as of the date of this Agreement and as of the Closing Date
as though made again as of the Closing Date. Acquiror shall have
received a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the Closing Date, to such
effect with respect to the representations and warranties of the
Company;
(b) The Company and each of the Shareholders shall have
performed or complied with all agreements and covenants required by
this Agreement to be performed or complied with by such person on or
prior to the Closing Date. Acquiror shall have received a certificate
of the Chief Executive Officer and the Chief Financial Officer of the
Company, dated the Closing Date, to such effect with respect to the
Company's performance and compliance;
(c) Acquiror shall have received a certificate of the
Secretary or Assistant Secretary (or other authorized corporate
officer) of the Company certifying as true, accurate and complete, as
of the date of the execution of this Agreement and again as of the
Closing Date: (i) a copy of the resolutions of the Company's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other documents contemplated hereby to which it is a
party and the consummation by the Company of the Merger; (ii) a copy of
the resolutions of the Company's shareholders authorizing the
execution, delivery and performance of this Agreement and the other
documents contemplated hereby to which it is a party and the
consummation by the Company of the Merger; (iii) a certified copy of
the Articles of Incorporation of the Company issued by the Secretary of
State of Colorado; (iv) a copy of the Bylaws of the
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Company; and (v) the incumbency of the officer or officers authorized
to execute on behalf of the Company this Agreement and the other
documents contemplated thereby to which it is a party;
(d) Acquiror shall have received a certificate of the
Secretary or Assistant Secretary (or other authorized corporate
officer) of each subsidiary of the Company certifying as true, accurate
and complete, as of the date of this Agreement and again as of the
Closing Date: (i) a certified copy of the Articles of Incorporation of
the subsidiary issued by the Secretary of State of the state of such
subsidiary's incorporation (except for Pulsonic Nigeria Limited which
shall be a copy); and (ii) a copy of the Bylaws of such subsidiary;
(e) The resignations, effective at the Effective Time, of each
of the directors and officers of the Company shall have been delivered
to Acquiror;
(f) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(g) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in the Acquiror Disclosure Schedule or the
Company Disclosure Schedule, shall have expired or been terminated;
(h) Acquiror shall have been advised in writing by Arthur
Andersen LLP as of the Closing Date to the effect that such firm knows
of no reason why the Merger cannot be treated for financial accounting
purposes as a pooling transaction;
(i) The Company shall have been advised in writing by Melton &
Melton, LLP as of the date of this Agreement and again as of the
Closing Date to the effect that such firm knows of no reason why the
Merger cannot be treated for financial accounting purposes as a pooling
transaction;
(j) Acquiror shall have received on the date of this Agreement
the Escrow Agreement, duly executed and delivered by the Shareholders'
Representative and the Escrow Agent;
(k) The Shareholders' Representative and each of the
Shareholders shall have executed and delivered the Appointment on the
date of this Agreement;
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(l) The Acquiror shall have received on the date of this
Agreement the written consent of BP Amoco to the assignment or change
of control of the BP Amoco License to Acquiror or its Affiliates on
terms acceptable to Acquiror in its sole discretion;
(m) The Acquiror shall have received on the date of this
Agreement the written release to the Terminated Lease on the Dallas
property and on the date of Closing the written release to the
Terminated Lease in Houston, Texas, both on terms acceptable to
Acquiror in its sole discretion;
(n) The Acquiror shall have received on the date of this
Agreement the written release to the Pulsonic Agreement on terms
acceptable to Acquiror in its sole discretion;
(o) The Acquiror shall have received on the date of this
Agreement proof of settlement with Paradigm Software for the Focus
software claim, such settlement not to exceed $35,000 cash, and receipt
of the written release of Paradigm Software for the Focus software
claim on terms acceptable to Acquiror in its sole discretion;
(p) The Acquiror shall have received on the date of this
Agreement proof of settlement with ACTC Technologies Inc. for the
buyout and release of any and all obligations of Pulsonic Technology
Corporation (and any successor) of the Agreement dated January 25,
1993, such settlement not to exceed $5,000 cash, and receipt of the
written release on terms acceptable to Acquiror in its sole discretion;
(q) The Company shall own 80% of Pulsonic Nigeria Limited;
and
(r) Employment Contracts of Patrick Keenan, Randall Keys and
Vasudhaven Sudhakar, substantially in the form of Exhibit D shall be
executed and delivered to Acquiror on the date of this Agreement.
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company and the Shareholders to effect the transactions
contemplated hereby on the Closing Date shall be subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived by the Company and the Shareholders, acting together, in whole or
in part, to the extent permitted by applicable Law:
(a) The representations and warranties of Acquiror contained in this
Agreement shall be true and correct in all material respects (without
duplication of any materiality exception contained in any individual
representation and warranty) as of the date of this Agreement and as of the
Closing Date as though made again as of the Closing Date. The Company shall have
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received a certificate of the President and the Chief Financial Officer of the
Acquiror (or the organizational equivalent), dated the Closing Date, to such
effect;
(b) The Acquiror Companies shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by each of them on or prior to the Closing
Date. The Company shall have received a certificate of the President
and the Chief Financial Officer of the Acquiror (or the organizational
equivalent), dated the Closing Date, to such effect;
(c) The Company and the Shareholders shall have received a
certificate of the Secretary or Assistant Secretary (or other
authorized corporate officer) of each of the Acquiror Companies
certifying as true, accurate and complete, as of the date of the
execution of this Agreement and again as of the Closing Date: (i) a
copy of the resolutions of the Board of Directors of each of the
Acquiror Companies (or the organizational equivalent) authorizing the
execution, delivery and performance of this Agreement and the other
documents contemplated hereby to which it is a party and the
consummation by the Company of the Merger; (ii) a copy of the
resolutions of Acquisition Sub's shareholder authorizing the execution,
delivery and performance of this Agreement and the other documents
contemplated hereby to which it is a party and the consummation by the
Company of the Merger; (iii) a copy of the Articles of Incorporation
(or equivalent organizational document) of Acquiror and a certified
copy of the Articles of Incorporation of the Acquisition Sub issued by
the Secretary of State of the State of Colorado; (iv) a copy of the
Bylaws (or equivalent organizational document) of each of the Acquiror
Companies; and (v) the incumbency of the officer or officers authorized
to execute on behalf of each of the Acquiror Companies this Agreement
and the other documents contemplated thereby to which it is a party;
(d) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(e) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in Acquiror Disclosure Schedule or the Company
Disclosure Schedule, shall have expired or been terminated; and
(f) The Company shall have received on the date of this
Agreement the written consent of BP Amoco to the assignment or change
of control of the BP Amoco License to Acquiror or its Affiliates on
terms acceptable to Acquiror in its sole discretion.
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ARTICLE X
MISCELLANEOUS
10.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual consent of Acquiror and the Company and each of
the Shareholders;
(b) by either Acquiror or the Company or any of the
Shareholders if the Effective Time has not occurred on or before July
31, 1999;
(c) by Acquiror, upon a breach of any covenant or agreement on
the part of the Company or any of the Shareholders set forth in this
Agreement, or if any representation or warranty of the Company or any
of the Shareholders shall have become untrue, in either case such that
the conditions set forth in Section 9.01(a) or Section 9.01(b) would
not be satisfied (a "Terminating Company Breach"); provided that, if
such Terminating Company Breach is curable by the Company or any of the
Shareholders, as the case may be, through the exercise of reasonable
efforts and for so long as the Company or such Shareholder or
Shareholders continue to exercise such reasonable efforts, Acquiror may
not terminate this Agreement under this Section 10.01(c);
(d) by the Company or any of the Shareholders, upon breach of
any covenant or agreement on the part of Acquiror set forth in this
Agreement, or if any representation or warranty of Acquiror shall have
become untrue, in either case such that the conditions set forth in
Section 9.02(a) or Section 9.02(b) would not be satisfied (a
"Terminating Acquiror Breach"); provided that, if such Terminating
Acquiror Breach is curable by Acquiror through the exercise of its
reasonable efforts and for so long as Acquiror continues to exercise
such reasonable efforts, the Company may not terminate this Agreement
under this Section 10.02(d); or
(e) by either Acquiror or the Company or any of the
Shareholders, if there shall be any Order which is final and
nonappealable preventing the consummation of the Merger, unless the
party relying on such Order has not complied with its obligations under
Section 7.03(b).
10.02 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 10.01, the Shareholders, the Company, Acquiror and
Acquisition Sub shall
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have no obligation or liability to each other except that (i) the provisions of
Sections 7.02(c) and (d) and 7.06 shall survive any such termination, (ii)
nothing herein and no termination pursuant hereto will relieve any party from
liability for any breach of this Agreement, and (iii) any promissory note for
funds advanced to the Company pursuant to Section 7.17 shall immediately become
due and payable.
10.03 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto. The waiver by any
party hereto of any condition or of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other condition or
subsequent breach.
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Schedules and Exhibits hereto) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof, and neither this nor any document delivered in connection with this
Agreement confers upon any person not a party hereto any rights or remedies
hereunder except as provided in Article I and Article VIII hereof.
10.05 ASSIGNMENT. This Agreement shall inure to the benefit of and
will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto,
except that the parties hereto agree that the rights and obligations of the
Acquiror may be assigned to any direct or indirect wholly owned subsidiary of
the Acquiror by written notice to all other parties hereto, but no such
assignment shall in any way operate to enlarge, alter or change any obligation
of or due to the Company or the Shareholders or relieve Acquiror of its
obligations hereunder.
10.06 CERTAIN DEFINITIONS. For the purposes of this Agreement, unless
the context clearly indicates otherwise, the term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
banks in The Netherlands or the State of Texas are authorized or
obligated to be closed;
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<PAGE> 57
(c) "Closing" shall have the meaning set forth in Section 1.11
of this Agreement, of persons interested in the transactions
contemplated by this Agreement at which all documents deemed necessary
by the parties to this Agreement to evidence the fulfillment or waiver
of all conditions precedent to the consummation of the transactions
contemplated by the Agreement are executed and delivered;
(d) "Closing Date" shall mean the date of the Closing as
determined pursuant to Section 1.11 of this Agreement.
(e) "Competing Transaction" shall mean any proposal or offer
from any person or entity (other than Acquiror or an affiliate of
Acquiror) relating to any acquisition or purchase of all or (other than
in the ordinary course of business) any material portion of the assets
of, or any possible disposition or issuance of any Common Stock or any
capital stock or other equity interests in the Company or any of its
subsidiaries (or any rights or securities exercisable for or
convertible into Common Stock or any such capital stock or other equity
interests), or any merger or other business combination with, the
Company or any of its subsidiaries;
(f) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise;
(g) "Intellectual Property Rights" shall mean: (a) all
software, source code and object code, and modifications (including
software under development), ideas and discoveries and inventions
(whether or not patentable), trade secrets, information (confidential
or otherwise), technical data, techniques, processes, methods, plans,
designs, drawings, schematics, specifications, communications
protocols, test procedures, algorithms, technology, know-how, customer
lists, marketing and customer information, documentation, materials and
works of authorship which are the subject matter of copyright,
regardless of how embodied; (b) all intangible intellectual property
rights therein, including the right to make, sell, license or otherwise
distribute, and use, and any and all applications for United States or
foreign patents or issued patents; all trademarks, service marks, trade
names, or trade dress, and all pending or issued United States or
foreign registrations thereof; and copyrights and United States and
foreign applications and registrations thereof, including the rights to
copy, sell, license or otherwise distribute, display, publish and
create derivative works therefrom; (c) the BP Amoco License with BP
Amoco; and (d) contracts, agreements and licenses with third parties
pertaining to such matters.
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<PAGE> 58
(h) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d) of the
Exchange Act);
(i) "subsidiary" or "subsidiaries" of the Company, Acquiror or
any other person, means any corporation, partnership, joint venture or
other legal entity of which the Company, Acquiror or any such other
person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity;
(j) "Tax" or "Taxes" shall mean any and all taxes, charges,
fees, levies, assessments, duties or other amounts payable to any
federal, state, local or foreign taxing authority or agency, including,
without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license,
payroll, withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (ii) customs,
duties, imposts, charges, levies or other similar assessments of any
kind, and (iii) interest, penalties and additions to tax imposed with
respect thereto; and
(k) "Trading Day" shall mean each business day on which the
New York Stock Exchange Market is open for trading.
10.07 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and (i) delivered in person or by courier, (ii) sent by
telecopy or facsimile transmission, or (iii) mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
If to the Company: Coherence Technology Company, Inc.
1155 Dairy Ashford, Suite 600
Houston, Texas 77079
Attention: Patrick Keenan
Telecopy: (281) 870-1088
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<PAGE> 59
with a copy (which shall
not constitute notice) to: Baker & Botts, L.L.P.
910 Louisiana
Houston, Texas 77002-4995
Attention: Gene Oshman
Telecopy: (713) 229-1522
If to the Shareholders or
Shareholders' Representative:c/o Shareholders' Representative of
Coherence Technology Company, Inc.
c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
Attention: Dirk W. McDermott
Telecopy: (303) 623-3525
with a copy (which shall
not constitute notice) to: Baker & Botts, L.L.P.
910 Louisiana
Houston, Texas 77002-4995
Attention: Gene Oshman
As Counsel to the Company, but
not as Counsel to the Shareholders
Telecopy: (713) 229-1522
If to Acquiror
or Acquisition Sub: Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
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<PAGE> 60
with a copy (which shall
not constitute notice) to: Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
or to such other address as the parties hereto shall have furnished to the other
parties hereto by notice given in accordance with this Section 10.07. Such
notices shall be effective (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by telecopy or facsimile
transmission, when the sender receives telecopier confirmation that such notice
was received at the telecopier number of the addressee, or (iii) if mailed, upon
the earlier of five (5) business days after deposit in the mail and the date of
delivery as shown by the return receipt therefor.
10.08 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive law of the State of Texas, without giving
effect to the principles of conflicts of law thereof.
10.09 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, by original or facsimile signatures, each of which shall be an
original, but all of which together shall constitute one and the same agreement.
10.11 HEADINGS. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
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<PAGE> 61
IN WITNESS WHEREOF, the Company and each of the Acquiror Companies have
each caused this Agreement to be executed on its behalf by its officer thereunto
duly authorized, and each of the Shareholders has executed this Agreement, all
as of the date first above written.
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., its Sole Managing Director
By: /s/ Jacobus Schouten
--------------------
Jacobus Schouten
Managing Director
CORE COLORADO ACQUISITION, INC.
By: /s/ David M. Demshur
--------------------
Name: David M. Demshur
Title: President
COHERENCE TECHNOLOGY COMPANY, INC.
By: /s/ Patrick G. Keenan
---------------------
Name: Patrick G. Keenan
Title: Chief Executive Officer
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<PAGE> 62
<TABLE>
<CAPTION>
NUMBER OF
SHARES NON-ACCREDITED ACCREDITED
OF COMPANY INVESTOR INVESTOR
STOCK
SHAREHOLDERS OWNED
(Please check one box)
<S> <C> <C> <C>
/s/ Alexis M. Cranberg 427,510 [ ] [X]
- ----------------------
Alexis M. Cranberg
McDermott & Associates, L.L.C. 364,600 [ ] [X]
By: /s/ Dirk W. McDermott
---------------------
Name: Dirk W. McDermott
Title: President
Altira Technology Fund I, L.L.C. 169,960 [ ] [X]
By: /s/ Dirk W. McDermott
---------------------
Name: Dirk W. McDermott
Title: President
/s/ Randall D. Keys 152,300 [ ] [X]
- -------------------
James R. Newell
by Randall D. Keys, Attorney-in-Fact
R. Chaney & Partners II, L.P. 100,000 [ ] [X]
By: /s/ Curtis Harrell
------------------
Name: Curtis Harrell
Title: E.V.P. - R. Chaney & Co.
/s/ Patrick G. Keenan 13,420 [ ] [X]
- ---------------------
Patrick G. Keenan
/s/ Daniel S. Morris 12,000 [X] [ ]
- --------------------
Daniel S. Morris
</TABLE>
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<PAGE> 63
EXHIBIT A
ESCROW AGREEMENT
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<PAGE> 64
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement"), dated as of June 9, 1999,
is entered into by and among Core Laboratories N.V., a Netherlands limited
liability company ("Acquiror"); Core Colorado Acquisition, Inc., a Colorado
corporation with its principal place of business in Houston, Texas and a wholly
owned subsidiary of Core ("Acquisition Sub"), Coherence Technology Company,
Inc., a Colorado corporation (the "Company"), Dirk McDermott (the "Shareholders'
Representative") and Bankers Trust Company, as escrow agent ("Escrow Agent").
Defined terms used but not otherwise defined herein shall have the meanings set
forth in the Merger Agreement (as defined below).
WHEREAS, Acquiror, Acquisition Sub, the Company, the Shareholders of
the Company and the Shareholder's Representative have entered into an Agreement
and Plan of Merger, dated June 9, 1999 (the "Merger Agreement"), pursuant to
which Acquisition Sub is merging with and into the Company with the Company as
the surviving corporation of such merger (the "Merger"), with the result that
the surviving corporation will become a wholly-owned subsidiary of Acquiror and
all of the outstanding shares of common stock, $0.001 par value of the Company
(the "Company Stock") will be converted into Acquiror Shares; and
WHEREAS, pursuant to the Merger Agreement, the Company and the
Shareholders have made certain representations, warranties, covenants and
agreements to and with Acquiror and the Shareholders have agreed to indemnify,
defend and hold harmless the Acquiror Indemnified Parties against Claims under
Article VIII of the Merger Agreement; and
WHEREAS, the parties to the Merger Agreement have agreed to establish
an escrow fund (the "Escrow Fund"), initially consisting of 17,055 Acquiror
Shares and cash in the amount of $2,616.34, from which they may, subject to the
terms and conditions of the Merger Agreement and this Escrow Agreement, satisfy
the Shareholders' obligations to indemnify against Claims; and
WHEREAS, the Escrow Agent has agreed to act as the agent and custodian
for the Escrow Fund for the benefit of the parties to the Merger Agreement; and
WHEREAS, pursuant to the Merger Agreement, the Appointment and the
terms and conditions hereof, the Shareholders' Representative is authorized to
serve as the representative and agent hereunder for each of the Shareholders
with full power and authority to execute, deliver and act on each such
Shareholder's behalf hereunder in all respects;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements, provisions and covenants contained in this Escrow Agreement and the
Merger Agreement, the parties hereby agree as follows:
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<PAGE> 65
ARTICLE 1
ESTABLISHMENT OF ESCROW
(a) Acquiror, Acquisition Sub, the Company and the Shareholders'
Representative each hereby appoint the Escrow Agent to act as agent and
custodian for the Escrow Fund for their respective benefit pursuant to the terms
of this Escrow Agreement, and the Escrow Agent hereby accepts such appointment
pursuant to such terms.
(b) Pursuant to the terms of Section 1.06 of the Merger Agreement,
Acquiror will cause to be delivered to, and directly deposited with, the Escrow
Agent for the account and future potential benefit of the Shareholders a stock
certificate representing 17,055 Acquiror Shares, which certificate shall be
registered as follows: "Bankers Trust Company f/b/o Certain Former Shareholders
of the Common Stock of Coherence Technology Company, Inc." and cash in the
amount of $2,616.34 by wire transfer pursuant to the instructions set forth on
Exhibit D, which cash shall be for the benefit of Dan Morris, a former
Shareholder of Coherence Technology Company, Inc. All such Acquiror Shares
hereby initially delivered to, and initially deposited with, the Escrow Agent,
together with all subsequent stock dividends or distributions of other Acquiror
Shares received in respect of such shares while deposited hereunder, together
with the cash deposited for the benefit of Dan Morris, shall be referred to
herein as the "Escrow Shares."
(c) The respective number of Escrow Shares to be initially deposited
with the Escrow Agent by Acquiror for the account of each Shareholder is set
forth on Exhibit A hereto.
(d) The Shareholders' Representative shall deliver to the Escrow Agent
simultaneously herewith four stock powers duly executed and endorsed in blank in
the form attached as Exhibit B with respect to each stock certificates
representing the Escrow Shares, and the Escrow Agent hereby acknowledges receipt
of the stock certificates representing the Escrow Shares and such executed stock
powers. The Shareholders' Representative agrees to execute in the future such
additional stock powers as may be required or requested by Acquiror or the
Escrow Agent to transfer any Escrow Shares required in accordance with the
provisions of the Merger Agreement and this Escrow Agreement.
(e) The Escrow Shares shall be retained, managed and disbursed by the
Escrow Agent subject to the terms and conditions of this Escrow Agreement and
Article VIII of the Merger Agreement. Each Shareholder shall have the full and
unencumbered right to vote all Escrow Shares held for his account in the Escrow
Fund on matters submitted to a vote of Acquiror's shareholders.
(f) All cash dividends and cash distributions on Escrow Shares, when
and if distributed by Acquiror, and all additional Acquiror Shares, property or
other securities, issued on or with respect to the Escrow Shares ("Additional
Corpus"), including as a result of stock splits, stock dividends or other
similar capital adjustments to, or recapitalizations on, or share
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<PAGE> 66
exchanges with (including by reason or merger, consolidation or other business
combination involving Acquiror), the Acquiror Shares, or other securities, shall
be retained in the Escrow Fund for the respective account of the Shareholders
subject to the terms hereof.
ARTICLE 2
CLAIMS AGAINST ESCROW SHARES
(a) If Acquiror is entitled to indemnification from the Shareholders
against a Claim pursuant to Section 8.01 (or any other section) of the Merger
Agreement, then such Claim shall be satisfied by the Escrow Agent's delivery to
Acquiror of the requisite number of Escrow Shares (determined in accordance with
Article VIII of the Merger Agreement). Any Claim by Acquiror against the
Shareholders shall be deemed to be paid and satisfied upon receipt by Acquiror
from the Escrow Agent of stock certificates representing the requisite number of
Escrow Shares (accompanied by stock powers duly executed and endorsed in blank
covering such shares in accordance with Article 3 of this Escrow Agreement) and
any Additional Corpus allocable to such Escrow Shares. As used in this Escrow
Agreement, the term "Claim" shall have the same meaning as set forth in Section
8.01 of the Merger Agreement as it shall apply to any claim for indemnification
asserted by Acquiror against the Shareholders pursuant to Section 8.01 (or any
other section) of the Merger Agreement. As used in this Escrow Agreement with
respect to entitlement to indemnification under the Merger Agreement, the term
"Acquiror" shall include all parties included in the definition of "Acquiror
Indemnified Parties" as set forth in Section 8.01 of the Merger Agreement.
(b) The delivery to Acquiror of Escrow Shares and Additional Corpus, if
any, applicable to such Escrow Shares, in satisfaction of an indemnification
claim hereunder shall be taken from the accounts of each Shareholder in the
Escrow Fund as nearly as practical on a pro rata basis based on the initial
ownership interest in all Escrow Shares initially deposited hereunder.
ARTICLE 3
PROCEDURE FOR CHARGE TO ESCROW
(a) Any Claim under the indemnification provisions of the Merger
Agreement to be satisfied under this Escrow Agreement shall be made by Acquiror
by notice to the Escrow Agent and the Shareholders' Representative, stating in
specific terms the circumstances giving rise to the Claim, the basis for
indemnification, specifying the amount of the Claim and making a request for any
payment then believed due. A Claim shall be deemed to be finally resolved and
appropriate for payment by the Escrow Agent when the conditions specified in
clause (b) below have been met with respect thereto.
(b) For purposes of this Escrow Agreement, a "Final Instruction" shall
mean a written notice given to the Escrow Agent directing the disbursement from
the Escrow Fund of the amount of the Claim, and shall be signed both by Acquiror
and by the Shareholders'
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<PAGE> 67
Representative except as otherwise provided in clause (ii) or (iii) below. A
Final Instruction shall be delivered to the Escrow Agent under the following
circumstances, and accompanied by the indicated documentation:
(i) If the Shareholders' Representative disputes either the
validity, amount or calculation of the Claim, the Shareholders'
Representative shall give written notice of such dispute to Acquiror,
with a copy to the Escrow Agent, within 30 days after the delivery of
notice of the Claim by Acquiror. Such notice shall set forth the
reasons and basis for disputing such Claim and the amount in dispute.
In such circumstances, no Final Instruction may be given to the Escrow
Agent except as provided in clause (iii) below.
(ii) If the Shareholders' Representative fails to respond to
the Claim within 30 days after the delivery to the Shareholders'
Representative and the Escrow Agent of the notice of the Claim, or if
the Shareholders' Representative notifies the Escrow Agent that there
is no dispute with respect to the Claim, Acquiror shall have the right
to deliver to the Escrow Agent a Final Instruction, signed only by
Acquiror, with respect to the Claim.
(iii) In the case of a dispute, the Escrow Agent shall not
disburse any of the Escrow Fund in connection with the disputed amount
of such Claim until such time as the Escrow Agent receives a Final
Instruction with respect to such disputed Claim as set forth below.
Upon receipt of such notice of dispute by Acquiror, both Acquiror and
the Shareholders' Representative shall use all reasonable efforts to
cooperate and arrive at a mutually acceptable resolution of such
dispute within the next 30 days. If the Shareholders' Representative
and the Acquiror reach an agreement with respect to such dispute, the
Shareholders' Representative and the Acquiror shall give to the Escrow
Agent a Final Instruction, signed by both the Shareholders'
Representative and the Acquiror, with respect to the Claim. If a
mutually acceptable resolution cannot be reached between Acquiror and
the Shareholders' Representative within such 30-day period, either
party may submit the dispute for resolution by binding arbitration
pursuant to the provisions of this Article 3. If a party elects to
submit such matter to arbitration, such party shall provide notice to
the other party of its election to do so, and the parties shall attempt
to appoint a single arbitrator. If the parties are unable within 10
days after receipt of the notice to agree on a single arbitrator, then
each party shall appoint one arbitrator, and the two arbitrators so
appointed shall name a third arbitrator within a period of 10 days of
their nomination. If the two arbitrators fail to appoint a third
arbitrator within such 10-day period, a third arbitrator shall be
appointed pursuant to the then existing Commercial Arbitration Rules
(the "Rules") of the American Arbitration Association ("AAA"). In all
respects, such panel and the arbitration proceeding shall be governed
by the Rules, and the place of arbitration shall be in a city mutually
selected by Acquiror and the Shareholders' Representative (or, if no
city can be mutually agreed upon within 10 days, then in Houston,
Texas). If it is finally determined that all or a portion of such Claim
amount is owed to an Acquiror Indemnified Party, the Acquiror
Indemnified
4
<PAGE> 68
Party shall be entitled to payment of such Claim upon presentation of a
Final Instruction signed by Acquiror and accompanied by a copy of the
arbitration order. Judgment upon the award resulting from arbitration
may be entered in any court having jurisdiction for direct enforcement,
or any application may be made to a court for a judicial acceptance of
the award and an order of enforcement, as the case may be.
(c) Promptly after resolution of a Claim as provided in clause (b)
above, the Escrow Agent shall satisfy such Claim by delivering to Acquiror the
amount of the Escrow Fund calculated in accordance with Section 8.05 of the
Merger Agreement or, if the value of the Escrow Fund held hereunder is less than
the amount of such Claim, by delivering to Acquiror all of the Escrow Fund then
held hereunder. Any Escrow Shares delivered to Acquiror in satisfaction of a
Claim hereunder shall be accompanied by duly executed blank stock powers (in the
form attached as Exhibit B) therefor and any such Escrow Shares so delivered
shall be free and clear of any interest of the Shareholders or Escrow Agent
therein. If the amount of the Escrow Shares to be delivered to Acquiror is not
available in that specified certificate denomination then the Escrow Agent
should request the necessary denomination from the stock transfer agent at the
following address: American Stock Transfer & Trust Company, 40 Wall Street, New
York, NY 10005, Attention: Jennifer Donnovan.
ARTICLE 4
DISPOSITION OF ESCROW FUND
(a) The Escrow Fund held hereunder shall be released by the Escrow
Agent to Shareholders' Representative, on the first to occur of (i) the issuance
of the first audit report following the Closing Date of the consolidated
financial statements of Acquiror which includes the Surviving Corporation and
(ii) the first anniversary of the Closing Date. The date the event described in
either of the preceding clauses (i) and (ii) occurs is referred to herein as the
"Distribution Date." Notwithstanding any other provision hereof, if on the
Distribution Date any unresolved Claim is then pending hereunder, only the
amount of the Escrow Fund having a value in excess of the value required to
satisfy such Claim (Escrow Shares being valued for such purpose in accordance
with Article VIII of the Merger Agreement) as determined in good faith by
Acquiror shall be released to the Shareholders Representative.
(b) At such later time as all Claims have been finally resolved and the
amount of all such Claims has been paid to Acquiror, the balance of the Escrow
Fund then held hereunder, if any, shall be disbursed to the Shareholders'
Representative. The Shareholders' Representative shall have no personal
liability as a result of any actions taken in such position to Acquiror,
Acquisition Sub or any of the Acquiror Indemnified Parties or to any Shareholder
in either case with respect to the disposition of the Escrow Shares or any other
action taken by him as the Shareholders' Representative, unless such actions
constitute gross negligence or willful misconduct.
5
<PAGE> 69
(c) The escrow established by this Escrow Agreement shall continue in
effect until release of the entire Escrow Fund pursuant to the provisions
hereof.
(d) No fractional Acquiror Shares shall be delivered at any time by the
Escrow Agent and the Escrow Agent shall be authorized to adjust shares between
the accounts of the Shareholders to eliminate fractional shares.
ARTICLE 5
PROVISIONS RELATING TO THE ESCROW AGENT
(a) The Escrow Agent shall have no duties or responsibilities
whatsoever with respect to the Escrow Fund except as are specifically set forth
herein. The Escrow Agent shall neither be responsible for or under, nor
chargeable with knowledge of the terms and conditions of, any other agreement,
instrument or document in connection herewith other than Article VIII of the
Merger Agreement, which is incorporated herein by reference. The Escrow Agent
may conclusively rely upon, and shall be fully protected from all liability,
loss, cost, damage or expense in acting or omitting to act pursuant to any
written notice, instrument, request, consent, certificate, document, letter,
telegram, opinion, order, resolution or other writing hereunder without being
required to determine the authenticity of such document, the correctness of any
fact stated therein, the propriety of the service thereof or the capacity,
identity or authority of any party purporting to sign or deliver such document.
The Escrow Agent shall have no responsibility for the contents of any such
writing contemplated herein and may rely without any liability upon the contents
thereof.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or with the rights or powers conferred upon it hereunder, nor for action
taken or omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be of the Escrow Agent's own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or omissions
of any kind except for its own willful misconduct or gross negligence.
(c) Each of the Acquiror and Shareholder's Representative agrees to
jointly and severally indemnify the Escrow Agent and its employees, directors,
officers and agents and hold each harmless against any and all liabilities
incurred by it hereunder as a consequence of such party's action, and the
parties agree jointly and severally to indemnify the Escrow Agent and hold it
harmless against any claims, costs, payments, and expenses (including the fees
and expenses of counsel) and all liabilities incurred by it in connection with
the performance of its duties hereunder and them hereunder, except in either
case for claims, costs, payments and expenses (including the fees and expenses
of counsel) and liabilities incurred by the Escrow Agent resulting from its own
willful misconduct or gross negligence.
(d) The Escrow Agent may resign as such following the giving of 60
days' prior written notice to Acquiror and the Shareholders' Representative.
Similarly, the Escrow Agent
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<PAGE> 70
may be removed and replaced following the giving of 60 days' prior written
notice to the Escrow Agent jointly by Acquiror and the Shareholders'
Representative. In either event, the duties of the Escrow Agent shall terminate
60 days after the date of such notice (or at such earlier date as may be
mutually agreeable), except for its obligations to hold and deliver the Escrow
Fund to the successor Escrow Agent; and the Escrow Agent shall then deliver the
balance of the Escrow Fund then in its possession to such a successor Escrow
Agent as shall be appointed by Acquiror and the Shareholders' Representative as
evidenced by a written notice filed with the Escrow Agent. If Acquiror and the
Shareholders' Representative are unable to agree upon a successor Escrow Agent
by the effective date of such resignation or removal, the then acting Escrow
Agent may petition any court of competent jurisdiction for the appointment of a
successor Escrow Agent or other appropriate relief; and any such resulting
appointment shall be binding upon all of the parties hereto. Upon acknowledgment
by any successor Escrow Agent of the receipt of the then remaining balance of
the Escrow Fund, the then acting Escrow Agent shall be fully released and
relieved of all duties, responsibilities and obligations under this Escrow
Agreement.
(e) The Escrow Agent shall not be bound in any way by any agreement,
other than this Escrow Agreement. A copy of the Merger Agreement, together with
the Schedules and Exhibits thereto, has been provided to the Escrow Agent in
connection with the execution of this Escrow Agreement and the Escrow Agent
understands that the terms of the Shareholders' indemnification obligations are
set forth in Article VIII of the Merger Agreement. The Merger Agreement forms an
integral part of this Escrow Agreement and, therefore, Article VIII thereof is
hereby incorporated by reference herein.
(f) The Escrow Agent shall be under no duty to institute or defend any
arbitration or legal proceeding with respect to the Escrow Fund or under this
Escrow Agreement and none of the costs or expenses or any such proceeding shall
be borne by the Escrow Agent. The costs and expenses of any such proceeding
shall be borne as decided by the arbitrators or court and shall be direct
obligations of Acquiror or the Shareholders' Representative, as the case may be,
and shall not be satisfied in any way by the Escrow Fund.
ARTICLE 6
SECURITY INTEREST
The Shareholders' Representative hereby grants to Acquiror, in the name
of and on behalf of the Shareholders, a first priority security interest in each
of the Shareholder's respective rights, title to and interest in the Escrow Fund
held under this Escrow Agreement, for the purpose of securing, or partially
securing, each and all of their indemnification obligations to Acquiror pursuant
to Article VIII of the Merger Agreement. The Shareholders' Representative agrees
to execute and deliver any such further instruments as Acquiror or Escrow Agent
may request from time to time evidencing such security interest.
7
<PAGE> 71
ARTICLE 7
NOTICES
All notices, requests, demands, claims and other communications which
are required to be or may be given under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered in person
or by courier, (ii) sent by telecopy or facsimile transmission, answer back
requested, or (iii) mailed, by registered or certified mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
(a) If to Acquiror:
Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and
Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
(b) If to the Escrow Agent:
Bankers Trust Company
4 Albany Street
New York, NY 10006
Telecopy: (212) 250-6392
Attention: Tom Hacker
8
<PAGE> 72
(c) If to the Shareholders' Representative:
c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
Telecopy: (303) 623-3525
Attention: Dirk W. McDermott
or to such other address as any party shall have furnished to the other
by notice given in accordance with this Article 7. Such notices shall
be effective, (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by telecopy or
facsimile transmission, when the answer back is received, or (iii) if
mailed, upon the earlier of five business days after deposit in the
mail and the date of delivery as shown by the return receipt therefor.
ARTICLE 8
BINDING EFFECT; OTHER INTERESTS
This Escrow Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns. Nothing herein is intended or
shall be construed to give any other person (including, without
limitation, any creditors of Escrow Agent, Acquiror, the Company or the
Shareholders' Representative) any right, remedy or claim under, in or
with respect to this Escrow Agreement or the Escrow Fund held
hereunder. The Escrow Agent shall not have a lien or adverse claim
upon, or any other right whatsoever to payment from, the Escrow Fund
(or dividends or distributions paid thereon) for or on account of any
right to payment or reimbursement hereunder or otherwise.
ARTICLE 9
GOVERNING LAW
This Escrow Agreement shall be construed and enforced in
accordance with the laws of the State of Texas, excluding any choice of
law rules that may direct the application of the laws of another
jurisdiction.
ARTICLE 10
COMPENSATION; EXPENSES
The Escrow Agent shall be entitled to payment from Acquiror
for customary fees and expenses for all services rendered by it
hereunder in accordance with Exhibit C attached hereto (as such
schedule may be amended from time to time), payable on the closing
date. The Escrow Agent shall also be entitled to reimbursement on
demand for all loss, liability, damage or expenses paid or incurred by
it in the administration of its
9
<PAGE> 73
duties hereunder, including, but not limited to, all counsel, advisors'
and agents' fees and disbursements and all taxes or other governmental
charges, such amounts to be shared equally between the Acquiror and the
Shareholders' Representative.
ARTICLE 11
TERM
This Escrow Agreement shall terminate on the later of (i) the
Distribution Date or (ii) the date on which all Claims, if any,
asserted by Acquiror pursuant to the terms of this Escrow Agreement and
the Merger Agreement shall have been conclusively resolved and paid
pursuant to this Escrow Agreement and the Merger Agreement. The rights
of the Escrow Agent and the obligations of the other parties hereto
under Articles 5 and 10 shall survive the termination thereof and the
resignation or removal of the Escrow Agent.
ARTICLE 12
AMENDMENT AND MODIFICATION
Acquiror, Shareholders' Representative and the Escrow Agent
may amend, modify and/or supplement this Escrow Agreement as they may
mutually agree in writing.
ARTICLE 13
COUNTERPARTS
This Escrow Agreement may be executed in two or more
counterparts or by facsimile, each of which shall be deemed an
original, but all of which together shall constitute but one and the
same instrument.
ARTICLE 14
HEADINGS
The headings used in this Escrow Agreement are for convenience
only and shall not affect the construction hereof.
ARTICLE 15
ASSIGNABILITY
Neither this Escrow Agreement nor any interest herein or in
the Escrow Fund may be assigned or transferred, voluntarily or by
operation of law, by Acquiror, the Shareholders' Representative or the
Escrow Agent, except pursuant to the laws of descent and distribution;
provided, however, that Acquiror may assign this Escrow Agreement and
any or all interest herein to any direct or indirect wholly owned
subsidiary of Acquiror upon notice to all parties and, thereupon such
assignee shall fully assume and
10
<PAGE> 74
succeed to all of the assignors' rights, benefits, obligations, duties
and responsibilities hereunder.
Notwithstanding the foregoing, if the Shareholders'
Representative is unable or unwilling to carry out his duties as
Shareholders' Representative, then the Shareholder who beneficially
held the next highest number of shares of Company Stock immediately
prior to the Effective Time (unless such Shareholder is then employed
or serves as a director of Acquiror or its affiliates), shall be
designated and appointed as the Shareholders' Representative, and shall
assume all of the powers and duties of the Shareholders' Representative
under the Merger Agreement and the Escrow Agreement. If any successor
Shareholders' Representative becomes unable or unwilling to carry out
his duties as Shareholders' Representative, his replacement shall be
the Shareholder who beneficially held next highest number of shares of
Company Stock immediately prior to the Effective Time.
ARTICLE 16
TAX WITHHOLDING
Notwithstanding anything to the contrary set forth herein, the
Escrow Agent is authorized to withhold from any proposed distribution
to the Shareholders from the Escrow Fund such amount as is necessary
for the purpose of complying with the Escrow Agent's obligations under
federal, state or local tax provisions; provided, however, that such
withholding shall not reduce the amount of the Escrow Fund which may
otherwise be required to be delivered to Acquiror under Article 3
hereof. In the event that there are insufficient funds remaining to pay
any withholding obligations after distribution of the Escrow Funds to
Acquiror, such liability shall be the responsibility of the
Shareholders.
ARTICLE 17
SEVERABILITY
If any term, provision, covenant or restriction of this Escrow
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provision, covenants
and restrictions of this Escrow Agreement shall continue in full force
and effect and shall in no way be affected, impaired or invalidated
unless such an interpretation would materially alter the rights and
privileges of any party hereto or materially alter the terms of the
transactions contemplated hereby.
ARTICLE 18
DESIGNEES FOR INSTRUCTIONS
Acquiror may, by notice to the Escrow Agent, designate one or
more persons who will execute notices and from whom the Escrow Agent
may take instructions hereunder. Such designations may be changed from
time to time upon notice to the Escrow Agent
11
<PAGE> 75
from Acquiror. The Escrow Agent will be entitled to rely conclusively
on any notices or instructions from any person so designated by
Acquiror.
ARTICLE 19
MEDIATION AND ARBITRATION
(a) Except as provided in Article 3 of this Escrow Agreement
for disputes relating to claims against the Escrow Fund:
(i) Before the institution of any litigation between any
persons relating to this Escrow Agreement, including any dispute over
the application or interpretation of any provision hereof, if
negotiations and other discussions fail, at the election of any party
to this Escrow Agreement, such dispute shall be first submitted to
mediation in accordance with the provisions of the Commercial Mediation
Rules of the AAA before resorting to arbitration. The parties agree to
conduct the mediation in good faith and make reasonable efforts to
resolve their dispute by mediation. The place of the mediation shall be
in a city mutually selected by the parties (or, if no city can be
mutually agreed upon within ten (10) days, then in Houston, Texas).
(ii) If the dispute is not resolved by the mediation required
under the preceding subsection, such dispute shall, at the election of
any party to this Escrow Agreement, be subject to binding arbitration
in accordance with the provisions of the Rules, and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be heard before a panel of
three (3) arbitrators selected in accordance with the procedures
therefor set forth in Article 3 of this Escrow Agreement. The parties
agree to use the Houston, Texas office of the AAA and the place of
arbitration shall be in a city mutually selected by the parties (or, if
no city can be mutually agreed upon within ten (10) days, then in
Houston, Texas).
(iii) The prevailing party in any mediation, arbitration or
litigation shall be entitled to recover from the other party reasonable
attorneys' fees, court costs and the administrative costs, fees and
expenses of the AAA, each as applicable, incurred in the same, in
addition to any other relief that may be awarded.
(b) If either party appeals the decision of the arbitrators, the
parties agree that the United States Judicial District including Harris County,
Texas, and the state courts within Harris County, Texas, shall have exclusive
venue and jurisdiction of same.
12
<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Escrow Agreement as of the day and year first above written.
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., its Sole Managing Director
By:
----------------------------------------
Jacobus Schouten
Managing Director
CORE COLORADO ACQUISITION, INC.
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
COHERENCE TECHNOLOGY COMPANY, INC.
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SHAREHOLDERS' REPRESENTATIVE:
By:
----------------------------------------
Name: Dirk W. McDermott
13
<PAGE> 77
BANKERS TRUST COMPANY, as Escrow Agent
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
14
<PAGE> 78
Exhibit A to
Escrow Agreement
ESCROW SHARES OF SHAREHOLDERS
<TABLE>
<CAPTION>
SHAREHOLDER ESCROW AGREEMENT
<S> <C>
Alexis M. Cranberg 5,939
McDermott & Associates, L.L.C. 5,065
Altira Technology Fund I, L.L.C. 2,361
James R. Newell 2,115
R. Chaney & Partners II, L.P. 1,389
Patrick G. Keenan 186
-------------------
Total 17,055
===================
</TABLE>
15
<PAGE> 79
Exhibit B to
Escrow Agreement
CORE LABORATORIES N.V.
COMMON STOCK
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________ __________________ (______) shares of the Common Stock of
Core Laboratories N.V., standing in my(our) name(s) on the books of said
Corporation represented by Certificate(s) No(s). _________ herewith, and do
hereby irrevocably constitute and appoint Bankers Trust Company attorney to
transfer the said stock on the books of said Corporation with full power of
substitution in the premises.
Dated:
----------------------
*By:
------------------------------------
*By:
------------------------------------
16
<PAGE> 80
Exhibit C to
Escrow Agreement
BANKERS TRUST COMPANY
CORPORATE TRUST AND AGENCY SERVICES
SCHEDULE OF FEES FOR
CORE LABORATORIES & COHERENCE TECHNOLOGY COMPANY ESCROW
A. Annual Administration Fee: $4,000
(Payable at closing and each subsequent anniversary)
These fees cover the review and execution of the Escrow Agreement,
establishment of the appropriate custody account, the receipt and
distribution of the Escrowed Shares, and all normal administrative time
spent coordinating with other members of the working group.
Note: The fees set forth in this schedule are subject to review of
documentation. The fees are also subject to change should circumstances warrant.
Out-of-pocket expenses and disbursements, including counsel fees, incurred in
the performance of our duties will be added to the billed fees. Fees for any
services not covered in this or related schedules will be based upon our
appraisal of the services rendered.
We may place orders to buy/sell financial instruments with outside
broker-dealers that we select, as well as with BT or its affiliates. These
transactions (for which normal and customary spreads or other compensation may
be earned by such broker-dealers, including BT or its affiliates, in addition to
the charges quoted above) will be executed on a riskless principal basis solely
for your account(s) and without recourse to us or our affiliates. If you choose
to invest in any mutual fund, BT and/or our affiliates may earn investment
management fees and other service fees/expenses associated with these funds as
disclosed in the mutual fund prospectus provided to you, in addition to the
charges quoted above. Likewise, BT has entered into agreements with certain
mutual funds or their agents to provide shareholder services to those funds. For
providing these shareholder services, BT is paid a fee by these mutual funds
that calculated on an annual basis does not exceed 25 basis points of the amount
of your investment in these mutual funds. In addition, if you choose to use
other services provided by BT or its affiliates, Corporate Trust or other BT
affiliates may be allocated a portion of the fees earned. We will provide
periodic account statements describing transactions executed for your
account(s). Trade confirms will be available upon your request at no additional
charge. If a transaction should fail to close for reasons beyond our control, we
reserve the right to charge our acceptance fee plus reimbursement for legal fees
incurred.
Shares of mutual funds are not deposits or obligations of, or guaranteed by,
Bankers Trust Company or any of its affiliates and are not insured by the
Federal Deposit Insurance Corporation or any other agency of the U.S.
JUNE, 1998
17
<PAGE> 81
Exhibit D to
Escrow Agreement
ABA # 021001033
Acct # 01419647
Ref: Core Laboratories
Elizabeth Eukers/Environmental Escrow
18
<PAGE> 82
EXHIBIT B
APPOINTMENT OF
SHAREHOLDERS' REPRESENTATIVE
19
<PAGE> 83
APPOINTMENT OF SHAREHOLDERS' REPRESENTATIVE
This Appointment of Shareholders' Representative, dated as of June 9,
1999 (the "Appointment"), is made and entered into by and among Dirk W.
McDermott, as the agent and attorney-in-fact (the "Shareholders'
Representative"), and the persons listed under the heading "Shareholders" on the
signature page of this Appointment, as the principals (individually, a
"Shareholder", and collectively, the "Shareholders"). This is the Appointment
required by Section 1.06(a) of that certain Agreement and Plan of Merger, dated
as of this date (the "Merger Agreement"), entered into by and among Core
Laboratories N.V., a Netherlands limited liability company ("Acquiror"), Core
Colorado Acquisition, Inc. a Colorado corporation ("Acquisition Sub"), Coherence
Technology Company, Inc., a Colorado corporation (the "Company"), and the
Shareholders of Coherence Technology Company, Inc. Capitalized terms used but
not defined in this Appointment shall have the meanings given to them in the
Merger Agreement or in the Escrow Agreement. This Appointment is subject to the
terms and conditions of the Merger Agreement, the Escrow Agreement, and the
other transaction documents referenced in the Merger Agreement, each of which is
hereby incorporated by reference.
RECITALS
WHEREAS, the Shareholders collectively are the legal and beneficial
owners and holders of record of all of the issued and outstanding Company Common
Stock; and
WHEREAS, pursuant to the Merger Agreement, Acquisition Sub will be
merged with and into the Company, with the Company as the Surviving Corporation
of the Merger, and the Company Stock of each Shareholder will be converted into
Acquiror Shares based on the Exchange Ratio, and certain of the Acquiror Shares
of each Shareholder will be deposited into escrow, upon the terms and subject to
the conditions of the Merger Agreement and Escrow Agreement; and
WHEREAS, each of the Shareholders desires to appoint Shareholders'
Representative as his agent and attorney-in-fact for the specific purposes set
forth herein in connection with the performance of the Escrow Agreement and
provisions of the Merger Agreement specifically relating thereto; and
WHEREAS, the parties acknowledge that Acquiror will be relying upon
this Appointment in entering into the Merger Agreement and Escrow Agreement, and
in consummating the Merger, and consent to such reliance.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants stated in this Agreement, and the
other good and valuable consideration exchanged between the parties, the receipt
and sufficiency of which is hereby acknowledged, the parties intending to be
legally bound agree as follows:
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<PAGE> 84
AGREEMENTS
1. APPOINTMENT. Each of the Shareholders hereby irrevocably makes,
constitutes, and appoints Shareholders' Representative as his agent and true and
lawful attorney-in-fact, for him, and in his name, place, and stead, to do any
and all of the following:
a. To execute, amend, deliver, acknowledge, file, certify,
waive, and perform pursuant to the terms of the Escrow Agreement, and to take
and perform all other acts and execute and deliver all other documents that are
necessary or advisable to give effect to and fully perform the Escrow Agreement,
as Shareholders' Representative determines in his sole discretion to be in the
best interests of the Shareholders;
b. To give and receive all notices and other communications,
whether written and oral, on such Shareholder's behalf with respect to the
Escrow Agreement;
c. To act and perform, or not act or perform, as Shareholders'
Representative determines in his sole discretion to be in the best interests of
the Shareholders, with respect to any notices or other communications, whether
written or oral, received with respect to the Agreement;
d. To control the disposition of the Escrow Funds of each
Shareholder in accordance with the terms of the Escrow Agreement, including, but
not limited to, paying or otherwise settling all Claims against such Escrow
Funds;
e. To execute, amend, deliver, acknowledge, file, certify,
waive, and perform all instruments, certificates, and other documents required
by or necessary or advisable to perform under this Appointment;
f. To take, or not take, such other actions relating to the
foregoing which a person with the authority granted to Shareholders'
Representative hereunder could reasonably be expected to perform, or not
perform, as the case may be; and
g. With respect to any claims for indemnification by the
Acquiror Indemnification Parties under the Escrow Agreement, to adjust and upon
release of the Escrow Funds to reallocate the Escrow Funds between the accounts
of the Shareholders to reflect, as nearly as practicable and as determined in
good faith by the Shareholders' Representative, (i) a pro rata reduction of the
Shareholders' accounts in satisfaction of claims arising out of a breach by the
Company (in the event that previous reductions in such accounts were not
effected on a pro rata basis) and/or (ii) an individual reduction of the account
or accounts of any Shareholder or Shareholders with respect to claims arising
out of a breach attributable to such Shareholder or Shareholders to the extent
that any other Shareholders' account has been reduced in respect to
2
<PAGE> 85
such breach. It is understood and agreed that Dan Morris shall be entitled, if
at all, to receive his share of the Escrow Funds only in cash.
In performing under this Appointment, every act and performance, or
failure to act and perform, shall be with the same effect as if the Shareholders
were acting and performing, or not doing so, personally for themselves and in
their own names, and each Shareholder hereby agrees to be bound by and ratifies
and confirms as his own act all the Shareholders' Representative shall do, or
cause to be done, under this Appointment. Further, every act and performance, or
failure to act and perform, by Shareholders' Representative shall be conclusive
evidence of his determination that such act and performance, or refusal to do
so, was in the best interests of the Shareholders.
2. LIMITATION OF LIABILITY. Notwithstanding any provision in this
Appointment to the contrary, the Shareholders' Representative shall have no
personal liability to any of the Shareholders, Acquiror, Acquisition Sub, or any
other person, as a result of any actions taken, or not taken, under this
Appointment, unless such actions constitute gross negligence or willful
misconduct by the Shareholders' Representative.
3. REVIEW OF TRANSACTION DOCUMENTS. Each of the Shareholders represents
and warrants to the Shareholders' Representative that he has read the Merger
Agreement, the Escrow Agreement, and the other transaction documents referenced
in the Merger Agreement by which he is bound, and understands his rights,
liabilities, and obligations thereunder. Each of the Shareholders agrees that,
as to each liability or obligation of his under the Escrow Agreement, he will
promptly perform all actions requested by the Shareholders' Representative with
respect thereto (including, but not limited to, making payment of or otherwise
settling any indemnification obligation under Article VIII of the Merger
Agreement).
4. COMPENSATION. The Shareholders' Representative shall not be entitled
to any compensation for performing under this Appointment.
5. IRREVOCABLE; TERMINATION.
a. The death or incapacity of any Shareholder shall not
terminate this Appointment. This Appointment is irrevocable and subject only to
termination pursuant to the following subsection. The appointment of
Shareholders' Representative is coupled with an interest in that Shareholders'
Representative is also a beneficial Shareholder, and thereby has a present,
legal and beneficial interest in the Company Stock.
b. This Appointment shall become effective at the Effective
Date and shall terminate, without any notice or further action on the part of
any party hereto, upon the natural expiration, or earlier termination, of the
Escrow Agreement or with respect to any particular Shareholders at such earlier
time as that Shareholder no longer holds any Escrow Shares or
3
<PAGE> 86
Additional Corpus (the "Termination Date"). From and after the Termination Date,
the Shareholders' Representative shall have no further liability or obligation
with respect to the Shareholders or Shareholder, as the case may be, under this
Appointment (except for any liability or obligation accruing prior to the
Termination Date).
6. SUBSTITUTE SHAREHOLDERS' REPRESENTATIVE. In the event the
Shareholders' Representative dies or earlier resigns from this Appointment or is
otherwise unable or unwilling to carry out his duties as the Shareholders'
Representative, then the Shareholder who beneficially held the next highest
number of shares of Company Stock immediately prior to the Effective Time
(unless such Shareholder is then employed or serves as a director of Acquiror or
its affiliates), shall be designated and appointed as the Shareholders'
Representative, and shall assume all of the powers and duties of the
Shareholders' Representative under this Appointment. If any successor
Shareholders' Representative becomes unable or unwilling to carry out his duties
as Shareholders' Representative, his replacement shall be the Shareholder who
beneficially held next highest number of shares of Company Stock immediately
prior to the Effective Time. Any successor Shareholders' Representative shall
perform subject to the terms and conditions of this Appointment as then in
effect and have the identical duties and functions of the Shareholders'
Representative hereunder.
7. INDEMNIFICATION OF SHAREHOLDERS' REPRESENTATIVE. The Shareholders,
jointly and severally, agree to indemnify and hold the Shareholders'
Representative harmless from and against any loss, liability, damage, cost, or
expense (including, but not limited to, legal fees and expenses) incurred by him
arising out of or in connection with the Shareholders' Representative's
performance under this Appointment.
8. NOTICES. Any notice required or permitted by this Appointment shall
be in writing and shall be sufficiently given if personally delivered, mailed by
certified or registered mail, return receipt requested, facsimile or sent by
Federal Express (or other guaranteed and receipted delivery service) to the
Shareholders' Representative at c/o Altira Group, L.L.C., 1625 Broadway, Suite
2150, Denver, Colorado 80202-4725, Telecopy: (303) 623-3525, Attention: Dirk W.
McDermott, and to each Shareholder at the address listed for him on the
signature page of this Appointment, (or such other addresses as specified by
written notice timely given to the other parties). Any notice given in
accordance with this section is effective three (3) business days after the date
on which the same was delivered or deposited, as applicable for the notice
procedure used.
9. MISCELLANEOUS.
a. ASSIGNABILITY; BINDING EFFECT. This Appointment is
personal to the Shareholders' Representative and the Shareholders. Except as
otherwise herein, no party may assign or delegate any rights or obligations
under this Appointment without the prior written
4
<PAGE> 87
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
b. WAIVER. There can be no waiver of any term, provision, or
condition of this Appointment which is not in writing signed by the party
against whom the waiver is sought to be enforced. Waiver by any party of the
default or breach of any provision of this Appointment by another shall not
operate or be construed as a waiver of any subsequent default or breach.
c. SEVERABILITY. If any one or more of the provisions of this
Appointment for any reason is held to be illegal, invalid, or unenforceable, the
illegality, invalidity, or unenforceability will not affect, impair, or
invalidate any other provision of this Appointment, which will be construed as
if the illegal, invalid, or unenforceable provision had not been contained in
the Appointment and, in lieu thereof, there will be added automatically as a
part of this Appointment a provision as similar in terms to the illegal,
invalid, or enforceable provision as possible and be legal, valid, and
enforceable.
d. FURTHER ASSURANCES. The parties agree to take such further
actions, including the execution and delivery of any documents, as may be
required, necessary, or desirable for the performance of this Appointment.
e. ENTIRE AGREEMENT; HEADINGS; INCORPORATION BY REFERENCE.
This Appointment, together with the other documents, exhibits, schedules, and
instruments referred to herein, constitutes the entire agreement between the
parties relating to the subject matter hereof, and supersedes all previous
agreements, written or oral. Except as provided otherwise in this Appointment,
this Appointment shall not be amended or modified except by an instrument in
writing signed by all parties. Headings are for convenience of reference only
and shall not affect the interpretation or construction of this Appointment. All
exhibits, schedules, documents, and instruments referred to in this Appointment
are incorporated by reference for all purposes.
f. GOVERNING LAW: ATTORNEY'S FEES. Any dispute between the
parties relating to this Appointment shall be construed under and in accordance
with the laws of the State of Texas, and applicable federal law, and is fully
performable in Houston, Texas. The prevailing party in any litigation shall be
entitled to recover from the other party reasonable attorney's fees and court
costs incurred in the same, in addition to any other relief that may be awarded.
g. MULTIPLE COUNTERPARTS. This Appointment may be executed in
multiple counterparts, each of which shall constitute an original and all of
which shall constitute one document; and furthermore, a facsimile signature
shall be deemed an original.
5
<PAGE> 88
IN WITNESS WHEREOF, the parties have executed this Appointment and
caused the same to be duly delivered on their behalf on the date first written
above.
[signatures on following page]
6
<PAGE> 89
SHAREHOLDERS' REPRESENTATIVE
------------------------------------------
Dirk W. McDermott
Address: c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
SHAREHOLDERS
------------------------------------------
Alexis M. Cranberg
511 - 16th Street, No. 300
Denver, Colorado 80202
McDermott & Associates, L.L.C.
------------------------------------------
Dirk W. McDermott
c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
Altira Technology Fund I, L.L.C.
------------------------------------------
Dirk W. McDermott
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
R. Chaney & Partners II, L.P.
------------------------------------------
Jason E. Whitley, Executive Vice President
c/o R. Chaney & Co., Inc.
909 Fannin, Suite 1275
Houston, Texas 77010-1006
7
<PAGE> 90
------------------------------------------
James R. Newell
2165 South Parfet Court
Lakewood, Colorado 80227
------------------------------------------
Patrick G. Keenan
707 St. Ives Court
Houston, Texas 77079
------------------------------------------
Daniel S. Morris
2332 North Boulevard
Houston, Texas 77098
8
<PAGE> 91
EXHIBIT C
FORM OF COMPANY AFFILIATES' LETTER
<PAGE> 92
AFFILIATE'S AGREEMENT
Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Ladies and Gentlemen:
The undersigned has been advised that as of the date of the Acquisition
Agreement (as defined below), the undersigned may have been deemed to be an
"affiliate" of Coherence Technology Company, Inc., a Colorado corporation (the
"Company"), as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act").
Pursuant to the terms of that certain Agreement and Plan of Merger by
and among Core Laboratories N.V., a Netherlands limited liability company (the
"Acquiror"), Core Colorado Acquisition, Inc., a Colorado corporation and a
wholly owned subsidiary of Acquiror, and the Company dated as of June 9, 1999
(the "Merger Agreement"), the undersigned received common shares, par value 0.03
Dutch guilders per share, of Acquiror ("Acquiror Shares").
The undersigned understands that the Merger (as defined in the Merger
Agreement) will be treated for financial accounting purposes as a "pooling of
interests" in accordance with United States generally accepted accounting
principles and that the staff of the SEC has issued certain guidelines that
should be followed to ensure the pooling of the entities.
In consideration of the agreements contained herein, Acquiror's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby represents, warrants and agrees
that (i) the undersigned has not made any sale, transfer or other disposition of
Acquiror Shares during the period commencing 30 days before the Closing (as
defined in the Merger Agreement) and (ii) the undersigned will not make any
sale, transfer or other disposition of Acquiror Shares from the Closing until
such time as financial statements that include at least 30 days of combined
operations of Acquiror and the Company after the Closing shall have been
publicly reported, unless the undersigned shall have delivered to Acquiror prior
to any such sale, transfer or other disposition, a written opinion from Arthur
Andersen LLP, independent public accountants for Acquiror, or a written
no-action letter from the accounting staff of the SEC, in either case in form
and substance reasonably satisfactory to Acquiror, to the effect that such sale,
transfer or other disposition will not cause the Merger not to be treated as a
"pooling of interests" for financial accounting purposes in accordance with
United States generally accepted accounting principles and the rules,
regulations and interpretations of the SEC and (iii) the undersigned will
1
<PAGE> 93
not make any sale, transfer or other disposition of any Acquiror Shares received
by the undersigned pursuant to the Merger in violation of the Securities Act or
the Rules and Regulations.
The undersigned also understands and agrees that stop transfer
instructions will be given to Acquiror's transfer agent with respect to the
Acquiror Shares received by the undersigned pursuant to the Merger and that
there will be placed on the certificates representing such Acquiror Shares, or
any substitutions therefor, a legend stating in substance as follows:
"These shares may only be transferred in accordance with the terms of
an Affiliate's Agreement between the original holder of such shares and
Core Laboratories N.V., a copy of which agreement is on file at the
principal offices of Core Laboratories N.V."
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By:
-----------------------------------
Address:
ACCEPTED this
____ day of ___________________, 1999
CORE LABORATORIES N.V.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
2
<PAGE> 94
EXHIBIT D
FORM OF EMPLOYMENT CONTRACT
<PAGE> 95
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of July 1, 1999 (the "Effective Date") by and between Core
Laboratories, Inc., a Delaware corporation ("Company"), and _______________
("Employee").
R E C I T A L S :
A. The Company is a corporation duly organized under the laws of the
State of Delaware.
B. Employee has sold his shares in Coherence Technology Company, Inc.
to Company's parent company, Core Laboratories N.V., and has benefited as a
shareholder from the acquisition by Company's parent company of all of the
outstanding capital stock of Coherence Technology Company, Inc. pursuant to the
Agreement and Plan of Merger dated June 9, 1999 among Core Laboratories N.V.,
Core Colorado Acquisition, Inc., Coherence Technology Company, Inc. and the
stockholders of Coherence Technology Company, Inc. (the "Merger Agreement").
C. The Company desires to employ Employee, and Employee desires to be
employed by the Company, to provide services for the Company and Company's
customers pursuant to the provisions of this Agreement.
A G R E E M E N T S :
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements in this Agreement, the parties do agree and
covenant as follows, intending to be legally bound:
1. EMPLOYMENT.
1.1. Engagement. The Company employs Employee, and Employee accepts
employment with Company, as _______________ of the CTC Division (and in such
other positions to which Employee may be assigned by Company) to render services
to Company and to the customers of Company, as determined by the Board of
Directors of Company (the "Board") and the appropriate authorized officers and
agents of Company. Employee shall maintain regular full-time office/work hours
in accordance with Company policies. Except as may be otherwise provided for in
this Agreement, during the term of this Agreement, Employee shall not, without
the prior written consent of Company, render compensable services except as an
employee of Company or directly or indirectly engage in any business activity
that competes with the business of Company, that duplicates a service provided
by Company, or that is adverse to the business of Company.
1
<PAGE> 96
1.2. Right to Fees. Any and all Service Fees generated during the term
of this Agreement shall belong to Company. "Service Fees" shall include, but not
be limited to, fees or remuneration generated by the provision of services by
Employee in Employee's capacity as an employee of Company. It is specifically
understood and agreed that Employee shall have no right or claim to any portion
of Service Fees, except as otherwise provided in this Agreement or by policies
adopted by the Board or the authorized officers of Company.
1.3. Customer Agreements. From time to time Company may enter into
agreements with customers or suppliers that may require Company and/or Employee
to engage in certain activities. Employee will fully cooperate in such
activities and will comply with any and all requirements of any customer or
supplier agreement to which Company becomes a party. Employee shall have no
authority to, and shall not, execute agreements binding Company unless Employee
is a duly authorized officer or agent of Company acting as authorized.
1.4. Records of Company. During the term of this Agreement or any time
thereafter, Employee shall not induce, solicit, or encourage any customer who
has received or is receiving products or services from Company to seek such
products or services from another source, including Employee. All business,
financial, or other records, papers, and documents generated by Employee,
Company, or employees or agents of Company shall belong to Company, and Employee
shall have no right to keep or retain such records, papers, or documents after
this Agreement is terminated.
2. DUTIES.
2.1. Professional Duties. Employee shall provide services exclusively
for Company at facilities used by Company or at other locations as Company
determines. Employee shall not render compensable services except as an employee
of Company. Employee agrees to use Employee's best efforts in performing
Employee's duties. Employee's essential duties shall also include without
limitation:
2.1.1. Keeping and maintaining, or causing to be kept and
maintained, appropriate records, reports, claims, and
correspondence necessary and appropriate in
connection with all services rendered by Employee
under this Agreement, all of which records, reports,
claims, and correspondence shall belong to Company;
2.1.2. Promoting the business of Company;
2.1.3. Attending to the administrative duties of the
business of Company;
2.1.4. Performing all acts reasonably necessary to maintain
and improve Employee's skills;
2.1.5. Assisting Company in fulfilling its contractual
obligations, if any; and
2.1.6. Providing services to customers of Company in
accordance with standards and policies adopted by
Company from time to time.
2
<PAGE> 97
3. COMPENSATION.
3.1. Base Salary. The monthly base salary of Employee shall
be__________________ and ___/100 Dollars ($_______) during the first year of
this Agreement. After the first year of this Agreement, the base salary of
Employee may be adjusted by Company at its discretion. The base salary shall be
payable in accordance with Company's schedule and policies.
3.2. Employment Taxes. Company shall withhold on behalf of Employee
appropriate employment taxes.
3.3. Leave Time. Employee shall be entitled to vacation and other leave
time in accordance with Company's policies. Paid vacation and leave time shall
not increase the base salary or other compensation of Employee under this
Agreement. Employee shall schedule vacation and leave time with reasonable
notice to Company.
3.4. Other Benefits. Company may provide and make available to Employee
other benefits of employment as determined by the Board, such as health, group
disability, and group life insurance. Company does not guarantee or make any
warranties regarding the insurability of Employee.
4. TERM AND TERMINATION.
4.1. Term. The initial term of this Agreement shall commence on the
Effective Date and shall continue for a period of one year, unless sooner
terminated in accordance with the terms of this Agreement.
4.2. Termination For Cause.
4.2.1. By Company. Company may terminate this Agreement
immediately upon notice to Employee for any of the following reasons, which
shall be deemed to be "cause":
4.2.1.1. Employee's failure or refusal to perform the duties
required under this Agreement or to comply with the policies, standards, and
regulations of Company that may be established from time to time, that apply to
all Company employees;
4.2.1.2. Employee's conviction in a court of competent
jurisdiction of any felony offense or of any misdemeanor offense involving moral
turpitude;
4.2.1.3. The commission by Employee of (i) any criminal
offense other than minor traffic violations, (ii) any public or private conduct
that offends decency or morality, causes Employee to be held in public ridicule
or scorn, or causes a public scandal, or (iii) any conduct that may harm the
reputation or operations of Company or that is detrimental to the interests of
Company;
3
<PAGE> 98
4.2.1.4. Employee, for reasons other than illness, disability,
family emergency, vacation scheduled in advance with reasonable notice to
Company, or holidays, devotes less than Employee's full time to Employee's
duties under this Agreement;
4.2.1.5. Employee takes any action, fails to take any action,
engages in any activity, the result of which is contrary to the interest of
Company, or in any way violates Company's ethics policy.
4.2.2. By Employee. Employee may terminate this Agreement
immediately upon written notice to Company, which notice shall describe the
reason for termination, for either of the following reasons:
4.2.2.1. Company dissolves;
4.2.2.2. Company materially fails to perform
its duties under this Agreement and such failure continues for thirty (30) days
after receipt of written notice.
4.3. Termination Without Cause. After the initial term, this Agreement
may be terminated immediately by Employee or Company without cause. In the event
of notice by either party of termination without cause, Company may limit
Employee's activities during the notice period or Company may impose any other
restrictions it deems necessary and reasonable.
4.4. Termination upon Death or Disability. This Agreement shall
automatically terminate upon Employee's death. Any salary, bonus, or fringe
benefits due at the time of death shall be paid on a pro rata basis. This
Agreement shall also be deemed to terminate upon the commencement date of
Employee's disability that does or is expected to continue for ninety (90) days.
For purposes of this Agreement, the term "disability" means a documented illness
or incapacity that keeps or is expected to keep Employee from resuming
Employee's full-time duties for at least ninety (90) days; provided, however,
that such ninety (90) day period shall not be deemed to be broken if Employee
returns to work for no more than three consecutive working days during any given
attempt to resume his or her regular work schedule.
4.5. Effect of Termination. Upon any termination of this Agreement,
Company shall pay Employee the compensation due through the date of termination
as full and final satisfaction of the terms of this Agreement, and Employee
shall have no further claims against Company for compensation.
4
<PAGE> 99
5. OUTSIDE ACTIVITIES AND NONCOMPETITION.
5.1. Covenant Not to Compete. Employee recognizes that Company's
decision to enter into this Agreement is induced primarily because of the
covenants and assurances made by Employee in this Agreement, that such covenants
and assurances are a precondition to Employee's right to receive payments from
Company's parent company in the form of stock in exchange for his shares in
Coherence Technology Company, Inc., that Employee's covenant not to compete is
necessary to ensure the continuation of the business of Company and the
reputation of Company and the receipt and enjoyment of the benefits of the
purchase of Coherence Technology Company, Inc., and that irrevocable harm and
damage will be done to Company if Employee competes with Company. Therefore,
Employee agrees that for a period of _____ years following the Effective Date or
for a period of _____ year after the termination for any reason of Employee's
employment with Company, whichever period is greater, Employee shall not,
directly or indirectly, as an employee, employer, contractor, consultant, agent,
principal, shareholder, corporate officer, director, or in any other individual
or representative capacity, engage or participate in any business or enterprise
within Texas, Louisiana, Oklahoma, or Colorado (the "Noncompetition Territory")
that is in competition in any manner whatsoever with the business of Company or
any affiliate of Company (including, without limitation, Core Laboratories N.V.
and its subsidiaries) without the prior written permission of Company. The
parties mutually acknowledge all of the following:
(a) Employee's covenant not to compete is reasonable and is
given as consideration for a portion of Employee's compensation and for
a portion of the sales price for the shares of Coherence Technology
Company, Inc.
(b) In exchange for Employee's covenants to Company in this
Agreement, Company is furnishing to Employee, in addition to Employee's
compensation, valuable consideration, including without limitation:
(i) full access to an established customer base;
(ii) the availability of expensive operating
equipment, office equipment, and a trained and
adequate staff; and
(iii) specialized training, as necessary, to provide
services according to Company's standards.
(c) If Employee should render services within the
Noncompetition Territory in competition with the business of Company,
it would cause economic harm and loss of goodwill to Company resulting
in immediate and irreparable loss, injuries, and damage to Company.
5
<PAGE> 100
Neither the public in general nor any customers will be
adversely affected by the enforcement of the noncompetition
covenant, in that other similar providers of similar services
are readily available within the restricted area.
5.2. Ancillary Agreement. This covenant not to compete shall be
construed as an agreement ancillary to the other provisions of this Agreement
and to the Merger Agreement, and the existence of any claim or cause of action
of Employee against Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Company of this covenant.
Without limiting other possible remedies to Company for breach of this covenant,
Employee agrees that injunctive or other equitable relief will be available to
enforce the covenants of this provision, such relief to be without the necessity
of posting a bond, cash or otherwise.
5.3. Enforcement. Company and Employee further agree that if any
restriction in this Article is held by any court to be unenforceable or
unreasonable, a lesser restriction will be enforced in its place and the
remaining restrictions in this Agreement will be enforced independently of each
other. Employee agrees to pay any attorney's fees, court costs, and expenses
incurred by Company if Company chooses, in its sole discretion, to enforce any
provision under this Article and Company prevails.
5.4. Survival. The provisions of this Article shall survive the
termination of this Agreement.
6. CONFIDENTIALITY OF INFORMATION.
Employee agrees to keep confidential and not to use or to disclose to
others during the term of this Agreement and for any time thereafter, except as
expressly consented to in writing by Company or as required by law, any secrets
or confidential technology, proprietary information, or trade secrets of
Company, or any matter or thing ascertained by Employee through Employee's
affiliation with Company, the use or disclosure of which matter or thing might
reasonably be construed to be contrary to the best interest of Company. Employee
further agrees that should Employee leave the employment of Company, Employee
will neither take nor retain, without prior written authorization from Company,
any papers, fee books, files, other documents, copies thereof, or other
confidential information of any kind belonging to Company pertaining to
Company's business, sales, financial condition, services, or products. Without
limiting other possible remedies to Company for the breach of this covenant,
Employee agrees that injunctive or other equitable relief shall be available to
enforce this covenant, such relief to be without the necessity of posting a
bond, cash, or otherwise. Employee further agrees that if any restriction in
this paragraph is held by any court to be unenforceable or unreasonable, a
lesser restriction shall be enforced in its place and the remaining restrictions
in this paragraph shall be enforced independently of each other.
6
<PAGE> 101
7. MISCELLANEOUS.
7.1. Assignability. Company may assign this Agreement to a successor
business upon notice to Employee. Otherwise, neither party may assign its rights
or duties under this Agreement without the prior written consent of the other
party.
7.2. Notice. Any notice, demand, or communication required, permitted,
or desired to be given under this Agreement shall be deemed effectively given
when personally delivered or mailed by prepaid certified mail, return receipt
requested, addressed to the party at the primary business address of Company,
or, if appropriate, at the residence of Employee on file with Company, or to
another address and to the attention of another person or officer that either
party may designate by written notice.
7.3. Enforceability. Should any provision of this Agreement be held
invalid, unenforceable, or unconstitutional by any governmental body or court of
competent jurisdiction, that holding shall not diminish the validity or
enforceability of any other provision of this Agreement.
7.4. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Texas, and venue for any cause of
action arising under this Agreement shall lie in Harris County.
7.5. Construction. Common nouns and pronouns and all other terms shall
be deemed to refer to the masculine, feminine, neuter, and singular and/or
plural, as the identity of the person or persons, firm, or association may
require in the context.
7.6. Binding Effect. The provisions of this Agreement shall inure to
the benefit of and shall be binding upon the heirs, personal representatives,
successors, assigns, estates, and legatees of each of the parties.
7.7. Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or another
provision.
7.8. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement in effect between the parties pertaining to the employment
relationship between Company and Employee and supersedes all prior or
contemporaneous agreements, understandings, or negotiations of the parties and,
in particular, supersedes and replaces that certain ____________________ dated
__________. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES. This Agreement shall not be modified, amended, or supplemented
except in a written instrument executed by both parties.
7
<PAGE> 102
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate originals effective as of the Effective Date.
COMPANY:
CORE LABORATORIES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EMPLOYEE:
--------------------------------------
(Name)
8
<PAGE> 103
EXHIBIT E
FORM OF PROMISSORY NOTE
<PAGE> 104
PROMISSORY NOTE
Houston, Texas June 9, 1999
Coherence Technology Company, Inc. (hereinafter called "Maker"), For
Value Received, promises and agrees to pay on the earlier to occur of: (i) July
31, 1999 and (ii) the date on which that certain Agreement and Plan of Merger
dated as of June 9, 1999 among Core Laboratories N.V., Core Colorado
Acquisition, Inc., Maker and all of the shareholders of Maker terminates, (the
"Maturity Date") unto the order of Core Laboratories N.V. (hereinafter called
"Lender"), at its offices in Houston, Harris County, Texas, in lawful money of
the United States of America, such sums as the Lender may loan or advance to or
for the benefit of Maker up to a maximum of $1,500,000.00 principal on or after
the date hereof in accordance with the terms hereof, together with interest on
the unpaid principal balance outstanding from time to time hereon computed from
the date of each advance until the Maturity Date at the rate of eight percent
(8%) per annum. All past due principal and interest shall bear interest until
paid at an interest rate which is four percent (4%) per annum in excess of the
pre-maturity rate specified in the immediately preceding sentence (but in no
event to exceed the maximum rate of nonusurious interest allowed by law as of
the date hereof). Interest shall be calculated on a per annum basis of 360 days
unless such calculation would result in a usurious rate, in which event,
interest shall be calculated on a full calendar year basis.
INTEREST and PRINCIPAL on this note shall be due and payable in full on
the Maturity Date.
PAYMENT of this note before the Maturity Date may be made at any time
or from time to time, in whole or in part, without penalty or premium. Any such
payment shall be applied first to accrued interest and second to principal.
THE UNPAID PRINCIPAL BALANCE of this note at any time shall be the
total amounts lent or advanced hereunder by the Lender, less the amount of
payments or prepayments of principal made hereon by or for the account of Maker.
It is contemplated that by reason of prepayments hereon there may be times when
no indebtedness is owing hereunder; but notwithstanding such occurrences, this
note shall remain valid and shall be in full force and effect as to loans or
advances made pursuant to and under the terms of this note subsequent to each
occurrence. All loans or advances and all payments or prepayments made hereunder
on account of principal or interest may be endorsed by the holder hereof on the
Schedule attached hereto and made a part hereof for all purposes. Additional
Schedule pages may be attached hereto from time to time by the holder hereof if
more space is necessary.
ADVANCES hereunder may be made by the holder hereof (i) pursuant to the
terms of any written agreement executed in connection herewith between Maker and
Lender, or (ii) at the oral or written request of any officer or agent of Maker,
who shall be deemed by virtue of making such request to be acting under the
authority of the Board of Directors of Maker for purposes of such
1
<PAGE> 105
request. Maker covenants and agrees to furnish to the holder hereof written
confirmation of any such oral request within two (2) days of the resulting loan
or advance, but any such loan or advance shall be deemed to be made under and
entitled to the benefits of this note irrespective of any failure by Maker to
furnish such written confirmation. Any loan or advance shall be conclusively
presumed to have been made under the terms of this note to or for the benefit of
Maker when made pursuant to the terms of any written agreement executed in
connection herewith between Maker and Lender, or in accordance with such
requests and directions.
MAKER covenants and agrees that all proceeds from advances hereunder
shall be used solely for the purposes set forth in the Agreement and Plan of
Merger dated June 9, 1999.
IF ANY principal and/or interest on this note is not paid when due; or
if Maker or any drawer, acceptor, endorser, guarantor, surety, accommodation
party or other person liable upon or for payment of this note (each hereinafter
called an "other liable party"), shall die, or become insolvent (however such
insolvency may be evidenced); or if Maker or any co-partnership of which Maker
is a member shall suspend the transaction of his, its or their usual business,
or be expelled from or suspended by any stock or securities exchange or other
exchange; or if any proceeding, procedure or remedy supplementary to or in
enforcement of judgment shall be resorted to or commenced against, or with
respect to any property of, Maker or any such co-partnership or other liable
party; or if a petition in bankruptcy or for any relief under any law relating
to the relief of debtors, re-adjustment of indebtedness, re-organization,
composition or arrangement shall be filed, or any proceedings shall be
instituted under any such law, by or against Maker or any such co- partnership
or other liable party; or if any governmental authority or any court at the
instance thereof shall take possession of any substantial part of the property
of, or assume control over the affairs or operations of, or a receiver shall be
appointed of the property of, or a writ or order of attachment or garnishment
shall be issued or made against any of the property of, Maker or any such
co-partnership or other liable party; or if any indebtedness of Maker or of any
such co-partnership or of other liable party for borrowed money shall become due
and payable by acceleration of maturity thereof; or if Maker or any such
co-partnership or other liable party ceases to generally pay his or its debts as
they become due; or if Maker (if a corporation) shall be dissolved or be a party
to any merger or consolidation without the written consent of Lender; or if
Maker or other liable party fails to furnish financial information requested by
Lender; or if a default occurs under any instrument now or hereafter executed in
connection with or as security for this note; thereupon, at the option of
Lender, this note and any and all other indebtedness of Maker to Lender shall
become and be due and payable forthwith without demand, notice of nonpayment,
presentment, protest or notice of dishonor, notice of intent to accelerate the
maturity hereof or notice of the acceleration of the maturity hereof, all of
which are hereby expressly waived by Maker and each other liable party.
IF THIS NOTE is not paid at maturity whether by acceleration or
otherwise and is placed in the hands of an attorney for collection, or suit is
filed hereon, or proceedings are had in probate, bankruptcy, receivership,
re-organization, arrangement or other legal proceedings for collection hereof,
Maker and each other liable party agree to pay Lender a reasonable amount as
attorney's fees which is agreed to be an additional amount equal to ten percent
of the unpaid principal and interest hereof. Maker and each other liable party
are and shall be directly and primarily, jointly and sev-
2
<PAGE> 106
erally, liable for the payment of all sums called for hereunder, and Maker and
each other liable party hereby expressly waive demand, notice of nonpayment,
presentment, protest, notice of dishonor, bringing of suit and diligence in
taking any action to collect any sums owing hereon and in the handling of any
security, and Maker and each other liable party hereby agree to any and all
renewals, extensions for any period, rearrangements and/or partial prepayments
hereon and to any release or substitution of security, in whole or in part, with
or without notice, before or after maturity. Maker and each other liable party
also waive, to the full extent permitted by law, all right to plead any statute
of limitation as a defense to any action hereunder.
IT IS the intention of Maker and Lender to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law (including the laws of the State of Texas
and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary herein or in any agreement entered into
in connection with or as security for this note, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under applicable
law that is taken, reserved, contracted for, charged or received under this note
or under any of the other aforesaid agreements or otherwise in connection with
this note shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be cancelled automatically and,
if theretofore paid, shall be credited on the note by the holder hereof (or, to
the extent that this note shall have been or would thereby be paid in full,
refunded to the Maker); and (ii) in the event that maturity of this note is
accelerated by reason of an election by the holder hereof resulting from any
default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount allowed by applicable law, and excess interest, if
any, provided for in this note or otherwise shall be cancelled automatically as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be credited on this note (or, to the extent that this note shall have been or
would thereby be paid in full, refunded to the Maker).
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas.
COHERENCE TECHNOLOGY COMPANY, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
3
<PAGE> 107
SCHEDULE
OF
ADVANCES OF PRINCIPAL
<TABLE>
<CAPTION>
TOTAL PRINCIPAL
BALANCE OF
OUTSTANDING
DATE AMOUNT OF ADVANCE UNDER NOTE NOTATION MADE BY
- ----------------------- ------------------------------- ----------------------- -----------------------
<S> <C> <C> <C>
</TABLE>
4
<PAGE> 1
EXHIBIT 10.5
AGREEMENT AND PLAN OF MERGER
AMONG
CORE LABORATORIES N.V.,
CORE ACQUISITION SUBSIDIARY, INC.,
RESERVOIRS, INC.
AND
THE STOCKHOLDERS OF
RESERVOIRS, INC.
JULY 26, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
THE MERGER
<S> <C> <C>
1.01 THE MERGER......................................................................................1
1.02 EFFECTIVE TIME..................................................................................2
1.03 EFFECT OF THE MERGER............................................................................2
1.04 ARTICLES OF INCORPORATION; BYLAWS...............................................................2
1.05 DIRECTORS AND OFFICERS..........................................................................2
1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES............................2
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES............................................5
1.08 NO FRACTIONAL SHARES............................................................................6
1.09 AGREEMENT TO VOTE SHARES........................................................................6
1.10 WITHHOLDING.....................................................................................6
1.11 CLOSING.........................................................................................6
1.12 ACTIONS AT CLOSING..............................................................................7
1.13 STOCK TRANSFER BOOKS............................................................................7
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION......................................................7
1.15 TAX CONSEQUENCES................................................................................7
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES....................................................7
2.02 ORGANIZATIONAL DOCUMENTS........................................................................8
2.03 CAPITALIZATION..................................................................................8
2.04 AUTHORITY.......................................................................................9
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS......................................................9
2.06 PERMITS; COMPLIANCE............................................................................10
2.07 FINANCIAL STATEMENTS...........................................................................11
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS...........................................................11
2.09 LITIGATION.....................................................................................11
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS..........................................................12
2.11 TAXES..........................................................................................14
2.12 TAX MATTERS....................................................................................15
2.13 AFFILIATES.....................................................................................15
2.14 CERTAIN BUSINESS PRACTICES.....................................................................15
2.15 ENVIRONMENTAL..................................................................................16
2.16 UNDISCLOSED LIABILITIES........................................................................16
</TABLE>
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<TABLE>
<S> <C> <C>
2.17 CERTAIN AGREEMENTS.............................................................................17
2.18 CONTRACTS AND COMMITMENTS......................................................................17
2.19 AFFILIATE INTERESTS............................................................................17
2.20 INTELLECTUAL PROPERTY..........................................................................17
2.21 BROKERS........................................................................................18
2.22 INSURANCE......................................................................................18
2.23 PROPERTIES.....................................................................................18
2.24 GOOD TITLE.....................................................................................19
2.25 CERTAIN SECURITIES LAW MATTERS.................................................................19
2.26 AUTHORIZATION AND VALIDITY OF AGREEMENT........................................................20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
3.01 ORGANIZATION AND QUALIFICATION.................................................................20
3.02 CAPITALIZATION.................................................................................21
3.03 AUTHORITY......................................................................................21
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.....................................................21
3.05 REPORTS; FINANCIAL STATEMENTS..................................................................22
3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS...........................................................22
3.07 TAX MATTERS...........................................................................23
3.08 BROKERS........................................................................................23
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT...........................................................................23
4.02 NEGATIVE COVENANTS.............................................................................24
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY...........................................................24
5.02 NEGATIVE COVENANTS OF THE COMPANY..............................................................25
ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR..............................................................27
6.02 NEGATIVE COVENANTS OF ACQUIROR.................................................................27
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE VII
ADDITIONAL AGREEMENTS
<S> <C> <C>
7.01 NOTIFICATION OF CERTAIN MATTERS................................................................28
7.02 ACCESS AND INFORMATION.........................................................................28
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS..........................................................29
7.04 PUBLIC ANNOUNCEMENTS...........................................................................30
7.05 EXPENSES.......................................................................................30
7.06 EMPLOYEES OF COMPANY...........................................................................31
7.07 TAX-FREE REORGANIZATION........................................................................31
7.08 INFORMATION FOR TAX RETURNS....................................................................31
7.09 NO HEDGING TRANSACTIONS........................................................................32
7.11 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL.....................................................................................33
8.02 NO EXHAUSTION OF REMEDIES......................................................................33
8.03 DEFENSE OF THIRD PARTY CLAIMS..................................................................33
8.04 PAYMENT; ARBITRATION...........................................................................34
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES......................................................35
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............................36
8.07 SUBROGATION....................................................................................36
ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES..................................36
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.............................................38
ARTICLE X
MISCELLANEOUS
10.01 TERMINATION....................................................................................39
10.02 EFFECT OF TERMINATION..........................................................................40
10.03 WAIVER AND AMENDMENT...........................................................................40
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES....................................................40
</TABLE>
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<TABLE>
<S> <C> <C>
10.05 ASSIGNMENT.....................................................................................40
10.06 CERTAIN DEFINITIONS............................................................................41
10.07 NOTICES........................................................................................42
10.08 GOVERNING LAW..................................................................................43
10.09 SEVERABILITY...................................................................................43
10.10 COUNTERPARTS...................................................................................43
10.11 HEADINGS.......................................................................................44
</TABLE>
EXHIBITS
Exhibit A -- Escrow Agreement
Exhibit B -- Appointment of Shareholders' Representative
Exhibit C -- Form of Registration Rights Agreement
Exhibit D -- Form of Employment Agreement
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of July 26, 1999 by and among Core Laboratories N.V., a
Netherlands limited liability company ("Acquiror"), Core Acquisition Subsidiary,
Inc., a Texas corporation with its principal place of business in Houston, Texas
and a wholly owned subsidiary of Acquiror ("Acquisition Sub"), Reservoirs, Inc.,
a Texas corporation ("Reservoirs" or the "Company"), and the stockholders of the
Company set forth on the signature pages hereto (collectively, the
"Shareholders"). Acquiror and Acquisition Sub are sometimes collectively
referred to herein as the "Acquiror Companies."
RECITALS
The Shareholders own all of the outstanding capital stock of the
Company, and Acquiror owns all of the outstanding capital stock of Acquisition
Sub.
Acquisition Sub, upon the terms and subject to the conditions of this
Agreement and in accordance with the Texas Business Corporation Act (the
"TBCA"), will merge with and into the Company (the "Merger").
The Board of Directors of the Company has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of the
Company and is fair to, and in the best interests of, the Company and the
Shareholders and has approved and adopted this Agreement and the transactions
contemplated hereby, and recommended approval and adoption of this Agreement and
the Merger by the Shareholders.
This Agreement and the Merger have been approved and adopted by the
requisite vote of the Shareholders and of the sole shareholder of Acquisition
Sub as required by the TBCA.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and will
not be taxable to the Shareholders under Section 367 of the Code.
NOW, THEREFORE, in consideration of the Recitals, the mutual
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the TBCA, at the Effective Time (as
defined in Section 1.02 of this Agreement), Acquisition Sub shall be merged with
and into the Company. As a result of the Merger, the separate corporate
existence of Acquisition Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"). The name of
the Surviving Corporation shall be "Reservoirs, Inc." Acquiror shall not be
deemed to be a party to the Merger for purposes of Article 5.06 of the TBCA.
<PAGE> 7
1.02 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article IX of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
Articles of Merger with the Secretary of State of the State of Texas, in such
form as required by, and executed in accordance with the relevant provisions of,
the TBCA (the date and time of the completion of such filing being the
"Effective Time").
1.03 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the TBCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property and assets of Acquisition Sub and the Company shall vest
in the Surviving Corporation, and all obligations and liabilities of Acquisition
Sub and the Company shall become the obligations and liabilities of the
Surviving Corporation.
1.04 ARTICLES OF INCORPORATION; BYLAWS. At the Effective Time, the
Articles of Incorporation and the Bylaws of Acquisition Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation, except that Article I of the
Articles of Incorporation thereof shall be amended to read "The name of the
corporation is Reservoirs, Inc.".
1.05 DIRECTORS AND OFFICERS. The directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Acquisition Sub immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF
SECURITIES. At the Effective Time, by virtue of the Merger and without any
action on the part of the Acquiror Companies, the Company or the holders of any
of the Company's securities:
(a) Subject to the other provisions of this Article I, each
share of the Company's common stock, par value $.01 per share ("Company
Stock"), issued and outstanding immediately prior to the Effective Time
(excluding any Company Stock described in Section 1.06(d) of this
Agreement), such shares being as shown on Schedule 1.06(a) to this
Agreement, shall be converted into 5.6375 shares of duly authorized,
validly issued, fully paid and nonassessable common shares, par value
NLG 0.03 per share ("Acquiror Shares"), of Acquiror (the "Exchange
Ratio"), subject to the escrow of a portion of such shares pursuant to
the terms and conditions set forth in Section 1.06(b).
(b) At the Effective Time, Acquiror will cause to be delivered
to, and directly deposited with, Bankers Trust Company or another
national bank acceptable to the Company and Acquiror (the "Escrow
Agent"), in escrow for the account and future potential benefit of the
Shareholders, a stock certificate representing 10% of the Acquiror
Shares issued at Closing pursuant to Section 1.06(a), which certificate
shall be registered as follows: "Bankers Trust Company, f/b/o the
Former Shareholders of the Common Stock of Reservoirs, Inc." All such
Acquiror Shares so delivered to the Escrow Agent, together with
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<PAGE> 8
all subsequent stock dividends or distributions of other Acquiror
Shares received in respect of such shares while deposited with the
Escrow Agent shall be referred to as "Escrow Shares." A pro rata number
of the Escrow Shares (determined on the basis of the relative amount of
Acquiror Shares each Shareholder is entitled to receive pursuant to
Section 1.06(a) of this Agreement, subject to adjustments by the Escrow
Agent to eliminate fractional shares) shall be subtracted from the
number of Acquiror Shares each Shareholder at the Effective Time is
entitled to receive pursuant to the Merger. The Escrow Shares shall be
held by the Escrow Agent pursuant to the terms and conditions of an
Escrow Agreement substantially in the form attached hereto as Exhibit A
(the "Escrow Agreement") between Acquiror, Acquisition Sub, the Company
and Randall S. Miller (the "Shareholders' Representative"). The
Shareholders will appoint Randall S. Miller as a Shareholders'
Representative pursuant to, and he shall have the rights and
obligations set forth in, the Appointment of Shareholders'
Representative, substantially in the form attached hereto as Exhibit B
(the "Appointment"). The Escrow Agreement and the Appointment shall
authorize the Shareholders' Representative to control the disposition
of such Escrow Shares pursuant to the terms of such documents. The
Shareholders' Representative shall have no personal liability as a
result of any actions taken in such position (i) to Acquiror or
Acquisition Sub, or (ii) to any holder of Company Stock at the
Effective Time, in either case with respect to the disposition of the
Escrow Shares or any other action taken by him as the Shareholders'
Representative, unless such actions constitute gross negligence or
willful misconduct by the Shareholders' Representative. The number of
Acquiror Shares each Shareholder shall be entitled to receive at the
Effective Time and the number of Escrow Shares attributable to such
Shareholder shall be as set forth on Schedule 1.06(a) to this
Agreement.
(c) As a result of their conversion pursuant to Section
1.06(a) of this Agreement, all shares of Company Stock shall cease to
be outstanding and shall automatically be canceled and retired, and
each certificate ("Certificate") previously evidencing Company Stock
outstanding immediately prior to the Effective Time (other than any
Company Stock described in Section 1.06(d) of this Agreement)
("Converted Shares") shall thereafter represent that number of Acquiror
Shares determined pursuant to the Exchange Ratio, rounded up or down to
the nearest whole share (the "Acquisition Consideration"). The holders
of Certificates previously evidencing Converted Shares shall cease to
have any rights with respect to such Converted Shares except the right
to receive the Acquisition Consideration and as otherwise provided
herein or by applicable federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws"). Such Certificates
previously evidencing Converted Shares shall be exchanged for
certificates evidencing whole shares of Acquiror Shares upon the
surrender of such Certificates in accordance with the provisions of
Section 1.07 of this Agreement. No fractional shares of Acquiror Shares
shall be issued.
(d) Notwithstanding any provision of this Agreement to the
contrary, each share of Company Stock held in the treasury of the
Company and each share of Company Stock or other capital stock of the
Company owned by Acquiror or any direct or indirect wholly owned
subsidiary of Acquiror or of the Company immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
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<PAGE> 9
(e) In the event that on or after the date of this Agreement,
Acquiror shall establish a record date prior to the Closing Date for
all its shareholders entitled to receive any securities, rights or
property of Acquiror (other than regular dividends), by reason of the
issuance of rights or options to purchase its securities, stock
dividends or distribution, or any stock split or reverse stock split,
or if there shall occur any capital reorganization of Acquiror or
reclassification of its capital stock or such other similar transaction
which will not be adequately reflected in the number of Acquiror Shares
which will constitute the Acquisition Consideration, such number of
Acquiror Shares shall be fairly and proportionately adjusted to prevent
dilution, and to fully and completely carry out the intent of the
parties as contemplated by this Agreement.
(f) Each share of common stock, no par value per share, of
Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, no
par value per share, of the Surviving Corporation.
(g) Each option to purchase Company Stock outstanding
immediately prior to the Effective Time (collectively, the "Company
Options"), all such options being as set forth on Schedule 1.06(a) to
this Agreement, shall be assumed by Acquiror and converted into an
option under the Core Laboratories N.V. 1995 Long-Term Incentive Plan
(as amended and restated as of May 29, 1997) (the "Long-Term Incentive
Plan") to purchase that number of Acquiror Shares determined by
multiplying the number of shares of Company Stock subject to such
Company Option immediately prior to the Effective Time by the Exchange
Ratio, at an exercise price per Acquiror Share equal to the exercise
price per share of such Company Option divided by the Exchange Ratio.
If the foregoing calculation results in an assumed Company Option being
exercisable for a fraction of an Acquiror Share, then the number of
Acquiror Shares subject to such option shall be rounded down to the
nearest whole number of shares, and the total exercise price for the
option will be reduced by the exercise price of the fractional share.
At the Closing, the agreements evidencing the Company Options shall be
amended and restated, effective as of the Effective Time, into the
standard form of nonstatutory stock option agreement used by Acquiror
under the Long-Term Incentive Plan; provided, however, that the Company
Options shall be fully vested and exercisable at any time immediately
after the Effective Time, and the term of the Company Options shall
continue to end no later than midnight on December 31, 2007.
(h) All obligations of the Company under the Company's 1997
Full Value Executive Stock Incentive Plan (the "Plan"), including with
respect to each and all rights granted under the Plan that have not
expired or been terminated prior to the Effective Time (the "Executive
Stock Rights"), shall, without further action on the part of the
Company or the holders of any Executive Stock Rights (collectively, the
"Plan Participants"), be assumed by Acquiror as of the Effective Time.
All terms and conditions of the Plan and Executive Stock Rights shall
be unchanged by the provisions of this Section 1.06(h) and the Plan
shall otherwise operate in accordance with its terms; provided,
however, that each Plan Participant's rights to receive payment under
the Plan with respect to all Executive Stock Rights shall be fully
vested and mature at the Effective Time, that such payment shall be
made to each Plan Participant no later than 60 days after the Effective
Time by delivery to the Plan Participant of the number of Acquiror
Shares determined by multiplying the number
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<PAGE> 10
of Executive Stock Rights held by the Plan Participant as of the
Closing (all such Executive Stock Rights being as set forth on Schedule
1.06(a) to this Agreement) by the Exchange Ratio, such shares to be
subject to the same restrictions as the Acquiror Shares issued pursuant
to Section 1.06(a), less the applicable withholding taxes required with
respect to such Plan Participant determined by multiplying the
applicable withholding tax rate by the number of the Acquiror Shares
such Plan Participant is entitled to herein, all to satisfy the
withholding obligations set forth in Section 14(b) of the Plan. The
Acquiror shall satisfy the payment of the withholding obligation by
determining the cash value of the withheld shares based on the closing
sale price of the Acquiror Shares on the trading day of the issuance of
the Acquiror Shares pursuant to this Section 1.06(h) and shall pay the
resulting amount to the appropriate governmental authority for such
Plan Participant's account. If the foregoing calculations result in a
fraction of an Acquiror Share being issued to the Plan Participant,
then the number of Acquiror Shares shall be rounded to the closest
whole numbers of shares and such shall be issued to the Plan
Participant.
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES.
(a) Exchange Procedures. Promptly after the Effective Time,
Acquiror shall deliver to each record holder of Company Stock at the Effective
Time a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to Acquiror and shall be in such form and contain
such other provisions as the Company and Acquiror shall agree) (the "Letter of
Transmittal"). Upon surrender of a Certificate for cancellation to the Acquiror,
together with such Letter of Transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole Acquiror Shares that such holder has the right
to receive pursuant to the provisions of this Article I, less the Escrow Shares
attributable to such holder that will be issued and deposited with the Escrow
Agent for the account of such holder, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Stock
that is not registered in the transfer records of the Company, a certificate
evidencing the proper number of Acquiror Shares may be issued to the transferee
if the Certificate evidencing the Company Stock shall be surrendered to the
Acquiror, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered for exchange in accordance with the provisions of this
Section 1.07(a), each Certificate theretofore representing Converted Shares
(other than shares of Company Stock to be canceled pursuant to Section 1.06(d)
of this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the Acquisition Consideration as set forth in
this Agreement. If any holder of Converted Shares shall be unable to surrender
such holder's Certificates because such Certificates have been lost or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond in form and substance and with surety reasonably satisfactory to Acquiror.
No interest shall be paid on any Acquisition Consideration payable to former
holders of Converted Shares.
(b) Distributions with Respect to Acquiror Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Acquiror Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the Acquiror
Shares evidenced thereby, and no Acquisition Consideration shall be paid to any
-5-
<PAGE> 11
such holder until the holder of such Certificate shall surrender such
Certificate. Subject to applicable Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates evidencing
whole Acquiror Shares issued in exchange therefor, without interest, (i)
promptly following the surrender of such Certificate, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole Acquiror Shares and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender payable with respect to such whole Acquiror Shares.
1.08 NO FRACTIONAL SHARES. Notwithstanding anything herein to the
contrary, no certificates or scrip evidencing fractional Acquiror Shares shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights as a
shareholder of Acquiror.
1.09 AGREEMENT TO VOTE SHARES. At any meeting of the Shareholders with
respect to any of the following, and at any adjournment thereof, and with
respect to any consent solicited with respect to any of the following, each
Shareholder who is a party to this Agreement hereby agrees to vote such
Shareholder's Company Stock (i) in favor of approval of the Merger and any
matter which could reasonably be expected to facilitate the Merger and (ii)
against approval of any proposal made in opposition to or in competition with
the Merger, against any merger, consolidation, sale of assets, reorganization or
recapitalization with any party, against any liquidation or winding up of the
Company and against any other matter which would, or could reasonably be
expected to, prohibit or discourage the Merger.
1.10 WITHHOLDING. Acquiror (or any affiliate thereof) shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of Converted Shares such amounts as Acquiror (or
any affiliate thereof) is required to deduct and withhold with respect to the
making of such payment under the Code (as hereinafter defined), or any other
provision of federal, state, local or foreign tax law. To the extent that
amounts are so withheld by Acquiror, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the former holder of the
Converted Shares in respect of which such deduction and withholding was made by
Acquiror.
1.11 CLOSING. The Closing shall take place at the offices of Vinson &
Elkins L.L.P., 1001 Fannin Street, 3600 First City Tower, Houston, Texas
77002-6760, at (a) 10:00 a.m., local time, effective as of August 2, 1999, or
(b) if the conditions set forth in Article IX of this Agreement have not been
satisfied or waived on or before August 2, 1999, at 10:00 a.m., local time, on
the second business day following the date on which the conditions set forth in
Article IX of this Agreement have been satisfied or waived or (c) at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing, the parties hereto shall cause the Articles of Merger to be filed with
the Secretary of State of the State of Texas.
1.12 ACTIONS AT CLOSING. At the Closing, (a) the Company and the
Shareholders shall deliver to the Acquiror Companies the various certificates,
instruments and documents referred to in Section 9.01 of this Agreement, (b) the
Acquiror Companies shall deliver to the Company and the Shareholders the various
certificates, instruments and documents referred to in Section 9.02 of this
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<PAGE> 12
Agreement, and (c) the parties shall file with the Secretary of State of the
State of Texas the Articles of Merger.
1.13 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of shares of Company Stock thereafter on the records of the
Company.
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION. Acquiror and the
Company shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If, at
any time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company or Acquisition Sub,
such corporations shall direct their respective officers and directors to take
all such lawful and necessary action.
1.15 TAX CONSEQUENCES. The parties to this Agreement intend for the
Merger to constitute a reorganization within the meaning of Section 368(a)(1)(A)
and Section 368(a)(2)(E) of the Code and hereby adopt this Agreement as the
"plan of reorganization" with respect to the Merger for purposes of and within
the meaning of Section 1.368-2(g) and Section 1.368-3(a) of the United States
Treasury Regulations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each of the Shareholders of the Company, jointly and
severally, hereby represent and warrant to Acquiror, as of the date hereof and
at the Closing Date, that:
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company is a
corporation whose ownership is represented solely by the Company Stock, and the
Company is duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation or organization. Except as set forth in
Section 2.01 of the Company Disclosure Schedule (as hereinafter defined), each
of the Company's subsidiaries (as such term is defined in Section 10.06 herein)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, and each of the
Company and its subsidiaries has all requisite power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing could not
reasonably be expected to have a Company Material Adverse Effect. The term
"Company Material Adverse Effect" as used in this Agreement shall mean any
change or effect that would be materially adverse to the financial condition,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, at the time of such change or effect. Section
2.01 of the Disclosure Schedule delivered by the Company to Acquiror
concurrently with the execution
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<PAGE> 13
of this Agreement (the "Company Disclosure Schedule") sets forth, as of the date
of this Agreement, a true and complete list of all the Company's directly or
indirectly owned subsidiaries, together with the jurisdiction of incorporation
or organization of each subsidiary and the percentage of each subsidiary's
outstanding capital stock or other equity interests owned by the Company or
another subsidiary of the Company.
2.02 ORGANIZATIONAL DOCUMENTS. The Company has heretofore furnished or
made available to Acquiror complete and correct copies of the Articles of
Incorporation and the Bylaws (or equivalent organizational documents), in each
case as amended or restated to the date hereof, of the Company and each of its
subsidiaries. Neither the Company nor any of its subsidiaries is in violation of
any of the provisions of its Articles of Incorporation or Bylaws (or equivalent
organizational documents).
2.03 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
1,000,000 shares of Common Stock, par value $.01 per share (the Company Stock),
and no shares of preferred stock. As of the date of this Agreement, 39,525
shares of Common Stock are issued and outstanding. As of the date of this
Agreement, there are 111,112 shares of Common Stock held by the Company in its
treasury, and 13,690 shares of Common Stock are reserved for issuance, including
7,400 shares for issuance under the Plan and 6,290 shares for issuance for
Company Options. Each of the issued shares of capital stock of, or other equity
interests in, each of the Company and its subsidiaries is duly authorized,
validly issued and, in the case of shares of capital stock, fully paid and
nonassessable, and has not been issued in violation of (nor are any of the
authorized shares of capital stock of, or other equity interests in, the Company
or any of its subsidiaries subject to) any preemptive or similar rights created
by statute, the Articles of Incorporation or Bylaws (or the equivalent
organizational documents) of the Company or any of its subsidiaries, or any
agreement to which the Company or any of its subsidiaries is a party or is
bound, and, except as set forth in Section 2.03(a) of the Company Disclosure
Schedule, all such issued shares or other equity interests owned by the Company
or a subsidiary of the Company are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations on the Company's or
such subsidiaries' voting rights, charges or other encumbrances of any nature
whatsoever.
(b) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into or exchangeable or
exercisable for securities having the right to vote) on any matters on which
shareholders may vote ("Company Voting Debt") are issued or outstanding.
(c) Except as set forth in Section 2.03(c) of the Company
Disclosure Schedule, there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which the Company or any of its subsidiaries is a party relating to the
issued or unissued capital stock or other equity interests of the Company or any
of its subsidiaries or obligating the Company or any of its subsidiaries to
grant, issue or sell any shares of capital stock, Company Voting Debt or other
equity interests of the Company or any of its subsidiaries. Except as set forth
in Section 2.03(c) of the Company Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries (i) to
repurchase,
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<PAGE> 14
redeem or otherwise acquire any shares of capital stock or other securities of
the Company or the capital stock or other equity interests of any subsidiary of
the Company or (ii) (other than advances to wholly owned subsidiaries in the
ordinary course of business) to provide material funds to, or to make any
material investment in (in the form of a loan, capital contribution or
otherwise), or to provide any guarantee with respect to the material obligations
of, any subsidiary of the Company or any other person. Except (i) as set forth
in Section 2.03(c) of the Company Disclosure Schedule or (ii) for subsidiaries
of the Company set forth in Section 2.01 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries (x) directly or indirectly owns,
(y) has agreed to purchase or otherwise acquire or (z) holds any interest
convertible into or exchangeable or exercisable for, any capital stock or other
equity interest of any corporation, partnership, joint venture or other business
association or entity. Except as set forth in Section 2.03(c) of the Company
Disclosure Schedule or for any agreements, arrangements or commitments between
the Company and its wholly owned subsidiaries or between such wholly owned
subsidiaries, there are no agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on, or calculated in accordance with, the
revenues or earnings of the Company or any of its subsidiaries. Except as set
forth in Section 2.03(c) of the Company Disclosure Schedule, there are no voting
trusts, proxies or other agreements or understandings to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound with respect to the voting of any shares of capital stock
or other equity interests of the Company or any of its subsidiaries.
2.04 AUTHORITY. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by each of the Acquiror Companies, constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated by the
exceptions to Section 2.05(b) are obtained or made and except as disclosed in
Section 2.05(a) of the Company Disclosure Schedule, the execution and delivery
of this Agreement by the Company does not, and the performance by the Company of
its obligations hereunder, including consummation of the transactions
contemplated hereby, will not (i) conflict with or violate the Articles of
Incorporation or Bylaws, or the equivalent organizational documents, in each
case as amended or restated, of the Company or any of its subsidiaries, (ii)
conflict with or violate any federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws") in effect as of the date of
this Agreement, or any judgment, order or decree applicable to the Company or
any of its subsidiaries or by or to which any of their respective properties is
bound or subject or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a
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<PAGE> 15
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by or to which the Company or any of its subsidiaries or any of their
respective properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance by the Company of its obligations
hereunder, including consummation of the transactions contemplated hereby, will
not, require the Company to obtain any consent, license, permit, waiver,
approval, authorization or order of, or to make any filing with or notification
to, any governmental or regulatory authority, federal, state, local or foreign
(collectively, "Governmental Entity"), except (i) the filing of Articles of
Merger with the Secretary of State of the State of Texas, (ii) the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
(iii) where the failure to obtain such consents, licenses, permits, waivers,
approvals, authorizations or orders, or to make such filings or notifications
could not reasonably be expected to cause a Company Material Adverse Effect or
to prevent the Company from performing its obligations under this Agreement and
(iv) as disclosed in Section 2.05(b) of the Company Disclosure Schedule.
2.06 PERMITS; COMPLIANCE. Except as disclosed in Section 2.06 of the
Company Disclosure Schedule, each of the Company and its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, identification and
registration numbers, approvals and orders necessary to own, lease and operate
its properties and to carry on its business as it is now being conducted with
respect to which the failure of the Company or its subsidiaries to have
possession would constitute a Company Material Adverse Effect (collectively, the
"Company Permits"). Section 2.06 of the Company Disclosure Schedule sets forth a
list of each of the Company Permits and the jurisdiction issuing the same, all
of which are in good standing and not subject to meritorious challenge. Section
2.06 of the Company Disclosure Schedule also sets forth, as of the date of this
Agreement, all actions, proceedings, investigations or surveys pending or, to
the knowledge of the Company or the Shareholders, threatened against the Company
or any of its subsidiaries that could reasonably be expected to result in the
loss, suspension or revocation of a Company Permit. Except as set forth in
Section 2.06 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries is in conflict with, in default under or in violation of , and
none of them has received, since June 30, 1997, from any Governmental Entity any
written notice with respect to any conflict with, default under or violation of,
(i) any Law applicable to the Company or any of its subsidiaries or by or to
which any of their respective properties is bound or subject, (ii) any judgment,
order or decree applicable to the Company or any of its subsidiaries or by or to
which any of their respective properties is bound or subject, or (iii) any of
the Company Permits.
2.07 FINANCIAL STATEMENTS. The Company has provided Acquiror with true,
correct and complete copies of its audited consolidated balance sheet, income
statement and statement of cash flows for the years ended June 30, 1996, 1997,
and 1998 and an unaudited consolidated balance sheet, income statement and
statement of cash flows for the 9 months ended March 31, 1999
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<PAGE> 16
(collectively, the "Company Financial Statements"). Each of the Company
Financial Statements (including, in each case, any related notes thereto) (a)
has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except (i) to the extent disclosed therein or
required by changes in GAAP, and (ii) as may be indicated in the notes thereto),
and (b) fairly present the consolidated financial position of the Company and
its subsidiaries as of the respective dates thereof and the consolidated results
of operations and cash flows for the periods indicated (subject, in the case of
unaudited consolidated financial statements for interim periods, to adjustments,
consisting only of normal, recurring accruals, necessary to present fairly such
results of operations and cash flows).
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as set forth in Section 2.08 of the Company Disclosure
Schedule, since June 30, 1998 the Company and its subsidiaries have conducted
their respective businesses only in the ordinary course and in a manner
consistent with past practice and there has not been: (i) any damage,
destruction or loss with respect to any assets of the Company or any of its
subsidiaries that, whether or not covered by insurance, would constitute a
Company Material Adverse Effect; (ii) any change by the Company or its
subsidiaries in their significant accounting policies; (iii) except for
dividends by a wholly owned subsidiary of the Company to the Company or to
another wholly owned subsidiary of the Company, any declaration, setting aside
or payment of any dividends or distributions in respect of shares of Company
Stock or the shares of stock of, or other equity interests in, any subsidiary of
the Company or any redemption, purchase or other acquisition of any of the
Company's securities or any of the securities of any subsidiary of the Company;
(iv) any material increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, performance awards (including, without limitation,
the granting of stock appreciation rights or restricted stock awards), stock
purchase or other employee benefit plan, or any increase in the compensation
payable or to become payable to any of the directors or officers of the Company
or the employees of the Company and its subsidiaries as a group; or (v) any
other Company Material Adverse Effect.
2.09 LITIGATION. Except as disclosed in Section 2.09 of the Company
Disclosure Schedule, there is no claim, action, suit, litigation, proceeding,
arbitration or investigation of any kind, at law or in equity (including actions
or proceedings seeking injunctive relief), pending or, to the knowledge of the
Company or any of the Shareholders, threatened against the Company or any of its
subsidiaries or any properties or rights of the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries is subject to
any executory judgment, order, writ, injunction, decree or award of any
Governmental Entity, including without limitation any cease and desist order and
any consent decree, settlement agreement or other similar agreement with any
Governmental Entity.
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Each Benefit Plan (as hereinafter defined) is listed in
Section 2.10(a) of the Company's Disclosure Schedule. The Company has delivered
or made available to Acquiror a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service (the "IRS")
for each Benefit Plan for which a Form 5500 is required to be filed, (ii) such
Benefit Plan and all amendments thereto, (iii) each trust agreement, if any,
relating to such Benefit
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<PAGE> 17
Plan, (iv) the most recent summary plan description for each Benefit Plan for
which a summary plan description is required, (v) the most recent determination
letter, if any, issued by the IRS with respect to any Benefit Plan qualified
under section 401 of the Code. "Benefit Plans" shall mean any employee pension
benefit plan (whether or not insured), as defined in Section 3(2) of Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), any employee
welfare benefit plan (whether or not insured) as defined in Section 3(1) of
ERISA, any plans that would be employee pension benefit plans or employee
welfare benefit plans if they were subject to ERISA, such as foreign plans and
plans for directors, any stock bonus, stock ownership, stock option, stock
purchase, stock appreciation rights, phantom stock, or other stock plan or
agreement (whether qualified or nonqualified), and any bonus, supplemental
income, deferred compensation or incentive compensation plan or agreement
sponsored, maintained, or contributed to by the Company or any of its
subsidiaries for the benefit of any of the present or former directors,
officers, employees, agents, consultants, or other similar representatives
providing services to or for the Company or any of its subsidiaries in
connection with such services or any such plans which have been so sponsored,
maintained, or contributed to within six years prior to the date of this
Agreement; provided, however, that such term shall not include (x) routine
employment policies and procedures developed and applied in the ordinary course
of business and consistent with past practice, including wage, vacation,
holiday, and sick or other leave policies, (y) workers compensation insurance,
and (z) directors and officers liability insurance.
(b) With respect to each Benefit Plan, no event has occurred
and there exists no condition or set of circumstances in connection with which
the Company or any of its subsidiaries could be subject to any liability under
the terms of such Benefit Plan, ERISA, the Code, or any other applicable Law,
other than any condition or set of circumstances that could not reasonably be
expected to have a Company Material Adverse Effect.
(c) Each Benefit Plan intended to be qualified under section
401 of the Code (i) satisfies in form the requirements of such section except to
the extent amendments are not required by Law to be made until a date after the
Closing Date, (ii) has received a favorable determination letter from the IRS
regarding such qualified status, (iii) has not, since receipt of the most recent
favorable determination letter, been amended, and (iv) has not been operated in
a way that would adversely affect its qualified status.
(d) There has been no termination or partial termination of
any Benefit Plan within the meaning of section 411(d)(3) of the Code.
(e) There are no actions, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of the Company, threatened
against, or with respect to, any Benefit Plan or its assets that could
reasonably be expected to have a Company Material Adverse Effect.
(f) There is no matter pending (other than routine
qualification determination filings) with respect to any Benefit Plan before the
IRS, the United States Department of Labor, the Pension Benefit Guaranty
Corporation or other governmental authority.
(g) All contributions required to be made to Benefit Plans
pursuant to their terms and the provisions of ERISA, the Code, or any other
applicable Law have been timely made.
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<PAGE> 18
(h) With respect to each Benefit Plan, no event has occurred
and, to the knowledge of the Company or any of the Shareholders, there exists no
condition or set of circumstances in connection with which the Company or any of
its subsidiaries could be subject to any liability with respect to a violation
of the terms of such Benefit Plans, ERISA, the Code or any other applicable Law.
(i) There are no collective bargaining or other labor union
contracts to which the Company or its subsidiaries is a party applicable to
persons employed by the Company or its subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. There
is no pending or, to the knowledge of the Company or the Shareholders,
threatened labor dispute, strike or work stoppage against the Company or any of
its subsidiaries. None of the Company, any of its subsidiaries or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of the Company or
its subsidiaries that could reasonably be expected to have a Company Material
Adverse Effect, and there is no pending or, to the knowledge of the Company or
any of the Shareholders, threatened charge or complaint against the Company or
any of its subsidiaries by the National Labor Relations Board or any comparable
state agency or any other governmental agency.
(j) Section 2.10(j) of the Company Disclosure Schedule
contains true and correct (i) copies of all employment agreements to which the
Company or any of its subsidiaries is a party; (ii) listings of all officers of
the Company who have executed a non-competition agreement with the Company or
any of its subsidiaries; (iii) copies of all severance agreements, programs and
policies of the Company or any of its subsidiaries with or relating to its, or
any of its subsidiaries, employees; and (iv) summary descriptions of all plans,
programs, agreements and other arrangements of the Company or any of its
subsidiaries with or relating to its, or any of its subsidiaries, employees.
Except as set forth in Section 2.10(j) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries will owe a severance payment or
similar obligation to any of their respective employees, officers or directors
as a result of the Merger or the other transactions contemplated by this
Agreement, and none of such persons will be entitled to severance payments or
other benefits as a result of the Merger or the other transactions contemplated
by this Agreement in the event of the subsequent termination of their
employment.
(k) No Benefit Plan provides retiree medical or retiree life
insurance benefits, and neither the Company nor any of its subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide life
insurance or medical benefits upon retirement or termination of employment of
employees, other than as required by the provisions of Sections 601 through 608
of ERISA and section 4980B of the Code.
(l) Neither the Company nor any corporation, trade, business
or entity under common control with the Company, within the meaning of section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA ("Commonly
Controlled Entity"), contributes to or has an obligation to contribute to, and
has not within six years prior to the date of this Agreement contributed to or
had an obligation to contribute to, (i) a plan subject to Section 4.2 of the
Code or Section 302 of ERISA; (ii) a multi-employer plan within the meaning of
Section 3(37) of ERISA or (iii) a plan subject to Title IV of ERISA.
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<PAGE> 19
(m) Except as disclosed on Schedule 2.10(m), neither the
Company nor any Commonly Controlled Entity has maintained a Benefit Plan which
provides for the purchase of common stock of the Company.
(n) Except as disclosed in Section 2.10(n) of the Company
Disclosure Schedule, the Company has not taken any of the following or other
similar actions since June 30, 1998: the acceleration of vesting, waiving of
performance criteria or the adjustment of awards or any other actions permitted
upon a change in control of the Company with respect to any of the Benefit Plans
or any of the plans, programs, agreements, policies or other arrangements
described in Section 2.10(j) of this Agreement.
(o) In connection with the consummation of the transactions
contemplated by this Agreement, no payments of money or other property,
acceleration of benefits, or provision of other rights have been or will be made
hereunder, under any agreement contemplated herein, or under any Benefit Plans
or any of the programs, agreements, policies, or other arrangements described in
Section 2.10(j) of the Company Disclosure Schedule that would be reasonably
likely to be nondeductible under section 280G of the Code, whether or not some
other subsequent action or event would be required to cause such payment,
acceleration, or provision to be triggered.
2.11 TAXES. Except as set forth in Section 2.11 of the Company
Disclosure Schedule,
(a) (i) All returns and reports of or with respect to any Tax
which is required to be filed with respect to the Company or any its
subsidiaries on or prior to the date hereof ("Tax Return") have been duly and
timely filed, (ii) all items of income, gain, loss, deduction and credit or
other items required to be included in each such Tax Return have been so
included and all information provided in each such Tax Return is true, correct
and complete in all respects (including, without limitation, documentation
relating to any reportable item of income, deduction, gain, loss or credit
maintained by the Company), (iii) all Taxes required to be paid with respect to
the period covered by each such Tax Return have been timely paid in full, (iv)
all withholding Tax requirements imposed on or with respect to Company or any of
its subsidiaries have been satisfied in all respects, and (v) no penalty,
interest or other charge is or will become due with respect to the late filing
of any such Tax Return or late payment of any such Tax.
(b) There is no claim against the Company or any of its
subsidiaries for any amount of Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax Return of or
with respect to the Company or any of its subsidiaries other than those
disclosed (and to which are attached true and complete copies of all audit or
similar reports) in Section 2.11 of the Company Disclosure Schedule.
(c) The total amounts set up as liabilities for current and
deferred Taxes in the Company Financial Statements are sufficient to cover the
payment of all Taxes, whether or not assessed or disputed, which are, or are
hereafter found to be, or to have been, due by or with respect to the Company
and any of its subsidiaries up to and through the periods covered thereby.
(d) Except for statutory liens for current Taxes not yet due,
no liens for Taxes exist upon any of the assets of the Company or any of its
subsidiaries.
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<PAGE> 20
(e) None of the transactions contemplated by this Agreement
will result in any Tax liability or the recognition of any item of income or
gain to the Company or any of its subsidiaries.
(f) Neither the Company nor any of its subsidiaries has made
an election under section 341(f) of the Code.
2.12 TAX MATTERS. None of the Company, its affiliates or the
Shareholders has taken or agreed to take any action that would prevent the
Merger from constituting a reorganization within the meaning of section 368(a)
of the Code. Without limiting the generality of the foregoing:
(a) Prior to and in connection with the Merger, (i) none of
the Company Common Stock has been or will be redeemed, (ii) no
extraordinary distribution has been or will be made with respect to
Company Common Stock, and (iii) none of the Company Common Stock has
been or will be acquired by any person related (as defined in Treas.
Reg. Section 1.368-1(e)(3) without regard to Section
1.368-1(e)(3)(i)(A)) to the Company.
(b) The Company and the Shareholders of the Company will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(c) There is no intercompany indebtedness existing between the
Company and the Acquiror or between the Company and Acquisition Sub
that was issued, acquired, or will be settled at a discount.
(d) The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) The Company is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of section 368(a)(3)(A) of
the Code.
2.13 AFFILIATES. Section 2.13 of the Company Disclosure Schedule
identifies all persons who, to the knowledge of the Company, may be deemed to be
affiliates of the Company within the meaning of that term as used in Rule 145
promulgated pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), including, without limitation, all directors and executive officers of
the Company.
2.14 CERTAIN BUSINESS PRACTICES. None of the Company, any of its
subsidiaries or any directors, officers, agents or employees of the Company or
any of its subsidiaries (in their capacities as such) has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful purposes, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment.
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<PAGE> 21
2.15 ENVIRONMENTAL. Except as set forth in Section 2.15 of the Company
Disclosure Schedule, the Company and each of its subsidiaries is in full
compliance with all laws, rules, regulations, orders, judgments, decrees and
other legal requirements, foreign and domestic, relating to the prevention of
pollution and the protection of the environment, including, without limitation,
all such legal requirements pertaining to human health and safety (collectively,
"Environmental Laws"). Except as set forth in Section 2.15 of the Company
Disclosure Schedule, there is no physical condition existing on any property
ever owned, operated, leased or used by the Company or any of its subsidiaries
nor are there any physical conditions existing on any other property that may
have been impacted by the operations of the Company or any of its subsidiaries
that could give rise to any remedial obligation under any Environmental Laws or
that could result in any liability to any third party claiming damage to person
or property as a result or consequence of such physical conditions. Except as
set forth in Section 2.15 of the Company Disclosure Schedule, none of the
Company or any of its subsidiaries has caused or permitted its businesses,
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce, or process any Hazardous
Substance (as defined below) except in compliance with all Environmental Laws,
and has not caused or permitted the Release (as defined below) or arrangement
for transport or disposal of any Hazardous Substance on or off the site of any
property of any of the Company or any of its subsidiaries. Except as set forth
in Section 2.15 of the Company Disclosure Schedule, there are no underground
storage tanks on, under, or about any property of the Company or any of its
subsidiaries, and to the knowledge of the Company and the Shareholders, no
underground storage tanks were previously located on such properties. The
Company does not know of, and has not received any written or oral notice or
other communications from any Governmental Entity or other third party relating
to Hazardous Substances or remediation thereof, of possible liability of or
enforcement against any person or entity pursuant to any Environmental Law,
other environmental conditions in connection with properties of the Company or
any of its subsidiaries, or any actual or potential administrative or judicial
proceedings in connection with any of the foregoing. The term "Hazardous
Substance" shall mean, without limitation, any hazardous waste, as defined by 42
U.S.C. 6903(5), any hazardous substance, as defined by 42 U.S.C. 9601(14), any
pollutant or contaminant, as defined by 42 U.S.C. 9601(33), asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon, crude oil or
derivatives thereof, petroleum products, and all other toxic substances,
hazardous materials or chemical substances regulated by any Environmental Law.
The term "Release" shall have the meaning set forth in 42 U.S.C. 9601(22).
2.16 UNDISCLOSED LIABILITIES. Except (i) as and to the extent of the
amounts specifically reflected or accrued for in the balance sheet dated as of
December 31, 1998, included in the Company Financial Statements or to the extent
specifically disclosed as a liability in other representations in this Article
II, (ii) for liabilities or obligations incurred in the ordinary course of
business since such balance sheet date, or (iii) as set forth in Section 2.16 of
the Company Disclosure Schedule, none of the Company or any of its subsidiaries
has any liabilities or obligations of any nature whether absolute, accrued,
contingent or otherwise, and whether due or to become due. Neither the Company
nor any of the Shareholders knows of any basis for the assertion against the
Company or any of its subsidiaries of any liability or obligation not excepted
by the preceding clauses (i) through (iii) of this Section.
2.17 CERTAIN AGREEMENTS. Except as set forth in Section 2.17 of the
Company Disclosure Schedule, none of the Company or any of its subsidiaries is a
party to, or bound by, any contract,
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<PAGE> 22
agreement or organizational document which purports to restrict, by virtue of a
noncompetition, territorial exclusivity or other provision covering such subject
matter, the scope of the business or operations of any of the Company or any of
its subsidiaries geographically or otherwise.
2.18 CONTRACTS AND COMMITMENTS. Section 2.18 of the Company Disclosure
Schedule sets forth (i) a list of each contract or commitment to which the
Company or any of its subsidiaries is a party or by which its or their property
is bound that involves consideration or other expenditure in excess of $10,000
or performance over a period of more than twelve (12) months or that is
otherwise material to the business or operations of the Company and its
subsidiaries, taken as a whole ("Material Contracts"); (ii) a list of all real
or personal property leases to which any of the Company or any of its
subsidiaries is a party ("Leases"); (iii) a list of guarantees, or agreements to
indemnify or be contingently liable for, the payment or performance by any
person or business entity to which any of the Company or any of its subsidiaries
is a party ("Guarantees"); and (iv) a list of contracts or other formal or
informal understandings between the Company or any of its subsidiaries and any
of its officers, directors, employees, consultants, agents or shareholders (or
any of such shareholders' family members or affiliates) ("Affiliate
Agreements"). True and complete copies of each Material Contract, Leases,
Guarantee and Affiliate Agreement has been furnished to Acquiror prior to the
date hereof. Except as specifically disclosed in Section 2.18 of the Company
Disclosure Schedule, each of the Material Contracts, Leases, Guarantees and
Affiliate Agreements constitutes the valid and legally binding obligation of the
parties thereto and is in full force and effect without default on the part of
the Company, and to the knowledge of the Company and the Shareholders, any other
party thereto.
2.19 AFFILIATE INTERESTS. None of the Shareholders nor any employee,
consultant, officer or director, or former shareholder, employee, consultant,
officer or director, of the Company or any of its subsidiaries has any interest,
direct or indirect, in any property, tangible, or intangible, including, without
limitation, patents, trade secrets, other confidential business information,
trademarks, service marks or trade names used in or pertaining to the business
of the Company or any of its subsidiaries, except for the normal rights of a
shareholder and as set forth in Section 2.19 of the Company Disclosure Schedule.
2.20 INTELLECTUAL PROPERTY. The Company or one or more of its
subsidiaries own, or hold licenses under or otherwise have the right to use or
sublicense, all foreign and domestic patents, trademarks (common law and
registered), trademark registration applications, service marks (common law and
registered), service mark registration applications, trade names and copyrights,
copyright applications, trade secrets, know-how and other proprietary
information as are reasonably necessary for the conduct of the business of the
Company and its subsidiaries as currently conducted. A list of all such
intellectual property is set forth in Section 2.20 of the Company Disclosure
Schedule. Neither the Company nor any of its subsidiaries is currently in
receipt of any notice of infringement or notice of conflict with the asserted
rights of others in any patents, trademarks, service marks, trade names, trade
secrets and copyrights owned or held by other persons, except, in each case, for
matters that could not reasonably be expected to have a Company Material Adverse
Effect. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will cause a violation of,
breach of the terms of, or any cancellation of any material license held by the
Company or any of its subsidiaries with regard to any patent,
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trademark, service mark, trade name, trade secret or copyright that reasonably
could be expected to have a Company Material Adverse Effect.
2.21 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of the Shareholders.
2.22 INSURANCE. Section 2.22 of the Company Disclosure Schedule sets
forth a list of all policies of insurance currently in effect relating to the
business or operations of the Company and its subsidiaries (true and complete
copies of which have been furnished to Acquiror). Such insurance policies are in
full force and effect. The Company and each of its subsidiaries are presently
insured, and during each of the past five (5) calendar years have been insured,
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. Except as set
forth in Section 2.22 of the Company Disclosure Schedule, the policies of
general liability, malpractice or professional liability, fire, theft and other
insurance maintained with respect to the operations, assets or businesses of the
Company and its subsidiaries provide adequate coverage against loss. The Company
or its subsidiaries have given in a timely manner to their insurers all notices
required to be given under such insurance policies with respect to all claims
and actions covered by insurance, and no insurer has denied coverage of any such
claims or actions or reserved it rights in respect of or rejected any of such
claims. None of the Company or any of its subsidiaries has received any notice
or other communication from any such insurer canceling or materially amending
any of such insurance policies, and no such cancellation is pending or
threatened. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not cause such insurance policies to
lapse, terminate or be canceled and will not result in any party thereto having
the right to terminate or cancel such insurance policies.
2.23 PROPERTIES. Except as set forth in Section 2.23 of the Company
Disclosure Schedule, the Company and its subsidiaries have good and marketable
title, free and clear of all liens to all their material properties and assets
whether tangible or intangible, real, personal or mixed, reflected in the
Company Financial Statements as being owned by the Company and its subsidiaries,
as of the date thereof, other than (i) any properties or assets that have been
sold or otherwise disposed of in the ordinary course of business since the date
of such Company Financial Statements, (ii) liens disclosed in the notes to such
financial statements, (iii) statutory liens for current Taxes not yet due and
(iv) liens arising in the ordinary course of business. All buildings, and all
fixtures, equipment and other property and assets that are material to its
business on a consolidated basis, held under leases or subleases by the Company
or any of its subsidiaries, are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable Laws of
bankruptcy, insolvency or similar Laws relating to creditors' rights generally
and to general principles of equity (whether applied in a proceeding in law or
equity). All of the Company's and its subsidiaries' equipment in regular use has
been reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
2.24 GOOD TITLE. Each of the Shareholders is the sole record and
beneficial owner of, and has good and valid title to, the number of shares of
Company Stock set forth opposite such Shareholder's name on Schedule 1.06(a) to
this Agreement, free and clear of all liens, claims, encumbrances, options,
voting trusts or agreements, proxies or other claims or charges of any nature
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whatsoever (other than resulting from this Agreement), except as disclosed in
Section 2.24 of the Company Disclosure Schedule.
2.25 CERTAIN SECURITIES LAW MATTERS.
(a) Each of the Shareholders, either alone or with his or its
purchaser representative as defined in Rule 501(h) under the Securities Act, if
any, has substantial experience in evaluating and investing in private placement
transactions so that such Shareholder is capable of evaluating the merits and
risks of his or its investment in the Acquiror Shares. Each of the Shareholders,
by reason of such Shareholder's business or financial experience, either alone
or with his or its purchaser representative as defined in Section 501(h) under
the Securities Act, if any, has the capacity to protect such Shareholder's own
interests in connection with the acquisition of the Acquiror Shares hereunder.
Each of the Shareholders who has designated himself, herself or itself, as the
case may be, (i) as an "accredited investor" on the signature page hereto is an
"accredited investor" as defined in Rule 501 of Regulation D promulgated
pursuant to the Securities Act or (ii) as a "nonaccredited investor" is not an
"accredited investor" and, either alone or with his purchaser representatives,
has such knowledge and experience in financial and business matters that he or
it is capable of evaluating the merits and risks of the transactions
contemplated by this Agreement. Acquiror has provided each of the Shareholders
or his or its purchaser representative, if any, with copies of the Acquiror SEC
Reports (as such term is defined in Section 3.05, as well as certain financial
and other information on the Acquiror). Each of the Shareholders or his or its
purchaser representative, if any, is familiar with the business and financial
condition, properties, operations and prospects of Acquiror and has had an
opportunity to discuss Acquiror's business and financial condition, properties,
operations and prospects with Acquiror's management. Each of the Shareholders or
his purchaser representative, if any, has also had an opportunity to ask
questions of officers of Acquiror, which questions were answered to such
Shareholder's satisfaction. Each of the Shareholders understands that such
discussion was intended to describe certain aspects of Acquiror's business and
financial condition, properties, operations and prospects, but were not a
thorough or exhaustive description.
(b) Each of the Shareholders understands that the Acquiror
Shares may be "restricted securities" under the applicable federal securities
laws and that the Securities Act and the rules of the Commission provide in
substance that such Shareholder may dispose of the Acquiror Shares only pursuant
to an effective registration statement under the Securities Act or an exemption
therefrom, and each Shareholder further understands that, and except as provided
under the Long- Term Incentive Plan, Acquiror has no obligation or intention to
register the Acquiror Shares, or to take action or not to take action so as to
permit or prevent sales pursuant to the Securities Act (including Rule 144)
thereunder which permits limited resales of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the issue, the resale occurring not
less than one (1) year after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in
transactions with a "market maker" and the number of shares being sold not
exceeding specified limitations. Accordingly, such Shareholder understands that
under the Commission's rules, such Shareholder may dispose of the Acquiror
Shares in transactions which are exempt from registration under the Securities
Act. As a consequence of all of the foregoing, each Shareholder understands that
such
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<PAGE> 25
Shareholder must bear the economic risk of the investment in the Acquiror Shares
for an indefinite period of time.
(c) Each of the Shareholders acknowledges and agrees that such
Shareholder is not relying upon Acquiror or the Company or their respective
officers, directors, employees or agents, as to the United States federal income
tax or any other tax consequences to such Shareholder of the transactions
contemplated by this Agreement. As to all such tax consequences, such
Shareholder hereby agrees and represents that such Shareholder has consulted
with such Shareholder's own legal and tax advisors to the extent that such
Shareholder has deemed such consultation necessary or appropriate, that such
Shareholder is making such Shareholder's own determination as to what the tax
consequences of the transactions contemplated hereby will be to such Shareholder
and that neither Acquiror nor the Company is making any representation, express
or implied, as to any such tax consequences.
2.26 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of the
Shareholders has the full power, legal right, capacity and authority to enter
into, execute and deliver this Agreement and to carry out and perform the
transactions contemplated hereby. This Agreement constitutes a valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company and the
Shareholders that:
3.01 ORGANIZATION AND QUALIFICATION. Acquiror is a limited
liability company duly organized, validly existing and in good standing under
the laws of The Netherlands and Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Texas. Each
of the Acquiror Companies has all requisite power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing could not
reasonably be expected to have an Acquiror Material Adverse Effect. The term
"Acquiror Material Adverse Effect" as used in this Agreement shall mean any
change or effect that would be materially adverse to the financial condition,
results of operations, business or prospects of Acquiror and its subsidiaries,
taken as a whole, at the time of such change or effect.
3.02 CAPITALIZATION.
(a) The authorized capital stock of Acquiror consists of (i)
100,000,000 Acquiror Shares, of which, as of June 1, 1999 (A) 29,414,784 are
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights created by statute, Acquiror's Articles of Association or Bylaws
(or the equivalent organizational documents) (collectively, the "Acquiror
Organizational Documents") or
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any agreement to which Acquiror is a party or is bound; (B) no shares are held
in the treasury of Acquiror and (C) 1,785,000 shares are reserved for future
issuance pursuant to stock option plans of Acquiror and (ii) 3,000,000
Preference Shares, par value NLG 0.03, none of which were issued or outstanding.
The authorized capital stock of Acquisition Sub consists of 1,000 shares of
common stock, no par value per share, of which, as of the date hereof, 100
shares are issued and outstanding. All of the issued and outstanding capital
stock of Acquisition Sub is owned by Acquiror.
(b) The Acquiror Shares to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid and nonassessable.
3.03 AUTHORITY. Each of the Acquiror Companies has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Acquiror Companies
and the performance by each of the Acquiror Companies of its obligations
hereunder, including the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of either of the Acquiror Companies are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of the Acquiror Companies and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes the legal, valid and
binding obligation of each of the Acquiror Companies enforceable against the
Acquiror Companies in accordance with its terms.
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated by the
exceptions to Section 3.04(b) are obtained or made and except as otherwise
disclosed in Section 3.04(a) of the Disclosure Schedule delivered by Acquiror to
the Company contemporaneously with the execution and delivery of this Agreement
(the "Acquiror Disclosure Schedule"), the execution and delivery of this
Agreement by the Acquiror Companies does not, and performance of their
respective obligations hereunder, including the consummation of the transactions
contemplated hereby, will not (i) conflict with or violate the Acquiror
Organizational Documents or the Articles of Incorporation or Bylaws of
Acquisition Sub, (ii) conflict with or violate any Laws in effect as of the date
of this Agreement or any judgment, order or decree applicable to Acquiror or any
of Acquiror's subsidiaries or by or to which any of their properties is bound or
subject or (iii) result in any breach of or constitute a default under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
or require payment under, or result in the creation of a lien or encumbrance on
any of the properties or assets of Acquiror or any of Acquiror's subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Acquiror
or any of Acquiror's subsidiaries is a party or by or to which Acquiror or any
of Acquiror's subsidiaries or any of their respective properties is bound or
subject.
(b) The execution and delivery of this Agreement by the
Acquiror Companies does not, and the performance of this Agreement by the
Acquiror Companies, including the consummation of the transactions contemplated
hereby, will not require Acquiror or Acquisition Sub to obtain any consent,
license, permit, waiver approval, authorization or order of, or to make any
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filing with or notification to, any Governmental Entities, except (i) for the
filing of Articles of Merger with the Secretary of State of the State of Texas,
(ii) the applicable requirements of the HSR Act or the Exchange Act, (iii) the
applicable requirements of the New York Stock Exchange ("NYSE"), (iv) where the
failure to obtain such consents, licenses, permits, waivers, approvals,
authorizations or orders, or to make such filings or notifications could not
reasonably be expected to prevent Acquiror or Acquisition Sub from performing
their respective obligations under this Agreement and (v) as disclosed in
Section 3.04(b) of the Acquiror Disclosure Schedule.
3.05 REPORTS; FINANCIAL STATEMENTS.
(a) Since December 31, 1998, Acquiror has filed all forms,
reports, statements and other documents required to be filed with the
Commission, including without limitation (i) all Annual Reports on Form 10-K,
(ii) all Quarterly Reports on Form 10-Q, (iii) all proxy statements relating to
meetings of shareholders (whether annual or special), (iv) all Current Reports
on Form 8- K and (v) all other reports, schedules, registration statements or
other documents (collectively referred to as the "Acquiror SEC Reports"). The
Acquiror SEC Reports were prepared in all material respects in accordance with
the requirements of applicable Law (including the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder applicable to the Acquiror SEC Reports) and the Acquiror SEC Reports
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the historical consolidated financial statements
(including, in each case, any related notes thereto) contained in the Acquiror
SEC Reports (i) have been prepared in accordance with the published rules and
regulations of the Commission and GAAP applied on a consistent basis throughout
the periods involved (except (A) to the extent disclosed therein or required by
changes in GAAP, (B) as may be indicated in the notes thereto and (C) in the
case of the unaudited financial statements, as permitted by the rules and
regulations of the Commission) and (ii) fairly present the consolidated
financial position of Acquiror and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for the
periods indicated (subject, in the case of unaudited consolidated financial
statements for interim periods, to adjustments, consisting only of normal,
recurring accruals, necessary to present fairly such results of operations and
cash flows).
3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Acquiror SEC Reports filed prior to the date of this Agreement or as
contemplated by this Agreement, since December 31, 1998, Acquiror and its
subsidiaries have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and there has not been any
Acquiror Material Adverse Effect.
3.07 TAX MATTERS.
(a) Neither the Acquiror nor any of its affiliates has taken
or agreed to take any action that would prevent the Merger from constituting a
reorganization within the meaning of section 368(a) of the Code.
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(b) Acquiror qualifies to be treated as a "party to a
reorganization" within the meaning of Section 368(b) of the Code in connection
with the Merger.
(c) Acquiror, or if applicable, any qualified subsidiary (as
defined in Section 1.367(a)-3(c)(5)(vii) of the United States Treasury
Regulations) or any qualified partnership (as defined in Section
1.367(a)-3(c)(5)(viii) of the United States Treasury Regulations) has been
engaged in an active trade or business outside the United States (as defined in
Section 1.367(a)-2T(b)(2) and (3) of the United States Treasury Regulations) for
the entire 36-month period immediately before the Effective Time of the Merger.
Acquiror (and, if applicable, any qualified subsidiary or qualified partnership
engaged in the active trade or business) has no intention to substantially
dispose of or discontinue such trade or business. At the Effective Time of the
Merger, the fair market value of the Acquiror is at least equal to the fair
market value of the Company as determined pursuant to Section
1.367-3(c)(3)(viii) of the United States Treasury Regulations.
(d) Stock representing fifty percent (50%) or less of both the
total voting power and total value of the stock of Acquiror will be issued in
the Merger.
(e) Fifty percent (50%) or less of each of the total voting
power and the total value of the stock of Acquiror will be owned, in the
aggregate, immediately after the Effective Time of the Merger by United States
persons that are either officers or directors of the Company or that are
shareholders of the Company who own at least five percent (5%) of either the
total voting power or total value of the Company immediately prior to the
Merger. For purposes of this representation, any stock of Acquiror owned by
United States persons immediately after the Effective Time of the Merger will be
taken into account, whether or not it was received in the Merger for stock of
the Company.
3.08 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT. Each of the Shareholders covenants and
agrees that, prior to the Closing Date, such Shareholder will take all
commercially reasonable actions necessary to ensure that the Company complies
with Articles V and VII hereof.
4.02 NEGATIVE COVENANTS. Each of the Shareholders covenants and agrees
that from the date of this Agreement until the Effective Time, such Shareholder
will not:
(a) take any action that reasonably could be expected to
result in (i) any of the representations and warranties of such
Shareholder and the Company set forth in Article II hereof becoming
untrue or (ii) any of the conditions set forth in Article IX hereof not
being satisfied; or
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(b) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or
that may reasonably be expected to lead to, any Competing Transaction
(as hereinafter defined), or enter into discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to, or endorse, any Competing
Transaction, or authorize or permit any agent, investment banker,
financial advisor, attorney, accountant or other representative
retained by such Shareholder to take any such action, and such
Shareholder shall promptly notify Acquiror of all relevant terms of any
such inquiries or proposals received by such Shareholder or by any such
agent, investment banker, financial advisor, attorney, accountant or
other representative relating to any of such matters and if such
inquiry or proposal is in writing, such Shareholder shall promptly
deliver or cause to be delivered to Acquiror a copy of such inquiry or
proposal. For purposes of this Agreement, "Competing Transaction" shall
mean any merger, consolidation, share exchange, business combination or
similar transaction involving the Company or any of its subsidiaries or
the acquisition in any manner, directly or indirectly, of a material
interest in any voting securities of, or a material equity interest in
a substantial portion of the assets of, the Company or any of its
subsidiaries, other than the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby covenants
and agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by Acquiror, the
Company will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
consistent with past practices;
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its rights and franchises,
retain the services of its respective officers and key employees and
maintain its relationships with its respective customers and suppliers;
(c) maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice;
(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained;
(e) ensure that the cash on hand at the Company shall not be
less than $3,800,000 and the aggregate outstanding balance of long-term
and short-term debt for borrowed money (except as set forth in Section
7.10) shall not be greater than zero; and
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(f) use its best efforts to ensure that the Shareholders'
Representative shall execute and deliver the Escrow Agreement.
5.02 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Acquiror,
from the date of this Agreement until the Effective Time, the Company will not
do, and will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become
payable to any director or executive officer; (ii) increase the
compensation payable or pay bonuses to employees of the Company other
than in the ordinary course of business, (iii) grant any severance or
termination pay (other than pursuant to the normal severance practices
of the Company or its subsidiaries as in effect on the date of this
Agreement) to, or enter into any employment or severance agreement
with, any director, officer or employee; (iv) except as set forth in
Section 2.10(a) of the Company Disclosure Schedule, establish, adopt or
enter into any Benefit Plan or (v) except as may be required by
applicable Law or as set forth in Section 2.10(a) of the Company
Disclosure Schedule, amend, or take any other actions (including,
without limitation, the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions permitted
upon a "change in control" (as defined in the respective plans) of the
Company, with respect to any of the Benefit Plans or any of the plans,
programs, agreements, policies or other arrangements described in
Section 2.10(a) of this Agreement;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock or
other equity interests, except dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the
Company;
(c) (i) except as described in Section 2.03(c) of the Company
Disclosure Schedule, redeem, purchase or otherwise acquire any shares
of its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or
its subsidiaries' capital stock (other than any such acquisition
directly from any wholly owned subsidiary of the Company in exchange
for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or
its subsidiaries' capital stock or any such securities or obligations;
(ii) effect any reorganization or recapitalization of the Company or
any of its subsidiaries; or (iii) split, combine or reclassify any of
its or its subsidiaries' capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its or its subsidiaries' capital stock;
(d) (i) except as set forth in Section 2.03(a) hereof or as
described in Section 2.03(c) of the Company Disclosure Schedule, issue
(whether upon original issue or out of treasury), sell, grant, award,
deliver or limit the voting rights of any shares of any class of its or
its subsidiaries' capital stock, any securities convertible into or
exercisable or exchangeable for any such shares, or any rights,
warrants or options to acquire, any such shares; (ii) amend or
otherwise modify the terms of any such rights, warrants or options the
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<PAGE> 31
effect of which shall be to make such terms materially more favorable
to the holders thereof; or (iii) take any action to accelerate the
vesting of any of the stock options;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any
other person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business and consistent with past
practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets or any
assets of any of its subsidiaries, except for pledges or dispositions
of assets in the ordinary course of business and consistent with past
practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or
that may reasonably be expected to lead to, any Competing Transaction,
or enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to, or endorse, any Competing Transaction, or authorize or permit
any of the officers, directors, employees or agents of the Company or
any of its subsidiaries or any agent, investment banker, financial
advisor, attorney, accountant or other representative retained by the
Company or any of the Company's subsidiaries to take any such action,
and the Company shall promptly notify Acquiror of all relevant terms of
any such inquiries or proposals received by the Company or any of its
subsidiaries or by any such officer, director, employee, agent,
investment banker, financial advisor, attorney, accountant or other
representative relating to any of such matters and if such inquiry or
proposal is in writing, the Company shall promptly deliver or cause to
be delivered to Acquiror a copy of such inquiry or proposal;
(h) release any third party from its obligations under any
existing standstill agreement or arrangement relating to a Competing
Transaction or otherwise under any confidentiality or other similar
agreement relating to information material to the Company or any of its
subsidiaries;
(i) propose to adopt any amendments to its Articles of
Incorporation or its Bylaws that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement;
(j) (i) change any of its significant accounting policies or
(ii) make or rescind any express or deemed election relating to Taxes,
settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to Taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year
ending December 31 1997, except, in the case of clause (i) or clause
(ii), as may be required by Law or GAAP;
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(k) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument or under any financing lease, whether pursuant to a
sale-and-leaseback transaction or otherwise, except in the ordinary
course of business consistent with past practice;
(l) enter into any material arrangement, agreement or contract
with any third party (other than customers in the ordinary course of
business); or
(m) agree in writing or otherwise to do any of the foregoing.
ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR. Acquiror hereby covenants and
agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by the Company and the
Shareholders, Acquiror will:
(a) use all reasonable efforts to preserve substantially
intact its business organization;
(b) maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice; and
(c) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
6.02 NEGATIVE COVENANTS OF ACQUIROR. Except as expressly contemplated
by this Agreement or otherwise consented to in writing by the Company and the
Shareholders, from the date of this Agreement until the Effective Time, Acquiror
will not do any of the following:
(a) amend any of the material terms or provisions of the
Acquiror Shares;
(b) knowingly take any action that would result in a failure
to maintain the listing of the Acquiror Shares on the New York Stock
Exchange;
(c) propose to adopt any amendments to the Acquiror
Organizational Documents that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement; or
(d) agree in writing or otherwise to do any of the foregoing.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 NOTIFICATION OF CERTAIN MATTERS. The Company and each of the
Shareholders shall give prompt notice to Acquiror, and Acquiror shall give
prompt notice to the Company, orally and in writing, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of the party giving such notice contained
in this Agreement to be untrue or inaccurate at any time from the date hereof to
the Effective Time, (ii) any material failure of the party giving such notice to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such person hereunder within the time specified therefor and
(iii) any change or event having, or which, insofar as can be reasonably
foreseen, could have, a material adverse effect on the financial condition,
results of operations, business or prospects of Acquiror or the Company.
7.02 ACCESS AND INFORMATION. Between the date hereof and the Closing
Date:
(a) The Company shall, and shall cause its subsidiaries to,
(i) afford to Acquiror and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Acquiror Representatives") access
during ordinary business hours and at other reasonable times, upon
reasonable prior notice, to the officers, employees, accountants,
agents, properties, offices and other facilities of the Company and its
subsidiaries and to the books and records thereof and (ii) furnish
promptly to Acquiror and the Acquiror Representatives such information
concerning the business, properties, contracts, records and personnel
of the Company and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be
reasonably requested, from time to time, by Acquiror or the Acquiror
Representatives.
(b) Notwithstanding the foregoing provisions of this Section
7.02, the Company shall not be required to grant access or furnish
information to the Acquiror Representatives to the extent that such
access or the furnishing of such information is prohibited by Law or
contract. No investigation by the Acquiror Representatives made
heretofore or hereafter shall affect the representations and warranties
of the Company that are contained herein and each such representation
and warranty shall survive such investigation.
(c) The Acquiror shall hold in confidence and not disclose,
except on a "need to know" basis to its respective Acquiror
Representatives, all nonpublic information received from the Company
("Confidential Information") until such time as such Confidential
Information is otherwise publicly available and, if this Agreement is
terminated, Acquiror will deliver to the Company all documents, work
papers and other materials (including copies) obtained by such party or
on its behalf from another party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution
hereof. The foregoing obligations of confidentiality and nondisclosure
shall be effective for a period of two (2) years after such
termination; provided, however, that such obligation shall terminate at
the Closing.
(d) In the event that the Acquiror, or anyone to whom it
supplies Confidential Information, receives a request to disclose all
or any part of the Confidential Information under the terms of a
subpoena or order issued by a Governmental Entity, Acquiror agrees
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(i) to notify the Company immediately of the existence, terms and
circumstances surrounding such request, (ii) to consult with the
Company on the advisability of taking legally available steps to resist
or narrow such request, and (iii) if disclosure of such Confidential
Information is required to prevent Acquiror from being held in contempt
or subject to other penalty, to furnish only such portion of the
Confidential Information as the Acquiror is legally compelled to
disclose and to exercise its best efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to the
disclosed Confidential Information.
(e) In addition to the foregoing, the rights and obligations
under that certain Confidentiality Agreement by and between Acquiror,
the Company and Chisholm Energy Partners executed in December, 1998,
shall not be affected by this Agreement, and shall remain in full force
and effect; provided, however, such Confidentiality Agreement shall
terminate on the Closing.
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company and Acquiror shall each use, and shall cause
each of their respective subsidiaries to use, and each of the Shareholders shall
use, all reasonable efforts promptly (i) to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) to obtain from any
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained by the Company, Acquiror or any
of the Shareholders, respectively, or any of the Company's or Acquiror's
respective subsidiaries, in connection with the authorization, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, (iii) to make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (A) the Securities Act and the Exchange Act and
the rules and regulations thereunder, and any other applicable federal or state
securities laws, (B) the HSR Act and (C) any other applicable Law; provided that
Acquiror and the Company shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to
the nonfiling party and its advisors prior to filing and, if requested, shall
accept all reasonable additions, deletions or changes suggested in connection
therewith. The Company and Acquiror shall furnish all information required for
any application or other filing to be made pursuant to the rules and regulations
of any applicable Law in connection with the transactions contemplated by this
Agreement.
(b) Acquiror, the Company and each of the Shareholders agree,
and Acquiror and the Company shall cause each of their respective subsidiaries,
to cooperate and to use all reasonable efforts to contest and resist any action,
including legislative, administrative or judicial action, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) (an "Order") that is in effect and
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement, including, without
limitation, by vigorously pursuing all available avenues of administrative and
judicial appeal and all available legislative action. Acquiror, the Company and
each of the Shareholders also agree to take any and all reasonable actions,
including, without
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<PAGE> 35
limitation, the disposition of assets or the withdrawal from doing business in
particular jurisdictions, required by regulatory authorities as a condition to
the granting of any approvals required in order to permit the consummation of
the Merger or as may be required to avoid, lift, vacate or reverse any
legislative or judicial action that would otherwise cause any condition to the
Merger not to be satisfied; provided, however, that in no event shall any party
take, or be required to take, any action that could reasonably be expected to
have a Company Material Adverse Effect or an Acquiror Material Adverse Effect.
(c) The Company, Acquiror and each of the Shareholders shall
each promptly give (or shall cause their respective subsidiaries to give) any
notices regarding the Merger, this Agreement or the transactions contemplated
hereby to third parties required by Law or by any contract, license, lease or
other agreement to which such person is a party or by which such person is
bound, and use (and cause its subsidiaries to use) all reasonable efforts to
obtain any third party consents (i) necessary, proper or advisable to consummate
the transactions contemplated by this Agreement, (ii) otherwise required under
any contracts, licenses, leases or other agreements in connection with the
consummation of the transactions contemplated by this Agreement or (iii)
required to prevent a Company Material Adverse Effect or an Acquiror Material
Adverse Effect, respectively, from occurring after the Effective Time.
(d) If any party shall fail to obtain any third party consent
described in subsection (c)(i) above, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon the Company and Acquiror, their
respective subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
7.04 PUBLIC ANNOUNCEMENTS. Acquiror and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation;
provided, however, that a party may, without consulting with the other party,
issue such a press release or make such a public statement if required by
applicable Law or the rules of the NYSE or a national securities exchange if
such party has used commercially reasonable efforts to consult with the other
party but has been unable to do so in a timely manner.
7.05 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses. The Company shall have fully paid all outside
legal and accounting expenses incurred in connection with this Agreement on or
before the Closing.
7.06 EMPLOYEES OF COMPANY.
(a) As soon as reasonably practicable after the Effective
Time, but in any event not later than January 1, 2000, Acquiror shall provide
employee benefit plans and arrangements to employees of the Company and its
subsidiaries that are similar to the employee benefit plans and arrangements of
Acquiror for similarly situated employees of the Acquiror as then in effect.
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<PAGE> 36
(b) The Company acknowledges that any benefits plans of the
Acquiror that may be provided to the employees of the Company after the
Effective Time may be substantially different from those provided such employees
of the Company prior to the Merger.
(c) The employees of Company and its subsidiaries shall be
credited for their actual years of service with the Company for purposes of
eligibility, vesting and benefit accrual under all benefit plans provided by
Acquiror in accordance with this Section 7.07, including, but not limited to,
vacation, severance, retirement and disability plans, but excluding any defined
benefit plans.
(d) Such employee benefits under any medical plan provided by
Acquiror in accordance with this Section 7.07 shall not be subject to any
exclusions for any pre-existing conditions to the extent such exclusions did not
apply under the Company's medical plan, and credit shall be received for any
deductibles or out-of-pocket amounts previously paid by employees of the Company
and its subsidiaries for the current plan year under the medical plan maintained
by the Company.
(e) Nothing in this Agreement is intended to confer upon any
employee of the Company or its subsidiaries retained by Acquiror after Closing
("Retained Employees") any right to continued employment after evaluation by
Acquiror and its affiliates of their employment needs at any time after the
Closing.
(f) Notwithstanding any provision in this Agreement to the
contrary, Acquiror expressly reserves the right to amend, modify, or terminate
any benefit plan, program or policy established or maintained by Acquiror or any
of its affiliates (including, without limitation, the Company or its
subsidiaries) for the benefit of the Retained Employees.
7.07 TAX-FREE REORGANIZATION. Subject to the terms and conditions
hereof, Acquiror and the Company shall each use its best efforts to cause the
Merger to be treated as a reorganization within the meaning of section 368(a) of
the Code and to constitute a tax-deferred transaction for the Shareholders under
section 367 of the Code. Acquiror shall cause the Company to comply with all
applicable reporting requirements under section 367(a) of the Code and U.S.
Treasury Regulations issued thereunder, including, without limitation, the
reporting requirements set forth in section 1.367(a)-3(c)(6) of the U.S.
Treasury Regulations.
7.08 INFORMATION FOR TAX RETURNS. From and after the Closing, the
Acquiror Companies shall cooperate with the Shareholders by providing and
granting access to the Shareholders, promptly upon request, to such records,
documents and other information regarding the Company and its subsidiaries as
the Shareholders may reasonably request from time to time, in connection with
the preparation or audit of any Tax Returns of any of the Company, its
subsidiaries or the Shareholders, and for audits, disputes, refund claims, or
litigation or other proceedings relating thereto.
7.09 NO HEDGING TRANSACTIONS. The Shareholders acknowledge that the
entering into of or participation in hedging or other derivative transactions
that include Common Stock, or derivatives thereof, of the Acquiror may have an
effect in the overall market for Common Stock of the Acquiror and, further, that
Acquiror has a policy restricting executives and affiliates from
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<PAGE> 37
engaging or participating in such transactions. Accordingly, the Shareholders
agree that they will not enter into any hedging or similar transaction (whether
through use of a forward contract, swap agreement, option or other instrument)
that in any way involves Common Stock of Acquiror or any derivatives thereof
without the prior written consent of Acquiror in its sole discretion; provided,
however, that the limitations imposed by this Section 7.10 shall not apply to
the Estate of Paul J. Cernock, Deceased or the Estate of Elizabeth M. Cernock,
Deceased.
7.10 PAYMENT OF CERTAIN COMPANY DEBT. No more than 90 days after
the Closing, the Acquiror shall cause the Company and its subsidiaries to repay
in full all amounts due and owing, including, without limitation, all associated
principal, interest, and pre-payment penalties, if any, with respect to the
following Company loans that have been previously guaranteed by Paul J. Cernock,
Deceased:
<TABLE>
<CAPTION>
ORIGINAL
LOAN BALANCE DUE
CREDITOR LOAN NUMBER AMOUNT AS OF 3/31/99
<S> <C> <C> <C>
Sterling Bank 112596834 $ 60,000.00 $13,333.24
Sterling Bank 01596054 $100,000.00 $15,415.32
Bank of America, FSB 1002520 $275,000.00 $262,082.97
Denver, Colorado (SBA Loan)
SBA Lending Group
No. 51002
P. O. Box 98624
Las Vegas, Nevada
Denver Urban Economic CDC892888-30-09 $227,000.00 $212.879.13
Development Corporation (SBA Loan)
3003 Arapahoe Street
Denver, Colorado
TOTAL $662,000.00 $503,710.66
</TABLE>
The Acquiror shall use reasonable efforts and cooperate with the Shareholders to
have each of the Shareholders released, as of the Closing Date, from all
Guarantees.
7.11 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Acquiror and the
Company agree that the indemnification obligations set forth in the Articles of
Incorporation and Bylaws of the Company, in each case as of the date of this
Agreement, shall survive the Merger and after the Effective Time any amendment,
repeal or other modification of the Articles of Incorporation or Bylaws shall
not adversely affect the rights thereunder of the individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company
or its subsidiaries.
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ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL. Subject to the terms and conditions of this Article
VIII, the Shareholders agree, jointly and severally, to indemnify, defend and
hold harmless Acquiror and its directors, officers, employees, consultants,
affiliates and controlling persons (collectively, and including the Company and
its subsidiaries after the Effective Time, the "Acquiror Indemnified Parties" or
an "Acquiror Indemnified Party"), from and against all Claims asserted against,
resulting from, imposed upon or incurred by Acquiror or any other Acquiror
Indemnified Party, directly or indirectly, by reason of, arising out of, or
resulting from (a) the inaccuracy or breach of any representation or warranty of
the Company or any of the Shareholders contained in or made pursuant to this
Agreement or (b) the breach of any covenant or agreement of the Company or any
of the Shareholders contained in or made pursuant to this Agreement. As used in
this Article VIII, the term "Claim" shall include (i) all debts, liabilities and
obligations, (ii) all losses, damages, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys' fees and expenses), and (iii)
all demands, claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments, whether or
not ultimately determined to be valid.
8.02 NO EXHAUSTION OF REMEDIES. The Shareholders acknowledge that their
obligation under Section 8.01 of this Agreement is independent of the
obligations of the Company pursuant to this Agreement, and that the Shareholders
waive any right to require the Acquiror Indemnified Parties to (i) proceed
against the Company; or (ii) pursue any other remedy whatsoever in the power of
the Acquiror Indemnified Parties.
8.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the Shareholders
to indemnify the Acquiror Indemnified Parties under this Article VIII with
respect to Claims relating to or arising from third parties (a "Third Party
Claim") shall be subject to the following terms and conditions:
(a) Notice and Defense. The Acquiror Indemnified Party will
give the other party or parties (whether one or more, the "Indemnifying
Party") prompt written notice (including all documents and other
nonprivileged information in the Acquiror Indemnified Party's
possession related thereto) of any such Third Party Claim, and the
Indemnifying Party may undertake the defense thereof by representatives
chosen by it upon written notice to the Acquiror Indemnified Party
provided within 20 days of receiving notice of such Third Party Claim
(or sooner if the nature of the Third Party Claim so requires). Failure
of the Acquiror Indemnified Party to give such notice shall not affect
the Indemnifying Party's duty or obligations under this Article VIII,
except to the extent the Indemnifying Party is materially prejudiced
thereby. The Acquiror Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other
materials required by the Indemnifying Party and in the possession or
under the control of the Acquiror Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such claim,
and shall in other respects give reasonable cooperation in such
defense.
(b) Failure to Defend. If the Indemnifying Party, within 20
days after notice of any such Third Party Claim (or sooner if the
nature of any Third Party Claim so requires), fails to undertake the
defense of such Third Party Claim actively and in good faith, then the
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<PAGE> 39
Acquiror Indemnified Party will have the right to undertake the
defense, compromise or settlement of such Third Party Claim, or consent
to the entry of a judgment with respect thereto.
(c) Acquiror Indemnified Party's Rights. Anything in this
Article VIII to the contrary notwithstanding, (i) if there is a
reasonable probability that the Third Party Claim may adversely affect
the Acquiror Indemnified Party other than as a result of money damages
or other money payments in an aggregate amount of less than $25,000,
the Acquiror Indemnified Party shall have the right to defend,
compromise or settle such Third Party Claim (provided that the Acquiror
Indemnified Party shall not settle such Third Party Claim or consent to
any judgment without first obtaining the consent of the Indemnifying
Party, which shall not be unreasonably withheld), and (ii) the
Indemnifying Party shall not without the written consent of the
Acquiror Indemnified Party, settle or compromise any Third Party Claim
or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff
to the Acquiror Indemnified Party of an unconditional release from all
liability in respect of such Third Party Claim.
8.04 PAYMENT; ARBITRATION. Upon the occurrence of a Claim (subject to
Section 8.03 with respect to a Third Party Claim) for which indemnification is
believed to be due hereunder, the Indemnified Party shall provide notice of such
Claim to the Indemnifying Party, stating in specific terms the circumstances
giving rise to the Claim, specifying the amount of the Claim and making a
request for any payment then believed due. Any Claim shall be conclusive against
the Indemnifying Party in all respects 30 days after receipt by the Indemnifying
Party of such notice, unless within such period the Indemnifying Party sends the
Indemnified Party a notice disputing the propriety of the Claim. Such notice of
dispute shall describe the basis for such objection and the amount of the Claim
as to which the Indemnifying Party does not believe should be subject to
indemnification. Upon receipt of any such notice of dispute, both the
Indemnified Party and the Indemnifying Party shall use all reasonable efforts to
cooperate and arrive at a mutually acceptable resolution of such dispute within
the next 30 days. If a mutually acceptable resolution cannot be reached between
the Indemnified Party and the Indemnifying Party with such 30-day period, either
party may submit the dispute for resolution by binding arbitration pursuant to
the provisions of this Section 8.04. If a party elects to submit such matter to
arbitration, such party shall provide notice to the other party of its election
to do so, and the parties shall attempt to appoint a single arbitrator. If the
parties are unable within 10 days after receipt of the notice to agree on a
single arbitrator, then each party shall appoint one arbitrator, and the two
arbitrators so appointed shall name a third arbitrator within a period of 10
days after their nomination. If the two arbitrators fail to appoint a third
arbitrator within such 10-day period, a third arbitrator shall be appointed
pursuant to the then existing Commercial Arbitration Rules (the "Rules") of the
American Arbitration Association. In all respects, such panel and the
arbitration proceeding shall be governed by the Rules, and the place of
arbitration shall be in a city mutually selected by the Indemnifying Party and
the Acquiror Indemnified Party (or, if no city can be mutually agreed upon
within 10 days, then in Houston, Texas). If it is finally determined that all or
a portion of such Claim amount is owed to the Indemnified Party, then such Claim
amount shall be satisfied in accordance with Section 8.05 of this Agreement and
the Acquiror Indemnified Party shall be entitled to recovery of all expenses,
including reasonable attorneys' fees, incurred in connection with enforcing its
rights under this Article VIII. Judgment upon the award resulting from
arbitration may be entered in any court having
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<PAGE> 40
jurisdiction for direct enforcement, or any application may be made to a court
for a judicial acceptance of the award and an order of enforcement, as the case
may be.
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES.
(a) Except for any Claim for fraud shall not be so limited,
the indemnification obligations of the Shareholders under Section 8.01 of this
Agreement (including with respect to any Third Party Claims) shall be satisfied
solely from payments of the Escrow Shares by delivery to the Acquiror
Indemnified Party entitled to indemnification hereunder.
(b) Pursuant to the provisions of the Escrow Agreement, if the
Shareholders are determined to owe a Claim amount pursuant to the procedures set
forth in Section 8.04, then the amount due the Acquiror Indemnified Party
hereunder shall be satisfied by the delivery to the Acquiror Indemnified Party
pursuant to the Escrow Agreement of Escrow Shares equal in value to the amount
of the Claim to be satisfied, and the Claim shall be deemed paid and satisfied
upon receipt by the Acquiror Indemnified Party of certificates representing such
number of Escrow Shares duly endorsed for transfer to the Indemnified Party. The
per share value of the Escrow Shares for purposes of this Article VIII and the
Escrow Agreement with respect to a particular Claim shall be the Market Value
(as defined herein) of the Escrow Shares. The "Market Value" of an Escrow Share
shall be the actual closing trading price at the end of business as of the
Closing Date (regardless of the actual trading price for the Acquiror Stock),
with appropriate adjustment to take into account any stock split, reverse stock
split, stock dividend, recapitalization, stock exchanges or other similar
capital adjustments with respect (including by reason of merger, consolidation
or other business combination involving Acquiror) to the Escrow Shares. The
Market Value of the Additional Corpus (as such term is defined in the Escrow
Agreement) shall be determined by mutual agreement of the Shareholders'
Representative and the Acquiror. In the event that such parties cannot in good
faith agree on the market value of the Additional Corpus, the matter shall be
settled by binding arbitration in accordance with the procedures set forth
herein, except for any claims of fraud.
(c) The Shareholders' Representative shall have the power and
authority to make all decisions with regard to the settlement of Claims brought
pursuant to Section 8.01 of this Agreement from the Escrow Shares. If the
Shareholders' Representative is unable to carry out his duties as Shareholders'
Representative, then the person designated in the Appointment of Shareholders'
Representative, shall be designated and appointed as the Shareholders'
Representative, and shall assume all of the powers and duties of the
Shareholders' Representative under the Agreement and the Escrow Agreement. If
any successor Shareholders' Representative becomes unable to carry out his
duties as Shareholders' Representative, his replacement shall be the person
designated in the Appointment of Shareholders' Representative.
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties, covenants and agreements of the Company and the
Shareholders in this Agreement or made pursuant hereto shall survive the
Closing, and any investigation thereof, until the first anniversary of the
Closing Date and, the Shareholders shall have no liability under this Article
VIII unless written notice of a Claim is provided within such period. After the
Effective Time, the Acquiror Indemnified Parties shall not be entitled to
indemnification for Claims from the Escrow Shares except to the extent the
aggregate amount for all claims exceeds $50,000. Once such
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<PAGE> 41
threshold is satisfied, the Shareholders, subject to the other limitations in
this Article VIII, shall be liable for all Claims of the Acquiror Indemnified
Parties in excess thereof. All Claims by the Acquiror Indemnified Parties
pursuant to this Agreement shall be limited to the Escrow Shares, except for any
claim of fraud.
8.07 SUBROGATION. Upon payment in full of any Third Party Claim or
other Claim, the Indemnifying Party shall be subrogated to the extent of such
payment to the rights of the Acquiror Indemnified Parties against any person
with respect to the subject matter and to the extent only of the Third Party
Claim or other Claim.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES. The
obligation of the Acquiror Companies to effect the transactions contemplated
hereby on the Closing Date shall be subject to the satisfaction at or prior to
the Closing Date of the following conditions, any or all of which may be waived
by Acquiror, in whole or in part, to the extent permitted by applicable law:
(a) Each of the representations and warranties of the Company
and each of the Shareholders contained in this Agreement shall be true
and correct in all material respects (without duplication of any
materiality exception contained in any individual representation and
warranty) as of the date of this Agreement and as of the Closing Date
as though made again as of the Closing Date. Acquiror shall have
received a certificate of the President and the Secretary of the
Company, dated the Closing Date, to such effect with respect to the
representations and warranties of the Company;
(b) The Company and each of the Shareholders shall have
performed or complied with all agreements and covenants required by
this Agreement to be performed or complied with by such person on or
prior to the Closing Date. Acquiror shall have received a certificate
of the President and the Secretary of the Company, dated the Closing
Date, to such effect with respect to the Company's performance and
compliance;
(c) Acquiror shall have received a certificate of the
President and Secretary or Assistant Secretary (or other authorized
corporate officer) of the Company certifying as true, accurate and
complete, as of the date of this Agreement and against as of the
Closing Date: (i) a copy of the resolutions of the Company's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other documents contemplated hereby to which it is a
party and the consummation by the Company of the Merger; (ii) a copy of
the resolutions of the Company's shareholders authorizing the
execution, delivery and performance of this Agreement and the other
documents contemplated hereby to which it is a party and the
consummation by the Company of the Merger; (iii) a certified copy of
the Articles of Incorporation of the Company issued by the Secretary of
State; (iv) a copy of the Bylaws of the Company; and (v) the incumbency
of the officer or officers authorized to execute on behalf of the
Company this Agreement and the other documents contemplated thereby to
which it is a party;
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(d) Acquiror shall have received a certificate of the
President and Secretary or Assistant Secretary (or other authorized
corporate officer) of each subsidiary of the Company certifying as
true, accurate and complete, as of the date of this Agreement and again
of the Closing Date: (i) a certified copy of the Articles of
Incorporation of the subsidiary issued by the Secretary of State of the
state of such subsidiary's incorporation; and (ii) a copy of the Bylaws
of such subsidiary;
(e) The resignations, effective at the Effective Time, of each
of the directors and officers of the Company shall have been delivered
to Acquiror on the Closing Date;
(f) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(g) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in the Acquiror Disclosure Schedule or the
Company Disclosure Schedule, shall have expired or been terminated;
(h) Acquiror shall have received the Escrow Agreement, duly
executed and delivered by the Shareholders' Representative and the
Escrow Agent;
(i) The Shareholders' Representative and each of the
Shareholders shall have executed and delivered the Appointment;
(j) Acquiror shall have received the Registration Rights
Agreement duly executed and delivered by the Shareholders to the
Acquiror, such agreement to be substantially in the form of Exhibit C;
(k) Randall S. Miller and Lawrence Bruno shall have duly
executed and delivered to Acquiror an Employment Agreement
substantially in the form of Exhibit D;
(l) All shares of the Company's Common Stock (or other equity
interests owned by the Company or a subsidiary of the Company) shall be
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on the Company's or such subsidiaries' voting
rights, charges or other encumbrances of any nature whatsoever;
(m) The Acquiror shall have received the waiver or consent of
all persons holding options to purchase Company Stock of any notice of
change of control to consummate the Merger, and the amended and
restated option agreements pertaining to the Company Options as
contemplated in Section 1.06(g) shall have been duly executed and
delivered;
(n) Acquiror shall have received a certified copy of the
resolution of the Company's Board of Directors that the actions
regarding the Plan and the treatment of the Executive Stock Rights as
set forth in Section 1.06(h) are in compliance with the terms of the
Plan;
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<PAGE> 43
(o) The Company shall have paid prior to Closing all
accounting fees and expenses and all legal fees and expenses and shall
not be liable for any accounting fees or expenses or legal fees or
expenses of the Shareholders relating to the negotiation or
consummation of this Agreement or the transactions contemplated herein;
and
(p) Acquiror shall have received from each person entitled to
any benefits under the Company Long-Term Incentive Compensation Plan or
any Company Deferred Compensation Agreement a waiver or release of such
benefits, such documents to be in a form acceptable to Acquiror in its
sole discretion.
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company and the Shareholders to effect the transactions
contemplated hereby on the Closing Date shall be subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived by the Company and the Shareholders, acting together, in whole or
in part, to the extent permitted by applicable Law:
(a) Each of the representations and warranties of Acquiror
contained in this Agreement shall be true and correct in all material
respects (without duplication of any materiality exception contained in
any individual representation and warranty) as of the date of this
Agreement and as of the Closing Date as though made again as of the
Closing Date. The Company shall have received a certificate of the
President and the Chief Financial Officer of the Acquiror (or the
organizational equivalent), dated the Closing Date, to such effect;
(b) The Acquiror Companies shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by each of them on or prior to the Closing
Date. The Company shall have received a certificate of the President
and the Chief Financial Officer of the Acquiror (or the organizational
equivalent), dated the Closing Date, to such effect;
(c) The Company and the Shareholders shall have received a
certificate of the Secretary or Assistant Secretary (or other
authorized corporate officer) of each of the Acquiror Companies
certifying as true, accurate and complete, as of the date of this
Agreement and again as of the Closing Date: (i) a copy of the
resolutions of the Board of Directors of each of the Acquiror Companies
(or the organizational equivalent) authorizing the execution, delivery
and performance of this Agreement and the other documents contemplated
hereby to which it is a party and the consummation by the Company of
the Merger; (ii) a copy of the resolutions of Acquisition Sub's
shareholder authorizing the execution, delivery and performance of this
Agreement and the other documents contemplated hereby to which it is a
party and the consummation by the Company of the Merger; (iii) a copy
of the Articles of Incorporation (or equivalent organizational
document) of each of the Acquiror Companies issued by The Netherlands
and the Secretary of State of the State of Texas, as the case may be;
(iv) a copy of the Bylaws (or equivalent organizational document) of
each of the Acquiror Companies; and (v) the incumbency of the officer
or officers authorized to execute on behalf of each of the Acquiror
Companies this Agreement and the other documents contemplated thereby
to which it is a party;
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<PAGE> 44
(d) The Estate of Paul J. Cernock and the Estate of Elizabeth
M. Cernock shall have been advised in writing by KPMG as of the Closing
Date to the effect that the Merger qualifies as a reorganization under
the provisions of Section 368(a) of the Code, and will not be taxable
to the Shareholders under Section 367 of the Code.
(e) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(f) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in Acquiror Disclosure Schedule or the Company
Disclosure Schedule, shall have expired or been terminated;
(g) The amendments to the Company Options contemplated in
Section 1.06(g) shall have been duly executed and delivered; and
(h) Randall S. Miller and Lawrence Bruno shall have received
from Acquiror a duly executed Employment Agreement substantially in the
form of Exhibit D.
ARTICLE X
MISCELLANEOUS
10.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual consent of Acquiror and the Company;
(b) by either Acquiror or the Company if the Effective Time
has not occurred on or before September 15, 1999;
(c) by Acquiror, upon a breach of any covenant or agreement on
the part of the Company or any of the Shareholders set forth in this
Agreement, or if any representation or warranty of the Company or any
of the Shareholders shall have become untrue, in either case such that
the conditions set forth in Section 9.01(a) or Section 9.01(b) would
not be satisfied (a "Terminating Company Breach"); provided that, if
such Terminating Company Breach is curable by the Company or any of the
Shareholders, as the case may be, through the exercise of reasonable
efforts and for so long as the Company or such Shareholder or
Shareholders continue to exercise such reasonable efforts, Acquiror may
not terminate this Agreement under this Section 10.01(c);
(d) by the Company, upon breach of any covenant or agreement
on the part of Acquiror set forth in this Agreement, or if any
representation or warranty of Acquiror shall have become untrue, in
either case such that the conditions set forth in Section 9.02(a) or
Section 9.02(b) would not be satisfied (a "Terminating Acquiror
Breach"); provided that, if
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<PAGE> 45
such Terminating Acquiror Breach is curable by Acquiror through the
exercise of its reasonable efforts and for so long as Acquiror
continues to exercise such reasonable efforts, the Company may not
terminate this Agreement under this Section 10.02(d); or
(e) by either Acquiror or the Company, if there shall be any
Order which is final and nonappealable preventing the consummation of
the Merger, unless the party relying on such Order has not complied
with its obligations under Section 7.03(b).
10.02 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 10.01, the Shareholders, the Company, Acquiror and
Acquisition Sub shall have no obligation or liability to each other except that
(i) the provisions of Sections 7.02(d), 7.02(e) and 7.06 shall survive any such
termination, and (ii) nothing herein and no termination pursuant hereto will
relieve any party from liability for any breach of this Agreement.
10.03 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto. The waiver by any
party hereto of any condition or of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other condition or
subsequent breach.
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Schedules and Exhibits hereto) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof, and neither this nor any document delivered in connection with this
Agreement confers upon any person not a party hereto any rights or remedies
hereunder except as provided in Article VIII hereof.
10.05 ASSIGNMENT. This Agreement shall inure to the benefit of and will
be binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns. This Agreement shall not be assignable by any
party hereto without the consent of the other parties hereto, except that the
parties hereto agree that the rights and obligations of the Acquiror may be
assigned to an affiliate of the Acquiror by written notice to all other parties
hereto.
10.06 CERTAIN DEFINITIONS. For the purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
banks in The Netherlands or the State of Texas are authorized or
obligated to be closed;
(c) "Closing" shall have the meaning set forth in Section 1.11
of this Agreement, of persons interested in the transactions
contemplated by this Agreement at which all documents deemed necessary
by the parties to this Agreement to evidence the fulfillment or
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<PAGE> 46
waiver of all conditions precedent to the consummation of the
transactions contemplated by the Agreement are executed and delivered;
(d) "Closing Date" shall mean the date of the Closing as
determined pursuant to Section 1.11 of this Agreement.
(e) "Competing Transaction" shall mean any proposal or offer
from any person or entity (other than Acquiror or an affiliate of
Acquiror) relating to any acquisition or purchase of all or (other than
in the ordinary course of business) any material portion of the assets
of, or any possible disposition or issuance of any Common Stock or any
capital stock or other equity interests in the Company or any of its
subsidiaries (or any rights or securities exercisable for or
convertible into Common Stock or any such capital stock or other equity
interests), or any merger or other business combination with, the
Company or any of its subsidiaries;
(f) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise;
(g) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d) of the
Exchange Act);
(h) "subsidiary" or "subsidiaries" of the Company, Acquiror or
any other person, means any corporation, partnership, joint venture or
other legal entity of which the Company, Acquiror or any such other
person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity;
(i) "Tax" or "Taxes" shall mean any and all taxes, charges,
fees, levies, assessments, duties or other amounts payable to any
federal, state, local or foreign taxing authority or agency, including,
without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license,
payroll, withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (ii) customs,
duties, imposts, charges, levies or other similar assessments of any
kind, and (iii) interest, penalties and additions to tax imposed with
respect thereto; and
(j) "Trading Day" shall mean each business day on which the
New York Stock Exchange Market is open for trading.
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<PAGE> 47
10.07 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and (i) delivered in person or by courier, (ii) sent by
telecopy or facsimile transmission, or (iii) mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
If to the Company: Reservoirs, Inc.
1151 Brittmore Road
Houston, Texas 77043
Attention: Randall S. Miller
Telecopy: (713) 932-0520
with a copy (which shall
not constitute notice) to: Chamberlain, Hrdlicka, White,
Williams & Martin
1200 Smith, 14th Floor
Houston, Texas 77002
Attention: Craig M. Bergez
Telecopy: (713) 658-2553
If to the Shareholders: Shareholders of Reservoirs, Inc.
c/o Randall S. Miller
22506 Wetherburn
Katy, Texas 77449
with a copy (which shall
not constitute notice) to: Chamberlain, Hrdlicka, White,
Williams & Martin
1200 Smith, 14th Floor
Houston, Texas 77002
Attention: Craig M. Bergez
Telecopy: (713) 658-2553
If to Acquiror: Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
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<PAGE> 48
with a copy (which shall
not constitute notice) to: Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
or to such other address as the parties hereto shall have furnished to the other
parties hereto by notice given in accordance with this Section 10.07. Such
notices shall be effective (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by telecopy or facsimile
transmission, when the sender receives telecopier confirmation that such notice
was received at the telecopier number of the addressee, or (iii) if mailed, upon
the earlier of five (5) business days after deposit in the mail and the date of
delivery as shown by the return receipt therefor.
10.08 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive law of the State of Texas, without giving
effect to the principles of conflicts of law thereof.
10.09 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, by original or facsimile signatures, each of which shall be an
original, but all of which together shall constitute one and the same agreement.
10.11 HEADINGS. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
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<PAGE> 49
IN WITNESS WHEREOF, the Company and each of the Acquiror Companies have
each caused this Agreement to be executed on its behalf by its officer thereunto
duly authorized, and each of the Shareholders has executed this Agreement, all
as of the date first above written.
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., its Sole Managing Director
By: /s/ Jacobus Schouten
--------------------
Jacobus Schouten
Managing Director
CORE ACQUISITION SUBSIDIARY, INC.
By: /s/ David M. Demshur
--------------------
David M. Demshur
President
RESERVOIRS, INC.
By: /s/ Randall S. Miller
---------------------
Name: Randall S. Miller
Title: President
SHAREHOLDERS' REPRESENTATIVE:
By /s/ Randall S. Miller
---------------------
Randall S. Miller
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<PAGE> 50
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMPANY NON-ACCREDITED ACCREDITED
SHAREHOLDERS: STOCK OWNED INVESTOR INVESTOR
--------------------------------------------------------------
(Please check one box)
<S> <C> <C> <C>
/s/ Randall S. Miller 8,500 [ ] [ ]
- -------------------------------
RANDALL S. MILLER
ESTATE OF PAUL J. CERNOCK,
DECEASED
By: /s/ Christopher M. Cernock
--------------------------
Christopher M. Cernock
Independent Co-Executor 14,280 [ ] [ ]
By: /s/ Laura E. Cernock
--------------------
Laura E. Cernock
Independent Co-Executor
ESTATE OF ELIZABETH M.
CERNOCK, DECEASED
By: /s/ Robert L. Thomas
--------------------
Robert L. Thomas
Independent Executor 14,280 [ ] [ ]
/s/ Lawrence Bruno
- ------------------
LAWRENCE BRUNO 935 [ ] [ ]
/s/ John Zellmer
- ----------------
JOHN ZELLMER 1,530 [ ] [ ]
</TABLE>
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<PAGE> 51
EXHIBIT A
ESCROW AGREEMENT
<PAGE> 52
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement"), dated as of July 26, 1999
is entered into by and among Core Laboratories N.V., a Netherlands limited
liability company ("Acquiror"); Core Acquisition Subsidiary, Inc., a Texas
corporation with its principal place of business in Houston, Texas ("Acquisition
Sub"), Reservoirs, Inc., a Texas corporation (the "Company"), Randall S. Miller
(the "Shareholders' Representative") and Bankers Trust Company, as escrow agent
("Escrow Agent"). Defined terms used but not otherwise defined herein shall have
the meanings set forth in the Merger Agreement (as defined below).
WHEREAS, Acquiror, Acquisition Sub, the Company, the Shareholders of
the Company and the Shareholder's Representative have entered into an Agreement
and Plan of Merger, dated July 26, 1999 (the "Merger Agreement"), pursuant to
which Acquisition Sub is merging with and into the Company with the Company as
the surviving corporation of such merger (the "Merger"), with the result that
the surviving corporation will become a wholly-owned subsidiary of Acquiror and
all of the outstanding shares of common stock, $.01 par value of the Company
(the "Company Stock") will be converted into Acquiror Shares; and
WHEREAS, pursuant to the Merger Agreement, the Company and the
Shareholders have made certain representations, warranties, covenants and
agreements to and with Acquiror and the Shareholders have agreed to indemnify,
defend and hold harmless the Acquiror Indemnified Parties against Claims under
Article VIII of the Merger Agreement; and
WHEREAS, the parties to the Merger Agreement have agreed to establish
an escrow fund (the "Escrow Fund"), initially consisting of 22,282 Acquiror
Shares, from which they may, subject to the terms and conditions of the Merger
Agreement and this Escrow Agreement, satisfy the Shareholders' obligations to
indemnify against Claims; and
WHEREAS, the Escrow Agent has agreed to act as the agent and custodian
for the Escrow Fund for the benefit of the parties to the Merger Agreement; and
WHEREAS, pursuant to the Merger Agreement, the Appointment and the
terms and conditions hereof, the Shareholders' Representative is authorized to
serve as the representative and agent hereunder for each of the Shareholders
with full power and authority to execute, deliver and act on each such
Shareholder's behalf hereunder in all respects;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements, provisions and covenants contained in this Escrow Agreement and the
Merger Agreement, the parties hereby agree as follows:
ARTICLE 1
ESTABLISHMENT OF ESCROW
(a) Acquiror, Acquisition Sub, the Company and the Shareholders'
Representative each hereby appoint the Escrow Agent to act as agent and
custodian for the Escrow Fund for their
A-1
<PAGE> 53
respective benefit pursuant to the terms of this Escrow Agreement, and the
Escrow Agent hereby accepts such appointment pursuant to such terms.
(b) Pursuant to the terms of Section 1.06 of the Merger Agreement,
Acquiror will cause to be delivered to, and directly deposited with, the Escrow
Agent for the account and future potential benefit of the Shareholders a stock
certificate representing 22,282 Acquiror Shares, which certificate shall be
registered as follows: "Bankers Trust Company f/b/o the Former Shareholders of
the Common Stock of Reservoirs, Inc." All such Acquiror Shares hereby initially
delivered to, and initially deposited with, the Escrow Agent, together with all
subsequent stock dividends or distributions of other Acquiror Shares received in
respect of such shares while deposited hereunder, shall be referred to herein as
the "Escrow Shares."
(c) The respective number of Escrow Shares to be initially deposited
with the Escrow Agent by Acquiror for the account of each Shareholder is set
forth on Exhibit A hereto.
(d) The Shareholders' Representative shall deliver to the Escrow Agent
simultaneously herewith five stock powers duly executed and endorsed in blank in
the form attached as Exhibit B with respect to each stock certificates
representing the Escrow Shares, and the Escrow Agent hereby acknowledges receipt
of the stock certificates representing the Escrow Shares and such executed stock
powers. The Shareholders' Representative agrees to execute in the future such
additional stock powers as may be required or requested by Acquiror or the
Escrow Agent to transfer any Escrow Shares required in accordance with the
provisions of the Merger Agreement and this Escrow Agreement.
(e) The Escrow Shares shall be retained, managed and disbursed by the
Escrow Agent subject to the terms and conditions of this Escrow Agreement and
Article VIII of the Merger Agreement. Each Shareholder shall have the full and
unencumbered right to vote all Escrow Shares held for his account in the Escrow
Fund on matters submitted to a vote of Acquiror's shareholders.
(f) All cash dividends and cash distributions on Escrow Shares, when
and if distributed by Acquiror, and all additional Acquiror Shares, property or
other securities, issued on or with respect to the Escrow Shares ("Additional
Corpus"), including as a result of stock splits, stock dividends or other
similar capital adjustments to, or recapitalizations on, or share exchanges with
(including by reason or merger, consolidation or other business combination
involving Acquiror), the Acquiror Shares, or other securities, shall be retained
in the Escrow Fund for the respective account of the Shareholders subject to the
terms hereof.
ARTICLE 2
CLAIMS AGAINST ESCROW SHARES
(a) If Acquiror is entitled to indemnification from the Shareholders
against a Claim pursuant to Section 8.01 (or any other section) of the Merger
Agreement, then such Claim shall be satisfied by the Escrow Agent's delivery to
Acquiror of the requisite number of Escrow Shares (determined in accordance with
Article VIII of the Merger Agreement). Any Claim by Acquiror against the
Shareholders shall be deemed to be paid and satisfied upon receipt by Acquiror
from the Escrow Agent of stock certificates representing the requisite number of
Escrow Shares (accompanied
A-2
<PAGE> 54
by stock powers duly executed and endorsed in blank covering such shares in
accordance with Article 3 of this Escrow Agreement) and any Additional Corpus
allocable to such Escrow Shares. As used in this Escrow Agreement, the term
"Claim" shall have the same meaning as set forth in Section 8.01 of the Merger
Agreement as it shall apply to any claim for indemnification asserted by
Acquiror against the Shareholders pursuant to Section 8.01 (or any other
section) of the Merger Agreement. As used in this Escrow Agreement with respect
to entitlement to indemnification under the Merger Agreement, the term
"Acquiror" shall include all parties included in the definition of "Acquiror
Indemnified Parties" as set forth in Section 8.01 of the Merger Agreement.
(b) The delivery to Acquiror of Escrow Shares and Additional Corpus, if
any, applicable to such Escrow Shares, in satisfaction of an indemnification
claim hereunder shall be taken from the accounts of each Shareholder in the
Escrow Fund as nearly as practical on a pro rata basis based on the initial
ownership interest in all Escrow Shares initially deposited hereunder.
ARTICLE 3
PROCEDURE FOR CHARGE TO ESCROW
(a) Any Claim under the indemnification provisions of the Merger
Agreement to be satisfied under this Escrow Agreement shall be made by Acquiror
by notice to the Escrow Agent and the Shareholders' Representative, stating in
specific terms the circumstances giving rise to the Claim, specifying the amount
of the Claim and making a request for any payment then believed due. A Claim
shall be deemed to be finally resolved and appropriate for payment by the Escrow
Agent when the conditions specified in clause (b) below have been met with
respect thereto.
(b) For purposes of this Escrow Agreement, a "Final Instruction" shall
mean a written notice given to the Escrow Agent directing the disbursement from
the Escrow Fund of the amount of the Claim, and shall be signed both by Acquiror
and by the Shareholders' Representative except as otherwise provided in clause
(ii) or (iii) below. A Final Instruction shall be delivered to the Escrow Agent
under the following circumstances, and accompanied by the indicated
documentation:
(i) If the Shareholders' Representative disputes either the
validity, amount or calculation of the Claim, the Shareholders'
Representative shall give written notice of such dispute to Acquiror,
with a copy to the Escrow Agent, within 45 days after the delivery of
notice of the Claim by Acquiror. Such notice shall set forth the
reasons and basis for disputing such Claim and the amount in dispute.
In such circumstances, no Final Instruction may be given to the Escrow
Agent except as provided in clause (iii) below.
(ii) If the Shareholders' Representative fails to respond to
the Claim within 45 days after the delivery to the Shareholders'
Representative and the Escrow Agent of the notice of the Claim, or if
the Shareholders' Representative notifies the Escrow Agent that there
is no dispute with respect to the Claim, Acquiror shall have the right
to deliver to the Escrow Agent a Final Instruction, signed only by
Acquiror, with respect to the Claim.
(iii) In the case of a dispute, the Escrow Agent shall not
disburse any of the Escrow Fund in connection with the disputed amount
of such Claim until such time as the Escrow Agent receives a Final
Instruction with respect to such disputed Claim as set forth
A-3
<PAGE> 55
below. Upon receipt of such notice of dispute by Acquiror, both
Acquiror and the Shareholders' Representative shall use all reasonable
efforts to cooperate and arrive at a mutually acceptable resolution of
such dispute within the next 30 days. If the Shareholders'
Representative and the Acquiror reach an agreement with respect to such
dispute, the Shareholders' Representative and the Acquiror shall give
to the Escrow Agent a Final Instruction, signed by both the
Shareholders' Representative and the Acquiror, with respect to the
Claim. If a mutually acceptable resolution cannot be reached between
Acquiror and the Shareholders' Representative within such 30-day
period, either party may submit the dispute for resolution by binding
arbitration pursuant to the provisions of this Article 3. If a party
elects to submit such matter to arbitration, such party shall provide
notice to the other party of its election to do so, and the parties
shall attempt to appoint a single arbitrator. If the parties are unable
within 10 days after receipt of the notice to agree on a single
arbitrator, then each party shall appoint one arbitrator, and the two
arbitrators so appointed shall name a third arbitrator within a period
of 10 days of their nomination. If the two arbitrators fail to appoint
a third arbitrator within such 10-day period, a third arbitrator shall
be appointed pursuant to the then existing Commercial Arbitration Rules
(the "Rules") of the American Arbitration Association ("AAA"). In all
respects, such panel and the arbitration proceeding shall be governed
by the Rules, and the place of arbitration shall be in a city mutually
selected by Acquiror and the Shareholders' Representative (or, if no
city can be mutually agreed upon within 10 days, then in Houston,
Texas). If it is finally determined that all or a portion of such Claim
amount is owed to an Acquiror Indemnified Party, the Acquiror
Indemnified Party shall be entitled to payment of such Claim upon
presentation of a Final Instruction signed by Acquiror and accompanied
by a copy of the arbitration order. Judgment upon the award resulting
from arbitration may be entered in any court having jurisdiction for
direct enforcement, or any application may be made to a court for a
judicial acceptance of the award and an order of enforcement, as the
case may be.
(c) Promptly after resolution of a Claim as provided in clause (b)
above, the Escrow Agent shall satisfy such Claim by delivering to Acquiror the
amount of the Escrow Fund calculated in accordance with Section 8.05 of the
Merger Agreement and Article 2 of this Escrow Agreement or, if the value of the
Escrow Fund held hereunder is less than the amount of such Claim, by delivering
to Acquiror all of the Escrow Fund then held hereunder. Any Escrow Shares
delivered to Acquiror in satisfaction of a Claim hereunder shall be accompanied
by duly executed blank stock powers (in the form attached as Exhibit B) therefor
and any such Escrow Shares so delivered shall be free and clear of any interest
of the Shareholders or Escrow Agent therein. If the amount of the Escrow Shares
to be delivered to Acquiror is not available in that specified certificate
denomination then the Escrow Agent should request the necessary denomination
from the stock transfer agent at the following address: American Stock Transfer
& Trust Company, 40 Wall Street, New York, NY 10005, Attention: Jennifer
Donnovan.
ARTICLE 4
DISPOSITION OF ESCROW FUND
(a) The Escrow Fund held hereunder shall be released by the Escrow
Agent to Shareholders the first anniversary of the Closing Date. The date the
event described in either of the preceding clauses (i) and (ii) occurs is
referred to herein as the "Distribution Date." Notwithstanding
A-4
<PAGE> 56
any other provision hereof, if on the Distribution Date any unresolved Claim is
then pending hereunder, only the amount of the Escrow Fund having a value in
excess of the value required to satisfy such Claim (Escrow Shares being valued
for such purpose in accordance with Article VIII of the Merger Agreement) as
determined in good faith by Acquiror shall be released to the Shareholders.
(b) At such later time as all Claims have been finally resolved and the
amount of all such Claims has been paid to Acquiror, the balance of the Escrow
Fund then held hereunder, if any, shall be disbursed to the Shareholders. The
Shareholders' Representative shall have no personal liability as a result of any
actions taken in such position to Acquiror, Acquisition Sub or any of the
Acquiror Indemnified Parties or to any Shareholder in either case with respect
to the disposition of the Escrow Shares or any other action taken by him as the
Shareholders' Representative, unless such actions constitute gross negligence or
willful misconduct.
(c) The escrow established by this Escrow Agreement shall continue in
effect until release of the entire Escrow Fund pursuant to the provisions
hereof.
(d) No fractional Acquiror Shares shall be delivered at any time by the
Escrow Agent and the Escrow Agent shall be authorized to adjust shares between
the accounts of the Shareholders to eliminate fractional shares.
ARTICLE 5
PROVISIONS RELATING TO THE ESCROW AGENT
(a) The Escrow Agent shall have no duties or responsibilities
whatsoever with respect to the Escrow Fund except as are specifically set forth
herein. The Escrow Agent shall neither be responsible for or under, nor
chargeable with knowledge of the terms and conditions of, any other agreement,
instrument or document in connection herewith. The Escrow Agent may conclusively
rely upon, and shall be fully protected from all liability, loss, cost, damage
or expense in acting or omitting to act pursuant to any written notice,
instrument, request, consent, certificate, document, letter, telegram, opinion,
order, resolution or other writing hereunder without being required to determine
the authenticity of such document, the correctness of any fact stated therein,
the propriety of the service thereof or the capacity, identity or authority of
any party purporting to sign or deliver such document. The Escrow Agent shall
have no responsibility for the contents of any such writing contemplated herein
and may rely without any liability upon the contents thereof.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or with the rights or powers conferred upon it hereunder, nor for action
taken or omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be of the Escrow Agent's own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or omissions
of any kind except for its own willful misconduct or gross negligence.
(c) Each of the Acquiror and Shareholder's Representative agrees to
jointly and severally indemnify the Escrow Agent and its employees, directors,
officers and agents and hold each harmless
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against any and all liabilities incurred by it hereunder as a consequence of
such party's action, and the parties agree jointly and severally to indemnify
the Escrow Agent and hold it harmless against any claims, costs, payments, and
expenses (including the fees and expenses of counsel) and all liabilities
incurred by it in connection with the performance of its duties hereunder and
them hereunder, except in either case for claims, costs, payments and expenses
(including the fees and expenses of counsel) and liabilities incurred by the
Escrow Agent resulting from its own willful misconduct or gross negligence.
(d) The Escrow Agent may resign as such following the giving of 60
days' prior written notice to Acquiror and the Shareholders' Representative.
Similarly, the Escrow Agent may be removed and replaced following the giving of
60 days' prior written notice to the Escrow Agent jointly by Acquiror and the
Shareholders' Representative. In either event, the duties of the Escrow Agent
shall terminate 60 days after the date of such notice (or at such earlier date
as may be mutually agreeable), except for its obligations to hold and deliver
the Escrow Fund to the successor Escrow Agent; and the Escrow Agent shall then
deliver the balance of the Escrow Fund then in its possession to such a
successor Escrow Agent as shall be appointed by Acquiror and the Shareholders'
Representative as evidenced by a written notice filed with the Escrow Agent. If
Acquiror and the Shareholders' Representative are unable to agree upon a
successor Escrow Agent by the effective date of such resignation or removal, the
then acting Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor Escrow Agent or other appropriate relief; and any
such resulting appointment shall be binding upon all of the parties hereto. Upon
acknowledgment by any successor Escrow Agent of the receipt of the then
remaining balance of the Escrow Fund, the then acting Escrow Agent shall be
fully released and relieved of all duties, responsibilities and obligations
under this Escrow Agreement.
(e) The Escrow Agent shall not be bound in any way by any agreement,
other than this Escrow Agreement. A copy of the Merger Agreement, together with
the Schedules and Exhibits thereto, has been provided to the Escrow Agent in
connection with the execution of this Escrow Agreement and the Escrow Agent
understands that the terms of the Shareholders' indemnification obligations are
set forth in Article VIII of the Merger Agreement. The Merger Agreement forms an
integral part of this Escrow Agreement and, therefore, Article VIII thereof is
hereby incorporated by reference herein.
(f) The Escrow Agent shall be under no duty to institute or defend any
arbitration or legal proceeding with respect to the Escrow Fund or under this
Escrow Agreement and none of the costs or expenses or any such proceeding shall
be borne by the Escrow Agent. The costs and expenses of any such proceeding
shall be borne as decided by the arbitrators or court and shall be direct
obligations of Acquiror or the Shareholders' Representative, as the case may be,
and shall not be satisfied in any way by the Escrow Fund.
ARTICLE 6
SECURITY INTEREST
The Shareholders' Representative hereby grants to Acquiror, in the name
of and on behalf of the Shareholders, a first priority security interest in each
of the Shareholder's respective rights, title to and interest in the Escrow Fund
held under this Escrow Agreement, for the purpose of
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securing, or partially securing, each and all of their indemnification
obligations to Acquiror pursuant to Article VIII of the Merger Agreement. The
Shareholders' Representative agrees to execute and deliver any such further
instruments as Acquiror or Escrow Agent may request from time to time evidencing
such security interest.
ARTICLE 7
NOTICES
All notices, requests, demands, claims and other communications which
are required to be or may be given under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered in person
or by courier, (ii) sent by telecopy or facsimile transmission, answer back
requested, or (iii) mailed, by registered or certified mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
(a) If to Acquiror:
Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and
Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
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<PAGE> 59
(b) If to the Escrow Agent:
Bankers Trust Company
4 Albany Street
New York, NY 10006
Telecopy: (212) 250-6392
Attention: Tom Hacker
(c) If to the Shareholders' Representative:
Randall S. Miller
22506 Wetherburn
Katy, Texas 77449
with a copy (which shall not constitute notice) to:
Chamberlain, Hrdlicka, White, Williams &
Martin
1200 Street Smith, 14th Floor
Houston, Texas 77002
Telecopy: (713) 658-2553
Attention: Craig M. Bergez
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Article 7. Such notices shall be effective,
(i) if delivered in person or by courier, upon actual receipt by the intended
recipient, (ii) if sent by telecopy or facsimile transmission, when the answer
back is received, or (iii) if mailed, upon the earlier of five business days
after deposit in the mail and the date of delivery as shown by the return
receipt therefor.
ARTICLE 8
BINDING EFFECT; OTHER INTERESTS
This Escrow Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns. Nothing herein is intended or shall be construed to give
any other person (including, without limitation, any creditors of Escrow Agent,
Acquiror, the Company or the Shareholders' Representative) any right, remedy or
claim under, in or with respect to this Escrow Agreement or the Escrow Fund held
hereunder. The Escrow Agent shall not have a lien or adverse claim upon, or any
other right whatsoever to payment from, the Escrow Fund (or dividends or
distributions paid thereon) for or on account of any right to payment or
reimbursement hereunder or otherwise.
ARTICLE 9
GOVERNING LAW
This Escrow Agreement shall be construed and enforced in accordance
with the laws of the State of Texas, excluding any choice of law rules that may
direct the application of the laws of another jurisdiction.
A-8
<PAGE> 60
ARTICLE 10
COMPENSATION; EXPENSES
The Escrow Agent shall be entitled to payment from Acquiror for
customary fees and expenses for all services rendered by it hereunder in
accordance with Exhibit C attached hereto (as such schedule may be amended from
time to time), payable on the closing date. The Escrow Agent shall also be
entitled to reimbursement on demand for all loss, liability, damage or expenses
paid or incurred by it in the administration of its duties hereunder, including,
but not limited to, all counsel, advisors' and agents' fees and disbursements
and all taxes or other governmental charges.
ARTICLE 11
TERM
This Escrow Agreement shall terminate on the later of (i) the
Distribution Date or (ii) the date on which all Claims, if any, asserted by
Acquiror pursuant to the terms of this Escrow Agreement and the Merger Agreement
shall have been conclusively resolved and paid pursuant to this Escrow Agreement
and the Merger Agreement. The rights of the Escrow Agent and the obligations of
the other parties hereto under Articles 5 and 10 shall survive the termination
thereof and the resignation or removal of the Escrow Agent.
ARTICLE 12
AMENDMENT AND MODIFICATION
Acquiror, Shareholders' Representative and the Escrow Agent may amend,
modify and/or supplement this Escrow Agreement as they may mutually agree in
writing.
ARTICLE 13
COUNTERPARTS
This Escrow Agreement may be executed in two or more counterparts or by
facsimile, each of which shall be deemed an original, but all of which together
shall constitute but one and the same instrument.
ARTICLE 14
HEADINGS
The headings used in this Escrow Agreement are for convenience only and
shall not affect the construction hereof.
ARTICLE 15
ASSIGNABILITY
Neither this Escrow Agreement nor any interest herein or in the Escrow
Fund may be assigned or transferred, voluntarily or by operation of law, by
Acquiror, the Shareholders' Representative or the Escrow Agent, except pursuant
to the laws of descent and distribution; provided, however, that Acquiror may
assign this Escrow Agreement and any or all interest herein
A-9
<PAGE> 61
to any "affiliate" of Acquiror upon notice to all parties and, thereupon such
assignee shall fully assume and succeed to all of the assignors' rights,
benefits, obligations, duties and responsibilities hereunder.
Notwithstanding the foregoing, if the Shareholders' Representative is
unable to carry out his duties of or has been removed as Shareholders'
Representative, then a successor Shareholders' Representative shall be
designated and appointed pursuant to Section 8.05(c) of the Merger Agreement,
and shall assume all of the powers and duties of the Shareholders'
Representative under the Merger Agreement and the Escrow Agreement. If any
successor Shareholders' Representative becomes unable to carry out his duties as
Shareholders' Representative, his replacement shall be designated and appointed
pursuant to Section 8.05(c) of the Merger Agreement.
ARTICLE 16
TAX WITHHOLDING
Notwithstanding anything to the contrary set forth herein, the Escrow
Agent is authorized to withhold from any proposed distribution to the
Shareholders from the Escrow Fund such amount as is necessary for the purpose of
complying with the Escrow Agent's obligations under federal, state or local tax
provisions; provided, however, that such withholding shall not reduce the amount
of the Escrow Fund which may otherwise be required to be delivered to Acquiror
under Article 3 hereof. In the event that there are insufficient funds remaining
to pay any withholding obligations after distribution of the Escrow Funds to
Acquiror, such liability shall be the responsibility of the Shareholders.
ARTICLE 17
SEVERABILITY
If any term, provision, covenant or restriction of this Escrow
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Escrow Agreement shall continue in full force and effect and shall in no
way be affected, impaired or invalidated unless such an interpretation would
materially alter the rights and privileges of any party hereto or materially
alter the terms of the transactions contemplated hereby.
ARTICLE 18
DESIGNEES FOR INSTRUCTIONS
Acquiror may, by notice to the Escrow Agent, designate one or more
persons who will execute notices and from whom the Escrow Agent may take
instructions hereunder. Such designations may be changed from time to time upon
notice to the Escrow Agent from Acquiror. The Escrow Agent will be entitled to
rely conclusively on any notices or instructions from any person so designated
by Acquiror.
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ARTICLE 19
MEDIATION AND ARBITRATION
(a) Except as provided in Article 3 of this Escrow Agreement for
disputes relating to claims against the Escrow Fund:
(i) Before the institution of any litigation between any
persons relating to this Escrow Agreement, including any dispute over
the application or interpretation of any provision hereof, if
negotiations and other discussions fail, at the election of any party
to this Escrow Agreement, such dispute shall be first submitted to
mediation in accordance with the provisions of the Commercial Mediation
Rules of the AAA before resorting to arbitration. The parties agree to
conduct the mediation in good faith and make reasonable efforts to
resolve their dispute by mediation. The place of the mediation shall be
in a city mutually selected by the parties (or, if no city can be
mutually agreed upon within ten (10) days, then in Houston, Texas).
(ii) If the dispute is not resolved by the mediation required
under the preceding subsection, such dispute shall, at the election of
any party to this Escrow Agreement, be subject to binding arbitration
in accordance with the provisions of the Rules, and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be heard before a panel of
three (3) arbitrators selected in accordance with the procedures
therefor set forth in Article 3 of this Escrow Agreement. The parties
agree to use the Houston, Texas office of the AAA and the place of
arbitration shall be in a city mutually selected by the parties (or, if
no city can be mutually agreed upon within ten (10) days, then in
Houston, Texas).
(iii) The prevailing party in any mediation, arbitration or
litigation shall be entitled to recover from the other party reasonable
attorneys' fees, court costs and the administrative costs, fees and
expenses of the AAA, each as applicable, incurred in the same, in
addition to any other relief that may be awarded.
(b) If either party appeals the decision of the arbitrators, the
parties agree that the United States Judicial District including Harris County,
Texas, and the state courts within Harris County, Texas, shall have exclusive
venue and jurisdiction of same.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Escrow Agreement as of the day and year first above written.
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., its Sole Managing Director
By:
--------------------------------
Jacobus Schouten
Managing Director
CORE ACQUISITION SUBSIDIARY, INC.
By:
--------------------------------
David M. Demshur
President
RESERVOIRS, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
SHAREHOLDERS' REPRESENTATIVE:
-----------------------------------------
Randall S. Miller
BANKERS TRUST COMPANY, as Escrow Agent
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
A-12
<PAGE> 64
Exhibit A to
Escrow Agreement
ESCROW SHARES OF SHAREHOLDERS
<TABLE>
<CAPTION>
SHAREHOLDER ESCROW SHARES
- ----------- -------------
<S> <C>
Estate of Paul J. Cernock, Deceased 8,050
Estate of Elizabeth M. Cernock, Deceased 8,050
Randall S. Miller 4,792
John. F. Zellmer 863
Lawrence Bruno 527
--------
Total.............................. 22,282
</TABLE>
A-13
<PAGE> 65
Exhibit B to
Escrow Agreement
CORE LABORATORIES N.V.
COMMON STOCK
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________ __________________ (______) shares of the Common Stock of
Core Laboratories N.V., standing in my(our) name(s) on the books of said
Corporation represented by Certificate(s) No(s). _________ herewith, and do
hereby irrevocably constitute and appoint Bankers Trust Company attorney to
transfer the said stock on the books of said Corporation with full power of
substitution in the premises.
Dated:
----------------------
*By:
---------------------------------
*By:
---------------------------------
A-14
<PAGE> 66
Exhibit C to
Escrow Agreement
BANKERS TRUST COMPANY
CORPORATE TRUST AND AGENCY SERVICES
SCHEDULE OF FEES FOR
CORE LABORATORIES & RESERVOIRS ESCROW
A. Annual Administration Fee: $4,000
(Payable at closing and each subsequent anniversary)
These fees cover the review and execution of the Escrow Agreement,
establishment of the appropriate custody account, the receipt and
distribution of the Escrowed Shares, and all normal administrative time
spent coordinating with other members of the working group.
Note: The fees set forth in this schedule are subject to review of
documentation. The fees are also subject to change should circumstances warrant.
Out-of-pocket expenses and disbursements, including counsel fees, incurred in
the performance of our duties will be added to the billed fees. Fees for any
services not covered in this or related schedules will be based upon our
appraisal of the services rendered.
We may place orders to buy/sell financial instruments with outside
broker-dealers that we select, as well as with BT or its affiliates. These
transactions (for which normal and customary spreads or other compensation may
be earned by such broker-dealers, including BT or its affiliates, in addition to
the charges quoted above) will be executed on a riskless principal basis solely
for your account(s) and without recourse to us or our affiliates. If you choose
to invest in any mutual fund, BT and/or our affiliates may earn investment
management fees and other service fees/expenses associated with these funds as
disclosed in the mutual fund prospectus provided to you, in addition to the
charges quoted above. Likewise, BT has entered into agreements with certain
mutual funds or their agents to provide shareholder services to those funds. For
providing these shareholder services, BT is paid a fee by these mutual funds
that calculated on an annual basis does not exceed 25 basis points of the amount
of your investment in these mutual funds. In addition, if you choose to use
other services provided by BT or its affiliates, Corporate Trust or other BT
affiliates may be allocated a portion of the fees earned. We will provide
periodic account statements describing transactions executed for your
account(s). Trade confirms will be available upon your request at no additional
charge. If a transaction should fail to close for reasons beyond our control, we
reserve the right to charge our acceptance fee plus reimbursement for legal fees
incurred.
Shares of mutual funds are not deposits or obligations of, or guaranteed by,
Bankers Trust Company or any of its affiliates and are not insured by the
Federal Deposit Insurance Corporation or any other agency of the U.S.
JUNE, 1998
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<PAGE> 67
EXHIBIT B
APPOINTMENT OF SHAREHOLDERS' REPRESENTATIVE
<PAGE> 68
APPOINTMENT OF SHAREHOLDERS' REPRESENTATIVE
This Appointment of Shareholders' Representative, dated as of July 26,
1999 (the "Appointment"), is made and entered into by and among Randall S.
Miller, as the agent and attorney-in-fact (the "Shareholders' Representative"),
and the persons listed under the heading "Shareholders" on the signature page of
this Appointment, as the principals (individually, a "Shareholder", and
collectively, the "Shareholders"). This is the Appointment required by Section
1.06(b) of that certain Agreement and Plan of Merger, dated as of this date (the
"Merger Agreement"), entered into by and among Core Laboratories N.V., a
Netherlands limited liability company ("Acquiror"), Core Acquisition Subsidiary,
Inc., a Texas corporation ("Acquisition Sub"), Reservoirs, Inc., a Texas
corporation (the "Company"), and the Shareholders of Reservoirs, Inc.
Capitalized terms used but not defined in this Appointment shall have the
meanings given to them in the Merger Agreement. This Appointment is subject to
the terms and conditions of the Merger Agreement, the Escrow Agreement, and the
other transaction documents referenced in the Merger Agreement, each of which is
hereby incorporated by reference.
RECITALS
WHEREAS, the Shareholders collectively are the legal and beneficial
owners and holders of record of all 39,525 shares of the issued and outstanding
Company Stock; and
WHEREAS, pursuant to the Merger Agreement, Acquisition Sub will be
merged with and into the Company, with the Company as the surviving corporation
of the Merger, and the Company Stock of each Shareholder will be converted into
Acquiror Shares based on the Exchange Ratio, and certain of the Acquiror Shares
of each Shareholder will be deposited into escrow, upon the terms and subject to
the conditions of the Merger Agreement and Escrow Agreement; and
WHEREAS, each of the Shareholders desires to appoint Shareholders'
Representative as his agent and attorney-in-fact for the specific purposes set
forth herein in connection with the performance of the Escrow Agreement and
provisions of the Merger Agreement specifically relating thereto; and
WHEREAS, the parties acknowledge that Acquiror will be relying upon
this Appointment in entering into the Merger Agreement and Escrow Agreement, and
in consummating the Merger, and consent to such reliance.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants stated in this Agreement, and the
other good and valuable consideration exchanged between the parties, the receipt
and sufficiency of which is hereby acknowledged, the parties intending to be
legally bound agree as follows:
B-1
<PAGE> 69
AGREEMENTS
1. APPOINTMENT. Each of the Shareholders hereby makes, constitutes, and
appoints Shareholders' Representative as it or his agent and true and lawful
attorney-in-fact, for it or him, and in it or his name, place, and stead, to do
any and all of the following upon the approval of Shareholders holding more than
sixty percent (60%) of the Escrow Shares (as reflected on Exhibit A of the
Escrow Agreement) pursuant to the Approval Procedures:
A. To execute, amend, deliver, acknowledge, file, certify,
waive, and perform pursuant to the terms of the Escrow Agreement, and to take
and perform all other acts and execute and deliver all other documents that are
necessary or advisable to give effect to and fully perform the Escrow Agreement;
B. To give and receive all notices and other communications,
whether written or oral, on such Shareholder's behalf with respect to the Escrow
Agreement;
C. To act and perform, or not act or perform with respect to
any notices or other communications, whether written or oral, received with
respect to the Agreement;
D. To control the disposition of the Escrow Shares of each
Shareholder in accordance with the terms of the Escrow Agreement, including, but
not limited to, paying or otherwise settling all Claims against such Escrow
Shares;
E. To execute, amend, deliver, acknowledge, file, certify,
waive, and perform all instruments, certificates, and other documents required
by or necessary or advisable to perform under this Appointment; and
F. To take, or not take, such other actions relating to the
foregoing which a person with the authority granted to Shareholders'
Representative hereunder could reasonably be expected to perform, or not
perform, as the case may be.
In performing under this Appointment, every act and performance, or
failure to act and perform, shall be with the same effect as if the Shareholders
were acting and performing, or not doing so, personally for themselves and in
their own names, and each Shareholder hereby agrees to be bound by and ratifies
and confirms as his own act all the Shareholders' Representative shall do, or
cause to be done, under this Appointment. Further, every act and performance, or
failure to act and perform, by Shareholders' Representative shall be conclusive
evidence of his determination that such act and performance, or refusal to do
so, was in the best interests of the Shareholders.
2. APPROVAL PROCEDURES. The following procedures (the "Approval
Procedures") shall be followed for purposed of obtaining the approval of
Shareholders required by Section 1 of this Appointment: (a) the Shareholders'
Representative shall give each Shareholder written notice of any matter
requiring approval of the Shareholders under Section 1 of this Appointment,
including a description of all material information associated with such matter;
(b) the Shareholders' Representative shall call a meeting of the Shareholders to
be held no less than three days after the notice required by Section 2(a) has
been given to the Shareholders for purposes of voting on the
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<PAGE> 70
approvals referenced in such notice; and (c) each Shareholder shall have one
vote for each Escrow Share held for the account of the Shareholder pursuant to
Exhibit A of the Escrow Agreement. Any such meeting may be held by means of
conference telephone or similar communications equipment that permits all
persons participating in the meeting to hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
Notwithstanding the foregoing, any action that could be taken at any such
meeting may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by Shareholders holding more than sixty percent
(60%) of the Escrow Shares (as reflected on Exhibit A of the Escrow Agreement).
3. LIMITATION OF LIABILITY. Notwithstanding any provision in this
Appointment to the contrary, the Shareholders' Representative shall have no
personal liability to any of the Shareholders, Acquiror, Acquisition Sub, or any
other person, as a result of any actions taken, or not taken, under this
Appointment, unless such actions constitute gross negligence or willful
misconduct by the Shareholders' Representative.
4. REVIEW OF TRANSACTION DOCUMENTS. Each of the Shareholders represents
and warrants to the Shareholders' Representative that he or its duly appointed
representative has read the Merger Agreement, the Escrow Agreement, and the
other transaction documents referenced in the Merger Agreement by which he or it
is bound, and understands his or its rights, liabilities, and obligations
thereunder. Each of the Shareholders agrees that, as to each liability or
obligation of the Shareholder under the Escrow Agreement, the Shareholder will
promptly perform all actions requested by the Shareholders' Representative with
respect thereto (including, but not limited to, making payment of or otherwise
settling any indemnification obligation under Article VIII of the Merger
Agreement).
5. COMPENSATION. The Shareholders' Representative shall not be entitled
to any compensation for performing under this Appointment.
6. IRREVOCABLE; TERMINATION.
a. The death or incapacity of any Shareholder shall not
terminate this Appointment. This Appointment is subject only to termination
pursuant to the following subsection. The appointment of Shareholders'
Representative is coupled with an interest in that Shareholders' Representative
is also a Shareholder, and thereby has a present, legal and beneficial interest
in the Company Stock.
b. This Appointment shall become effective at the Effective
Date and shall terminate, without any notice or further action on the part of
any party hereto, upon the natural expiration, or earlier termination, of the
Escrow Agreement (the "Termination Date"). From and after the Termination Date,
the Shareholders' Representative shall have no further liability or obligation
under this Appointment (except for any liability or obligation accruing prior to
the Termination Date).
7. SUBSTITUTE SHAREHOLDERS' REPRESENTATIVE. In the event the
Shareholders' Representative dies or earlier resigns from this Appointment or is
otherwise unable to carry out his duties as the Shareholders' Representative,
then Lawrence Bruno shall be designated and appointed
B-3
<PAGE> 71
as the Shareholders' Representative, and shall assume all of the powers and
duties of the Shareholders' Representative under this Appointment. If Lawrence
Bruno becomes unable to carry out his duties or resigns as Shareholders'
Representative, his replacement shall be John F. Zellmer. If John F. Zellmer
becomes unable to carry out his duties or resigns as Shareholders'
Representative, the Shareholders shall appoint a Shareholders' Representative
upon the approval of Shareholders holding more than sixty percent (60%) of the
Escrow Shares (as reflected on Exhibit A of the Escrow Agreement) pursuant to
the Approval Procedures. A Shareholders' Representative may be removed at any
time upon the approval of Shareholders holding more than sixty percent (60%) of
the Escrow Shares (as reflected on Exhibit A of the Escrow Agreement) pursuant
to the Approval Procedures, in which case a successor Shareholders'
Representative shall be determined pursuant to the foregoing rules of
succession. Any successor Shareholders' Representative shall perform subject to
the terms and conditions of this Appointment as then in effect and have the
identical duties and functions of the Shareholders' Representative hereunder.
8. INDEMNIFICATION OF SHAREHOLDERS' REPRESENTATIVE. The Shareholders,
jointly and severally, agree to indemnify and hold the Shareholders'
Representative harmless from and against any loss, liability, damage, cost, or
expense (including, but not limited to, legal fees and expenses) incurred by him
arising out of or in connection with the Shareholders' Representative's
performance under this Appointment, except to the extent caused by actions
constituting gross negligence or willful misconduct of the Shareholders'
Representative.
9. NOTICES. Any notice required or permitted by this Appointment shall
be in writing and shall be sufficiently given if personally delivered, mailed by
certified or registered mail, return receipt requested, or sent by Federal
Express (or other guaranteed and receipted delivery service) to the
Shareholders' Representative at 22506 Wetherburn, Katy, Texas, 77449, and to
each Shareholder at the last known address on the Acquiror's records (or such
other addresses as specified by written notice timely given to the other
parties). Any notice given in accordance with this section is effective five (5)
business days after the date on which the same was delivered or deposited, as
applicable for the notice procedure used.
10. MEDIATION AND ARBITRATION.
a. Except as provided in Article 3 of the Escrow Agreement for
disputes relating to claims against the Escrow Fund:
(i) Before the institution of any litigation between any
persons relating to this Appointment including any dispute over the
application or interpretation of any provision hereof, if negotiations
and other discussions fail, at the election of any party to this
Appointment, such dispute shall be first submitted to mediation in
accordance with the provisions of the Commercial Mediation Rules of the
AAA before resorting to arbitration. The parties agree to conduct the
mediation in good faith and make reasonable efforts to resolve their
dispute by mediation. The place of the mediation shall be in a city
mutually selected by the parties (or, if no city can be mutually agreed
upon within ten (10) days, then in Houston, Texas).
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(ii) If the dispute is not resolved by the mediation required
under the preceding subsection, such dispute shall, at the election of
any party to this Appointment, be subject to binding arbitration in
accordance with the provisions of the Rules, and judgment on the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be heard before a panel of
three (3) arbitrators selected in accordance with the procedures
therefor set forth in Article 3 of the Escrow Agreement. The parties
agree to use the Houston, Texas office of the AAA and the place of
arbitration shall be in a city mutually selected by the parties (or, if
no city can be mutually agreed upon within ten (10) days, then in
Houston, Texas).
(iii) The prevailing party in any mediation, arbitration or
litigation shall be entitled to recover from the other party reasonable
attorneys' fees, court costs and the administrative costs, fees and
expenses of the AAA, each as applicable, incurred in the same, in
addition to any other relief that may be awarded.
b. If either party appeals the decision of the arbitrators,
the parties agree that the United States Judicial District including Harris
County, Texas, and the state courts within Harris County, Texas, shall have
exclusive venue and jurisdiction of same.
11. MISCELLANEOUS.
a. ASSIGNABILITY; BINDING EFFECT. This Appointment is personal
to the Shareholders' Representative and the Shareholders. Except as otherwise
herein, no party may assign or delegate any rights or obligations under this
Appointment without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
b. WAIVER. There can be no waiver of any term, provision, or
condition of this Appointment which is not in writing signed by the party
against whom the waiver is sought to be enforced. Waiver by any party of the
default or breach of any provision of this Appointment by another shall not
operate or be construed as a waiver of any subsequent default or breach.
d. SEVERABILITY. If any one or more of the provisions of this
Appointment for any reason is held to be illegal, invalid, or unenforceable, the
illegality, invalidity, or unenforceability will not affect, impair, or
invalidate any other provision of this Appointment, which will be construed as
if the illegal, invalid, or unenforceable provision had not been contained in
the Appointment and, in lieu thereof, there will be added automatically as a
part of this Appointment a provision as similar in terms to the illegal,
invalid, or enforceable provision as possible and be legal, valid, and
enforceable.
d. FURTHER ASSURANCES. The parties agree to take such further
actions, including the execution and delivery of any documents, as may be
required, necessary, or desirable for the performance of this Appointment.
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e. ENTIRE AGREEMENT; HEADINGS; INCORPORATION BY REFERENCE.
This Appointment, together with the other documents, exhibits, schedules, and
instruments referred to herein, constitutes the entire agreement between the
parties relating to the subject matter hereof, and supersedes all previous
agreements, written or oral. Except as provided otherwise in this Appointment,
this Appointment shall not be amended or modified except by an instrument in
writing signed by all parties. Headings are for convenience of reference only
and shall not affect the interpretation or construction of this Appointment. All
exhibits, schedules, documents, and instruments referred to in this Appointment
are incorporated by reference for all purposes.
f. GOVERNING LAW: ATTORNEY'S FEES. Any dispute between the
parties relating to this Appointment shall be construed under and in accordance
with the laws of the State of Texas, and applicable federal law. The prevailing
party in any litigation shall be entitled to recover from the other party
reasonable attorney's fees and court costs incurred in the same, in addition to
any other relief that may be awarded.
g. MULTIPLE COUNTERPARTS. This Appointment may be executed in
multiple counterparts, either by original or facsimile signatures, each of which
shall constitute an original and all of which shall constitute one document; and
furthermore, a facsimile signature shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Appointment and
caused the same to be duly delivered on their behalf on the date first written
above.
[signatures on following page]
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SHAREHOLDERS' REPRESENTATIVE
---------------------------------------------
Randall S. Miller
SHAREHOLDERS
---------------------------------------------
RANDALL S. MILLER
ESTATE OF PAUL J. CERNOCK, DECEASED
By:
-----------------------------------------
Laura E. Cernock, Independent Co-Executor
By:
-----------------------------------------
Christopher M. Cernock,
Independent Co-Executor
ESTATE OF ELIZABETH M. CERNOCK, DECEASED
By:
-----------------------------------------
Robert L. Thomas, Independent Executor
------------------------------------------
LAWRENCE BRUNO
------------------------------------------
JOHN F. ZELLMER
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<PAGE> 75
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 76
COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
This Common Stock Registration Rights Agreement ("Agreement"), dated as
of July ___, 1999, is made by and among Core Laboratories N.V., a Netherlands
limited liability company ("Company"), and those certain holders listed on the
signature page(s) hereto (individually a "Holder" and collectively the
"Holders"), who hereby agree as follows:
1. INTRODUCTION.
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them below:
(i) "Common Stock" means the Company's common stock, par value
NLG $0.03 per share.
(ii) "Effective Time" shall have the meaning set forth in the
Agreement and Plan of Merger between the Company, the Holders,
Reservoirs, Inc. and Core Acquisition Subsidiary, Inc., dated July ___,
1999.
(iii) "Holder's Shares" means the number of shares of Common
Stock specified on Exhibit A to this Agreement.
2. PIGGYBACK REGISTRATION.
(a) Right to Piggyback. Whenever the Company proposes to register any
of its Common Stock for its own account under the Securities Act of 1933, as
amended (the "Securities Act") (other than pursuant to a registration statement
relating to warrants, options or shares of capital stock granted, to be granted,
sold or to be sold exclusively to employees or directors of the Company, a
registration statement filed pursuant to Rule 145 under the Securities Act or a
shelf registration statement pursuant to Rule 415 under the Securities Act), the
Company will give prompt written notice to the Holders of its intention to
effect a registration and will, subject to Section 2(b) below, include in such
registration Holder's Shares with respect to which the Company has received
written requests for inclusion therein within 15 days after the giving of notice
by the Company. All registrations requested pursuant to this Section 2(a) are
referred to herein as "Piggyback Registrations."
(b) Priority on Piggyback Registrations. If a Piggyback Registration
involves the registration of shares of Common Stock offered in a firm commitment
underwritten offering and the managing underwriter(s) for the offering advise
the Company that in their opinion the number of shares of Common Stock requested
to be included in such registration exceeds the number of shares of Common Stock
which can be sold in such offering without adversely affecting the offering
price of the shares of Common Stock to be included therein, the Company will so
advise the Holders in writing and will include in such registration that number
of shares of Common Stock which the
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managing underwriter(s) have advised the Company, in their opinion, will not
adversely affect the offering price of the shares of Common Stock to be offered
by the Company, such number of shares to be included in such registration in
accordance with the following priorities: (i) first, the Common Stock and other
securities, if any, that the Company proposes to sell; (ii) second, the Common
Stock and securities, if any, that First Britannia Mezzanine N.V. proposes to
sell; (iii) third, the Common Stock and securities, if any, that any person
(other than the Holders) having piggy-back registration rights granted prior to
the date hereof proposes to sell; and (iv) fourth, on a pro-rata basis, (A) the
Holder's Shares requested to be included in such registration pursuant to
Section 2(a) above and (B) any other Common Stock owned by persons other than
the Holders having rights to participate in an underwritten registered offering
of Common Stock and who have notified the Company of their intention to
participate in such registration.
(c) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the Company will select a managing underwriter(s) of
nationally recognized standing.
3. REGISTRATION PROCEDURES.
Whenever the Holders have requested that any Holder's Shares be
registered pursuant to this Agreement, and subject to Section 2(b) above, the
Company will use its reasonable efforts to effect the registration of such
Holder's Shares and pursuant thereto the Company will:
(a) prepare and file with the Securities and Exchange
Commission ("Commission") under the Securities Act a registration
statement with respect to such Holder's shares, which registration
statement will state that the Holders of Holder's Shares covered
thereby and the holders of any other shares of Common Stock to be
included therein may sell such Shares under such registration
statement, and use its reasonable efforts to cause such registration
statement to become effective and to remain effective as provided
herein;
(b) prepare and file with the Commission such amendments and
supplements, if any, to such registration statement and the prospectus
used in connection therewith as may be necessary to (i) keep such
registration statement effective for a period which is the earlier of
(A) 90 days or (B) until the completion of the distribution under such
registration statement and (ii) comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Holder's Shares such number of
copies of such registration statement (including exhibits), each
amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) as such
seller may reasonably request in order to facilitate the disposition of
such shares;
(d) use its reasonable efforts to register or qualify such
Holder's Shares under such securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions
of the Holder's Shares owned by such seller, provided that the Company
will not be required to (i) qualify generally
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to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection, (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;
(e) notify each seller of Holder's Shares at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, when it becomes aware of the happening of any event as
a result of which the prospectus included in such registration
statement (as then in effect) contains any untrue statement of a
material fact or omits any fact necessary to make the statements
therein not misleading in light of the circumstances then existing,
and, as promptly as practicable thereafter, prepare in sufficient
quantities a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Holder's Shares, such
prospectus will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading in light of the circumstances then existing;
(f) enter into customary agreements relating to the
registration (including an underwriting agreement in customary form);
(g) subject to the execution of confidentiality agreements in
a form satisfactory to the Company, make reasonably available for
inspection by any seller of Holder's Shares, any underwriter
participating in any disposition pursuant to such registration
statement, the Representative Counsel (as hereinafter defined) and any
attorney, accountant or other agent retained by any such Representative
Counsel or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, Representative
Counsel, attorney, accountant or agent in connection with such
registration statement to the extent such information is reasonably
necessary to satisfy any of its obligations under applicable law;
(h) use reasonable efforts to obtain an appropriate opinion
from counsel for the Company and a cold comfort letter from the
Company's independent public accountants in customary form and covering
such matters of the type customarily covered by opinions of counsel and
cold comfort letters in similar registrations as the Holders of a
majority of the Holder's Shares covered by such registration statement
reasonably request; provided, however, that failure to provide such
opinion or letter, or the provision of any such opinion or letter in a
form not satisfactory to any Holder whose Holder's Shares are covered
by such registration statement shall not give rise to any action, at
law or in equity, for damages or injunctive or other relief , but
rather, shall only entitle such Holder to withdraw his Holder's shares
from such registration statement pursuant to Section 3(k) below;
(i) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(e), such
Holder will forthwith discontinue such Holder's disposition of Holder's
Shares pursuant to the registration statement covering such Holder's
shares until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in
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<PAGE> 79
such holder's possession of the prospectus covering such Holder's
Shares current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in Section
3(b) shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the
date when each seller of any Holder's Shares and other shares of Common
Stock covered by such registration statement shall have received the
copies of the supplemented or amended prospectus contemplated by
Section 3(e);
(j) in connection with the preparation and review pursuant to
this Agreement of any registration statement or prospectus or any
amendments or supplements thereto, the Holders of a majority of the
Holder's Shares included in such registration will choose one counsel
("Representative Counsel") who shall participate in the registration
process on their behalf, coordinate requests by sellers of Holder's
Shares for information from the Company and act as liaison between such
selling stockholders or their individual counsel, accountants and
agents and the Company; and
(k) if any Holder disapproves of the terms of any offering,
such Holder's sole remedy shall be to withdraw therefrom by written
notice to the Company and the underwriter (if any) and all other
participants in such offering, and the Holder's Shares so withdrawn
will also be withdrawn from registration.
4. REGISTRATION EXPENSES.
(a) Whether or not any registration pursuant to this Agreement shall
become effective, all expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, National Association of Securities Dealers' fees, fees and
expenses of compliance with state securities or blue sky laws, printing and
engraving expenses and fees and disbursements of counsel for the Company, the
Representative Counsel, the independent certified public accountants for the
Company, underwriters (excluding discounts and commissions) and other persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company; provided, however, that (i) if other
holders of Common Stock who have included shares in the registration statement
are required to pro-rate any Registration Expenses which are to be paid by the
Holders hereunder, then each Holder will also pro-rate such Registration
Expenses with such other holders and (ii) each seller of Holder's Shares shall
pay (A) any underwriting discounts and selling commissions applicable to
Holder's Shares sold by the Holders and (B) all fees and disbursements of
counsel for the Holders (other than the Representative Counsel); provided,
however, that the Company's obligation to pay the fees, expenses and
disbursements of Representative Counsel on the Piggyback Registrations shall be
limited to reasonable fees, expenses and disbursements.
(b) Notwithstanding anything herein to the contrary, each seller of
Holder's Shares shall pay the Registration Expenses to the extent required by
applicable law.
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<PAGE> 80
5. INDEMNIFICATION.
(a) Indemnification by the Company. The Company agrees to indemnify,
with respect to any registration statement filed by it, to the full extent
permitted by law, each Holder, its officers, directors and agents and each
person who controls such Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or contained in
any information with respect to such Holder furnished in writing to the Company
by such Holder expressly for use therein.
(b) Indemnification by Holders. In connection with any registration
statement in which a Holder is participating, each such Holder will furnish to
the Company in writing such information with respect to such Holder as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and agrees to indemnify, to the fullest extent permitted
by law, the Company, its directors and officers and each person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is caused by or contained in any information with respect
to such Holder so furnished in writing by such Holder expressly for use therein.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party under subsection (a) or (b) above of notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing for which such person will claim indemnification pursuant to
this Agreement, such indemnified party shall notify the indemnifying party in
writing of the commencement thereof or of such involvement, as the case may be,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
such subsection. in case any such action referred to under subsection (a) or (b)
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. The indemnifying party
shall not be required to indemnify the indemnified party with respect to any
amounts paid in settlement of any action, proceeding or investigation entered
into without the written consent of the indemnifying party.
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<PAGE> 81
(d) Contribution. If the indemnification provided for in this Section 5
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect or as a result of any losses, claims,
damages, liabilities or expenses (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other hand, the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense and any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 5(a) and (b) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 5(d).
(e) Indemnification and Contribution of Underwriters. In connection
with any underwritten offering contemplated by this Section 5, the Company, with
respect to any registration statement filed by it, will agree to customary
provisions for indemnification and contribution in respect of losses, claims,
damages, liabilities and expenses of the underwriters by the Company.
6. PARTICIPATION IN UNDERWRITTEN REGISTERED OFFERINGS.
No person may participate in any underwritten offering hereunder unless
such person (a) agrees to sell such person's securities on the basis provided in
any underwriting arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
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7. MISCELLANEOUS.
(a) Termination. This Agreement and all rights and obligations
hereunder with respect to any Holder's Shares (except for the indemnification
rights provided in Section 5 hereof which shall survive forever) will terminate
one year from the date of this Agreement.
(b) Waivers. Except as otherwise provided herein, the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
Holders of a majority of all of the Holder's Shares.
(c) Amendments. Except as otherwise provided herein, this Agreement may
be amended only with the written consent of the Company and the Holders of a
majority of all of the Holder's Shares.
(d) Subsequent Holders of Holder's Shares. This Agreement shall not be
assignable by the Holders.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, by facsimile or original signatures, but all counterparts taken
together will constitute one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement and the exhibits and schedules hereto will
be governed by the internal law, and not the law of conflicts, of the State of
Texas, United States of America.
(i) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands and other communications will
be sent to each of the Holders or subsequent holders of the Holder's Shares as
the case may be, at their respective addresses on the books of the Company, and
to the Company at the address indicated below:
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<PAGE> 83
If to Company: Core Laboratories, N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
with a copy (which
shall not constitute
notice) to: Vinson & Elkins, L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(j) Benefit of Agreement. No person not a party to this Agreement shall
have rights under this Agreement as a third party beneficiary or otherwise.
[signatures on following page]
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<PAGE> 84
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date.
CORE LABORATORIES N.V.
By: CORE LABORATORIES INTERNATIONAL B.V.
its Sole Management Director
By:
------------------------------------------
Jacobus Schouten
Managing Director
HOLDERS:
ESTATE OF PAUL J. CERNOCK, DECEASED
By:
------------------------------------------
Christopher M. Cernock
Independent Co-Executor
By:
------------------------------------------
Laura E. Cernock
Independent Co-Executor
ESTATE OF ELIZABETH M. CERNOCK, DECEASED
By:
------------------------------------------
Robert L. Thomas
Independent Executor
----------------------------------------------
RANDALL MILLER
----------------------------------------------
JOHN ZELLMER
----------------------------------------------
LAWRENCE BRUNO
C-9
<PAGE> 85
EXHIBIT A
<TABLE>
<CAPTION>
TOTAL ACQUIROR
NAME ESCROW SHARES CLOSING SHARES SHARES
- ---- ------------- -------------- --------------
<S> <C> <C> <C>
Estate of Paul J. Cernock 8,050 72,454 80,504
Estate of Elizabeth M. Cernock 8,050 72,454 80,504
Randall Miller 4,792 43,126 47,918
John Zellmer 863 7,762 8,625
Lawrence Bruno 527 4,744 5,271
--- ----- -----
Total 22,282 200,540 222,822
</TABLE>
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<PAGE> 86
EXHIBIT D
FORM OF EMPLOYMENT CONTRACT
<PAGE> 87
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of August 2, 1999 (the "Effective Date") by and between Core
Laboratories, Inc., a Delaware corporation ("Company"), and _______________
("Employee").
R E C I T A L S :
A. The Company is a corporation duly organized under the laws of the
State of Delaware.
B. Employee has sold his shares in Reservoirs, Inc. to Company's parent
company, Core Laboratories N.V., and has benefited as a shareholder from the
acquisition by Company's parent company of all of the outstanding capital stock
of Reservoirs, Inc. pursuant to the Agreement and Plan of Merger dated July 26,
1999 among Core Laboratories N.V., Core Acquisition Subsidiary, Inc.,
Reservoirs, Inc. and the stockholders of Reservoirs, Inc. (the "Merger
Agreement").
C. The Company desires to employ Employee, and Employee desires to be
employed by the Company, to provide services for the Company and Company's
customers pursuant to the provisions of this Agreement.
A G R E E M E N T S :
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements in this Agreement, the parties do agree and
covenant as follows, intending to be legally bound:
1. EMPLOYMENT.
1.1. Engagement. The Company employs Employee, and Employee accepts
employment with Company, as _______________ (and in such other positions to
which Employee may be assigned by Company) to render services to Company and to
the customers of Company, as determined by the Board of Directors of Company
(the "Board") and the appropriate authorized officers and agents of Company.
Employee shall maintain regular full-time office/work hours in accordance with
Company policies. Except as may be otherwise provided for in this Agreement,
during the term of this Agreement, Employee shall not, without the prior written
consent of Company, render compensable services except as an employee of Company
or directly or indirectly engage in any business activity that competes with the
business of Company, that duplicates a service provided by Company, or that is
adverse to the business of Company.
1.2. Right to Fees. Any and all Service Fees generated during the term
of this Agreement shall belong to Company. "Service Fees" shall include, but not
be limited to, fees or remuneration generated by the provision of services by
Employee in Employee's capacity as an employee of Company. It is specifically
understood and agreed that Employee shall have no right or claim to any portion
of Service Fees, except as otherwise provided in this Agreement or by policies
adopted by the Board or the authorized officers of Company.
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1.3. Customer Agreements. From time to time Company may enter into
agreements with customers or suppliers that may require Company and/or Employee
to engage in certain activities. Employee will fully cooperate in such
activities and will comply with any and all requirements of any customer or
supplier agreement to which Company becomes a party. Employee shall have no
authority to, and shall not, execute agreements binding Company unless Employee
is a duly authorized officer or agent of Company acting as authorized.
1.4. Records of Company. During the term of this Agreement or any time
thereafter, Employee shall not induce, solicit, or encourage any customer who
has received or is receiving products or services from Company to seek such
products or services from another source, including Employee. All business,
financial, or other records, papers, and documents generated by Employee,
Company, or employees or agents of Company shall belong to Company, and Employee
shall have no right to keep or retain such records, papers, or documents after
this Agreement is terminated.
2. DUTIES.
2.1. Professional Duties. Employee shall provide services exclusively
for Company at facilities used by Company or at other locations as Company
determines. Employee shall not render compensable services except as an employee
of Company. Employee agrees to use Employee's best efforts in performing
Employee's duties. Employee's essential duties shall also include without
limitation:
2.1.1. Keeping and maintaining, or causing to be kept and
maintained, appropriate records, reports, claims, and
correspondence necessary and appropriate in
connection with all services rendered by Employee
under this Agreement, all of which records, reports,
claims, and correspondence shall belong to Company;
2.1.2. Promoting the business of Company;
2.1.3. Attending to the administrative duties of the
business of Company;
2.1.4. Performing all acts reasonably necessary to maintain
and improve Employee's skills;
2.1.5. Assisting Company in fulfilling its contractual
obligations, if any; and 2.1.6. Providing services to
customers of Company in accordance with standards
and policies adopted by Company from time to time.
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3. COMPENSATION.
3.1. Base Salary. The annual base salary of Employee shall
be__________________ and ___/100 Dollars ($_______) during the first year of
this Agreement. After the first year of this Agreement, the base salary of
Employee may be adjusted by Company at its discretion. The base salary shall be
payable in accordance with Company's schedule and policies.
3.2. Employment Taxes. Company shall withhold on behalf of Employee
appropriate employment taxes.
3.3. Leave Time. Employee shall be entitled to vacation and other leave
time in accordance with Company's policies. Paid vacation and leave time shall
not increase the base salary or other compensation of Employee under this
Agreement. Employee shall schedule vacation and leave time with reasonable
notice to Company.
3.4. Other Benefits. Company may provide and make available to Employee
other benefits of employment as determined by the Board, such as health, group
disability, and group life insurance. Company does not guarantee or make any
warranties regarding the insurability of Employee.
3.5 Bonus. Employee shall be eligible to receive an annual incentive
bonus on or about March 31 of each calendar year in accordance with and subject
to the performance criteria approved by the Board or the appropriate authorized
officers or agents of the Company or his designee(s) and commensurate with those
applicable to senior management of the Company. The amount of any such incentive
bonus shall be limited to no more than _____% of Employee's then base salary
specified in Section 3.1.
4. TERM AND TERMINATION.
4.1. Term. The initial term of this Agreement shall commence on the
Effective Date and shall continue for a period of _____ year, unless sooner
terminated in accordance with the terms of this Agreement.
4.2. Termination For Cause.
4.2.1. By Company. Company may terminate this Agreement
immediately upon notice to Employee for any of the following reasons, which
shall be deemed to be "cause":
4.2.1.1. Employee's failure or refusal to perform the duties
required under this Agreement or to comply with the policies, standards, and
regulations of Company that may be established from time to time, that apply to
all Company employees;
4.2.1.2. Employee's conviction in a court of competent
jurisdiction of any felony offense or of any misdemeanor offense involving moral
turpitude;
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4.2.1.3. The commission by Employee of (i) any criminal
offense other than minor traffic violations, (ii) any public or private conduct
that offends decency or morality, causes Employee to be held in public ridicule
or scorn, or causes a public scandal, or (iii) any conduct that may harm the
reputation or operations of Company or that is detrimental to the interests of
Company;
4.2.1.4. Employee, for reasons other than illness, disability,
family emergency, vacation scheduled in advance with reasonable notice to
Company, or holidays, devotes less than Employee's full time to Employee's
duties under this Agreement;
4.2.1.5. Employee takes any action, fails to take any action,
engages in any activity, the result of which is contrary to the interest of
Company, or in any way violates Company's ethics policy.
4.2.2. By Employee. Employee may terminate this Agreement
immediately upon written notice to Company, which notice shall describe the
reason for termination, for either of the following reasons:
4.2.2.1. Company dissolves;
4.2.2.2. Company materially fails to perform
its duties under this Agreement and such failure continues for thirty (30) days
after receipt of written notice.
4.3. Termination Without Cause. After the initial term, this Agreement
may be terminated immediately by Employee or Company without cause. In the event
of notice by either party of termination without cause, Company may limit
Employee's activities during the notice period or Company may impose any other
restrictions it deems necessary and reasonable.
4.4. Termination upon Death or Disability. This Agreement shall
automatically terminate upon Employee's death. Any salary, bonus, or fringe
benefits due at the time of death shall be paid on a pro rata basis. This
Agreement shall also be deemed to terminate upon the commencement date of
Employee's disability that does or is expected to continue for ninety (90) days.
For purposes of this Agreement, the term "disability" means a documented illness
or incapacity that keeps or is expected to keep Employee from resuming
Employee's full-time duties for at least ninety (90) days; provided, however,
that such ninety (90) day period shall not be deemed to be broken if Employee
returns to work for no more than three consecutive working days during any given
attempt to resume his or her regular work schedule.
4.5. Effect of Termination. Upon any termination of this Agreement,
Company shall pay Employee the compensation due through the date of termination
as full and final satisfaction of the terms of this Agreement, and Employee
shall have no further claims against Company for compensation.
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5. OUTSIDE ACTIVITIES AND NONCOMPETITION.
5.1. Covenant Not to Compete. Employee recognizes that Company's
decision to enter into this Agreement is induced primarily because of the
covenants and assurances made by Employee in this Agreement, that such covenants
and assurances are a precondition to Employee's right to receive payments from
Company's parent company in the form of stock in exchange for his shares in
Reservoirs, Inc., that Employee's covenant not to compete is necessary to ensure
the continuation of the business of Company and the reputation of Company and
the receipt and enjoyment of the benefits of the purchase of Reservoirs, Inc.,
and that irrevocable harm and damage will be done to Company if Employee
competes with Company. Therefore, Employee agrees that for a period of _____
years following the Effective Date or for a period of _____ year after the
termination for any reason of Employee's employment with Company, whichever
period is greater, Employee shall not, directly or indirectly, as an employee,
employer, contractor, consultant, agent, principal, shareholder, corporate
officer, director, or in any other individual or representative capacity, engage
or participate in any business or enterprise in countries or locations where
Reservoirs, Inc. or Core Laboratories N.V. or any of their subsidiaries
currently conduct business, including, but not limited to Texas, the parishes of
Louisiana listed on Exhibit A, Oklahoma, or Colorado (the "Noncompetition
Territory") that is in competition in any manner whatsoever with the business of
Company or any affiliate of Company (including, without limitation, Core
Laboratories N.V. and its subsidiaries) without the prior written permission of
Company. The parties mutually acknowledge all of the following:
(a) Employee's covenant not to compete is reasonable and is
given as consideration for a portion of Employee's compensation and for
a portion of the sales price for the shares of Reservoirs, Inc.
(b) In exchange for Employee's covenants to Company in this
Agreement, Company is furnishing to Employee, in addition to Employee's
compensation, valuable consideration, including without limitation:
(i) full access to an established customer base;
(ii) the availability of expensive operating
equipment, office equipment, and a trained
and adequate staff; and
(iii) specialized training, as necessary, to
provide services according to Company's
standards.
(c) If Employee should render services within the
Noncompetition Territory in competition with the business of Company,
it would cause economic harm and loss of goodwill to Company resulting
in immediate and irreparable loss, injuries, and damage to Company.
Neither the public in general nor any customers will be
adversely affected by the enforcement of the noncompetition
covenant, in that other similar providers of similar services
are readily available within the restricted area.
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5.2. Ancillary Agreement. This covenant not to compete shall be
construed as an agreement ancillary to the other provisions of this Agreement
and to the Merger Agreement, and the existence of any claim or cause of action
of Employee against Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Company of this covenant.
Without limiting other possible remedies to Company for breach of this covenant,
Employee agrees that injunctive or other equitable relief will be available to
enforce the covenants of this provision, such relief to be without the necessity
of posting a bond, cash or otherwise.
5.3. Enforcement. Company and Employee further agree that if any
restriction in this Article is held by any court to be unenforceable or
unreasonable, a lesser restriction will be enforced in its place and the
remaining restrictions in this Agreement will be enforced independently of each
other. Employee agrees to pay any attorney's fees, court costs, and expenses
incurred by Company if Company chooses, in its sole discretion, to enforce any
provision under this Article and Company prevails.
5.4. Survival. The provisions of this Article shall survive the
termination of this Agreement.
6. CONFIDENTIALITY OF INFORMATION.
Employee agrees to keep confidential and not to use or to disclose to
others during the term of this Agreement and for any time thereafter, except as
expressly consented to in writing by Company or as required by law, any secrets
or confidential technology, proprietary information, or trade secrets of
Company, or any matter or thing ascertained by Employee through Employee's
affiliation with Company, the use or disclosure of which matter or thing might
reasonably be construed to be contrary to the best interest of Company. Employee
further agrees that should Employee leave the employment of Company, Employee
will neither take nor retain, without prior written authorization from Company,
any papers, fee books, files, other documents, copies thereof, or other
confidential information of any kind belonging to Company pertaining to
Company's business, sales, financial condition, services, or products. Without
limiting other possible remedies to Company for the breach of this covenant,
Employee agrees that injunctive or other equitable relief shall be available to
enforce this covenant, such relief to be without the necessity of posting a
bond, cash, or otherwise. Employee further agrees that if any restriction in
this paragraph is held by any court to be unenforceable or unreasonable, a
lesser restriction shall be enforced in its place and the remaining restrictions
in this paragraph shall be enforced independently of each other.
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7. MISCELLANEOUS.
7.1. Assignability. Company may assign this Agreement to a successor
business upon notice to Employee. Otherwise, neither party may assign its rights
or duties under this Agreement without the prior written consent of the other
party.
7.2. Notice. Any notice, demand, or communication required, permitted,
or desired to be given under this Agreement shall be deemed effectively given
when personally delivered or mailed by prepaid certified mail, return receipt
requested, addressed to the party at the primary business address of Company,
or, if appropriate, at the residence of Employee on file with Company, or to
another address and to the attention of another person or officer that either
party may designate by written notice.
7.3. Enforceability. Should any provision of this Agreement be held
invalid, unenforceable, or unconstitutional by any governmental body or court of
competent jurisdiction, that holding shall not diminish the validity or
enforceability of any other provision of this Agreement.
7.4. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Texas, and venue for any cause of
action arising under this Agreement shall lie in Harris County.
7.5. Construction. Common nouns and pronouns and all other terms shall
be deemed to refer to the masculine, feminine, neuter, and singular and/or
plural, as the identity of the person or persons, firm, or association may
require in the context.
7.6. Binding Effect. The provisions of this Agreement shall inure to
the benefit of and shall be binding upon the heirs, personal representatives,
successors, assigns, estates, and legatees of each of the parties.
7.7. Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or another
provision.
7.8. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement in effect between the parties pertaining to the employment
relationship between Company and Employee and supersedes all prior or
contemporaneous agreements, understandings, or negotiations of the parties. THIS
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. This Agreement shall not be modified, amended, or supplemented except
in a written instrument executed by both parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate originals effective as of the Effective Date.
COMPANY:
CORE LABORATORIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EMPLOYEE:
---------------------------------------
(Name)
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<PAGE> 1
EXHIBIT 10.6
AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), effective as of July 22, 1999, is entered into by and among CORE
LABORATORIES N.V., a Netherlands limited liability company (the "Parent"), CORE
LABORATORIES, INC., a Delaware corporation (the "US Borrower" and together with
the Parent the "Borrowers"), the Subsidiaries of the Borrowers (together with
their respective successors and assigns) designated under the Credit Agreement
or this Amendment as Guarantors, the banks named on the signature pages hereto
(together with their respective successors and assigns in such capacity, the
"Banks"), BANKERS TRUST COMPANY, as the administrative agent for the Banks
(together with its successors and assigns in such capacity, the "Administrative
Agent"), and BANK OF AMERICA, N.A., successor by merger to NATIONSBANK, N.A., as
the syndication agent for the Banks (together with its successors and assigns in
such capacity, the "Syndication Agent" and, together with the Administrative
Agent, the "Agents"), and as the issuing bank with respect to the Letters of
Credit issued hereunder (together with its successors and assigns in such
capacity, the "Issuing Bank"). Unless otherwise defined herein, all capitalized
terms used herein are as defined in the hereafter-referenced Credit Agreement.
WHEREAS, the Borrowers and certain Subsidiaries of the
Borrowers, as Guarantors, the Agents and the Banks have executed that certain
Amended and Restated Credit Agreement dated as of July 18, 1997 (as it may be
amended, extended, supplemented or amended and restated from time to time, the
"Credit Agreement").
WHEREAS, pursuant to the Credit Agreement, (a) the Banks
agreed to provide (i) the Parent with a $55,000,000 term loan facility (the
"Tranche A Loan") and the Equivalent in Dutch Guilders of a $5,000,000 revolving
credit facility (the "Guilder Revolving Loans"), (ii) the US Borrower with a
$50,000,000 revolving credit facility providing for letters of credit and
revolving loans (the "Dollar Revolving Loans") and (iii) the UK Borrower with
the Equivalent in Pounds Sterling of a $15,000,000 term loan facility (the
"Tranche B Loan") and (b) the Guilder Swing Line Banks agreed to provide the
Equivalent in Dutch Guilders of a $5,000,000 revolving credit facility (the
"Guilder Swing Line Loan").
WHEREAS, in connection with the Credit Agreement, the
Borrowers executed Pledge Agreements granting security interests and liens on
all of the Collateral subject thereto in favor of the Administrative Agent for
the benefit of the Bank Group.
WHEREAS, the Borrowers have now requested that (a) the Tranche
A Loan, the Tranche B Loan and the Guilder Swing Line Loan be repaid in full
with a portion of the proceeds of certain Indebtedness described in Section
6.01(g) to be incurred by the U.S. Borrower and to terminate the Commitment of
the relevant Banks to make such Loans, (b) the Total Dollar Revolving Commitment
be increased from $50,000,000 to $95,000,000, (c) that the Guilder Revolving
Loan Bank solely provide the Guilder Revolving Commitment, (d) that a Dollar
Swing Line Loan be
<PAGE> 2
added and (e) that the Collateral (except for the Subsidiaries' Guaranties)
securing the Obligations be released.
WHEREAS, the Banks and the Agents have agreed to do so to the
extent reflected in this Amendment provided that each of the Parent, the US
Borrower and each Guarantor ratifies and confirms all of its respective
obligations under the Credit Agreement and the Loan Documents and agrees to make
certain other amendments as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments to the Credit Agreement. The following
provisions of the Credit Agreement are hereby modified as follows:
a. Section 2.01 - Amendment. (i) Section 2.01(a) is
hereby deleted in its entirety and the following is substituted
therefor:
"Section 2.01 Commitments. (a) Tranche A Loan. The
parties hereby acknowledge and agree that, as of the date of
the Amendment, the Banks no longer have any obligation or
liability to make any Tranche A Loans (as defined by the
Credit Agreement prior to the Amendment) and all Tranche A
Loans shall be repaid simultaneously with the execution of the
Amendment. Accordingly, the parties further agree that, as of
the date of the Amendment, the Tranche A Commitment of each of
the Banks is hereby fully, finally and irrevocably terminated.
All references in the Credit Agreement to Tranche A Loans and
related matters are no longer applicable from the date of the
Amendment. Notwithstanding the foregoing, the Parent and the
Guarantors shall continue to be liable for the repayment of
any Tranche A Loans outstanding until the full and final
repayment thereof."
(ii) Section 2.01(b) is hereby deleted in its entirety and the
following is substituted therefore:
"(b) Tranche B Loan. The parties hereby acknowledge and
agree that, as of the date of the Amendment, the Banks no
longer have any obligation or liability to make any Tranche B
Loans (as defined by the Credit Agreement prior to the
Amendment) and all Tranche B Loans shall be repaid
simultaneously with the execution of the Amendment.
Accordingly, the parties further agree that, as of the date of
the Amendment, the Tranche B Commitment of each of the Banks
is hereby fully, finally and irrevocably terminated. All
references in the Credit Agreement to Tranche B Loans and
related matters are no longer applicable from the date of the
Amendment. Notwithstanding the foregoing, the UK Borrower and
the Guarantors
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<PAGE> 3
shall continue to be liable for the repayment of any Tranche B
Loans outstanding until the full and final repayment thereof."
(iii) Section 2.01(d) is hereby deleted in its entirety and
the following is substituted therefor:
"(d) Guilder Revolving Loans. The Guilder Revolving
Loan Bank agrees, on the terms and conditions hereinafter set
forth, to make one or more loans (each a "Guilder Revolving
Loan") to the Parent from time to time on any Business Day,
from the date of the Amendment up to but excluding the
Termination Date, in an aggregate amount outstanding not to
exceed the Guilder Revolving Loan Bank's Guilder Revolving
Commitment. All Guilder Revolving Loans (i) subject to Section
2.13(a) shall be made and repaid in Guilders or Euros, (ii)
made and maintained as Eurocurrency Rate Loans and (iii) may
be repaid and reborrowed in the same manner as Dollar
Revolving Loans."
(iv) Section 2.01(e) is hereby deleted in its entirety and the
following is substituted therefor:
"(e) Guilder Swing Line Loans. The parties hereby
acknowledge and agree that as of the date of the Amendment the
Guilder Swing Line Banks no longer have any obligation or
liability to make any Guilder Swing Line Loans (as defined by
the Credit Agreement prior to this Amendment) and all Guilder
Swing Line Loans shall be repaid simultaneously with the
execution of the Amendment. Accordingly, the parties further
agree that as of the date of the Amendment each Guilder Swing
Line Commitment is hereby fully, finally and irrevocably
terminated. All references in the Credit Agreement to Guilder
Swing Line Loans and related matters are no longer applicable
from the date of the Amendment. Notwithstanding the foregoing,
the Parent and the Guarantors shall continue to be liable for
the repayment of any Guilder Swing Line Loans outstanding
until the full and final repayment thereof."
(v) A new Section 2.01(h) is hereby added to read as follows:
"(h) Dollar Swing Line Loans. (i) Subject to the terms
and conditions hereof, and in substitution for the Dollar
Revolving Loans described in Section 2.01(c) above, the
Dollar Swing Line Banks agree at any time and from time to
time on and after the date of the Amendment and prior to the
Termination Date, to make swing line loans (each a "Dollar
Swing Line Loan" and collectively, the "Dollar Swing Line
Loans") to the US Borrower in an aggregate principal amount
at any one time outstanding not to exceed $10,000,000. The
Dollar Swing Line Loans shall be made and maintained as Base
Rate Loans and as part of a single Borrowing made by the
Dollar Swing Line Banks on the same day ratably according to
their respective Commitment Percentages for Dollar Swing
Line Loans. Each Borrowing
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<PAGE> 4
of Dollar Swing Line Loans shall be in an aggregate amount not
less than $1,000,000 and in an integral multiple of $200,000
in excess thereof. Within the limits set forth above and
subject to the terms and conditions of this Agreement, the US
Borrower may borrow, repay pursuant to Section 2.06 or prepay
pursuant to Section 2.08 and reborrow under this Section
2.01(h). Funding and maintenance of Dollar Swing Line Loans
shall be in Dollars. Dollar Swing Line Loans shall constitute
"Dollar Revolving Loans" for all purposes hereunder, provided,
they shall be held by the Dollar Swing Line Banks (subject to
sub-clauses (ii) and (iii) below), and provided further, the
Dollar Swing Line Loans shall not be considered a utilization
of the Dollar Revolving Commitment for the purpose of
calculating the Commitment Fee only.
(ii) If a Dollar Swing Line Loan is outstanding more
than five (5) days, or at any time after a Default or an Event
of Default, if 100% of the Dollar Swing Line Banks so decide,
in their sole discretion, they may give notice to the Agent to
require each Bank to make a Dollar Revolving Loan in an amount
equal to such Bank's Commitment Percentage times the
outstanding principal balance of all Dollar Swing Line Loans
(the "Refunded Dollar Swing Line Loan") outstanding on the
date such notice is given; provided that the provision of this
subsection shall not affect the obligation of the US Borrower
to prepay Swing Line Loans in accordance with Section 2.01(h)
and 2.06(e). Upon (A) the delivery of such notice and (B) each
Bank either making a Dollar Revolving Loan or purchasing from
the Dollar Swing Line Banks a pro rata participation in such
Dollar Swing Line Loan as required under Section 2.01(h)(iii),
the Dollar Swing Line Commitments and the Dollar Revolving
Loan Commitments shall be terminated. Unless the Dollar
Revolving Commitments shall have expired or terminated, each
Bank shall make the proceeds of its Dollar Revolving Loan
available to the Agent for the pro rata account of the Dollar
Swing Line Banks on the next Business Day following such
request, in immediately available funds. The proceeds of such
Dollar Revolving Loans shall be immediately applied to repay
the Refunded Dollar Swing Line Loan.
(iii) At any time after a Default or an Event of
Default, if the Dollar Revolving Commitments shall have
expired or be terminated while any Dollar Swing Line Loan is
outstanding, the Banks, shall, notwithstanding the expiration
or termination of the Dollar Revolving Commitments, make a
Dollar Revolving Loan (which shall be deemed a "Revolving
Loan" for all purposes of this Agreement and the other Loan
Documents) and, if any Bank shall not have made its Dollar
Revolving Loans, such Bank shall be deemed, without further
action by any Person, to have purchased from the Dollar Swing
Line Banks a pro rata participation in such Dollar Swing Line
Loan in either case in an amount equal to such Bank's
Commitment Percentage times the outstanding principal balance
of such Dollar Swing Line Loan. The Agent shall notify each
such Bank of the amount of such Dollar Revolving Loan or
participation and such Bank will transfer to the Agent for
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<PAGE> 5
the pro rata account of the Dollar Swing Line Banks on the
next Business Day following such notice, in immediately
available funds, the amount of its Dollar Revolving Loan or
participation.
(iv) If any such Bank shall not have so made its
Dollar Revolving Loan or its percentage participation
available to the Agent pursuant to this Section 2.01(h), such
Bank agrees to pay interest thereon for each day from such
date until the date such amount is paid at the lesser of (1)
the Federal Funds Rate on the date payment is to be made to
the Agent and (2) the Highest Lawful Rate. Whenever, at any
time after the Agent has received from any Bank such Bank's
Dollar Revolving Loan or participating interest in a Dollar
Swing Line Loan, the Agent receives any payment on account
thereof, the Agent will pay to such Bank its participating
interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during
which such Bank's participating interest was outstanding and
funded) which payment shall be subject to repayment by such
Bank if such payment received by the Agent is required to be
returned. Each Bank's obligation to make the Dollar Revolving
Loans or purchase such participating interests pursuant to
this Section 2.01(h) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without
limitation, (A) any set-off, counterclaim, recoupment, defense
or other right which such Bank or any other Person may have
against the Dollar Swing Line Banks or either one of same, the
Agent or any other Person for any reason whatsoever; (B) the
occurrence or continuance of a Default or an Event of Default
or the termination of Dollar Revolving Commitments; (C) the
occurrence of any Material Adverse Effect; (D) any breach of
this Agreement by any of the Borrowers or any other Bank; or
(E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. Each Dollar
Swing Line Loan, once so participated by any Bank, shall cease
to be a Dollar Swing Line Loan with respect to that amount for
purposes of this Agreement, but shall continue to be a Dollar
Revolving Loan and be evidenced by such Bank's Dollar
Revolving Note.
(v) In the event that any Dollar Swing Line Bank
incurs any tax, cost or expense of the type described in
Sections 2.11 through 2.14, inclusive, by reason of repaying
or participating a Dollar Swing Line Loan as described in this
Section 2.01(h), the US Borrower shall reimburse such Dollar
Swing Line Bank the full amount of such tax, cost or expense
subject to the terms and conditions herein.
(vi) The US Borrower expressly agrees and
acknowledges that, in respect of each Bank's funded
participation interest in any Dollar Swing Line Loan, such
Bank shall be deemed to be in privity of contract with the US
Borrower and have the same rights and remedies against the US
Borrower under the Loan Documents as if such funded
participation interest in such Dollar Swing Line Loan were a
Dollar Revolving Loan."
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<PAGE> 6
b. Section 2.04 - Amendment. (i) Sections 2.04(a), (b) and (c)
are hereby deleted in their entirety and the following substituted
therefor:
"(a) Omitted
(b) Omitted
(c) The Dollar Revolving Loans made by each Bank
making a Dollar Revolving Loan shall be evidenced by a Dollar
Revolving Note issued to such Bank by the US Borrower (i)
dated the effective date of the Amendment (or such other date
as may be specified in Section 10.02), (ii) payable to the
order of such Bank and (iii) otherwise duly completed."
(ii) Section 2.04(d) is hereby deleted in its entirety and the
following substituted therefor:
"(d) The Guilder Revolving Loans made by the Guilder
Revolving Loan Bank shall be evidenced by a Guilder Revolving
Note issued to the Guilder Revolving Loan Bank by the Parent
(i) dated the effective date of the Amendment (or such other
date as may be specified in Section 10.02), (ii) payable to
the order of the Guilder Revolving Loan Bank and (iii)
otherwise duly completed."
(iii) Section 2.04(e) is hereby deleted in its entirety and
the following substituted therefor:
"(e) The Dollar Swing Line Loans made by each of the
Dollar Swing Line Banks shall be evidenced by a Dollar Swing
Line Note issued to such Dollar Swing Line Bank by the US
Borrower, (i) dated the date of the Amendment (or such other
date as may be specified in Section 10.02), (ii) payable to
the order of such Dollar Swing Line Bank and (iii) otherwise
duly completed."
c. Section 2.06 - Amendment. Section 2.06 is hereby amended by
deleting subsections (a) and (c) thereof in their entirety.
d. Section 2.07 - Amendment. (i) Section 2.07 is hereby
amended by deleting subparagraphs (a)(i) and (a)(ii) thereof and
replacing them with the following:
(i) Base Rate Loans. If such Loan is a Base Rate
Loan, a rate per annum equal at all times to the lesser of (A)
the Highest Lawful Rate and (B) the sum of the Base Rate in
effect from time to time plus, except as set forth below, the
Applicable Margin in effect from time to time for Base Rate
Loans, and unpaid accrued interest on such Loans shall be due
and payable on each payment date and on the date such
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<PAGE> 7
Base Rate Loan shall be paid in full or converted; provided,
that with respect to all Base Rate Loans which are Dollar
Swing Line Loans the rate per annum as set forth in this
Section 2.07(a)(i) less the percentage per annum Commitment
Fee in effect pursuant to Section 2.10.
(ii) Eurocurrency Rate Loans. If such loan is a Eurocurrency
Rate Loan, a rate per annum equal at all times during the
Interest Period for such Loan to the lesser of (A) the Highest
Lawful Rate and (B) the sum of the Eurocurrency Rate for such
Interest Period plus, except as set forth below, the
Applicable Margin in effect as of the first day of such
Interest Period for Eurocurrency Rate Loans, and unpaid
accrued interest on such Loans shall be due and payable the
last day of such Interest Period; provided, in the case of an
Interest Period longer than three months, (i) interest shall
also be paid, and (ii) the Applicable Margin shall change, in
each case, effective as of the date occurring every three
months after the first day of such Interest Period, and on the
date such Eurocurrency Rate Loan shall be paid in full or
Converted.
(iii) Section 2.07 is hereby further amended by deleting
subparagraph (c) thereof and replacing it with the following:
"(c) As used herein, "Applicable Margin" means, and
"Commitment Fee" means, for any day, (subject to Section
2.10), at such time as the Margin Ratio is in one of the
following ranges, the percentage per annum set forth opposite
such Margin Ratio:
<TABLE>
<CAPTION>
Margin Ratio Eurocurrency Base Rate
Margin Margin Commitment Fee
------ ------ --------------
<S> <C> <C> <C>
Less than 2.0 to 1.0 1.25% 0% .375%
Equal to or greater than 2.0 to 1.0 1.50% .25% .375%
but less than 2.5 to 1.0
Equal to or greater than 2.5 to 1.0 1.75% .50% .375%
</TABLE>
(iv) Section 2.07 is hereby amended by deleting subparagraph
(d) thereof and replacing it with the following:
"(d) For purposes hereof, "Margin Ratio" means, as of
any date, the ratio of (i) the Parent's total consolidated
Indebtedness as of the calendar quarter ending on such date,
to (ii) its consolidated EBITDA for the twelve month period
ending on the last day of such calendar quarter.
The Margin Ratio set forth in the most recent Margin
Ratio Certificate delivered to the Administrative Agent shall,
for purposes of determining the Applicable Margin, be in
effect from the second business day after the date such Margin
Ratio Certificate is delivered (or is required to be
delivered), until the second business day after the next such
Margin Ratio Certificate is delivered (or is required
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<PAGE> 8
to be delivered), with the following exceptions: (a) if the
Administrative Agent in good faith determines that the
calculations of the Margin Ratio reflected in any Margin Ratio
Certificate are manifestly in error, the Administrative Agent
may correct any error and calculate the appropriate Margin
Ratio (and promptly give the Borrowers notice thereof with
supporting documentation and calculations), (b) if the Parent
fails to deliver any Margin Ratio Certificate when due, the
Margin Ratio shall be deemed to be greater than 2.5 to 1.0
until such Margin Ratio Certificate is delivered, and (c) in
the event of the consummation of any merger or acquisition of
a Subsidiary, the Margin Ratio shall be immediately
recalculated on a pro forma, trailing twelve month basis (as
if such Subsidiary had been acquired on the first day of such
twelve (12) month period) and be in effect from such
consummation until the earlier of (1) the second business day
after a new Margin Ratio Certificate is delivered or (2) the
consummation of another merger or acquisition of a
Subsidiary."
e. Section 2.10 - Amendment. Section 2.10 is hereby
amended by adding the following paragraph (d) thereto:
"(d) The Borrowers jointly and severally agree to pay
to the Administrative Agent, for the account of each Bank, a
one-time fee, in Dollars, equal to .25% of all of such Bank's
Commitment existing immediately after the execution of the
Amendment."
f. Section 3.02 - Amendment. Section 3.02 is hereby amended by
modifying the reference in the last line thereof to "Refunded Guilder
Swing Line Loan" to refer to "Refunded Dollar Swing Line Loan."
g. Section 4.16. Section 4.16 is hereby deleted in its
entirety.
h. Section 4.19. Section 4.19 is hereby deleted in its
entirety.
i. Section 4.20. A new Section 4.20 is added to read in its
entirety as follows:
"Section 4.20 Year 2000. All Information Systems and
Equipment material to the operations of the Company or any of
its Subsidiaries are either Year 2000 Compliant, or any
reprogramming, remediation, or any other corrective action,
including the internal testing of all such Information Systems
and Equipment, will be completed by September 30, 1999.
Further, to the extent that such reprogramming/remediation and
corrective action is required, the cost thereof, as well as
the cost of the reasonably foreseeable consequences of failure
to become Year 2000 Compliant, to the Borrowers and their
Subsidiaries (including, without limitation, reprogramming
errors and the failure of other systems or equipment) will not
result in a Default or a Material Adverse Effect."
-8-
<PAGE> 9
j. Section 5.09 - Amendment. Section 5.09 is hereby
deleted and the following substituted therefor:
"Section 5.09 Use of Loans and Letters of Credit. All
Letters of Credit shall be issued for general corporate
purposes consistent with the terms of this Agreement and all
Requirements of Law. The US Borrower will use the proceeds of
all Dollar Revolving Loans for working capital and other
general corporate purposes, including for Capital Expenditures
and Permitted Acquisitions, consistent with the terms of this
Agreement and all Requirements of Law. The Parent will use the
proceeds of the Guilder Revolving Loans (i) for the repayment
of any amounts outstanding under the Guilder Swing Line Loans,
and (ii) for working capital and other general corporate
purposes consistent with the terms of this Agreement and all
Requirements of Law."
k. Section 5.10 - Amendment. Section 5.10 is hereby deleted in
its entirety and the following is substituted therefor:
"Section 5.10 Additional Guarantees. (a) In the event
any Borrower or any of their Subsidiaries, subsequent to the
date of the Amendment, acquires any non-U.S. Subsidiary and
the cash consideration paid for such non-U.S. Subsidiary
exceeds the equivalent of $20,000,000.00, such non-U.S.
Subsidiary shall execute and deliver to the Administrative
Agent a Guaranty Agreement guaranteeing the Obligations on the
same basis as the other Guarantors. In addition, if the gross
revenue or total assets of such non-U.S. Subsidiary exceeds
five percent (5%) of the consolidated gross revenue or total
assets, respectively, of the Parent and its Subsidiaries, or
if any non-U.S. Subsidiary (other than Core Laboratories Sales
N.V. or Core Laboratories Australia Pty. Ltd., which shall be
excluded herefrom) that is not a Credit Party changes in such
a manner that said Subsidiary: (i) has total gross revenue or
total assets constituting five percent (5%) or more of the
consolidated total gross revenue or total assets of the Parent
and all of its Subsidiaries, such Subsidiary upon the written
request of the Majority Banks shall execute and deliver to the
Administrative Agent a Guaranty Agreement guaranteeing the
Obligations on the same basis as the other Guarantors. Except
as otherwise expressly provided herein, all domestic
Subsidiaries shall be Guarantors hereunder at all times."
"(b) If any Subsidiary guarantees the Indebtedness,
or any part thereof, permitted under Section 6.01(g), such
Subsidiary shall immediately, if it has not already done so,
execute and deliver to the Administrative Agent a Guaranty
Agreement guaranteeing the Obligations on the same basis as
the other Guarantors."
l. Section 5.11- Amendment. Section 5.11 is hereby deleted in
its entirety and the following is substituted therefor:
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<PAGE> 10
"Section 5.11 Further Assurances in General. Each
Borrower at its expense shall, and shall cause each of its
Subsidiaries to, promptly execute and deliver all such other
and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and
agreements of a Borrower or any of its Subsidiaries in the
Loan Documents, including, without limitation, the
accomplishment of any condition precedent that may have been
waived by the Banks prior to the initial Borrowing or Letter
of Credit or any subsequent Borrowings or Letters of Credit."
m. Section 5.13. A new Section 5.13 is added to read in
its entirety as follows:
"Section 5.13 Year 2000. Each Borrower will ensure
that its Information Systems and Equipment are at all times
after September 30, 1999, Year 2000 Compliant, except insofar
as the failure to do so could not reasonably be expected to
result in a Material Adverse Affect, and shall notify the
Administrative Agent and all Banks promptly upon detecting any
failure of the Information Systems and Equipment to be Year
2000 Compliant if same could reasonably be expected to result
in a Material Adverse Effect. In addition, the Borrowers shall
provide the Administrative Agent and all Banks with such
information about its year 2000 computer readiness (including,
without limitation, information as to contingency plans,
budgets and testing results) as the Administrative Agent or
such Banks shall reasonably request."
n. (i) Section 6.01(d) - Amendment. Section 6.01(d) is hereby
deleted in its entirety and the following substituted therefor:
"(d) subject to the limitations of Section 6.07,
unsecured Indebtedness owing to a Borrower by any of its
Subsidiaries or owing by a Borrower to any of its
Subsidiaries; provided, any such Indebtedness in excess of
$10,000,000 shall be evidenced by a subordinated promissory
note in a form reasonably satisfactory to the Administrative
Agent."
(ii) A new subsection 6.01(g) is hereby added to read as
follows:
"(g) Indebtedness of the U.S. Borrowers evidenced by
8.11% Guaranteed Senior Notes, Series A, Due 2009 in an
original principal amount of $35,000,000 and 8.21% Guaranteed
Senior Notes, Series B, Due 2011 in an original principal
amount of $40,000,000 and guaranties of said Indebtedness by
the Guarantors."
o. Section 6.03 - Amendment. Section 6.03 is hereby
deleted in its entirety and the following substituted therefor:
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<PAGE> 11
"Section 6.03 Derivatives. The Borrowers shall not,
and shall not permit any of their Subsidiaries to, enter into
any Derivatives other than interest rate and foreign exchange
Derivatives entered into for purposes of hedging bona fide
interest and foreign exchange risk and not for speculation.
Any Derivative Agreements entered into with any of the Banks
shall be considered Loan Documents and any Borrowers'
Obligations therewith shall be guaranteed by the Guaranties."
p. Section 6.04 - Amendment. (i) Section 6.04(a) is
hereby deleted in its entirety and the following substituted therefor:
"(a) Fixed Charge Coverage Ratio. As of the last day
of any month, the Parent will not permit the ratio of (i) its
consolidated EBITDA for the twelve (12) month period then
ended calculated on a rolling twelve (12) month basis to (ii)
its consolidated Fixed Charges for such twelve month period to
be less than 1.4 to 1.0 during the term hereof. In calculating
the Fixed Charge Coverage Ratio subsequent to the date of the
Amendment, for any acquisition accounted for on a pooling
basis the historical EBITDA and Fixed Charges of the acquired
company, for the preceding twelve (12) months (or other
relevant calculation period) as shown by said acquired
company's most recent audited financial statements (when
available) and subsequent unaudited interim statements, shall
be included as of the date of such acquisition (or next month
or quarter-ending period)."
(ii) Section 6.04(b) is hereby deleted in its entirety and the
following is substituted therefor:
"(b) Indebtedness-to-EBITDA Ratio. As of any date of
determination, the Parent will not permit the ratio of (i) its
total consolidated Indebtedness as of the last day of the
fiscal quarter immediately preceding the date of determination
to (ii) its consolidated EBITDA for the twelve month period
ending on the last day of the quarter immediately preceding
the date of determination, calculated on a rolling twelve (12)
month basis, to be greater than (A) 3.0 to 1.0 from the date
of the Amendment through June 30, 2001, (B) 2.5 to 1.0 from
July 1, 2001 through June 30, 2003, and (C) 2.0 to 1.0 from
July 1, 2003 through the Termination Date. In calculating the
Indebtedness to EBITDA Ratio subsequent to the date of the
Amendment, the historical EBITDA of the acquired company for
the preceding twelve (12) months (or other relevant
calculation period) as shown by said acquired company's most
recent audited financial statements (when available) and
subsequent unaudited interim statements, shall be included, on
a pro forma basis, as of the date of such acquisition (or next
month or quarter-ending period)."
(iii) Section 6.04(c) is hereby deleted in its entirety and
the following is substituted therefor:
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<PAGE> 12
"(c) Minimum Net Worth. The Parent will not permit
consolidated Net Worth to at any time be less than the sum of
(i) $145,000,000.00 plus (ii) fifty percent (50%) of Net
Income for any fiscal quarter ending after the date of the
Amendment (excluding any such fiscal quarter in which Net
Income is a negative number), plus (iii) 75% of the net
proceeds or the net increase resulting from any issuance of
any stock of the Parent or any sale or issuance of any stock
of any Subsidiary (if such sale or issuance is otherwise
permitted herein) after the date of the Amendment."
q. Section 6.07 - Amendment. (i) Section 6.07(f) is
hereby deleted in its entirety and the following is substituted
therefor:
"(f) Capital Expenditures (including Capital Leases,
but excluding Capital Expenditures through the date of
acquisition of any Person accounted for as a pooling of
interests) of not more than (i) $12,500,000 during the
remainder of calendar year 1999; (ii) $25,000,000 for calendar
year 1999 and (iii) increasing by 10% per annum for each
calendar year subsequent to 1999 during the term hereof;"
(ii) Section 6.07 is hereby amended by deleting paragraph
(g) thereof and replacing it with the following:
"(g) acquisitions (each, a "Permitted Acquisition")
by the Parent or any of its Subsidiaries of capital stock or
other equity interests in any other Person the consideration
for which is: (i) common stock of the Parent or (ii) cash of
not more than $20,000,000.00 in any single acquisition,
including assumption of debt during the term hereof; provided
that (1) the total consideration paid for any such individual
acquisition not exceed $50,000,000.00, (2) the Borrowers
remain in compliance with all financial covenants set forth in
the Loan Documents on a pro forma basis, (3) no Default exists
or would occur as a result of such acquisition, and (4) the
Person that is the subject of the acquisition operates a
business that is the same as or substantially similar to the
Business of the Parent or an existing Subsidiary;"
r. Section 6.11 - Prepayment of Indebtedness. A new
Section 6.11 is hereby added to read as follows:
"Section 6.11 Payment of Indebtedness. None of the
Borrowers nor any of their Subsidiaries will prepay any
Indebtedness permitted under Section 6.01(g) hereof (except in
accordance with regularly scheduled payments required by the
terms thereof) nor will they establish any sinking fund for
such purpose or in any other manner defease or beneficially
prepay such Indebtedness provided, said parties may prepay
such Indebtedness, notwithstanding the restrictions otherwise
imposed in Section 6.07, if: (i), such prepayment is completed
at a discount to the face value of the Indebtedness so prepaid
as of the date of such prepayment, (ii) simultaneously
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<PAGE> 13
therewith, said prepaying party prepays a pro rata amount (as
determined by the Administrative Agent in its sole discretion)
of the Obligations owing in respect of the Revolving Loans and
(iii) no Default or Event of Default has occurred hereunder
and is continuing."
s. Section 10.18. A new Section 10.18 is hereby added
to the Credit Agreement to read as follows:
"Section 10.18 Euro. (i) If, at any time
that a Guilder Revolving Loan is outstanding, Dutch Guilders
are fully replaced as the lawful currency of the Netherlands
by the Euro so that all payments are to be made in the
Netherlands in Euros and not in Dutch Guilders, then each such
Guilder Revolving Loan shall be automatically converted into a
Loan denominated in Euros in a principal amount equal to the
amount of Euros into which the principal amount of such
Guilder Revolving Loan would be converted pursuant to the EMU
Legislation and thereafter no further Loans will be available
in Dutch Guilders but Loans in Euros shall be thereafter
available in the same maximum aggregate equivalent in Dollars
as was applicable to Guilder Revolving Loans with the basis of
accrual of interest, notice requirements and payment offices
with respect to such converted Loans to be consistent with the
convention and practices in the London interbank market for
Euro denominated Loans at the time of conversion as reasonably
determined by the Administrative Agent."
t. Section 10.19. A new Section 10.19 is hereby added
to the Credit Agreement to read as follows:
"Section 10.19 Pro Rata Treatment. Notwithstanding
any other provisions contained herein, all parties hereto
recognize that the Loans are held by the Banks in varying
percentages and that not each member of the Bank Group
participates in each Loan. Accordingly, when the term "pro
rata" is used in regard to making payments by the Borrowers or
distributing payments by the Administrative Agent, it shall
mean that each Bank receives its share of such payment pro
rata within each Loan in which it participates."
u. Release of Pledge Agreements. Each Agent and Bank
hereby authorizes and directs the Administrative Agent to release, and
hereby releases, all property which is Collateral for the Obligations
of the Credit Parties under the Credit Agreement and the other Loan
Documents. The Administrative Agent, on behalf of the Bank Group hereby
terminates in their entirety each of the Pledge Agreements, reassigns
and releases all of the shares pledged thereunder, and agrees that,
from the date of this Agreement, the Pledge Agreements shall be of no
further force or effect, provided such release shall not invalidate or
in any way affect, the Guaranty Agreements or any Person's liabilities
or obligations under the Guaranty Agreements. The Administrative Agent
agrees to execute such other documents and take any
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<PAGE> 14
such steps as any of the Borrowers may reasonably request to effect the
terns of this Section, all at the expense of the requesting Borrower.
v. (a) The Commitments of each of the Banks shown on the
signature pages of the Credit Agreement are hereby deleted and replaced
with the new amounts shown on the signature pages to this Amendment.
(b) The exhibits attached to this Amendment supersede and
replace the comparable, marked Exhibits to the Credit Agreement.
(c) All references to Tranche A Loans, Tranche B Loans,
Guilder Swing Line Loans, Collateral, Pledge Agreements, Security
Documents and related items are generally modified and/or deleted, as
appropriate, to comport with the intent of the parties as expressed
herein.
(d) All references to the Borrowers shall no longer include
the UK Borrower and references to the UK Borrower shall instead be to a
Guarantor or a Credit Party, as the context requires to comport with
the intent of the parties as expressed herein.
(e) The certificates required by Section 5.01(a)(ii) and
5.01(c) shall be combined into the form attached hereto as
Exhibit 5.01.
w. Annex A - Amendment.
(i) The following definitions are hereby added
to the Annex of definitions to read as follows:
A. "Amendment" shall mean that certain
Amendment to Amended and Restated Credit Agreement,
dated July ____, 1999, by and among the Borrowers,
the Guarantors, the Banks and the Agents, which
Amendment, among other things, amended certain
provisions of this Agreement."
B. "Dollar Swing Line Commitment" means the
obligation of the Dollar Swing Line Banks to make the
Dollar Swing Line Loans pursuant to Section 2.01(h),
and is part of the "Dollar Revolving Commitment."
C. "Dollar Swing Line Loan" has the meaning
specified in Section 2.01(h).
D. "Dollar Swing Line Note" means a
promissory note of the US Borrower payable to the
order of a Dollar Swing Line Bank substantially in
the form of Exhibit 2.04(e) evidencing the aggregate
indebtedness of the US
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<PAGE> 15
Borrower to such Dollar Swing Line Bank resulting
from the Dollar Swing Line Loans made by such Dollar
Swing Line Bank together with all modifications,
extensions, renewals, and rearrangements thereof from
time to time in effect.
E. "Dollar Swing Line Banks" means Bankers
Trust Company and any other Banks so designated as
Dollar Swing Line Banks from time to time hereunder.
F. "EMU Legislation" shall mean the
legislative measures of the European Council for the
introduction of, changeover to or operation of a
single or unified European currency."
G. "Euro" shall mean the European Monetary
Unit issued pursuant to the terms of the EMU
Legislation."
H. "Guilder Revolving Loan Bank" means
Bankers Trust Company, its successors and assigns.
I. "Information Systems and Equipment" means
all material computer hardware and software, as well
as other information processing systems, or any
equipment containing embedded microchips, whether
directly owned, licensed, leased, operated or
otherwise controlled by the Borrowers or any of their
Subsidiaries, including through third-party service
providers, and which, in whole or in part, are
integral to, the Borrowers' or any of their
Subsidiaries' conduct of their business."
J. "Permitted Acquisition" has the meaning
specified in Section 6.07(g)."
K. "Refunded Dollar Swing Line Loan" has the
meaning specified in Section 2.01(h)."
L. "Year 2000 Compliant" means that all
Information Systems and Equipment accurately process
date data (including, but not limited to,
calculating, comparing and sequencing), before,
during and after the year 2000, as well as same and
multi-century dates, or between the years 1999 and
2000, taking into account all leap years, including
the fact that the year 2000 is a leap year, and
further, that when used in combination with, or
interfacing with, other Information Systems and
Equipment, shall accurately accept, release and
exchange date data, and shall in all material
respects continue to function in the same manner as
it performs today and shall not otherwise impair the
accuracy or functionality of Information Systems and
Equipment."
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<PAGE> 16
(ii) The hereinafter listed definitions are hereby
deleted from the Annex of definitions and the following
substituted therefor:
A. "Applicable Margin" has the meaning
specified in Section 2.07(c)."
B. "Base Rate Loan" means a Dollar Revolving
Loan that the applicable Borrower has designated, or
is deemed to have designated, as such in accordance
with Article II and shall include all Dollar Swing
Line Loans, all as shown on the signature page of
such Bank to the Amendment."
C. "Borrowing" means a Revolving Borrowing."
D. "Commitment" means as to any Bank, the
sum of such Bank's Dollar Revolving Commitment,
Guilder Revolving Commitment and, in the case of the
Dollar Swing Line Banks, the Dollar Swing Line
Commitment."
E. "Dollar Revolving Commitment" means the
amount set forth under the caption "Dollar Revolving
Commitment" for each Bank on the signature pages to
the Amendment, as such amount may be increased
pursuant to this Agreement."
F. "Dollar Revolving Loan" means a Revolving
Loan to the US Borrower made in US Dollars pursuant
to Section 2.01(c)."
G. "EBITDA" means for any period, (a) the
sum of the following: (i) the Net Income for such
period, (ii) the amount of amortization or write-off
of deferred financing costs which were deducted from
gross income in determining such Net Income for such
period, (iii) the amount of depreciation and
amortization expense which was deducted from gross
income in determining such Net Income for such
period, (iv) the amount of Interest Expense which was
deducted in the calculation of such Net Income for
such period, (v) the amount of income taxes deducted
in the calculation of such Net Income for such
period, and (vi) any writedowns of assets or similar
non-recurring, non cash items deducted in the
calculation of Net Income for such period less, (b)
(1) any interest income included in the calculation
of Net Income for such period, (2) the amount of
gains on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary
gains which were added in the calculation of such Net
Income for such period, and (3) other cash flow of
non-Credit Parties that is not available to any of
the Borrowers due to currency controls, limits on
dividend or profit repatriations, local tax
requirements or similar laws or regulations, all as
determined on a consolidated basis in accordance with
GAAP.
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<PAGE> 17
H. "Eurocurrency Rate" means, with respect
to each Interest Period for each Eurocurrency Rate
Loan, the quotient of (a) (i) the composite offered
rate for London interbank deposits (rounded to the
nearest 1/16 of 1%) for deposits of US dollars, Dutch
Guilders or Euros, as applicable, for a period
equivalent to the Interest Period to be applicable to
such Eurocurrency Rate Loan, determined as of 11:00
a.m. (London time) on the date which is two (2)
Business Days prior to the commencement of such
Interest Period in the case of a Eurodollar Rate Loan
denominated in Dollars and three (3) Business Days
prior to the commencement of such Interest Period in
the case of a Eurocurrency Rate Loan denominated in a
Foreign Currency, and which, at the sole option of
the Administrative Agent, may be the rate which is
displayed on Telerate page 3750 (British Bankers'
Association Interest Settlement Rates) or such other
page as may replace such page 3750 or otherwise be
applicable on such system; or (ii) if the rate in
clause (i) is not so displayed on such date, or the
Administrative Agent chooses not to use such screen
shall be the arithmetic average (rounded to the
nearest 1/16 of 1%) of the offered quotation to
first-class banks in the interbank Eurocurrency
market by the Administrative Agent for deposits of
Dollars, Dutch Guilders or Euros, as applicable, of
an amount in same day funds comparable to the
outstanding principal amount of the Eurocurrency Rate
Loan of the Administrative Agent (in its capacity as
a Bank) for which an interest rate is then being
determined with maturities comparable to the Interest
Period to be applicable to such Eurocurrency Rate
Loan, determined as of 10:00 a.m. (New York time) on
the date which is two Business Days in the case of
Eurocurrency Rate Loans denominated in Dollars and
three (3) Business Days in the case of Eurocurrency
Rate Loans denominated in a Foreign Currency prior to
the commencement of such Interest Period, divided
(and rounded upward to the next whole multiple of
1/16 of 1%) by (b) a percentage equal to 100% minus
the then stated maximum rate of all reserve
requirements (including without limitation, any
marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the
Federal Reserve System in respect of "Eurocurrency
liabilities" as defined in Regulation D of the Board
of Governors of the Federal Reserve System (or any
successor category of liabilities under Regulation
D)."
I. "Guilder Revolving Commitment" means the
amount set forth on the signature page of the Guilder
Revolving Loan Bank to the Amendment, as amended from
time to time.
J. "Loan Documents" means this Agreement,
the Notes, the Letters of Credit, the Guaranty
Agreements and all other agreements, instruments and
documents, including, without limitation, notes,
warrants, guaranties, subordination agreements,
powers of attorney, consents, the
-17-
<PAGE> 18
Subordination Agreement, letter agreements,
contracts, notices, leases, amendment, Letter of
Credit applications and reimbursement agreements, any
documents executed by any of the Borrowers with any
of the Banks evidencing any obligations in respect of
any Derivative, and all other writings heretofore,
now, or hereafter executed by or on behalf of a
Borrower or any of its Subsidiaries, any of their
respective Affiliates or any other Person in
connection with or relating to this Agreement,
together with all agreements, instruments and
documents referred to therein or contemplated
thereby."
K. "Notes" means the Revolving Notes."
L. "Revolving Borrowing" means a group of
Revolving Loans of a single Type made by the Banks,
or Converted into such, as applicable, on a single
date and may be a Dollar Revolving Loan, a Dollar
Swing Line Loan or a Guilder Revolving Loan and, in
the case of a Revolving Loan that is also a
Eurocurrency Rate Loan, as to which a single Interest
Period is in effect."
M. "Revolving Loan" means Dollar Revolving
Loans, Dollar Swing Line Loans and Guilder Revolving
Loans."
N. "Revolving Notes" means Dollar Revolving
Notes, Dollar Swing Line Notes and Guilder Revolving
Notes."
O. "Termination Date" means June 30, 2004 or
, in the case of the Revolving Commitments, such
earlier date on which the Revolving Commitments are
terminated pursuant to Section 2.05 or Section 7.01."
P. "Total Dollar Revolving Commitment"
means, as of any date, an amount equal to the sum of
the Banks' Dollar Revolving Commitments as of such
date (inclusive of the Dollar Swing Line
Commitments), which shall never exceed $95,000,000.00
in the aggregate."
2. Waiver of Violations of Section 5.10. Any violation
of the terms of Section 5.10 prior to the date of this Amendment is hereby
waived through the date of this Amendment but not otherwise.
3. Representations and Warranties. Each Borrower and
Guarantor hereby represents and warrants to the Administrative Agent and Banks
that (a) this Amendment has been duly executed and delivered on behalf of each,
(b) this Amendment constitutes a valid and legally binding agreement enforceable
against each in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting the enforcement of
creditors' rights generally, and by general principles of equity regardless of
whether such enforceability is a proceeding in equity
-18-
<PAGE> 19
or at law, (c) the representations and warranties contained in the Credit
Agreement as modified hereby are true and correct on and as of the date hereof
as though made as of the date hereof except as heretofore otherwise disclosed in
writing to the Administrative Agent (other than those of such representations
and warranties which by their express terms speak to a date on or before the
date hereof), (d) no Default or Event of Default exists under the Credit
Agreement or any of the Loan Documents as modified hereby, and (e) the
execution, delivery and performance of this Amendment has been duly authorized
by all Borrowers and Guarantors, by all appropriate corporate action and does
not violate any of their respective charters or bylaws. Said parties will
provide evidence to the Administrative Agent of the items contained in
sub-sections (a) and (e) of this Section 3.
4. Reference to the Credit Agreement and Effect on the Notes
and Other Documents executed pursuant to the Credit Agreement.
(a) Upon the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement," "hereunder," "herein," "hereof" or
words of similar import shall mean and be a reference to the Credit Agreement,
as amended hereby.
(b) Upon the effectiveness of this Amendment, each reference
in the Notes, the Security Documents and the other Loan Documents delivered or
to be delivered pursuant to the Credit Agreement shall mean and be a reference
to the Credit Agreement as amended hereby.
5. Ratification of Credit Agreement and Other Loan Documents
and Release.
(a) Each party hereto hereby confirms and ratifies the Credit
Agreement and each of the other Loan Documents as amended hereby and
acknowledges and agrees that the same shall continue in full force and effect as
amended hereby. Each Guarantor hereby reaffirms its Guaranty and agrees that
such is still in effect, in regard to the Credit Agreement and the Obligations,
as amended hereby. The Parent specifically affirms that its Guaranty is in
effect in regard to the full amount of Dollar Revolving Loans, notwithstanding
the cancellation of the Tranche A and Tranche B Loans, and that it is
unconditionally, jointly and severally liable for the repayment thereof. Each of
the undersigned parties not previously a party to the Credit Agreement expressly
assumes all duties, Obligations and liabilities of a Guarantor under the Credit
Agreement as if it had executed a Guaranty Agreement and, by its execution
hereof, hereby acknowledges said duties, Obligations and liabilities.
(b) The Administrative Agent and each of the Banks hereby
releases any of the Guarantors under the Credit Agreement who are not
signatories to this Amendment from any liability under its Guaranty.
6. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
-19-
<PAGE> 20
7. Release. Each of the Borrowers and each of the Guarantors
does hereby release and forever discharge the Administrative Agent and each of
the Banks and each affiliate thereof and each of their respective employees,
officers, directors, trustees, agents, attorneys, successors, assigns or other
representatives from any and all claims, demands, damages, actions,
cross-actions, causes of action, costs and expenses (including legal expenses),
of any kind or nature whatsoever, whether based on law or equity, which any of
said parties has held or may now or in the future own or hold, whether known or
unknown, for or because of any matter or thing done, omitted or suffered to be
done on or before the actual date upon which this Amendment is signed by any of
such parties (a) arising directly or indirectly out of the Loan Documents, or
any other documents, instruments or any other transactions relating thereto
and/or (b) relating directly or indirectly to all transactions by and between
the Borrowers, their Subsidiaries, or their representatives and the
Administrative Agent and each Bank or any of their respective directors,
officers, agents, employees, attorneys or other representatives. Such release,
waiver, acquittal and discharge shall and does include, without limitation, any
claims of usury, fraud, duress, misrepresentation, lender liability, control,
exercise of remedies and all similar items and claims, which may, or could be,
asserted by any of the Borrowers or the Guarantors.
8. Counterparts. This Amendment may be signed in any number of
counterparts, and delivered in facsimile or in original document form, each of
which shall be construed as an original, but all of which together shall
constitute one and the same instrument.
9. Conditions to Effectiveness. This Amendment shall become
effective immediately upon (a) the execution and delivery to the Administrative
Agent of: (i) signed originals hereof by all parties, (ii) Guaranty Agreements
from all Subsidiaries becoming Guarantors pursuant to Section 5.10, (iii)
executed Notes in favor of any new Banks and other Banks, as required,
evidencing the indebtedness described in the Credit Agreement (including,
without limitation, Dollar Swing Line Notes), and (iv) an opinion from: (Y)
Vinson & Elkins LLP and (Z) John Denson, general counsel to the Credit Parties,
in respect hereof reasonably satisfactory to the Administrative Agent; and (b)
payment by the Borrowers of (i) the fee referenced in Section 2.10, above, (ii)
all amounts outstanding under the Tranche A Loan, the Tranche B Loan and the
Guilder Swing Line Loan and (iii) all fees, costs and expenses due and owing to
the Administrative Agent or any of the Banks, as provided herein, provided, this
Amendment shall not become effective unless the representations and warranties
contained in Section 3 of this Amendment shall be true and correct in all
material respects.
10. GOVERNING LAW. THIS AMENDMENT (INCLUDING THE VALIDITY AND
ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
11. FINAL AGREEMENT OF THE PARTIES. THIS AMENDMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
-20-
<PAGE> 21
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
[Signature Pages Follow]
-21-
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BORROWERS:
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., ITS SOLE MANAGING DIRECTOR
By: /s/ Jacobus Schouten
-----------------------------------------
Name: Jacobus Schouten
Title: Managing Director
CORE LABORATORIES, INC.
By: /s/ Richard L. Bergmark
-----------------------------------------
Richard L. Bergmark
Executive Vice President
<PAGE> 23
GUARANTORS:
CORE LABORATORIES N.V. BY: CORE LABORATORIES
INTERNATIONAL B.V., ITS SOLE MANAGING DIRECTOR
By: /s/ Jacobus Schouten
----------------------------------------
Name: Jacobus Schousten
Title: Managing Director
CORE LABORATORIES, INC.
By: /s/ Richard L. Bergmark
----------------------------------------
Richard L. Bergmark
Executive Vice President
SAYBOLT INTERNATIONAL B.V.
By: /s/ Jan Heinsbroek
----------------------------------------
Name: Jan Heinsbroek
Title: Managing Director
SAYBOLT INC.
SAYBOLT NORTH AMERICA, INC.
By: /a/ Monty L. Davis
----------------------------------------
Name: Monty L. Davis
Title: President
SAYBOLT NEDERLAND B.V.
By: /s/ Jan Heinsbroek
----------------------------------------
Name: Jan Heinsbroek
Title: Managing Director
OWEN OIL TOOLS, INC.
By: /s/ David S. Wesson
----------------------------------------
Name: David S. Wesson
Title: President
THE ANDREWS GROUP INTERNATIONAL, INC.
By: /s/ Robert Andrews
----------------------------------------
Name: Robert Andrews
Title: President & CEO
AGI MEXICANA, DE S.A.
By: /s/ R. L. Bergmark
----------------------------------------
Name: R. L. Bergmark
Title: Authorized Representative
<PAGE> 24
BANKS:
Tranche A Commitment: Terminated BANKERS TRUST COMPANY
Tranche B Commitment: Terminated
Dollar Revolving Commitment: $13,500,000
Guilder Revolving Commitment:
$5,000,000 Equivalent By: /s/ Marcus M. Tarkington
Guilder Swing Line --------------------------
Commitment: Terminated Name: Marcus M. Tarkington
Dollar Swing Line Commitment: $10,000,000.00 Title: Director
Address:
130 Liberty Street, 14th Floor
New York, New York 10006
Telecopy No.: (212) 250-6029
Domestic Lending Office:
Bankers Trust
130 Liberty Street, 14th Floor
New York, New York 10006
Eurocurrency Lending Office:
Bankers Trust
130 Liberty Street, 14th Floor
New York, New York 10006
ADMINISTRATIVE AGENT:
BANKERS TRUST COMPANY
By: /s/ Marcus M. Tarkington
--------------------------
Name: Marcus M. Tarkington
Title: Director
<PAGE> 25
Tranche A Commitment: Terminated BANK OF AMERICA, N.A., FORMERLY
Tranche B Commitment: Terminated KNOWN AS NATIONSBANK, N.A.
Dollar Revolving Commitment: $18,500,000.00
Guilder Revolving Commitment:
0 Equivalent
Guilder Swing Line By: /s/ Patrick M. Delaney
Commitment: Terminated ----------------------------
Patrick M. Delaney
Managing Director
Address:
700 Louisiana, 8th Floor
Houston, Texas 77002
Telecopy No.: (713) 247-6568
Domestic Lending Office:
Bank of America, N.A.
Attn: Paul Colon
901 Main Street
Dallas, Texas 75202
Telecopy No.: (713) 651-4834
Eurocurrency Lending Office:
Bank of America, N.A.
Attn: Paul Colon
901 Main Street
Dallas, Texas 75202
Telecopy No.: (713) 651-4834
SYNDICATION AGENT:
BANK OF AMERICA SECURITIES LLC.,
as Syndication Agent and as
Issuing Bank
By: /s/ Jeff Susman
----------------------------
Jeff Susman
Principal
<PAGE> 26
Tranche A Commitment: Terminated CIBC INC.
Tranche B Commitment: Terminated
Dollar Revolving Commitment: $18,000,000.00
Guilder Revolving Commitment:
0 Equivalent
By: /s/ Roger Colden
----------------------------
Name: Roger Colden
Title: Authorized Signatory
Address:
1600 Smith Street
Houston, Texas 77002
Telecopy No.: (713) 650-7675
Domestic Lending Office:
2 Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Eurocurrency Lending Office:
2 Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
<PAGE> 27
Tranche A Commitment: Terminated BANK ONE, LOUISIANA, N.A., AS
Tranche B Commitment: Terminated SUCCESSOR TO FIRST NATIONAL BANK
Dollar Revolving Commitment: $15,000,000.00 OF COMMERCE
Guilder Revolving Commitment:
0 Equivalent
By: /s/ J. Charles Freel, Jr.
-----------------------------
Name: J. Charles Freel, Jr.
Title: Senior Vice President
Address:
201 St. Charles Ave., 29th Floor
New Orleans, Louisiana 70170
Telecopy No.: (504) 623-6555
Domestic Lending Office:
201 St. Charles Ave., 29th Floor
New Orleans, Louisiana 70170
Telecopy No.: (504) 623-6555
Eurocurrency Lending Office:
201 St. Charles Ave., 29th Floor
New Orleans, Louisiana 70170
Telecopy No.: (504) 623-6555
<PAGE> 28
Tranche A Commitment: Terminated BANQUE NATIONALE DE PARIS
Tranche B Commitment: Terminated
Dollar Revolving Commitment: $10,000,000.00
Guilder Revolving Commitment:
0 Equivalent
By: /s/ Warren Ross
---------------------------------
Name: Warren Ross
Title: Assistant Vice President
Address:
333 Clay Street, Suite 3400
Houston, Texas 77002
Telecopy No.: (713) 659-1414
Domestic Lending Office:
333 Clay Street, Suite 3400
Houston, Texas 77002
Telecopy No.: (713) 659-1414
Eurocurrency Lending Office:
333 Clay Street, Suite 3400
Houston, Texas 77002
Telecopy No.: (713) 659-1414
<PAGE> 29
Tranche A Commitment: Terminated ABN AMRO BANK, N.V.
Tranche B Commitment: Terminated
Dollar Revolving Commitment: $15,000,000.00
Guilder Revolving Commitment:
0 Equivalent
By: /s/ Brandi Lippincott
------------------------------
Name: Brandi Lippincott
Title: Assistant Vice President
By: /s/ Stuart Murray
------------------------------
Name: Stuart Murray
Title: Vice President
Address:
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopy No.: (713) 621-5801
Domestic Lending Office:
208 South LaSalle, Suite 1500
Chicago, Illinois 60604-1003
Attn: Loan Administration
Telecopy No.: (312) 992-5157
Phone No.: (312) 992-5152
Eurocurrency Lending Office:
208 South LaSalle, Suite 1500
Chicago, Illinois 60604-1003
Attn: Loan Administration
Telecopy No.: (312) 992-5157
Phone No.: (312) 992-5152
<PAGE> 30
Tranche A Commitment: Terminated COMERICA BANK
Tranche B Commitment: Terminated
Dollar Revolving Commitment: $5,000,000.00
Guilder Revolving Commitment:
0 Equivalent
By: /s/ Brian J. Walsh
------------------------------
Name: Brian J. Walsh
Title: AVP
Address:
6260 East Mockingbird Lane
2nd Floor Mail Code 6592
Dallas, Texas 75214
Telecopy No. (214) 827-9817
Domestic Lending Office:
Telecopy No.:
Eurocurrency Lending Office:
Telecopy No.:
<PAGE> 1
EXHIBIT 10.7
EXECUTION COPY
===============================================================================
CORE LABORATORIES, INC., as Issuer
CORE LABORATORIES N.V., as Guarantor
8.11% Guaranteed Senior Notes, Series A, due 2009
8.21% Guaranteed Senior Notes, Series B, due 2011
----------------------------
NOTE AND GUARANTEE AGREEMENT
----------------------------
Dated as of July 22, 1999
===============================================================================
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. AUTHORIZATION OF NOTES..................................................................1
1.1. The Notes....................................................................1
1.2. The Guarantees...............................................................1
2. SALE AND PURCHASE OF NOTES..............................................................2
3. CLOSING.................................................................................2
4. CONDITIONS TO CLOSING...................................................................3
4.1. Representations and Warranties...............................................3
4.2. Performance; No Default......................................................3
4.3. Compliance Certificates......................................................3
4.4. Opinions of Counsel..........................................................3
4.5. Subsidiary Guarantees........................................................4
4.6. Purchase Permitted by Applicable Law, etc....................................4
4.7. Sale of Notes to Other Purchasers............................................4
4.8. Payment of Special Counsel Fees..............................................4
4.9. Private Placement Numbers....................................................5
4.10. Changes in Corporate Structure..............................................5
4.11. Proceedings and Documents...................................................5
5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE COMPANY............................5
5.1. Organization; Power and Authority............................................5
5.2. Authorization, etc...........................................................6
5.3. Disclosure...................................................................6
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.............7
5.5. Financial Statements.........................................................7
5.6. Compliance with Laws, Other Instruments, etc.................................8
5.7. Governmental Authorizations, etc.............................................8
5.8. Litigation; Observance of Agreements, Statutes and Orders....................8
5.9. Taxes. 9
5.10. Title to Property; Leases..................................................10
5.11. Licenses, Permits, Y2K, etc................................................10
5.12. Compliance with ERISA......................................................11
5.13. Private Offering...........................................................12
5.14. Use of Proceeds; Margin Regulations........................................13
5.15. Existing Indebtedness; Future Liens........................................13
5.16. Foreign Assets Control Regulations, etc....................................14
5.17. Status Under Certain Statutes..............................................14
5.18. Environmental Matters......................................................14
6. REPRESENTATIONS OF THE PURCHASER.......................................................15
6.1. Purchase of Notes...........................................................15
6.2. Source of Funds.............................................................15
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
7. INFORMATION AS TO COMPANY..............................................................16
7.1. Financial and Business Information..........................................16
7.2. Officer's Certificate.......................................................19
7.3. Inspection..................................................................19
8. PREPAYMENT OF THE NOTES................................................................20
8.1. Required Prepayments........................................................20
8.2. Optional Prepayments........................................................21
8.3. Prepayment in Connection with a Change of Control and Debt Downgrade........21
8.4. Allocation of Partial Prepayments...........................................22
8.5. Maturity; Surrender, etc....................................................22
8.6. Purchase of Notes...........................................................23
8.7. Make-Whole Amount...........................................................23
9. AFFIRMATIVE COVENANTS..................................................................25
9.1. Compliance with Law.........................................................25
9.2. Insurance...................................................................25
9.3. Maintenance of Properties...................................................25
9.4. Payment of Taxes and Claims.................................................26
9.5. Corporate Existence, etc....................................................26
9.6. Additional Subsidiary Guarantees; Release of Subsidiary Guarantees..........26
10. NEGATIVE COVENANTS....................................................................27
10.1. Total Indebtedness; Subsidiary Indebtedness................................27
10.2. Liens. 29
10.3. Limitation on Sale and Leaseback Transactions..............................30
10.4. Maintenance of Net Worth...................................................31
10.5. Merger, Consolidation, Amalgamation, etc...................................31
10.6. Lines of Business..........................................................33
10.7. Transactions with Affiliates...............................................33
11. EVENTS OF DEFAULT.....................................................................33
12. REMEDIES ON DEFAULT, ETC..............................................................36
12.1. Acceleration...............................................................36
12.2. Other Remedies.............................................................37
12.3. Rescission.................................................................37
12.4. No Waivers or Election of Remedies, Expenses, etc..........................37
13. TAX INDEMNIFICATION...................................................................38
14. PARENT GUARANTEE......................................................................39
14.1. Guarantee..................................................................39
14.2. Subrogation and Contribution...............................................41
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.........................................42
15.1. Registration of Notes......................................................42
15.2. Transfer and Exchange of Notes.............................................42
15.3. Replacement of Notes.......................................................43
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
16. PAYMENTS ON NOTES.....................................................................43
16.1. Place of Payment...........................................................43
16.2. Home Office Payment........................................................44
17. EXPENSES, ETC.........................................................................44
17.1. Transaction Expenses.......................................................44
17.2. Survival...................................................................45
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........................45
19. AMENDMENT AND WAIVER..................................................................45
19.1. Requirements...............................................................45
19.2. Solicitation of Holders of Notes...........................................46
19.3. Binding Effect, etc........................................................46
19.4. Notes held by the Issuer, etc..............................................47
20. NOTICES...............................................................................47
21. REPRODUCTION OF DOCUMENTS.............................................................48
22. CONFIDENTIAL INFORMATION..............................................................48
23. SUBSTITUTION OF PURCHASER.............................................................49
24. MISCELLANEOUS.........................................................................50
24.1. Successors and Assigns.....................................................50
24.2. Construction...............................................................50
24.3. Jurisdiction and Process; Waiver of Jury Trial; Judgment Currency..........50
24.4. Payments Due on Non-Business Days..........................................52
24.5. Severability...............................................................52
24.6. Accounting Terms; Pro Forma Calculations...................................52
24.7. Counterparts...............................................................53
24.8. Governing Law..............................................................53
Exhibit 1.1(a) -- Form of 8.11% Guaranteed Senior Note,
Series A, due 2009
Exhibit 1.1(b) -- Form of 8.21% Guaranteed Senior Note,
Series B, due 2011
Exhibit 1.2 -- Form of Subsidiary Guarantee
Exhibit 4.4(a)(i) -- Form of Opinion of Special Counsel for
the Issuer and the Company
Exhibit 4.4(a)(ii) -- Form of Opinion of United States
Special Counsel for the Issuer and
the Company
Exhibit 4.4(a)(iii) -- Form of Opinion of Dutch Special
Counsel for the Company
Exhibit 4.4(b) -- Form of Opinion of Dutch Special Counsel for the Issuer
Exhibit 4.4(c) -- Form of Opinion of Special Counsel for
the Purchasers
Schedule A -- Names and Addresses of Purchasers
Schedule B -- Defined Terms
Schedule 5.3 -- Disclosure Documents
Schedule 5.4 -- Subsidiaries
Schedule 5.5 -- Financial Statements
Schedule 5.8 -- Litigation
Schedule 5.11 -- Licenses, etc.
Schedule 5.15 -- Existing Indebtedness
</TABLE>
(iii)
<PAGE> 5
CORE LABORATORIES, INC.
CORE LABORATORIES N.V.
8.11% Guaranteed Senior Notes, Series A, due 2009
8.21% Guaranteed Senior Notes, Series B, due 2011
As of July 22, 1999
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
CORE LABORATORIES, INC., a Delaware corporation (the "ISSUER"),
and CORE LABORATORIES N.V., a Netherlands limited liability company (the
"COMPANY" or the "PARENT"), jointly and severally agree with you as follows:
1. AUTHORIZATION OF NOTES.
1.1. THE NOTES.
The Issuer has duly authorized the issue and sale of $35,000,000
aggregate principal amount of its 8.11% Guaranteed Senior Notes, Series A, due
2009 (the "SERIES A NOTES") and $40,000,000 aggregate principal amount of its
8.21% Guaranteed Senior Notes, Series B, due 2011 (the "SERIES B NOTES" and,
together with the Series A Notes, the "NOTES"), such notes to be in the
respective form set out in Exhibits 1.1(a) and 1.1(b). As used herein, the term
"NOTES" shall mean all notes (irrespective of series unless otherwise specified)
originally delivered pursuant to this Agreement and the Other Agreements
referred to below and all notes delivered in substitution or exchange for any
such note and, where applicable, shall include the singular number as well as
the plural. The terms "NOTE", "SERIES A NOTE" and "SERIES B NOTE" mean one of
the Notes, Series A Notes and Series B Notes, respectively. Certain capitalized
and other terms used in this Agreement are defined in Schedule B; references to
a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or
an Exhibit attached to this Agreement.
1.2. THE GUARANTEES.
(a) The Notes and the obligations of the Issuer hereunder and
under the Other Agreements will be unconditionally guaranteed by the Parent,
which owns beneficially and of record
<PAGE> 6
all of the issued and outstanding capital stock of the Issuer, pursuant to a
parent guarantee contained in Section 14 of this Agreement and the Other
Agreements (the "PARENT GUARANTEE").
(b) The Notes and the obligations of the Issuer hereunder and
under the Other Agreements will also be unconditionally guaranteed by certain of
the Company's existing Subsidiaries, pursuant to subsidiary guarantees
substantially in the form of Exhibit 1.2 (individually a "SUBSIDIARY GUARANTEE"
and collectively the "SUBSIDIARY GUARANTEES", which terms shall include after
the date of the Closing all additional Subsidiary Guarantees from time to time
executed and delivered pursuant to Section 9.6).
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Issuer
will issue and sell to you and you will purchase from the Issuer, at the Closing
provided for in Section 3, Notes of the series and in the principal amount
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Issuer and the Company are entering into separate Note and Guarantee
Agreements (the "OTHER AGREEMENTS") identical with this Agreement with each of
the other purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for
the sale at such Closing to each of the Other Purchasers of Notes of the series
and in the principal amount specified opposite its name in Schedule A. Your
obligation hereunder and the obligations of the Other Purchasers under the Other
Agreements are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or non-performance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Willkie Farr & Gallagher, 787
Seventh Avenue, New York, NY 10019 at 10:00 a.m., New York time, at a closing
(the "CLOSING") on July 22, 1999, or on such other Business Day thereafter as
may be agreed upon by the Issuer and you and the Other Purchasers. At the
Closing the Issuer will deliver to you the Notes to be purchased by you in the
form of a single Note (or such greater number of Notes in denominations of at
least $100,000 as you may request prior to the Closing) dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Issuer or its order of immediately available funds in the
amount of the purchase price therefor by wire transfer of immediately available
funds for the account of the Issuer to account number 2662372753, at NationsBank
of Texas, N.A., ABA number 111-000-025.
2
<PAGE> 7
If at the Closing the Issuer shall fail to tender such Notes to
you as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction, prior to
or at the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Issuer and the Company
in this Agreement shall be correct when made and (unless specifically limited to
an earlier date) at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Issuer and the Company shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by them prior to or at the Closing and after giving
effect to the issue and sale of the Notes (and the application of the proceeds
thereof as contemplated by Section 5.14) no Default or Event of Default shall
have occurred and be continuing. Neither the Company nor any Subsidiary shall
have entered into any transaction since the date of the Memorandum that would
have been prohibited by Section 10.1 (without regard to the proviso in Section
10.1(a)), 10.2, 10.3, 10.5, 10.6 or 10.7 had such Sections applied since such
date.
4.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificates. Each of the Issuer and the Company
shall have delivered to you an Officer's Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.10
have been fulfilled.
(b) Secretary's Certificates. Each of the Issuer and the Company
shall have delivered to you a certificate of its Secretary or an Assistant
Secretary certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of this
Agreement and the Other Agreements and, in the case of the Issuer, the Notes.
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4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from (i) John D. Denson,
Esq., Vice President and General Counsel for the Issuer and the Company, (ii)
Vinson & Elkins L.L.P., United States special counsel for the Issuer and the
Company, and (iii) Nauta Dutihl, Dutch special counsel for the Company,
substantially in the respective forms set forth in Exhibits 4.4(a)(i),
4.4(a)(ii) and 4.4(a)(iii), and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Issuer and the Company hereby instruct their counsel to deliver such
opinions to you) and (b) from Willkie Farr & Gallagher, your special counsel in
connection with such transactions, substantially in the form set forth in
Exhibit 4.4(b) and covering such other matters incident to such transactions as
you may reasonably request.
4.5. SUBSIDIARY GUARANTEES.
A Subsidiary Guarantee, dated as of a date on or before the date
of the Closing, shall have been executed and delivered by each Subsidiary that
at the time is a borrower or guarantor under the Bank Credit Facility (sometimes
individually a "SUBSIDIARY GUARANTOR" and collectively the "SUBSIDIARY
GUARANTORS", which term shall include at any time after the date of the Closing
each other Subsidiary that theretofore executes and delivers a Subsidiary
Guarantee pursuant to Section 9.6 but shall exclude at such time any Subsidiary
or other Person theretofore released from its obligations as a Subsidiary
Guarantor pursuant to Section 9.6) in the form hereinabove recited and shall be
in full force and effect.
4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including without limitation
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
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4.7. SALE OF NOTES TO OTHER PURCHASERS.
The Issuer shall sell to the Other Purchasers and the Other
Purchasers shall purchase the Notes to be purchased by them at the Closing as
specified in Schedule A.
4.8. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 17.1, the Issuer shall
have paid on or before the Closing the reasonable fees, charges and
disbursements of your special counsel referred to in Section 4.4 to the extent
reflected in a statement of such counsel rendered to the Company at least one
Business Day prior to the Closing.
4.9. PRIVATE PLACEMENT NUMBERS.
A Private Placement Number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes of each series.
4.10. CHANGES IN CORPORATE STRUCTURE.
Neither the Issuer nor the Company shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation or
succeeded to all or any substantial part of the liabilities of any other entity
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
4.11. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE COMPANY.
The Issuer and the Company jointly and severally represent and
warrant to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Issuer is a corporation and the Company is a limited liability
company, in each case duly organized, validly
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existing and in good standing under the laws of its jurisdiction of formation,
and is duly qualified and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each of the
Issuer and the Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Other Agreements and (in the case of the Issuer) the Notes and
to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement and the Other Agreements and the Notes have been
duly authorized by all necessary corporate action on the part of the Issuer, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Issuer enforceable
against the Issuer in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). This
Agreement and the Other Agreements have been duly authorized by all necessary
corporate action on the part of the Company and this Agreement constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited as aforesaid.
5.3. DISCLOSURE.
The Company, through its agent, Credit Suisse First Boston
Corporation, has delivered to you a copy of a Confidential Offering Memorandum,
dated June 1999 (the "MEMORANDUM"), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and its
Subsidiaries. This Agreement, the Memorandum, the documents, certificates or
other writings delivered to you by an agent or authorized representative on
behalf of the Issuer and the Company in connection with the transactions
contemplated hereby and described in Schedule 5.3 (together with the Memorandum,
the "DISCLOSURE DOCUMENTS"), and the financial statements listed in Schedule
5.5, 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 not
misleading in light of the circumstances under which they were made. Since
December 31, 1998, there has been no change in the financial condition,
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operations, business or properties of the Company or any Subsidiary except
changes disclosed in the Disclosure Documents or in the financial statements
listed in Schedule 5.5 and other changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum or in the
other Disclosure Documents.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of the Company's (i) Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii)
Affiliates, other than Subsidiaries, and (iii) directors and senior officers.
Schedule 5.4 also identifies each Significant Subsidiary and each Subsidiary
that is a borrower or a guarantor under the Bank Credit Facility.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate power and authority to
own or hold under lease the properties it purports to own or hold under lease
and to transact the business it transacts and proposes to transact and, in the
case of each Subsidiary Guarantor, to execute and deliver and perform its
obligations under its respective Subsidiary Guarantee.
(d) No Subsidiary (other than the Issuer) is a party to, or
otherwise subject to any legal restriction or any agreement (other than this
Agreement, the agreements listed in Schedule 5.4 and customary limitations
imposed by corporate law or currency export limitation statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of
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its Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to you copies of the consolidated
financial statements of the Company and its Subsidiaries listed in Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Issuer of this
Agreement and the Notes, by the Company of this Agreement and by the Subsidiary
Guarantors of their respective Subsidiary Guarantees will not (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Issuer, the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other material
agreement or instrument to which the Issuer, the Company or any Subsidiary is
bound or by which the Issuer, the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Issuer, the Company or any Subsidiary or (iii) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Issuer, the Company or any Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required for the validity of
the execution, delivery or performance by the Issuer of this Agreement or the
Notes, by the Company of this Agreement or by the Subsidiary Guarantors of their
respective Subsidiary Guarantees.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the
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Issuer or the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
(a) The Issuer, the Company and the Company's other Subsidiaries
have filed all tax returns that are required to have been filed in any
jurisdiction, and have paid all Taxes shown to be due and payable on such
returns and all other taxes levied upon them or their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes (i)
currently payable without penalty or interest, (ii) the amount of which is not
individually or in the aggregate Material or (iii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the consolidated books of the Company and its Subsidiaries in respect of U.S.
or Dutch federal, state or provincial or other taxes for all fiscal periods are
adequate in all material respects. The U.S. federal income tax liabilities of
the Issuer have not been and currently are not the subject of any U.S. federal
tax audit.
(b) No liability for any tax (whether income, documentary, sales,
stamp, registration, issue, capital, property, excise or otherwise), duty, levy,
impost, fee, charge or withholding (each a "TAX" and collectively "TAXES")
directly or indirectly imposed, assessed, levied or collected by or for the
account of any Governmental Authority in The Netherlands, or to the knowledge of
the Issuer or the Company any other jurisdiction, will be incurred by the Issuer
or the Company, any Subsidiary Guarantor or any holder of a Note as a result of
the execution or delivery of this Agreement, the Notes or the Subsidiary
Guarantees and, based on present law, no deduction or
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withholding in respect of Taxes imposed by or for the account of any
Governmental Authority in The Netherlands, or to the knowledge of the Issuer or
the Company any other jurisdiction, is required to be made from any payment by
the Issuer under this Agreement or the Notes, by the Company under this
Agreement (including without limitation the Parent Guarantee) or by any
Subsidiary Guarantor under its respective Subsidiary Guarantee, other than
income taxes payable in respect of any such payment imposed by the United
States, any state thereof or any political subdivision or taxing authority
thereof or therein.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to
their respective real properties and good and sufficient title to their
respective other properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
listed on Schedule 5.5 or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of), in each
case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
5.11. LICENSES, PERMITS, Y2K, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, proprietary
software, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the
Company infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, proprietary software,
service mark, trademark, trade name or other right owned by any other
Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, proprietary
software, service mark, trademark, trade name or other right owned or
used by the Company or any of its Subsidiaries.
The Company and its Subsidiaries have (a) initiated a review and
assessment of all areas within their respective businesses and operations
(including those affected by information received from suppliers and vendors)
that could
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reasonably be expected to be adversely affected by the Year 2000 Problem, (b)
developed a plan and timetable for addressing the Year 2000 Problem on a timely
basis, and (c) to date, implemented that plan substantially in accordance with
that timetable. The Company reasonably believes that all computer applications
(including those affected by information received from its suppliers and
vendors) that are material to the businesses and operations of the Company and
its Subsidiaries will on a timely basis be Year 2000 Compliant, except to the
extent that a failure to be so could not reasonably be expected to have a
Material Adverse Effect. The Company does not believe that the costs to be
incurred after the date of this Agreement for the purpose of ensuring that the
Company and its Subsidiaries will be Year 2000 Compliant will be Material. As
used in this Agreement, the term "YEAR 2000 COMPLIANT" means all computer
applications (including those affected by information received from suppliers
and vendors) that are material to the businesses and operations of the Company
and its Subsidiaries will on a timely basis be able to perform properly
date-sensitive functions involving all dates on and after January 1, 2000; and
the term "YEAR 2000 PROBLEM" means the risk that computer applications used by
the Company or any of its Subsidiaries (including those affected by information
received from suppliers and vendors) may be unable to recognize and perform
properly date-sensitive functions involving certain dates on and after January
1, 2000.
5.12. COMPLIANCE WITH ERISA.
(a) The Issuer and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Issuer nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Issuer or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets of the Issuer
or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit
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liabilities by more than $10,000,000. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Issuer and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) With respect to each employee benefit plan, if any, disclosed
by you in writing to the Company in accordance with Section 6.2(c), neither the
Issuer nor the Company nor any "affiliate" of the Issuer or the Company (as
defined in Section V(c) of the QPAM Exemption) has at this time, nor has
exercised at any time during the immediately preceding year, the authority to
appoint or terminate the "QPAM" (as defined in Part V of the QPAM Exemption)
disclosed by you to the Company pursuant to Section 6.2(c) as manager of any of
the assets of any such plan or to negotiate the terms of any management
agreement with such QPAM on behalf of any such plan, and neither the Issuer nor
the Company is an "affiliate" (as so defined) of such QPAM. Neither the Issuer
nor the Company is a party in interest with respect to any employee benefit plan
disclosed by you in accordance with Section 6.2(b) or 6.2(e). The execution and
delivery of this Agreement and the issuance and sale of the Notes at the Closing
hereunder will not involve any prohibited transaction (as such term is defined
in section 406(a) of ERISA and section 4975(c)(1)(A)-(D) of the Code), that
could subject the Issuer or the Company or any holder of a Note to any tax or
penalty on prohibited transactions imposed under said section 4975 of the Code
or by section 502(i) of ERISA. The representation by the Issuer and the Company
in the preceding sentence of this Section 5.12(e) is made in reliance upon and
subject to the accuracy of your representation in Section 6.2 as to the source
of the funds used to pay the purchase price of the Notes to be purchased by you.
(f) All Foreign Plans have been established, operated,
administered and maintained in compliance with all laws, regulations and orders
applicable thereto except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material Adverse
Effect. All premiums, contributions and any other amounts required by applicable
Foreign Plan documents or applicable laws to be paid
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or accrued by the Company and its Subsidiaries, to the extent Material, have
been paid or accrued as required.
5.13. PRIVATE OFFERING.
Neither the Issuer nor the Company nor anyone acting on their
behalf has offered the Notes, the Parent Guarantee, the Subsidiary Guarantees or
any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than you, the Other Purchasers and not more than 40 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Issuer nor the Company nor anyone acting on
their behalf has taken, or will take, any action that would subject the issuance
or sale of the Notes or the issuance of the Parent Guarantee or the Subsidiary
Guarantees to the registration requirements of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Issuer will apply the net proceeds of the sale of the Notes to
repay existing Indebtedness and for general corporate purposes. No part of the
proceeds from the sale of the Notes hereunder will be used, and no part of the
proceeds of any such Indebtedness being repaid was used, directly or indirectly,
for the purpose of buying or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System (12 CFR
21), or for the purpose of buying or carrying or trading in any securities under
such circumstances as to involve the Issuer or the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 10% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 25% of the value of such assets. As used
in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR carrying"
shall have the meanings assigned to them in said Regulation U.
5.15. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of June 30,
1999, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default, and no waiver of default is currently in effect, in
the payment of any principal or interest on any Indebtedness of the Company or
such Subsidiary, and no event or condition exists with respect to any
Indebtedness of the Company
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or any Subsidiary that would permit (or that with the giving of notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor
any Subsidiary has agreed or consented to cause or permit in the future (upon
the happening of a contingency or otherwise) any of its property, whether now
owned or hereafter acquired, to be subject to a Lien not permitted by Section
10.2.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Issuer hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing prior to your execution and delivery of this Agreement,
(a) no officer or senior manager of the Company or any Subsidiary
has knowledge of any facts which would give rise to any claim, public
or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or
to other assets or their use or to their business operations, except,
in each case, such as could not reasonably be expected to result in a
Material Adverse Effect;
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(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them and has not disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case
in any manner that could reasonably be expected to result in a Material
Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse
Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE OF NOTES.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Issuer is not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account", as
such term is defined in Prohibited Transaction Exemption ("PTE") 95-60
(issued July 12, 1995), and there is no plan with respect to which the
aggregate amount of such general account's reserves and liabilities for
the contracts held by or on behalf of such plan and all other plans
maintained by the same employer (and affiliates thereof as defined in
section V(a)(1) of PTE 95-60) or by the same employee organization (in
each case determined in accordance with PTE 95-60) exceeds or will
exceed 10% of the total of all reserves and liabilities of such general
account (determined in accordance with PTE 95-60, exclusive of separate
account liabilities, plus any applicable surplus) as of the date of the
Closing; or
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(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Issuer in writing pursuant to this paragraph (b), no employee
benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Issuer in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Issuer in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
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(a) Quarterly Statements -- within 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer of the Company as fairly presenting, in all material respects,
the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from
year-end adjustments;
(b) Annual Statements -- within 120 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances;
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the
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Issuer or the Company generally to their respective shareholders or
creditors (other than the Company or another Subsidiary), and (ii) each
regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission and of each
press release and other statement made available generally by the
Company or the Issuer to the public concerning developments that are
Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer of the Issuer or
the Company becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any action
with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default
of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Issuer
and the Company are taking or propose to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer of the Issuer or the Company becoming aware
of any of the following, a written notice setting forth the nature
thereof and the action, if any, that the Issuer or one or more of its
ERISA Affiliates propose to take with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the Issuer
or any of its ERISA Affiliates of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Issuer or any of its
ERISA Affiliates pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Issuer or any of its ERISA Affiliates
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such
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liabilities or Liens then existing, could reasonably be expected
to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any federal, state or provincial
Governmental Authority relating to any order, ruling, statute or other
law or regulation that could reasonably be expected to have a Material
Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder, the ability of the Issuer to perform
its obligations hereunder and under the Notes or the ability of a
Subsidiary Guarantor to perform its obligations under its respective
Subsidiary Guarantee, in each case as from time to time may be
reasonably requested by any such holder of Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer of the Company setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Issuer and the
Company were in compliance with the requirements of Sections 10.1
through 10.4, inclusive, during the quarterly or annual period covered
by the statements then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum or
minimum amount, ratio or percentage, as the case may be, permissible
under the terms of such Sections, the calculation of the amount, ratio
or percentage then in existence, and detailed calculations with respect
to any Step-up Period occurring during such quarterly or annual
period); and
(b) Default -- a statement that such Senior Financial Officer
has reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition
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or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Issuer and the Company
shall have taken or propose to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive offices of the Company
and the Issuer, to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the officers of the Company and the
Issuer, and (with the consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants, and (with
the consent of the Company, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and
each Subsidiary, all at such reasonable times during normal business
hours and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Issuer, to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees and the
Company's independent public accountants (and by this provision the
Company authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries), all at such times
and as often as may be requested.
8. PREPAYMENT OF THE NOTES.
In addition to the payment of the entire unpaid principal amount
of the Notes of each series at the final maturity thereof, the Issuer will make
required, and may make optional, prepayments in respect of the Notes as
hereinafter provided.
8.1. REQUIRED PREPAYMENTS.
(a) On July 22, 2005 and on each July 22 thereafter to and
including July 22, 2008, the Issuer will prepay $7,000,000 aggregate
principal amount (or such lesser principal amount as shall then be
outstanding) of the Series A Notes, such prepayment
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to be made at the principal amount to be prepaid, together with accrued
interest thereon to the date of such prepayment, without any Make-Whole
Amount or other premium, and allocated as provided in Section 8.4 and
subject to paragraph (c) below.
(b) On July 22, 2007 and on each July 22 thereafter to and
including July 22, 2010, the Issuer will prepay $8,000,000 aggregate
principal amount (or such lesser principal amount as shall then be
outstanding) of the Series B Notes, such prepayment to be made at the
principal amount to be prepaid, together with accrued interest thereon
to the date of such prepayment, without any Make-Whole Amount or other
premium, and allocated as provided in Section 8.4 and subject to
paragraph (c) below.
(c) Upon any partial prepayment of the Notes of either series
pursuant to Section 8.2 or purchase of Notes of either series permitted
by Section 8.6, the principal amount of each required prepayment of the
Notes of such series becoming due under this Section 8.1 on and after
the date of such prepayment or purchase shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes of
such series is reduced as a result of such prepayment or purchase.
8.2. OPTIONAL PREPAYMENTS.
The Issuer may, at its option and upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes (in a
minimum amount of $1,000,000 and otherwise in multiples of $100,000) at the
principal amount so prepaid, together with interest accrued thereon to the date
of such prepayment, plus the Make-Whole Amount, if any, for the Notes of each
series determined for the prepayment date with respect to such principal amount.
The Issuer will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall specify
the date fixed for such prepayment (which shall be a Business Day), the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of Notes (if any) held by such holder to be prepaid (determined
in accordance with Section 8.4) and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid.
Each such notice of prepayment shall be accompanied by a
certificate of a Senior Financial Officer of the Issuer as to the estimated
Make-Whole Amount for the Notes of each series due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment of Notes, the Issuer shall deliver to each holder of
the Notes a certificate of a Senior Financial Officer of the Issuer specifying
the calculation of such Make-Whole Amount for the Notes of each series as of the
specified prepayment date.
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8.3. PREPAYMENT IN CONNECTION WITH A CHANGE OF CONTROL AND DEBT DOWNGRADE.
Promptly and in any event within ten Business Days after the
occurrence of a Change of Control and a Change of Control Debt Downgrade, the
Company will give written notice thereof (a "CHANGE OF CONTROL Notice") to the
holders of all outstanding Notes, which Change of Control Notice shall (a) refer
specifically to this Section 8.3, (b) describe the Change of Control and Change
of Control Debt Downgrade in reasonable detail and specify the Change of Control
Prepayment Date and the Response Date (as respectively defined below) in respect
thereof and (c) offer to prepay all Notes at the price specified below on the
date therein specified (the "CHANGE OF CONTROL PREPAYMENT DATE"), which shall be
a Business Day not more than 90 days after the date of such Change of Control
Notice. Each holder of a Note will notify the Company of such holder's
acceptance or rejection of such offer by giving written notice of such
acceptance or rejection to the Company on or before the date for such notice
specified in such Change of Control Notice (the "RESPONSE DATE"), which
specified date shall be not less than 30 days nor more than 60 days after the
date of such Change of Control Notice. The Company shall prepay on the Change of
Control Prepayment Date all of the Notes held by the holders as to which such
offer has been so accepted, at the principal amount of each such Note, together
with interest accrued thereon to the Change of Control Prepayment Date, but
without any Make-Whole Amount or any premium. If any holder shall reject such
offer or fail to accept such offer on or before the Response Date, such holder
shall be deemed to have waived its rights under this Section 8.3 to require
prepayment of all Notes held by such holder in respect of such Change of Control
but not in respect of any subsequent Change of Control.
For purposes of this Section 8.3: a "Change of Control Debt
Downgrade" means that (i) the credit rating (the "RATING") by Fitch IBCA, Inc.
(or another Approved Rating Agency referred to below in the event Fitch IBCA,
Inc. is no longer providing a credit rating for the Notes) in effect for the
Notes immediately prior to any disclosure relating to a Change of Control is
lowered for reasons attributable to such Change of Control or (ii) there is no
Rating in effect at the time of such Change of Control; and an "APPROVED RATING
Agency" means Fitch IBCA, Inc., Duff & Phelps Credit Rating Co., Standard &
Poor's Ratings Group, Moody's Investors Service, Inc., or any successor to any
of the foregoing. Without limiting the notice requirements of this Section 8.3
with respect to a Change of Control, the Company will give prompt written notice
to each holder of a Note of any change of the Rating as in effect from time to
time or of the Approved Rating Agency then providing such rating.
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8.4. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of all Notes pursuant to
Section 8.2 or the Notes of either series pursuant to Section 8.1, the principal
amount of the Notes to be prepaid shall be allocated among all Notes or the
Notes of such series, as the case may be, at the time outstanding in proportion,
as nearly as practicable, to the respective unpaid principal amounts thereof.
8.5. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section
8, the principal amount of each Note to be prepaid shall mature and become due
and payable on the date fixed for such prepayment, together with interest on
such principal amount accrued to such date and the applicable Make-Whole Amount,
if any. From and after such date, unless the Issuer shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Issuer and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.6. PURCHASE OF NOTES.
Neither the Issuer nor the Company will, nor will either of them
permit any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to an offer made by the Issuer, the Company or any such
Affiliate to all holders of the Notes to purchase Notes on the same terms and
conditions (except for differences to reflect the terms of the Notes of each
series), pro rata among all Notes tendered, which offer shall remain outstanding
for a reasonable period of time (not to be less than 30 days).
Any Notes so repurchased shall immediately upon acquisition
thereof be cancelled and no Notes shall be issued in substitution or exchange
therefor.
Promptly and in any event within five Business Days after each
such purchase of Notes, the Issuer will furnish each holder of the Notes with a
certificate of a Senior Financial Officer of the Issuer describing such purchase
(including the aggregate principal amount of Notes of each series so purchased
and the purchase price therefor) and certifying that such purchase was made in
compliance with the requirements of this Section.
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8.7. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, .0.50% over the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on (x) the Bloomberg Financial Markets News screen
PX1 or the equivalent screen provided by Bloomberg Financial Markets
News, or (y) if such on-line market data is not at the time provided by
Bloomberg Financial Markets News, on the display designated as "Page
500" on the Telerate service (or such other display as may replace Page
500 on the Telerate service), in any case for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or (ii) if
such yields are not reported as of such time or the yields reported as
of such time are not ascertainable (including by way of interpolation),
the Treasury Constant Maturity Series Yields reported, for the latest
day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to
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bond-equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with a maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury
security with a maturity closest to and less than the Remaining Average
Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Issuer and the Company jointly and severally covenant that so
long as any of the Notes are outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including without limitation Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary
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to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
9.2. INSURANCE.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claim if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes
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and assessments in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
9.5. CORPORATE EXISTENCE, ETC.
Subject to Section 10.5, each of the Issuer and the Company will
at all times preserve and keep in full force and effect its corporate existence.
Subject to Section 10.5, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries (unless
merged into the Company or a Subsidiary) and all rights and franchises (as
franchisee) of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
9.6. ADDITIONAL SUBSIDIARY GUARANTEES; RELEASE OF SUBSIDIARY GUARANTEES.
Prior to or concurrently with any Subsidiary becoming an obligor
or a guarantor under the Bank Credit Facility after the Closing, the Company
will cause such Subsidiary to execute and deliver a Subsidiary Guarantee, and
within ten Business Days thereafter the Company will furnish each holder of the
Notes with a counterpart of such executed Subsidiary Guarantee. If any opinion
of counsel relating to the authorization, execution, delivery or enforceability
of the obligations of such Subsidiary under the Bank Credit Facility is then
provided to the lenders under the Bank Credit Facility in connection with such
Subsidiary becoming an obligor or guarantor as aforesaid, the Company will
concurrently furnish each holder of the Notes with an opinion of counsel as to
such matters as they relate to such executed Subsidiary Guarantee. Any
Subsidiary Guarantor that is being released from its obligations (as obligor or
guarantor) under the Bank Credit Facility shall, at the Company's request, be
discharged from all of its obligations and liabilities under its Subsidiary
Guarantee by the Required Holders entering into a release in form and substance
reasonably satisfactory to the Required Holders, and you and each other holder
of a Note, by acceptance of such Note, agree to enter into such a satisfactory
release promptly upon request, except that this sentence shall not apply (a) if
a Default or Event of Default shall have occurred and be continuing after giving
effect to such release, (b) to a Subsidiary if any amount is then due and
payable under its Subsidiary Guarantee, or (c) unless such Subsidiary is
concurrently released from such obligations or guarantee under the Bank Credit
Facility.
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10. NEGATIVE COVENANTS.
The Issuer and the Company jointly and severally covenant that so
long as any of the Notes are outstanding:
10.1. TOTAL INDEBTEDNESS; SUBSIDIARY INDEBTEDNESS.
(a) The Company will not and will not permit any Subsidiary to
create, assume, incur, guarantee or otherwise become liable in respect of any
Indebtedness if immediately after giving effect thereto and to the application
of the proceeds of such Indebtedness the Total Indebtedness to EBITDA Ratio
exceeds 3.00 to 1.
Notwithstanding the foregoing provisions of this Section 10.1(a),
the Company or a Subsidiary may incur Indebtedness during a Step-up Period
referred to below if immediately after giving effect thereto and to the
application of the proceeds of such Indebtedness the Total Indebtedness to
EBITDA Ratio exceeds 3.00 to 1.0 but does not exceed 3.50 to 1.0, provided that
until the earlier of (i) the expiration of the Maximum Step-up Period referred
to below and (ii) the earliest date after such incurrence on which such Ratio
shall not exceed 3.00 to 1.0, the Company will not at any time permit such Ratio
to exceed 3.50 to 1.0. If such Ratio exceeds 3.0 to 1.0 at the expiration of the
Maximum Step-up Period, whether or not Indebtedness is then being incurred, the
Company shall be in default in compliance with this Section 10.1(a). As used
herein the term "STEP-UP PERIOD" means a period (expressed as a number of days)
commencing on any date of incurrence of Indebtedness under circumstances
described in the preceding sentence and ending on the earliest date thereafter
when the Total Indebtedness to EBITDA Ratio does not exceed 3.0 to 1.0; and the
term "MAXIMUM STEP-UP PERIOD" means one or more Step-up Periods aggregating 1095
days.
(b) The Company will not permit any Subsidiary to create, assume,
incur, guarantee or otherwise become liable in respect of any Indebtedness
except
(i) Indebtedness secured by Liens permitted by Section
10.2(a), (b) or (c),
(ii) the Notes and other Indebtedness of the Issuer,
(iii) Indebtedness of Subsidiary Guarantors (A) evidenced by
the Subsidiary Guarantees and other guarantees by the Subsidiary
Guarantors in respect of unsecured Indebtedness of the Company and (B)
as obligors or guarantors under the Bank Credit Facility (subject to
Section 9.6),
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(iv) in the case of any Person that after the date of the
Closing becomes a Subsidiary or is consolidated with or merged with or
into a Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to a Subsidiary, Indebtedness
existing at the time such Person becomes a Subsidiary or is so
consolidated or merged or effects such sale, lease or other disposition
of property (and not created in anticipation thereof),
(v) Indebtedness owing to the Company or a Wholly-Owned
Subsidiary, and
(vi) other Indebtedness, provided that immediately after
giving effect to such other Indebtedness the sum (without duplication)
of (A) the aggregate unpaid principal amount of Indebtedness (including
Capitalized Lease Obligations) of the Company secured by Liens
permitted by Section 10.2(e) plus (B) the aggregate unpaid principal
amount of Indebtedness of all Subsidiaries (other than Indebtedness
permitted by clauses (i) through (v) above) plus (C) the aggregate
Attributable Debt in connection with all sale and leaseback
transactions of the Company and its Subsidiaries entered into after the
date of the Closing in accordance with the provisions of Section
10.3(a), does not exceed 15% of Consolidated Tangible Assets.
For purposes of this Section 10.1(b), a Subsidiary shall be deemed to have
incurred Indebtedness in respect of any obligation previously owed to the
Company or to a Wholly-Owned Subsidiary on the date the obligee ceases for any
reason to be the Company or a Wholly-Owned Subsidiary, and a Person that
hereafter becomes a Subsidiary shall be deemed at that time to have incurred all
of its outstanding Indebtedness.
10.2. LIENS.
The Company will not and will not permit any Subsidiary to create,
assume, incur or suffer to exist any Lien upon or with respect to any property
or assets, whether now owned or hereafter acquired, securing any Indebtedness
without making effective provision (pursuant to documentation in form and
substance reasonably satisfactory to the Required Holders) whereby the Notes
shall be secured by such Lien equally and ratably with or prior to any and all
Indebtedness and other obligations to be secured thereby, provided that nothing
in this Section 10.2 shall prohibit:
(a) Liens in respect of property of the Company or a
Subsidiary existing on the date of the Closing and described in
Schedule 5.15, and extensions, renewals and replacements (including
successive extensions, renewals and replacements) of any such Liens,
provided that in any such case the principal amount of Indebtedness (or
the maximum commitment
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therefor) secured by any such Lien is not increased above the unpaid
principal amount (or maximum commitment) on the date of such extension,
renewal or replacement and such Lien does not extend to or cover any
property other than the property covered by such Lien on the date of
the Closing;
(b) Liens in respect of property (including without limitation
shares of capital stock) acquired or constructed by the Company or a
Subsidiary after the date of the Closing, which are created at the time
of or within 360 days after acquisition or completion of construction
of such property to secure Indebtedness assumed or incurred to finance
all or any part of the purchase price or cost of construction of such
property, provided that in any such case
(i) no such Lien shall extend to or cover any other property
of the Company or such Subsidiary, as the case may be, and
(ii) the aggregate principal amount of Indebtedness secured
by all such Liens in respect of any such property shall not
exceed the cost of such property and any improvements then being
financed;
(c) Liens in respect of property (including without limitation
shares of capital stock) acquired by the Company or a Subsidiary after
the date of the Closing, existing on such property at the time of
acquisition thereof (and not created in anticipation thereof), or in
the case of any Person that after the date of the Closing becomes a
Subsidiary or is consolidated with or merged with or into the Company
or a Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to the Company or a Subsidiary, Liens
existing at the time such Person becomes a Subsidiary or is so
consolidated or merged or effects such sale, lease or other disposition
of property (and not created in anticipation thereof), provided that in
any such case no such Lien shall extend to or cover any other property
of the Company or such Subsidiary, as the case may be;
(d) Liens securing Indebtedness owed by a Subsidiary to the
Company or to a Wholly-Owned Subsidiary; and
(e) Liens which would otherwise not be permitted by Section
10.2(a), (b), (c) or (d), securing additional Indebtedness of the
Company or a Subsidiary, provided that after giving effect thereto the
sum (without duplication) of (i) the aggregate unpaid principal amount
of Indebtedness (including Capitalized Lease Obligations) of the
Company secured by such Liens permitted by this Section 10.2(e) plus
(ii) the aggregate unpaid principal amount of Indebtedness of
Subsidiaries (other than Indebtedness permitted by
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clauses (i) through (v) of Section 10.1(b)) plus (iii) the aggregate
Attributable Debt in connection with all sale and leaseback
transactions of the Company and its Subsidiaries entered into after the
date of the Closing in accordance with the provisions of Section
10.3(a), does not exceed 15% of Consolidated Tangible Assets.
For purposes of this Section 10.2 any Lien existing in respect of property at
the time such property is acquired or in respect of property of a Person at the
time such Person is acquired, consolidated or merged with or into the Company or
a Subsidiary shall be deemed to have been created at that time.
10.3. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Subsidiary to sell,
lease, transfer or otherwise dispose of (collectively, a "TRANSFER") any asset
on terms whereby the asset or a substantially similar asset is or may be leased
or reacquired by the Company or any Subsidiary over a period in excess of three
years, unless either
(a) after giving effect to such transaction and the incurrence
of Attributable Debt in respect thereof, the sum (without duplication)
of (i) the aggregate unpaid principal amount of Indebtedness (including
Capitalized Lease Obligations) of the Company secured by such Liens
permitted by Section 10.2(e) plus (ii) the aggregate unpaid principal
amount of Indebtedness of Subsidiaries (other than the Notes
Indebtedness permitted by clauses (i) through (v) of Section 10.1(b))
plus (iii) the aggregate Attributable Debt in connection with all sale
and leaseback transactions of the Company and its Subsidiaries entered
into after the date of the Closing in accordance with the provisions of
this Section 10.3(a), does not exceed 15% of Consolidated Tangible
Assets, or
(b) the net proceeds realized from the transfer are applied
within 180 days after the receipt thereof to the reinvestment in
similar categories of property or assets for use in the business of the
Company and its Subsidiaries or to the repayment of unsubordinated
Indebtedness.
10.4. MAINTENANCE OF NET WORTH.
The Company will not at any time permit Consolidated Net Worth to
be less than the sum of (a) $145,000,000 plus (b) 50% of Consolidated Net Income
for the nine-month period ending on December 31, 1999 (if such Consolidated Net
Income is positive) plus (c) 50% of Consolidated Net Income for each fiscal year
thereafter for which Consolidated Net Income is positive.
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10.5. MERGER, CONSOLIDATION, AMALGAMATION, ETC.
The Company will not and will not permit any Subsidiary to
consolidate, amalgamate or merge with any other Person or convey, transfer or
lease all or substantially all of its assets in a single transaction or series
of transactions to any Person except:
(a) a Subsidiary (other than the Issuer) may consolidate,
amalgamate or merge with any other corporation or convey or transfer
all or substantially all of its assets to
(i) the Company, provided that the Company shall be the
continuing, surviving or acquiring Person (the "SURVIVING
PERSON"), or a then existing Wholly-Owned Subsidiary, or
(ii) any other Person, provided that if such Subsidiary is a
Subsidiary Guarantor and it is not the surviving Person, the
surviving Person shall have (A) executed and delivered to each
holder of a Note its assumption of the due and punctual
performance and observance of all obligations of such Subsidiary
under its Subsidiary Guarantee and (B) caused to be delivered to
each holder of a Note an opinion of counsel reasonably
satisfactory to the Required Holders to the effect that all
agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the
terms of this Agreement and such Subsidiary Guarantee;
(b) the Issuer may consolidate, amalgamate or merge with any
other corporation or convey or transfer all or substantially all of its
assets to a corporation organized and existing under the laws of the
United States or any State thereof (including the District of
Columbia), The Netherlands or any other Permitted Jurisdiction,
provided that
(i) the continuing, surviving or acquiring corporation (if
not the Issuer) shall have (A) executed and delivered to each
holder of a Note its assumption of the due and punctual
performance and observance of all obligations of the Issuer under
this Agreement, the Other Agreements and the Notes and (B) caused
to be delivered to each holder of a Note an opinion of counsel
reasonably satisfactory to the Required Holders to the effect that
all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the
terms of this Agreement, and
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(ii) immediately after giving effect to such transaction,
(A) no Default or Event of Default shall have occurred and be
continuing and (B) if the continuing, surviving or acquiring
corporation is not a then existing Wholly-Owned Subsidiary, the
Company would be permitted to incur at least $1 of additional
Indebtedness under Section 10.1(a); and
(c) the Company may consolidate, amalgamate or merge with any
other corporation or convey or transfer all or substantially all of its
assets to a Person organized and existing under the laws of the United
States or any State thereof (including the District of Columbia), The
Netherlands or any other Permitted Jurisdiction, provided that
(i) the surviving Person (if not the Company) shall have (A)
executed and delivered to each holder of a Note its assumption of
the due and punctual performance and observance of all obligations
of the Company under this Agreement and the Other Agreements and
(B) caused to be delivered to each holder of a Note an opinion of
counsel reasonably satisfactory to the Required Holders to the
effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and
comply with the terms of this Agreement, and
(ii) immediately after giving effect to such transaction,
(A) no Default or Event of Default shall have occurred and be
continuing, (B) if the surviving Person is not a then existing
Wholly-Owned Subsidiary of the Company, the surviving Person (as
the Company) would be permitted to incur at least $1 of additional
Indebtedness under Section 10.1(a) and (C) the Company shall have
complied with its obligations under Section 8.3.
No such conveyance, transfer or lease of substantially all of the assets of the
Issuer or the Company shall have the effect of releasing the Issuer or the
Company or any successor corporation that shall theretofore have become such in
the manner prescribed in this Section 10.5 from its liability under this
Agreement or (in the case of the Issuer) the Notes.
10.6. LINES OF BUSINESS.
The Company and its Subsidiaries taken as a whole will continue to
engage in the businesses in which they are engaged as described in the
Memorandum and businesses reasonably related thereto or in furtherance thereof,
provided the Company and its Subsidiaries may from time to time be engaged in
other businesses
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that are insignificant in relation to the businesses then engaged in by the
Company and its Subsidiaries taken as a whole.
10.7. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to enter
into directly or indirectly any Material transaction or Material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Subsidiary), except in the ordinary
course and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) default in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration
or otherwise; or
(b) default in the payment of any interest on any Note, or any
amount due in respect thereof pursuant to Section 13, and such default
shall have continued for more than five Business Days; or
(c) default in the performance of or compliance with any term
contained in Section 7.1(d) or 8.3 or Sections 10.1 to 10.5, inclusive,
and, in the case of any such default under Section 10.4, such default
shall have continued for a period of 30 days after a Responsible
Officer of the Company obtains knowledge thereof (if and so long as the
Company is proceeding diligently and in good faith, by issuing equity
securities or otherwise, to remedy such default during such 30-day
period); or
(d) default in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) and such default is not remedied within 30
days after a Responsible Officer obtaining knowledge of such default;
or
(e) any representation or warranty made in writing by or on
behalf of the Issuer, the Company or a Subsidiary Guarantor or by any
officer of the Issuer, the Company or a Subsidiary Guarantor in this
Agreement or a Subsidiary Guarantee or in any writing furnished in
connection with the
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transactions contemplated hereby proves to have been false or incorrect
in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary Guarantor or other
Significant Subsidiary is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness (other than the
Notes) that is outstanding in an aggregate principal amount of at least
$10,000,000 beyond any period of grace provided with respect thereto,
or (ii) the Company or any Subsidiary Guarantor or other Significant
Subsidiary is in default in the performance of or compliance with any
term of any evidence of any such Indebtedness or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such
Indebtedness has become, or has been declared, due and payable before
its stated maturity or before its regularly scheduled dates of payment,
or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the
holder of such Indebtedness to convert such Indebtedness into equity
interests), the Company or any Subsidiary Guarantor or other
Significant Subsidiary has become obligated to purchase or repay any
such Indebtedness before its regular maturity or before its regularly
scheduled dates of payment; or
(g) the Company, the Issuer or any Subsidiary Guarantor or
other Significant Subsidiary (i) admits in writing its inability to pay
its debts as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction,
(iii) makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to
be liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the
Company, the Issuer or any Subsidiary Guarantor or other Significant
Subsidiary, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the
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dissolution, winding-up or liquidation of the Company, the Issuer or
any such Subsidiary Guarantor or other Significant Subsidiary, or any
such petition shall be filed against the Company, the Issuer or any
such Subsidiary Guarantor or other Significant Subsidiary and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $10,000,000 are rendered against one or more
of the Company and its Significant Subsidiaries which judgments are
not, within 60 days after entry thereof, bonded, paid, discharged or
stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(j) the Parent Guarantee or, except for releases provided for
in Section 9.6, any Subsidiary Guarantee shall cease to be in full
force and effect as an enforceable instrument or the Company or any
Subsidiary (or any Person at its authorized direction or on its behalf)
shall assert in writing that the Parent Guarantee or the Subsidiary
Guarantee of such Subsidiary, as the case may be, is unenforceable in
any material respect; or
(k) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been filed with the PBGC or the
PBGC shall have instituted proceedings under ERISA section 4042 to
terminate or appoint a trustee to administer any Plan or the PBGC shall
have notified the Company or any ERISA Affiliate that a Plan may become
a subject of any such proceedings, (iii) the aggregate "amount of
unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed $10,000,000, (iv) the Company or any
ERISA Affiliate shall have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans,
(v) the Company or any ERISA Affiliate withdraws from any Multiemployer
Plan, or (vi) the Company or any Subsidiary establishes or amends any
employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the Company
or any Subsidiary thereunder; and any such event or events described in
clauses (i) through (vi) above, either individually or together with
any other such event or events, could reasonably be expected to have a
Material Adverse Effect.
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As used in Section 11(k), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company or the
Issuer described in paragraph (g) or (h) of Section 11 has occurred, all the
Notes then outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
the Required Holders may at any time at its or their option, by notice or
notices to the Issuer, declare all the Notes at the time outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Issuer, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Issuer
and the Company acknowledge, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Issuer (except as herein specifically provided) and that the provision
for payment of a Make-Whole Amount by the Issuer in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the
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terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by
written notice to the Issuer, may rescind and annul any such declaration and its
consequences if (a) the Issuer has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
the non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 19, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Issuer and the Company under
Section 17, the Issuer will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all costs and expenses of such
holder incurred in any enforcement or collection under this Section 12,
including without limitation reasonable attorneys' fees, expenses and
disbursements.
13. TAX INDEMNIFICATION.
All payments whatsoever under this Agreement, the Notes and the
Subsidiary Guarantees will be made by the Issuer, the Company or the respective
Subsidiary Guarantors, as the case may be, in the lawful currency of the United
States of America free and clear of, and without liability or withholding or
deduction for or on account of, any present or future Taxes of whatever nature
imposed or levied by or on behalf of any jurisdiction other than the United
States (or any political subdivision or taxing authority of or in such
jurisdiction) (hereinafter a
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"TAXING JURISDICTION"), unless the withholding or deduction of such Tax is
compelled by law.
If any deduction or withholding or payment for any Tax of a Taxing
Jurisdiction shall at any time be required in respect of any amounts to be paid
by the Issuer, the Company or any Subsidiary Guarantor under this Agreement, the
Notes or a Subsidiary Guarantee, as the case may be, the Issuer, the Company or
such Subsidiary Guarantor, as the case may be, will pay such additional amounts
as may be necessary in order that the net amounts paid to each holder pursuant
to the terms of this Agreement, the Notes or any Subsidiary Guarantee, as the
case may be, after such deduction or withholding or payment (including any
required deduction, withholding or other payment of Tax on or with respect to
such additional amount), shall be not less than the amounts then due and payable
under the terms of this Agreement, the Notes or the Subsidiary Guarantees, as
the case may be, provided that no payment of any additional amounts shall be
required to be made for or on account of:
(a) any Tax which would not have been imposed but for the
existence at the time of any present or former connection between such
holder (or between a fiduciary, settlor, beneficiary, member of,
shareholder of, or possessor of a power over, such holder, if such
holder is an estate, trust, partnership or corporation or any Person
other than the holder to whom the relevant Note or Subsidiary
Guarantee, as the case may be, or any amount payable thereon is
attributable for the purposes of such tax, assessment or charge) and
the Taxing Jurisdiction, other than the mere holding of the relevant
Note or Subsidiary Guarantee, as the case may be, including without
limitation such holder (or such other Person described in the above
parenthetical) being or having been a citizen or resident thereof, or
being or having been engaged in a trade or business therein or having
an establishment therein;
(b) any Tax that is imposed or withheld by reason of the
failure to comply (after a reasonable period of not less than 60 days
nor more than 120 days to respond) by the holder or any other Person
mentioned in clause (a) above with a request of the Company addressed
to the holder to provide information (other than any confidential or
proprietary tax return or other information) concerning the
nationality, residence or identity of the holder or such other Person,
and to make such declaration or other similar claim or reporting
requirement regarding such information (other than any such declaration
claim or reporting requirement that would involve the disclosure of
confidential or proprietary tax return or other information), which is
required by a statute, treaty or regulation of the Taxing Jurisdiction
as a precondition to
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exemption from all or part of such tax, assessment or other governmental charge;
or
(c) any combination of clauses (a) and (b) above;
provided further that no such additional amounts shall be payable in respect of
any Note held by (i) any holder who is a fiduciary or a partnership or a
beneficial owner who is other than the sole beneficial owner of such payment to
the extent a beneficiary or settlor with respect to such fiduciary or a member
of such partnership or a beneficial owner would not have been entitled to such
additional amounts had it been the holder of such Note or (ii) any holder who is
not a resident of the United States or with respect to any payment all or any
part of which represents income which is not subject to United States tax as
income of a resident of the United States to the extent that, had the holder
been a resident of the United States or had the payment been so subject to
United States tax, the provisions of a statute, treaty or regulation of such
Taxing Jurisdiction would have enabled an exemption to be claimed from the tax
assessment or governmental charge in respect of which an additional amount would
otherwise have been payable.
The Company will furnish the holders of Notes, within the period
of payment permitted by applicable law, an official receipt, if any, issued by
the relevant taxation or other authorities involved for all amounts deducted or
withheld as aforesaid.
14. PARENT GUARANTEE.
14.1. GUARANTEE.
(a) Guaranteed Obligations. The Parent hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety,
(i) the punctual payment when due, whether at stated maturity,
by prepayment, by acceleration or otherwise, of all obligations of the
Issuer arising under this Agreement, the Other Agreements and the
Notes, whether for principal, interest (including without limitation
interest on any overdue principal, Make-Whole Amount and interest at
the rate specified in the Notes and interest accruing or becoming owing
both prior to and subsequent to the commencement of any bankruptcy,
reorganization or similar proceeding involving either the Issuer or the
Company), Make-Whole Amount, fees, expenses, indemnification or
otherwise, and
(ii) the due and punctual performance and observance by the
Issuer of all covenants, agreements and
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conditions on its part to be performed and observed under this
Agreement, the Other Agreements and the Notes.
The obligations guaranteed by this Parent Guarantee are sometimes called the
"GUARANTEED OBLIGATIONS".
Without limiting the generality of the foregoing, this Parent
Guarantee guarantees, to the extent provided herein, the payment of all amounts
which constitute part of the Guaranteed Obligations and would be owed by any
other Person to any holder of a Note but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Person.
(b) Guarantee Absolute. This Parent Guarantee constitutes a
present and continuing guarantee of payment and not of collection and the Parent
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of this Agreement, the Other Agreements and the Notes, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any holder of a Note with respect
thereto. The obligations of the Parent under this Parent Guarantee are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against the Parent to enforce this Parent Guarantee,
irrespective of whether any action is brought against the Issuer or any other
Person liable for the Guaranteed Obligations or whether the Issuer or any other
such Person is joined in any such action or actions. The liability of the Parent
under this Parent Guarantee shall be primary, absolute, irrevocable, and
unconditional irrespective of:
(i) any lack of validity or enforceability of any Guaranteed
Obligation, this Agreement, the Other Agreements, the Notes or any
agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from this
Agreement, the Other Agreements, the Notes or this Parent Guarantee;
(iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure by the Parent or other Person liable, or any other
guarantee, for all or any of the Guaranteed Obligations;
(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral or any other assets of the
Issuer or any other Subsidiary;
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(v) any change, restructuring or termination of the corporate
structure or existence of the Issuer or any other Subsidiary; or
(vi) any other circumstance (including without limitation any
statute of limitations) that might otherwise constitute a defense,
offset or counterclaim available to, or a discharge of, the Issuer or
the Parent.
This Parent Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by any holder
of a Note or any other Person upon the insolvency, bankruptcy or reorganization
of the Issuer or otherwise, all as though such payment had not been made.
(c) Waivers by the Parent. The Parent hereby irrevocably waives,
to the extent permitted by applicable law:
(i) promptness, diligence, presentment, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations
and this Parent Guarantee;
(ii) any requirement that any holder of a Note or any other
Person protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against the
Issuer or any other Person or any collateral;
(iii) any defense, offset or counterclaim arising by reason of
any claim or defense based upon any action by any holder of a Note;
(iv) any duty on the part of any holder of a Note to disclose
to the Parent any matter, fact or thing relating to the business,
operation or condition of any Person and its assets now known or
hereafter known by such holder; and
(v) any rights by which it might be entitled to require suit
on an accrued right of action in respect of any of the Guaranteed
Obligations or require suit against the Issuer or the Parent or any
other Person.
14.2. SUBROGATION AND CONTRIBUTION.
The Parent shall not assert, enforce, or otherwise exercise (a)
any right of subrogation to any of the rights, remedies, powers, privileges or
Liens of any holder of a Note or any other beneficiary against the Issuer or any
other obligor on the Guaranteed Obligations or any collateral or other security,
or (b) any right of recourse, reimbursement, contribution, indemnification, or
similar right against the Issuer, and the Parent hereby waives any and all of
the foregoing rights,
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remedies, powers, privileges and the benefit of, and any right to participate
in, any collateral or other security given to any holder of a Note or any other
beneficiary to secure payment of the Guaranteed Obligations, until such time as
the Guaranteed Obligations have been indefeasibly paid in full.
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
15.1. REGISTRATION OF NOTES.
The Issuer shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Issuer shall not be affected
by any notice or knowledge to the contrary. The Issuer shall give to any holder
of a Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
15.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of
the Issuer for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or such holder's attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Note or part thereof), within
five Business Days thereafter the Issuer shall execute and deliver, at the
Issuer's expense (except as provided below), one or more new Notes of the same
series (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request. Each such new Note shall be dated and bear interest from the
date to which interest shall have been paid on the surrendered Note or dated the
date of the surrendered Note if no interest shall have been paid thereon. The
Issuer may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $500,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $500,000.
You agree that the Issuer shall not be required to register the
transfer of any Note to any Person (other than your
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nominee) or to any separate account maintained by you unless the Issuer receives
from the transferee a representation to the Issuer (and appropriate information
as to any separate accounts or other matters) to the same or similar effect with
respect to the transferee as is contained in Section 6.2 or other assurances
reasonably satisfactory to the Issuer that such transfer does not involve a
prohibited transaction (as such term is used in Section 5.12(e)). You shall not
be liable for any damages in connection with any such representations or
assurances provided to the Issuer by any transferee.
15.3. REPLACEMENT OF NOTES.
Upon receipt by the Issuer of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or any other
Institutional Investor, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
within five Business Days thereafter the Issuer at its own expense shall execute
and deliver, in lieu thereof, a new Note of the same series, dated and bearing
interest from the date to which interest shall have been paid on such lost,
stolen, destroyed or mutilated Note or dated the date of such lost, stolen,
destroyed or mutilated Note if no interest shall have been paid thereon.
16. PAYMENTS ON NOTES.
16.1. PLACE OF PAYMENT.
Subject to Section 16.2, payments of principal, Make-Whole Amount,
if any, and interest becoming due and payable on the Notes shall be made at the
principal office of Citibank, N.A. in New York City. The Issuer may at any time,
by notice to each holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal office of the Issuer
in the United States or the principal office of a bank or trust company in the
United States.
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16.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 16.1 or in such Note to the
contrary, the Issuer will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Issuer in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that upon written
request of the Issuer made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Issuer at the
principal executive office of the Company or at the place of payment most
recently designated by the Issuer pursuant to Section 16.1. Prior to any sale or
other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Issuer in exchange for a new Note or Notes pursuant to Section 15.2. The Issuer
will afford the benefits of this Section 16.2 to any Institutional Investor that
is the direct or indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such Note as you have
made in this Section 16.2.
17. EXPENSES, ETC.
17.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are
consummated, the Issuer and the Company jointly and severally agree to pay all
costs and expenses (including reasonable attorneys' fees of your special counsel
and, if reasonably required, local or other counsel) incurred by you and each
Other Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under this Agreement, the Notes or any Subsidiary Guarantee or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement, the Notes or any Subsidiary
Guarantee, or by reason of being a holder of any Note, and (b) the reasonable
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company, the Issuer or any Subsidiary
Guarantor or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Issuer
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and the Company will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).
In furtherance of the foregoing, on the date of the Closing the
Issuer will pay or cause to be paid the reasonable fees and disbursements and
other charges (including estimated unposted disbursements and other charges as
of the date of the Closing) of your special counsel which are reflected in the
statement of such special counsel submitted to the Issuer at least one Business
Day prior to the date of the Closing. The Issuer will also pay, promptly upon
receipt of supplemental statements therefor, reasonable additional fees, if any,
and disbursements and other charges of such special counsel in connection with
the transactions hereby contemplated (including disbursements and other charges
unposted as of the date of the Closing to the extent such disbursements and
other charges exceed estimated amounts paid as aforesaid).
17.2. SURVIVAL.
The obligations of the Issuer and the Company under this Section
17 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the termination
of this Agreement.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Issuer or the Company pursuant to
this Agreement shall be deemed representations and warranties of the Issuer and
the Company under this Agreement. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and understanding between
you and the Issuer and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
19. AMENDMENT AND WAIVER.
19.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of
any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the
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written consent of the Issuer and the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4,
5, 6 or 23, or any defined term (as it is used therein), will be effective as to
you unless consented to by you in writing, and (b) no such amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or change the rate or the time of payment
or method of computation of interest or of the Make-Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the holders of
which are required to consent to any such amendment or waiver, or (iii) amend
any of Sections 8, 11(a), 11(b), 12, 13, 14, 19 or 22.
19.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Issuer and the Company will provide each
holder of the Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Issuer and the Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 19 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.
(b) Payment. Neither the Issuer nor the Obligor will directly or
indirectly pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant any security, to
any holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes of any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
19.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section
19 applies equally to all holders of Notes and is binding upon them and upon
each future holder of any Note and upon the Issuer and the Company without
regard to whether such Note has been marked to indicate such amendment or
waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No
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course of dealing between the Issuer or the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
19.4. NOTES HELD BY THE ISSUER, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Issuer, the Company or
any of their respective Affiliates shall be deemed not to be outstanding.
20. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Issuer and the Company
in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Issuer
and the Company in writing,
(iii) if to the Issuer, to the Issuer at 5295 Hollister Road,
Houston, TX 77040, to the attention of its Secretary and the General
Counsel, or at such other address as the Issuer shall have specified to
the holder of each Note in writing, or
(iv) if to the Company, to the Company at Herengracht 424,
1017 BZ Amsterdam, The Netherlands, to the attention of its Managing
Director, with a copy to General Counsel c/o 5295 Hollister Road,
Houston, TX 77040 or at such other address as the Company shall have
specified to the holder of each Note in writing.
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Notices under this Section 20 will be deemed given only when actually received.
21. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. Each of
the Issuer and the Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 21 shall not prohibit Issuer or the Company or any other holder of Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
22. CONFIDENTIAL INFORMATION.
For the purposes of this Section 22, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, trustees, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes and
whose duties require them to maintain the confidentiality of such information),
(ii) your
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financial advisors and other professional advisors whose duties require them to
hold confidential the Confidential Information substantially in accordance with
the terms of this Section 22, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 22), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 22),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 22 as though it
were a party to this Agreement. On reasonable request by the Issuer or the
Company in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Issuer and the
Company embodying the provisions of this Section 22. Your obligations under this
Section 22 will survive the payment or transfer of any Note held by you and the
termination of this Agreement.
23. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
as the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Issuer and the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 23), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such
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Affiliate, upon receipt by the Issuer and the Company of notice of such
transfer, wherever the word "you" is used in this Agreement, such word shall no
longer be deemed to refer to such Affiliate, but shall refer to you, and you
shall have all the rights of an original holder of the Notes under this
Agreement.
24. MISCELLANEOUS.
24.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including without limitation any subsequent
holder of a Note) whether so expressed or not.
24.2. 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.
24.3. JURISDICTION AND PROCESS; WAIVER OF JURY TRIAL; JUDGMENT CURRENCY.
(a) Each of the Issuer and the Company irrevocably submits to the
non-exclusive in personam jurisdiction of any New York State or federal court
sitting in the Borough of Manhattan, The City of New York, over any suit, action
or proceeding arising out of or relating to this Agreement or the Notes. To the
fullest extent permitted by applicable law, each of the Issuer and the Company
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any claim that it is not subject to the in personam jurisdiction of
any such court, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
(b) Each of the Issuer and the Company agrees, to the fullest
extent permitted by applicable law, that a final judgment in any suit, action or
proceeding of the nature referred to in Section 24.3(a) brought in any such
court shall be conclusive and binding upon it subject to rights of appeal, as
the case may be, and may be enforced in the courts of the United States of
America
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or the State of New York (or any other courts to the jurisdiction of which it is
or may be subject) by a suit upon such judgment.
(c) Each of the Issuer and the Company consents to process being
served in any suit, action or proceeding of the nature referred to in Section
24.3(a) by mailing a copy thereof by registered or certified mail, postage
prepaid, return receipt requested, to it at its address specified in Section 20
or at such other address of which you shall then have been notified pursuant to
said Section. Each of the Issuer and the Company agrees that such service upon
receipt (i) shall be deemed in every respect effective service of process upon
it in any such suit, action or proceeding and (ii) shall, to the fullest extent
permitted by applicable law, be taken and held to be valid personal service upon
and personal delivery to it. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States
Postal Service or any reputable commercial delivery service.
(d) Nothing in this Section 24.3 shall affect the right of any
holder of a Note to serve process in any manner permitted by law, or limit any
right that the holders of any of the Notes may have to bring proceedings against
the Issuer or the Company in the courts of any appropriate jurisdiction or to
enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.
(E) EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT
ON OR WITH RESPECT TO THIS AGREEMENT, THE OTHER AGREEMENTS, THE NOTES OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.
(f) Any payment on account of an amount that is payable hereunder
(including without limitation under the Parent Guarantee) or under the Notes by
either the Issuer or the Company in U.S. Dollars which is made to or for the
account of any holder of Notes in any other currency, whether as a result of any
judgment or order or the enforcement thereof or the realization of any security
or the liquidation of the Issuer or the Company, shall constitute a discharge of
the obligation of the Issuer or the Company under this Agreement (including
without limitation the Parent Guarantee) or the Notes only to the extent of the
amount of U.S. Dollars which such holder could purchase in the foreign exchange
markets in London, England, with the amount of such other currency in accordance
with normal banking procedures at the rate of exchange prevailing on the London
Banking Day following receipt of the payment first referred to above. If the
amount of U.S. Dollars that could be so purchased is less than the amount of
U.S. Dollars originally due to such holder, the Issuer and the Company jointly
and severally agree, to the fullest extent permitted by law, to indemnify and
save harmless such holder from and against all loss or damage arising out of or
as a result of such deficiency. This indemnity shall, to the
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fullest extent permitted by law, constitute an obligation separate and
independent from the other obligations contained in this Agreement (including
without limitation the Parent Guarantee) and the Notes, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by such holder from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a liquidated sum in
respect of an amount due hereunder (including without limitation under the
Parent Guarantee) or under the Notes or under any judgment or order. As used
herein the term "LONDON BANKING DAY" shall mean any day other than Saturday or
Sunday or a day on which commercial banks are required or authorized by law to
be closed in London, England.
24.4. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Sections 8.2 and 8.3
that notice of any optional prepayment specify a Business Day as the date fixed
for such prepayment), any payment of principal of or Make-Whole Amount (if any)
or interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.
24.5. SEVERABILITY.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the fullest extent permitted by applicable law) not
invalidate or render unenforceable such provision in any other jurisdiction.
24.6. ACCOUNTING TERMS; PRO FORMA CALCULATIONS.
All accounting terms used herein which are not expressly defined
in this Agreement have the meanings respectively given to them in accordance
with GAAP. Except as otherwise specifically provided herein, all computations
made pursuant to this Agreement shall be made in accordance with GAAP and all
balance sheets and other financial statements with respect thereto shall be
prepared in accordance with GAAP. Except as otherwise specifically provided
herein, any consolidated financial statement or financial computation shall be
done in accordance with GAAP. In case GAAP changes from time to time after the
date of the Closing, the covenant levels or other components of financial
computations required to be made pursuant to this Agreement shall be
appropriately adjusted by the Company in good faith in consultation with its
independent public
53
<PAGE> 58
accountants so that the effects of such changes in GAAP will be negated.
Forthwith and in any event within ten Business Days after any such
adjustment, the Company will furnish each holder of the Notes with certificates
or written statements of a Senior Financial Officer and such accountants
specifying the effective date of such change in GAAP, describing in reasonable
detail such adjustments to covenant levels or other components of financial
computations and certifying that such adjustments were made in accordance with
the requirements of the preceding paragraph of this Section.
Any pro forma computation required to be made hereby shall include
adjustments (without limitation as to other appropriate pro forma adjustments in
accordance with generally accepted financial practice) giving effect to all
acquisitions and dispositions made during the period with respect to which such
computation is being made as if such acquisitions and dispositions were made on
the first day of such period.
24.7. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. 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.
24.8. GOVERNING LAW.
This Agreement and the Notes shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws 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.
54
<PAGE> 59
If you are in agreement with the foregoing, please sign the
form of agreement in the space below provided on a counterpart of this Agreement
and return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Issuer and the Company.
Very truly yours,
CORE LABORATORIES, INC.
By
--------------------------------------
Title:
CORE LABORATORIES N.V.
By
--------------------------------------
Title:
The foregoing is hereby agreed
to as of the date thereof.
[PURCHASER]
By
----------------------------
Title:
55
<PAGE> 60
SCHEDULE A
This Schedule A shows the names and addresses of the Purchasers
under the foregoing Note and Guarantee Agreement and the Other Agreements
referred to therein and the respective Series and principal amounts of Notes to
be purchased by each.
<TABLE>
<CAPTION>
Principal Amount
Name and Address of Purchaser and Series
- ----------------------------- ----------------
<S> <C>
THE FRANKLIN LIFE INSURANCE COMPANY $10,000,000 (Series B)
(1) All payments by wire transfer of
immediately available funds, with
sufficient information (including PPN
21867@ AB 2, interest rate, maturity
date, interest amount, principal
amount and premium amount, if
applicable) to identify the source and
application of such funds, to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Franklin Life Insurance Company
AC-2492-440-9
OBI = PPN# 21867@ AB 2 and description of payment
Fund Number PA37
(2) All notices of payments and written
confirmations of such
wire transfers, to:
The Franklin Life Insurance Company and PA37
c/o State Street Bank and Trust Company
Insurance Services, WES2S
105 Rosemont Road
Westwood, MA 02090
Facsimile Number: (781) 302-8005
(3) All communications (including
payment notices), to:
The Franklin Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address:
2929 Allen Parkway
Houston, TX 77019-2155
Facsimile Number: (713) 831-1366
(4) Tax I.D. Number: 37-0281650
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
Principal Amount
Name and Address of Purchaser and Series
- ----------------------------- ----------------
<S> <C>
THE VARIABLE ANNUITY LIFE INSURANCE $10,000,000 (Series B)
COMPANY
(1) All payments by wire transfer of
immediately available funds, with
sufficient information (including PPN
21867@ AB 2, interest rate, maturity
date, interest amount, principal
amount and premium amount, if
applicable) to identify the source and
application of such funds, to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life Insurance
Company
AC-0125-82-9
OBI = PPN# 21867@ AB 2 and
description of payment
Fund Number PA54
(2) All notices of payments and written
confirmations of such wire
transfers, to:
The Variable Annuity Life Insurance Company
and PA54
c/o State Street Bank and Trust Company
Insurance Services, WES2S
105 Rosemont Road
Westwood, MA 02090
Facsimile Number: (781) 302-8005
(3) All communications (including
payment notices), to:
The Variable Annuity Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address:
2929 Allen Parkway
Houston, TX 77019-2155
Facsimile Number: (713) 831-1366
(4) Tax I.D. Number: 74-1625348
</TABLE>
A-2
<PAGE> 62
<TABLE>
<CAPTION>
Principal Amount
Name and Address of Purchaser and Series
- ----------------------------- ----------------
<S> <C>
THE GUARDIAN LIFE INSURANCE COMPANY $20,000,000 (Series A)
OF AMERICA
(I/N/O CUDD & CO.)
(1) All payments on account of the
Notes shall be made by wire
transfer of federal or other
immediately available funds, to:
The Chase Manhattan Bank
FED ABA #021000021
CHASE/NYC/CTR/BNF
A/C 900-9-000200
Reference A/C #G05978 Guardian Life
with sufficient information
(including interest rate and
maturity) to identify the issue to
which the payment relates and the
source and application of such
funds, including the amount of
principal, interest and premium and
the PPN: 21867@ AA 4 of the Notes
(2) All notices with respect to payment:
The Guardian Life Insurance Company
of America
Attn: Investment Accounting Dept. 17-B
7 Hanover Square
New York, NY 10004-2616
Fax: 212-598-7011
(3) Address for all other communications and
notices:
The Guardian Life Insurance Company
of America
7 Hanover Square
New York, NY 10004-2616
Attn: Raymond Henry
Investment Department 20-A
Fax: 212-919-2656/2658
(4) Tax Identification No.: 13-6022143
</TABLE>
A-3
<PAGE> 63
<TABLE>
<CAPTION>
Principal Amount
Name and Address of Purchaser and Series
- ----------------------------- ----------------
<S> <C>
PROVIDENT LIFE AND ACCIDENT INSURANCE $20,000,000 (Series B)
COMPANY
(I/N/O CUDD & CO.)
(1) All payments by wire transfer of
immediately available funds to:
CUDD & CO.
c/o The Chase Manhattan Bank
New York, NY
ABA No. 021000 021
SSG Private Income Processing
A/C #900-9-000200
Custodial Account N. G06704
Please reference: Issuer
PPN - 21867@ AB 2
Coupon
Maturity
Principal = $
Interest - $
(2) Address all notices regarding
payments and all other
communications to:
Provident Investment Management, LLC
Private Placvements
One Fountain Square
Chattanooga, Tennessee
Telephone: (423) 755-1365
Fax: (423) 755-3351
(4) Tax Identification Number: 13-6022143 (CUDD & CO.)
</TABLE>
A-4
<PAGE> 64
<TABLE>
<CAPTION>
Principal Amount
Name and Address of Purchaser and Series
- ----------------------------- ----------------
<S> <C>
CONNECTICUT GENERAL LIFE INSURANCE $15,000,000 (Series A)
COMPANY
(I/N/O CIG & CO.)
(1) All payments on account of the Notes
shall be made in the form of bank wire
transfer or other immediately
available funds to: FED ABA
#021000021 Chase NYC/CTR/BNF=CIGNA
Private Placements/AC=9009001802
OBI=
Senior Notes due 2009
PPN: 21867@ AA 4, the amount of
interest and/or principal, the
amount of any prepayment, the
payable date, the originator's
contact name and telephone number
(2) Address for all notices in respect to payments:
CIG & CO.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2309
Attention: Securities Processing (S-309)
CIG & CO.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2309
Attention: Private Securities Operations
Group (S-307)
With a copy to:
The Chase Manhattan Bank
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, NY 10081
Attention: CIGNA Private Placements
Fax: 212-552-3107/1005
(3) Address for all other communications:
CIG & CO.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2307
Attention: Private Securities Division (S-307)
James G. Schelling
(4) Tax Identification Number: 13-3574027
</TABLE>
A-5
<PAGE> 65
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, (a) with respect to any Person
(including without limitation the Company), any other Person that at such time
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person, and (b) with
respect to the Company, any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating to
a sale and leaseback transaction, the total amount of rent (discounted
semiannually from the respective due dates thereof at the interest rate implicit
in such lease) required to be paid by the lessee under such lease during the
remaining term thereof. The amount of rent required to be paid under any such
lease for any such period shall be (a) the total amount of the rent payable by
the lessee with respect to such period after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments,
utilities, operating and labor costs and similar charges plus (b) without
duplication, any guaranteed residual value in respect of such lease to the
extent such guarantee would be included in indebtedness in accordance with GAAP.
"BANK CREDIT FACILITY" means the Credit Agreement dated as of May
12, 1997 by and among the Company, certain banks and Bankers Trust Company, as
Administrative Agent, and Bank of America National Association (as successor by
merger to Nationsbank, N.A.), as Syndication Agent and Issuing Bank, as
supplemented, amended, restated or refinanced from time to time.
"BUSINESS DAY" means (a) for the purposes of Section 8.7 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, and (b) for the purposes of
any other
Schedule B
<PAGE> 66
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City or The Netherlands are required or
authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means with respect to any Person,
all outstanding obligations of such Person in respect of Capital Leases, taken
at the capitalized amount thereof accounted for as indebtedness in accordance
with GAAP.
"CHANGE OF CONTROL" means such time as a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 35% of the Voting Stock of the Company.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.
"COMPANY" means Core Laboratories N.V., a Netherlands limited
liability company.
"CONFIDENTIAL INFORMATION" is defined in Section 22.
"CONSOLIDATED INDEBTEDNESS" means, at any date, all Indebtedness
of the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" for any period means the sum for
the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, of all amounts which would be deducted in computing
Consolidated Net Income on account of interest on Indebtedness (including
imputed interest in respect of Capitalized Lease Obligations and amortization of
debt discount and expense).
"CONSOLIDATED NET INCOME" for any period means the net income of
the Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP, excluding
(a) the proceeds of any life insurance policy,
(b) any gains arising from (i) the sale or other disposition of
any assets (other than current assets) to the
Schedule B
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<PAGE> 67
extent that the aggregate amount of the gains during such period
exceeds the aggregate amount of the losses during such period from the
sale, abandonment or other disposition of assets (other than current
assets), (ii) any write-up of assets or (iii) the acquisition of
outstanding securities of the Company or any Subsidiary,
(c) any amount representing any interest in the undistributed
earnings of any other Person (other than a Subsidiary),
(d) any earnings, prior to the date of acquisition, of any
Person acquired in any manner (except in connection with a pooling
transaction), and any earnings of any Subsidiary prior to its becoming
a Subsidiary,
(e) any earnings of a successor to or transferee of the assets
of the Company prior to its becoming such successor or transferee,
(f) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person, and
(g) any extraordinary gains not covered by clause (b) above.
"CONSOLIDATED NET WORTH" means, at any date, on a consolidated
basis for the Company and its Subsidiaries, (a) the sum of (i) capital stock
taken at par or stated value plus (ii) capital in excess of par or stated value
relating to capital stock plus (iii) retained earnings (or minus any retained
earning deficit) minus (b) the sum of treasury stock, capital stock subscribed
for and unissued and other contra-equity accounts, all determined in accordance
with GAAP.
"CONSOLIDATED TANGIBLE ASSETS" means, at any date, Consolidated
Total Assets minus all intangible assets of the Company and its Subsidiaries as
of such date determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, at any date, the total assets
of the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"DEFAULT" means an event or condition the occurrence or existence
of which would, with the giving of notice or the lapse of time, or both, become
an Event of Default.
"DEFAULT RATE" means that rate of interest for the Notes of each
series that is the greater of (i) 2% per annum above the stated interest rate
for the Notes of such series and (ii) 2% above the rate of interest publicly
announced by
Schedule B
-3-
<PAGE> 68
Citibank, N.A. from time to time at its principal office in New York City as its
prime rate.
"DOLLARS" or "$" means lawful money of the United States.
"EBITDA" for any period means Consolidated Net Income plus all
amounts deducted in the computation thereof on account of (a) Consolidated
Interest Expense, (b) depreciation and amortization expenses and other non-cash
charges and (c) income and profits taxes.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Issuer or
the Company under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"FOREIGN PLAN" means each plan that is, or within the preceding
five years has been, maintained, sponsored or otherwise contributed to by the
Company or any Subsidiary and that provides, or within the preceding five years
has provided, retirement or welfare benefits and is, or within the preceding
five years has been, maintained outside the United States primarily for the
benefit of individuals substantially all of whom are or were "nonresident
aliens", as defined in Section 7701(b) of the Code.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
Schedule B
-4-
<PAGE> 69
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State thereof or The
Netherlands or any province thereof or any other political subdivision
of any thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including without limitation obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production,
Schedule B
-5-
<PAGE> 70
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law (including
without limitation asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Issuer pursuant to
Section 15.1.
"INDEBTEDNESS" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money or its mandatory
purchase, redemption or other retirement obligations in respect of
mandatorily redeemable Preferred Stock,
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property),
(c) its Capitalized Lease Obligations,
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities),
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money), excluding any letter of
credit given in the ordinary course of business in lieu of a
performance bond or similar undertaking,
(f) Swaps of such Person, and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) above.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) above to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
Schedule B
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<PAGE> 71
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding (together with one or more of its
Affiliates) more than 2% of the aggregate principal amount of the Notes then
outstanding, and (c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
"ISSUER" means Core Laboratories, Inc., a Delaware corporation.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business, operations,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, operations, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, (b) the ability of the Issuer to
perform its obligations under this Agreement and the Notes or the ability of the
Company to perform its obligations under this Agreement or (c) the validity or
enforceability of this Agreement, the Notes, the Parent Guarantee or any
Subsidiary Guarantee.
"MEMORANDUM" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NOTES" is defined in Section 1.1.
"OECD" means the "Organization for Economic Co-operation and
Development", the economic organization currently comprising 29 nations formed
by the signing of a convention in Paris on December 14, 1960.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer of the Issuer or the Company or of any other
Schedule B
-7-
<PAGE> 72
officer of the Issuer or the Company whose responsibilities extend to the
subject matter of such certificate.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PARENT" means Core Laboratories, N.V., a Netherlands limited
liability company.
"PARENT GUARANTEE" is defined in Section 1.2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERMITTED JURISDICTION" means (a) the United States of America,
(b) the Netherlands Antilles and (c) any country that on the date hereof is a
member of the OECD (other than Greece, Poland, Korea or Turkey).
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.
"PREFERRED STOCK", as applied to any Person, means shares or
equity interests of such Person that shall be entitled to preference or priority
over any other shares or equity interests of such Person in respect of either
the payment of dividends or the distribution of assets upon liquidation, or
both.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, inchoate
or otherwise.
"PTE" is defined in Section 6.2.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued on March 13, 1984 by the United States Department of Labor.
Schedule B
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<PAGE> 73
"REQUIRED HOLDERS" means, at any time, the holders of at least a
majority in unpaid principal amount of the Notes at the time outstanding.
"RESPONSIBLE OFFICER" means any Senior Financial Officer of the
Issuer or the Company and any other officer of the Issuer or the Company with
responsibility for the administration of the relevant portion of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SENIOR FINANCIAL OFFICER" of the Issuer or the Company means the
chief financial officer, principal accounting officer, treasurer or controller
of the Issuer or the Company.
"SIGNIFICANT SUBSIDIARY" means, at any date, (a) a Subsidiary
Guarantor and (b) any other Subsidiary (i) which, together with its
Subsidiaries, produced more than 5% of consolidated gross revenues of the
Company and its Subsidiaries for the fiscal year then most recently ended
(calculated on a pro forma basis in the case of any Person which became a
Subsidiary during or after the end of such fiscal year) or (ii) the assets of
which, together with the assets of its Subsidiaries, exceeded 5% of the
consolidated total assets (fixed and current) of the Company and its
Subsidiaries as of the last day of such fiscal year (calculated on a pro forma
basis as of the last day of such fiscal year in the case of any Person which
became a Subsidiary thereafter).
"STEP-UP PERIOD" is defined in Section 10.1(a)
"SUBSIDIARY" means, as to any Person, any corporation or other
business entity a majority of the combined voting power of all Voting Stock of
which is owned by such Person or one or more of its Subsidiaries or such Person
and one or more of its Subsidiaries. Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company, including the Issuer.
"SUBSIDIARY GUARANTEE" is defined in Section 1.2.
"SUBSIDIARY GUARANTOR" is defined in Section 4.5.
"SWAPS" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had
Schedule B
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<PAGE> 74
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.
"TAX" is defined in Section 5.9(b).
"TOTAL INDEBTEDNESS TO EBITDA RATIO" means, at any date, the ratio
of (a) Consolidated Indebtedness as at such date to (b) pro forma EBITDA for the
four consecutive fiscal quarters then most recently ended.
"VOTING STOCK" means, with respect to any Person, any shares of
stock or other equity interests of any class or classes of such Person whose
holders are entitled under ordinary circumstances (irrespective of whether at
the time stock or other equity interests of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
to vote for the election of a majority of the directors, managers, trustees or
other governing body of such Person.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary at
least 90% of the equity interests (except directors' qualifying shares) and
voting interests of which are owned by any one or more of the Company and the
Company's other Wholly-Owned Subsidiaries at such time.
Schedule B
-10-
<PAGE> 75
EXHIBIT 1.1(a)
[FORM OF SERIES A NOTE]
CORE LABORATORIES, INC.
8.11% GUARANTEED SENIOR NOTE, SERIES A, DUE 2009
No. [_____] New York, New York
$[_______] [Date]
PPN: 21867@ AA 4
FOR VALUE RECEIVED, the undersigned, CORE LABORATORIES, INC. (the
"ISSUER"), a Delaware corporation, hereby promises to pay to [_______________],
or registered assigns, the principal sum of [______________________] DOLLARS on
July 22, 2009, with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) from the date hereof on the unpaid balance thereof at the
rate of 8.11% per annum, payable semiannually on January 22 and July 22 in each
year, until the principal hereof shall have become due and payable, and (b) on
any overdue payment of principal, any overdue payment of interest (to the extent
permitted by applicable law) and any overdue payment of any Make-Whole Amount
(as defined in the Note Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand) at a
rate per annum from time to time equal to the greater of (i) 10.11% and (ii) 2%
above the rate of interest publicly announced by Citibank, N.A. from time to
time at its principal office in New York City as its prime rate.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America at said principal office of Citibank, N.A. in New York City or at such
other place as the Issuer shall have designated by written notice to the holder
of this Note as provided in the Note Agreements referred to below.
This Note is one of a series of Senior Notes issued pursuant to
separate Note and Guarantee Agreements dated as of July 22, 1999 (as from time
to time amended, the "NOTE AGREEMENTS") between the Issuer and Core Laboratories
N.V. and the respective Purchasers named therein and is entitled to the benefits
thereof. This Note is also entitled to the benefits of a Parent Guarantee
included in the Note Agreements and certain Subsidiary Guarantees executed and
delivered from time to time pursuant to the Note Agreements. Each holder of this
Note will be deemed, by its acceptance hereof, to have agreed to the
confidentiality provisions set forth in Section 22 of the Note Agreements.
<PAGE> 76
This Note is a registered Note and, as provided in the Note
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note of the same series and for a like principal amount (or, if
less, the then unpaid principal amount) will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of transfer,
the Issuer may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Issuer will not be affected by any notice to the contrary.
The Issuer will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreements, but not otherwise.
If an Event of Default, as defined in the Note Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreements.
This Note shall be construed and enforced in accordance with, and
the rights of the Issuer and the holder hereof shall be governed by, the laws 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.
CORE LABORATORIES, INC.
By
-------------------------------
Title:
-2-
<PAGE> 77
EXHIBIT 1.1(b)
[FORM OF SERIES B NOTE]
CORE LABORATORIES, INC.
8.21% GUARANTEED SENIOR NOTE, SERIES B, DUE 2011
No. [_____] New York, New York
$[_______] [Date]
PPN: 21867@ AB 2
FOR VALUE RECEIVED, the undersigned, CORE LABORATORIES, INC. (the
"ISSUER"), a Delaware corporation, hereby promises to pay to [___________], or
registered assigns, the principal sum of [_________________________] DOLLARS on
July 22, 2011, with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) from the date hereof on the unpaid balance thereof at the
rate of 8.21% per annum, payable semiannually on January 22 and July 22 in each
year, until the principal hereof shall have become due and payable, and (b) on
any overdue payment of principal, any overdue payment of interest (to the extent
permitted by applicable law) and any overdue payment of any Make-Whole Amount
(as defined in the Note Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand) at a
rate per annum from time to time equal to the greater of (i) 10.21% and (ii) 2%
above the rate of interest publicly announced by Citibank, N.A. from time to
time at its principal office in New York City as its prime rate.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America at said principal office of Citibank, N.A. in New York City or at such
other place as the Issuer shall have designated by written notice to the holder
of this Note as provided in the Note Agreements referred to below.
This Note is one of a series of Senior Notes issued pursuant to
separate Note and Guarantee Agreements dated as of July 22, 1999 (as from time
to time amended, the "NOTE AGREEMENTS") between the Issuer and Core Laboratories
N.V. and the respective Purchasers named therein and is entitled to the benefits
thereof. This Note is also entitled to the benefits of a Parent Guarantee
included in the Note Agreements and certain Subsidiary Guarantees executed and
delivered from time to time pursuant to the Note Agreements. Each holder of this
Note will be deemed, by its acceptance hereof, to have agreed to the
confidentiality provisions set forth in Section 22 of the Note Agreements.
<PAGE> 78
This Note is a registered Note and, as provided in the Note
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note of the same series and for a like principal amount (or, if
less, the then unpaid principal amount) will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of transfer,
the Issuer may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Issuer will not be affected by any notice to the contrary.
The Issuer will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreements, but not otherwise.
If an Event of Default, as defined in the Note Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreements.
This Note shall be construed and enforced in accordance with, and
the rights of the Issuer and the holder hereof shall be governed by, the laws 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.
CORE LABORATORIES, INC.
By
-------------------------------
Title:
-2-
<PAGE> 79
EXHIBIT 1.2
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of ______________ made by
________________________, a _________________ [ ] (the "GUARANTOR"),
in favor of the holders from time to time of the Notes referred to below
(collectively the "OBLIGEES").
WHEREAS, Core Laboratories, Inc., a Delaware corporation (the
"ISSUER"), and Core Laboratories N.V., a Netherlands limited liability company
(the "COMPANY" or the "PARENT" and, together with the Issuer, individually an
"OBLIGOR" and collectively the "OBLIGORS"), have entered into several Note and
Guarantee Agreements dated as of July 22, 1999 (as amended or otherwise modified
from time to time, collectively the "NOTE AGREEMENTS" and terms defined therein
and not otherwise defined herein are being used herein as so defined) with the
institutional purchasers listed in Schedule A thereto, pursuant to which the
Issuer proposes to issue and sell to such purchasers $35,000,000 aggregate
principal amount of its 8.11% Guaranteed Senior Notes, Series A, due 2009 and
$40,000,000 aggregate principal amount of its 8.21% Guaranteed Senior Notes,
Series B, due 2011 (the "NOTES");
WHEREAS, the Parent has unconditionally guaranteed the Notes and
the obligations of the Issuer under the Note Agreements pursuant to a parent
guarantee (the "PARENT GUARANTEE") contained in Section 14 of the Note
Agreements; and
WHEREAS, it is a [condition precedent to the purchase of the Notes
by such purchasers under/requirement of] the Note Agreements that the Guarantor
shall execute and deliver this Guarantee Agreement;
NOW, THEREFORE, in consideration of the premises the Guarantor
hereby agrees as follows:
SECTION 1. Guarantee. The Guarantor unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety,
A. the punctual payment when due, whether at stated maturity, by
prepayment, by acceleration or otherwise, of all obligations of the
Issuer arising under the Note Agreements and the Notes, including all
extensions, modifications, substitutions, amendments and renewals
thereof, whether for principal, interest (including without limitation
interest on any overdue principal, the Make-Whole Amount, if any, and
interest at the rate specified in the Notes and interest accruing or
becoming owing both prior to
GUARANTEE AGREEMENT
<PAGE> 80
and subsequent to the commencement of any proceeding against or with
respect to either Obligor under any applicable Debtor Relief Laws as
defined below), Make-Whole Amount, fees, expenses, indemnification or
otherwise, and
B. the due and punctual performance and observance by the
Obligors of all covenants, agreements and conditions on their part to
be performed and observed under the Note Agreements and the Notes;
(all such obligations are called the "GUARANTEED OBLIGATIONS"); provided that
the aggregate liability of the Guarantor hereunder in respect of the Guaranteed
Obligations shall not exceed at any time the lesser of (1) the amount of the
Guaranteed Obligations and (2) the maximum amount for which the Guarantor is
liable under this Guarantee Agreement without such liability being deemed a
fraudulent transfer (or any analogous concept) under applicable Debtor Relief
Laws (as hereinafter defined), as determined by a court of competent
jurisdiction. As used herein, the term "DEBTOR RELIEF LAWS" means any applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief laws affecting the rights of creditors
generally from time to time in effect.
The Guarantor also agrees to pay, in addition to the amount stated
above, any and all reasonable expenses (including reasonable counsel fees and
expenses) incurred by any Obligee in enforcing any rights under this Guarantee
Agreement or in connection with any amendment of this Guarantee Agreement.
Without limiting the generality of the foregoing, this Guarantee
Agreement guarantees, to the extent provided herein, the payment of all amounts
which constitute part of the Guaranteed Obligations and would be owed by any
other Person to any Obligee but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Person.
SECTION 2. Guarantee Absolute. The obligations of the Guarantor
under Section 1 of this Guarantee Agreement constitute a present and continuing
guaranty of payment and not of collectability and the Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Note Agreements and the Notes, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of any Obligee with respect thereto. The obligations of the Guarantor
under this Guarantee Agreement are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Guarantee Agreement, irrespective of whether any
action is brought against either Obligor or any other Person liable for the
Guaranteed
GUARANTEE AGREEMENT
2
<PAGE> 81
Obligations or whether an Obligor or any other such Person is joined in any such
action or actions. The liability of the Guarantor under this Guarantee Agreement
shall be primary, absolute, irrevocable, and unconditional irrespective of:
A. any lack of validity or enforceability of any Guaranteed
Obligation, the Note Agreements, the Parent Guarantee, any Note or any
agreement or instrument relating thereto;
B. any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the Note
Agreements, the Parent Guarantee, any Note or this Guarantee Agreement;
C. any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure by the Guarantor or other Person liable, or any other
guarantee, for all or any of the Guaranteed Obligations;
D. any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral or any other assets of the
Company or any Subsidiary;
E. any change, restructuring or termination of the corporate
structure or existence of the Company, the Issuer or any other
Subsidiary; or
F. any other circumstance (including without limitation any
statute of limitations) that might otherwise constitute a defense,
offset or counterclaim available to, or a discharge of, the Company,
the Issuer or the Guarantor.
This Guarantee Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by any Obligee
or any other Person upon the insolvency, bankruptcy or reorganization of an
Obligor or otherwise, all as though such payment had not been made.
SECTION 3. Waivers. The Guarantor hereby irrevocably waives, to
the extent permitted by applicable law:
A. promptness, diligence, presentment, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations
and this Guarantee Agreement;
B. any requirement that any Obligee or any other Person protect,
secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against either Obligor or any
other Person or any collateral;
GUARANTEE AGREEMENT
3
<PAGE> 82
C. any defense, offset or counterclaim arising by reason of
any claim or defense based upon any action by any Obligee;
D. any duty on the part of any Obligee to disclose to the
Guarantor any matter, fact or thing relating to the business, operation
or condition of any Person and its assets now known or hereafter known
by such Obligee; and
E. any rights by which it might be entitled to require suit on
an accrued right of action in respect of any of the Guaranteed
Obligations or require suit against the Obligors or the Guarantor or
any other Person.
SECTION 4. Waiver of Subrogation and Contribution. The Guarantor
shall not assert, enforce, or otherwise exercise (A) any right of subrogation to
any of the rights, remedies, powers, privileges or Liens of any Obligee or any
other beneficiary against the Issuer, the Company or any other obligor on the
Guaranteed Obligations or any collateral or other security, or (B) any right of
recourse, reimbursement, contribution, indemnification, or similar right against
the Issuer or the Company, and the Guarantor hereby waives any and all of the
foregoing rights, remedies, powers, privileges and the benefit of, and any right
to participate in, any collateral or other security given to any Obligee or any
other beneficiary to secure payment of the Guaranteed Obligations, until such
time as the Guaranteed Obligations have been indefeasibly paid in full.
SECTION 5. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
A. The Guarantor is a [corporation/limited liability
company/other entity to be described] duly organized, validly existing
and in good standing under the laws of its jurisdiction of formation.
The execution, delivery and performance of this Guarantee Agreement
have been duly authorized by all necessary action on the part of the
Guarantor.
B. The execution, delivery and performance by the Guarantor of
this Guarantee Agreement will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any
Lien in respect of any property of the Guarantor or any Subsidiary of
the Guarantor under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or
any other material agreement or instrument to which the Guarantor or
any Subsidiary of the Guarantor is bound or by which the Guarantor or
any Subsidiary of the Guarantor or any of their respective
GUARANTEE AGREEMENT
4
<PAGE> 83
properties may be bound or affected, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Guarantor or any Subsidiary of the
Guarantor or (iii) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to the Guarantor
or any Subsidiary of the Guarantor.
C. The Guarantor and the Obligors are members of the same
consolidated group of companies and are engaged in related businesses
and the Guarantor will derive substantial direct and indirect benefit
from the execution and delivery of this Guarantee Agreement.
SECTION 6. Amendments, Etc. No amendment or waiver of any
provision of this Guarantee Agreement and no consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided that no amendment, waiver or consent shall, unless in
writing and signed by all Obligees, (i) limit the liability of or release the
Guarantor hereunder, (ii) postpone any date fixed for, or change the amount of,
any payment hereunder or (iii) change the percentage of Notes the holders of
which are, required to take any action hereunder.
SECTION 7. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and sent (A) by
telecopy if the sender on the same day sends a confirming copy of such notice by
a recognized overnight delivery service (charges prepaid), or (B) by registered
or certified mail with return receipt requested (postage prepaid), or (C) by a
recognized overnight delivery service (with charges prepaid). Such notice if
sent to the Guarantor shall be addressed to it at the address of the Guarantor
provided below its name on the signature page of this Guarantee Agreement or at
such other address as the Guarantor may hereafter designate by notice to each
holder of Notes, or if sent to any holder of Notes, shall be addressed to it as
set forth in the Note Agreements. Any notice or other communication herein
provided to be given to the holders of all outstanding Notes shall be deemed to
have been duly sent if sent as aforesaid to each of the registered holders of
the Notes at the time outstanding at the address for such purpose of such holder
as it appears on the Note register maintained by the Issuer in accordance with
the provisions of Section 15.1 of the Note Agreements. Notices under this
Section 7 will be deemed given only when actually received.
SECTION 8. No Waiver; Remedies. No failure on the part of any
Obligee to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any
GUARANTEE AGREEMENT
5
<PAGE> 84
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9. Continuing Guarantee. This Guarantee Agreement is a
continuing guarantee of payment and performance and shall (A) remain in full
force and effect until payment in full of the Guaranteed Obligations and all
other amounts payable under this Guarantee Agreement, (B) be binding upon the
Guarantor, its successors and assigns and (C) inure to the benefit of and be
enforceable by the Obligees and their successors, transferees and assigns.
SECTION 10. Jurisdiction and Process; Waiver of Jury Trial. The
Guarantor irrevocably submits to the non-exclusive in personam jurisdiction of
any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Guarantee Agreement. To the fullest extent permitted by applicable law,
the Guarantor irrevocably waives and agrees not to assert, by way of motion, as
a defense or otherwise, any claim that it is not subject to the in personam
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
The Guarantor consents to process being served in any suit, action
or proceeding of the nature referred to in this Section by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to the Guarantor at its address specified in Section 7 or at such
other address of which the Obligees shall then have been notified pursuant to
said Section. The Guarantor agrees that such service upon receipt (i) shall be
deemed in every respect effective service of process upon it in any such suit,
action or proceeding and (ii) shall, to the fullest extent permitted by
applicable law, be taken and held to be valid personal service upon and personal
delivery to the Guarantor. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States
Postal Service or any recognized courier or overnight delivery service.
Nothing in this Section 10 shall affect the right of any Obligee
to serve process in any manner permitted by law, or limit any right that the
Obligees may have to bring proceedings against the Guarantor in the courts of
any appropriate jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.
THE GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS GUARANTEE AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH.
GUARANTEE AGREEMENT
6
<PAGE> 85
[SECTION 11. Tax Indemnification.
All payments whatsoever under this Guarantee will be made by the
Guarantor in the lawful currency of the United States of America free and clear
of, and without liability or withholding or deduction for or on account of, any
present or future Taxes of whatever nature imposed or levied by or on behalf of
any jurisdiction other than the United States (or any political subdivision or
taxing authority of or in such jurisdiction) (hereinafter a "TAXING
JURISDICTION"), unless the withholding or deduction of such Tax is compelled by
law.
If any deduction or withholding or payment for any Tax of a Taxing
Jurisdiction shall at any time be required in respect of any amounts to be paid
by the Guarantor under this Guarantee Agreement, the Guarantor will pay such
additional amounts as may be necessary in order that the net amounts paid to
each Obligee pursuant to the terms of this Guarantee Agreement, after such
deduction or withholding or payment (including any required deduction,
withholding or other payment of Tax on or with respect to such additional
amount), shall be not less than the amounts then due and payable under the terms
of this Guarantee Agreement to any Holder, provided that no payment of any
additional amounts shall be required to be made for or on account of:
(a) any Tax which would not have been imposed but for the
existence at the time of any present or former connection between such
Holder (or between a fiduciary, settlor, beneficiary, member of,
shareholder of, or possessor of a power over, such Holder, if such
Holder is an estate, trust, partnership or corporation or any Person
other than the Holder to whom this Guarantee Agreement or any amount
payable hereunder is attributable for the purposes of such tax,
assessment or charge) and the Taxing Jurisdiction, other than the mere
holding of this Guarantee Agreement including without limitation such
Holder (or such other Person described in the above parenthetical)
being or having been a citizen or resident thereof, or being or having
been engaged in a trade or business therein or having an establishment
therein;
(b) any Tax that is imposed or withheld by reason of the
failure to comply (after a reasonable period of not less than 60 days
nor more than 120 days to respond) by the Holder or any other Person
mentioned in clause (a) above with a request of the Guarantor addressed
to the Holder to provide information (other than any confidential or
proprietary tax return or other information) concerning the
nationality, residence or identity of the Holder or such other Person,
and to make such declaration or other similar claim or reporting
requirement regarding such information (other than any such declaration
claim or reporting requirement that would involve the disclosure of
GUARANTEE AGREEMENT
7
<PAGE> 86
confidential or proprietary tax return or other information), which is
required by a statute, treaty or regulation of the Taxing Jurisdiction
as a precondition to exemption from all or part of such tax, assessment
or other governmental charge; or
(c) any combination of clauses (a) and (b) above;
provided further that no such additional amounts shall be payable to (i) any
Holder who is a fiduciary or a partnership or a beneficial owner who is other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to such additional amounts had it
been the Holder or (ii) any Holder who is not a resident of the United States or
with respect to any payment all or any part of which represents income which is
not subject to United States tax as income of a resident of the United States to
the extent that, had the holder been a resident of the United States or had the
payment been so subject to United States tax, the provisions of a statute,
treaty or regulation of such Taxing Jurisdiction would have enabled an exemption
to be claimed from the tax assessment or governmental charge in respect of which
an additional amount would otherwise have been payable.
The Guarantor will furnish the Holders, within the period of
payment permitted by applicable law, an official receipt, if any, issued by the
relevant taxation or other authorities involved for all amounts deducted or
withheld as aforesaid.
Section 12. Judgment Currency. Any payment on account of an amount
that is payable hereunder by the Guarantor in U.S. Dollars which is made to or
for the account of any Obligee in any other currency, whether as a result of any
judgment or order or the enforcement thereof or the realization of any security
or the liquidation of the Guarantor, shall constitute a discharge of the
Guarantor's obligation under this Guarantee Agreement only to the extent of the
amount of U.S. Dollars which such Obligee could purchase in the foreign exchange
markets in London, England, with the amount of such other currency in accordance
with normal banking procedures at the rate of exchange prevailing on the London
Banking Day following receipt of the payment first referred to above. If the
amount of U.S. Dollars that could be so purchased is less than the amount of
U.S. Dollars originally due to such Obligee, the Guarantor agrees, to the
fullest extent permitted by law, to indemnify and save harmless such Obligee
from and against all loss or damage arising out of or as a result of such
deficiency. This indemnity shall, to the fullest extent permitted by law,
constitute an obligation separate and independent from the other obligations
contained in this Guarantee Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by such Obligee from time
GUARANTEE AGREEMENT
8
<PAGE> 87
to time and shall continue in full force and effect notwithstanding any judgment
or order for a liquidated sum in respect of an amount due hereunder or under any
judgment or order. As used herein the term "LONDON BANKING DAY" shall mean any
day other than Saturday or Sunday or a day on which commercial banks are
required or authorized by law to be closed in London, England.
SECTION 13.]* Governing Law. This Guarantee Agreement shall be
construed and enforced in accordance with, and the rights of the Guarantor and
the Obligees shall be governed by, the laws 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.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
Agreement to be duly executed and delivered as of the date first above written.
[GUARANTOR]
By
--------------------------------------
Title:
Address:
Attention:
Telephone:
Telecopy:
- --------------------
* Bracketed Sections 11 and 12 to be inserted if the Guarantor is a Subsidiary
with a jurisdiction of organization outside the United States.
GUARANTEE AGREEMENT
9
<PAGE> 88
EXHIBITS 4.4(a)(i), (ii) and (iii)
OPINIONS OF SPECIAL COUNSEL FOR THE ISSUER AND THE COMPANY
The following opinions are to be provided by U.S. and Dutch
special counsel for the Issuer and the Company (allocated among such counsel as
appropriate), subject to customary assumptions, limitations and qualifications.
All capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreements.
1. The Company is a limited liability company duly organized and
validly existing under the laws of The Netherlands and has all requisite power
and authority to own or hold under lease the property it purports to own or hold
under lease, to carry on its business as now being conducted and to execute and
deliver the Agreements and to perform the provisions thereof.
2. The Issuer is a corporation duly organized and validly existing
under the laws of the State of Delaware and has all requisite power and
authority to own or hold under lease the property it purports to own or hold
under lease, to carry on its business as now being conducted and to execute and
deliver the Agreements and the Notes and to perform the provisions thereof. The
Issuer has duly qualified and is authorized to do business in each jurisdiction
where such qualification and authorization is necessary.
3. Each Subsidiary (other than the Issuer and the inactive
Subsidiaries so designated in Schedule 5.4 of the Agreements) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, except where the failure to be so qualified or
in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has all
requisite corporate power and authority to own or hold under lease the property
it purports to own or hold under lease and to carry on its business as now being
conducted and, in the case of a Subsidiary Guarantor, to execute and deliver its
respective Subsidiary Guarantee and perform the provisions thereof.
4. The Agreements have been duly authorized, executed and
delivered by the Issuer and the Company and constitute legal, valid and binding
agreements of the Issuer and the Company, enforceable against the Issuer and the
Company in accordance with their terms.
5. The Notes being purchased by you today have been duly
authorized, executed and delivered by the Issuer and
<PAGE> 89
constitute legal, valid and binding obligations of the Issuer, enforceable
against the Issuer in accordance with their terms.
6. The Subsidiary Guarantees have been duly authorized, executed
and delivered by the respective Subsidiary Guarantors and constitute legal,
valid and binding obligations of such Subsidiary Guarantors, enforceable against
such Subsidiary Guarantors in accordance with their respective terms.
7. No consent, approval or authorization of, or declaration,
registration or filing with, any Governmental Authority is required to be
obtained or made as a condition to the validity of the execution and delivery by
the Issuer or the Company of the Agreements, by the Issuer of said Notes or by
the Subsidiary Guarantors of said Subsidiary Guarantees or for the performance
by the Issuer or the Company or the Subsidiary Guarantors of their respective
obligations thereunder.
8. It was not necessary in connection with the offering, sale and
delivery of said Notes, the Parent Guarantee or said Subsidiary Guarantees,
under the circumstances contemplated by the Agreements, to register said Notes,
the Parent Guarantee or said Subsidiary Guarantees under the Securities Act or
to qualify an indenture in respect of the Notes under the Trust Indenture Act of
1939, as amended.
9. The execution, delivery and performance by the Company of the
Agreements, by the Issuer of the Agreements and the Notes and by the Subsidiary
Guarantors of their respective Subsidiary Guarantees will not (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company or any Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement or
instrument known to such counsel to which the Company or any Subsidiary is bound
or by which the Company or any Subsidiary or any of their respective properties
may be bound or affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
10. Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as
amended.
11. None of the transactions contemplated by the Agreements
(including without limitation the use of the proceeds from the sale of the
Notes) will violate or result in a violation of Section 7 of the Exchange Act,
or any regulations issued
2
<PAGE> 90
pursuant thereto, including without limitation Regulations T, U and X of the
Board of Governors of the Federal Reserve System (12 CFR, Part 220, Part 221 and
Part 224, respectively).
12. No liability for any Tax, directly or indirectly, imposed,
assessed, levied or collected by or for the account of any Governmental
Authority in The Netherlands will be incurred by you or by the Issuer, the
Company or any Subsidiary Guarantor as a result of the execution or delivery of
the Agreements, the Notes purchased by you today or said Subsidiary Guarantees,
and assuming you are resident in the United States and are not engaged in
business in The Netherlands, no deduction or withholding in respect of Taxes
imposed by or for the account of any Governmental Authority in The Netherlands
is required to be made from any payment by the Issuer, the Company or the
Subsidiary Guarantors under the Agreements, said Notes, the Parent Guarantee or
said Subsidiary Guarantees.
13. Assuming you do not otherwise have a presence in The
Netherlands, you will not be deemed to be domiciled or resident in The
Netherlands for tax purposes or carrying on business in The Netherlands solely
by reason of the making and performance or enforcement of the Agreements or the
holding of Notes.
14. A final judgment properly obtained in any court of the State
of New York or any federal court in the United States of America located in the
Borough of Manhattan, The City of New York, in respect of any suit, action or
proceeding arising out of the Agreements, the Notes or said Subsidiary
Guarantees will be given conclusive effect by the courts in The Netherlands
without reexamination of the substantive matters thereby adjudicated.
15. It is not necessary under the laws of The Netherlands in order
to enable any Person to enforce its rights under the Agreements, the Notes or
said Subsidiary Guarantees that such Person be licensed, qualified or otherwise
entitled to carry on business in The Netherlands.
16. There are no actions, suits or proceedings pending, or to the
knowledge of such counsel threatened, against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority,
except actions, suits or proceedings which (a) individually do not in any manner
draw into question the validity of the Agreements, the Subsidiary Guarantees or
the Notes and (b) in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
* * * *
This opinion is given solely for your benefit, and for the benefit
of the institutional investor holders from time to time of the Notes purchased
by you today, in connection with the closing held today of the transactions
contemplated by the Agreements, and may not be relied upon by any other person
for any purpose without our prior written consent.
3
<PAGE> 91
EXHIBIT 4.4(b)
FORM OF OPINION OF WF&G
July , 1999
Re: Core Laboratories, Inc.
Guaranteed Senior Notes
To the several Purchasers listed in
the Schedule A to the
within-mentioned Note Agreements
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
issuance by Core Laboratories, Inc. (the "Issuer") of its 8.11% Guaranteed
Senior Notes, Series A, due 2009 in an aggregate principal amount of $35,000,000
and its 8.21% Guaranteed Senior Notes, Series B, due 2011 in an aggregate
principal amount of $40,000,000 (collectively, the "Notes"), and the purchases
by you pursuant to the several Note and Guarantee Agreements made by you with
the Company and Core Laboratories, N.V., (the "Company") under date of July 22,
1999 (the "Note Agreements") of Notes of the series and in the respective
aggregate principal amounts set forth in Schedule A to the Note Agreements. All
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Note Agreements.
We have examined such corporate records of the Company and the
Issuer, agreements and other instruments, certificates of public officials and
of officers and representatives of the Company and the Issuer, and such other
documents, as we have deemed necessary in connection with the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures, the authenticity of documents submitted to us as originals and
the conformity with the authentic originals of all documents submitted to us as
copies. As to questions of fact material to such opinions we have, when relevant
facts were not independently established, relied upon the representations set
forth in the Note Agreements and upon certifications by officers or other
representatives of the Company and the Issuer.
In addition, we attended the closing held today at our office at
which you purchased and made payment for Notes of the series and in the
respective aggregate principal amounts to be purchased by you, all in accordance
with the Note Agreements.
<PAGE> 92
Based upon the foregoing and having regard for legal
considerations that we deem relevant, we render our opinion to you pursuant to
Section 4.4(b) of the Note Agreements as follows:
1. The Issuer is a validly existing corporation in good standing
under the laws of the State of Delaware and has the corporate power to execute
and deliver the Note Agreements and the Notes and to perform its obligations
thereunder.
2. The Note Agreements have been duly authorized, executed and
delivered by the Issuer and constitute legal, valid and binding agreements of
the Issuer, enforceable against the Company in accordance with their terms.
3. The Note Agreements constitute legal, valid and binding
agreements of the Company, enforceable against the Company in accordance with
their terms.
4. The Notes being purchased by you today have been duly
authorized, executed and delivered by the Issuer and constitute legal, valid and
binding obligations of the Issuer, enforceable against the Issuer in accordance
with their respective terms; and said Notes are entitled to the benefits of the
Parent Guarantee in accordance with its terms.
5. No consent, approval or authorization of, or declaration,
registration or filing with, any New York or Federal Governmental Authority is
required to be obtained or made as a condition to the validity of the execution
and delivery by the Company or the Issuer of the Note Agreements or by the
Issuer of said Notes or for the performance by the Company or the Issuer of
their respective obligations thereunder.
6. It was not necessary in connection with the offering, sale and
delivery of said Notes or the Parent Guarantee or the Subsidiary Guarantees
delivered today, under the circumstances contemplated by the Note Agreements, to
register said Notes or the Parent Guarantee or said Subsidiary Guarantees under
the Securities Act of 1933, as amended, or to qualify an indenture in respect of
the Notes under the Trust Indenture Act of 1939, as amended.
8. The opinions of John D. Denson, Esq., Vice President and
General Counsel for the Issuer and the Company, Vinson & Elkins L.L.P., United
States special counsel for the Issuer and the Company, and Nauta Dutihl, Dutch
special counsel for the Company, each dated today and delivered to you pursuant
to Section 4.4 of the Note Agreements, are satisfactory to us in form and scope
with respect to the matters respectively specified therein and we believe that
you are justified in relying thereon.
The opinions expressed above as to the enforceability of the Note
Agreements and the Notes purchased by you today in accordance with their
respective terms are subject to the
<PAGE> 93
exception that such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and (b) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
To the extent that the opinions expressed above involve matters
governed by Dutch law we have relied upon the aforementioned opinion of Nauta
Dutihl, and our conclusions as to such matters are subject to the same
assumptions, limitations and qualifications as are contained in said opinion.
We express no opinion as to Section 24.3 of the Note Agreements
insofar as said Section relates to (i) the subject matter jurisdiction of the
United States District Court for the Southern District of New York to adjudicate
any controversy relating to the Note Agreements or the Notes, (ii) the waiver of
inconvenient forum with respect to proceedings in such United States District
Court or (iii) the waiver of the right to jury trial.
We are members of the bar of the State of New York and do not
herein intend to express any opinion as to any matters governed by any laws
other than Federal laws of the United States of America and the laws of the
State of New York and the General Corporation Law of the State of Delaware.
This opinion is given solely for your benefit and for the benefit
of the institutional investor holders from time to time of the Notes purchased
by you today, in connection with the closing held today of the transactions
contemplated by the Note Agreements, and may not be relied upon by any other
person for any purposes without our prior written consent.
Very truly yours,
<PAGE> 94
SCHEDULE 5.3
Disclosure Documents
<PAGE> 95
SCHEDULE 5.4
Subsidiaries
<PAGE> 96
SCHEDULE 5.5
Financial Statements
<PAGE> 97
SCHEDULE 5.8
Litigation
<PAGE> 98
SCHEDULE 5.11
Licenses, etc.
<PAGE> 99
SCHEDULE 5.15
Existing Indebtedness
<PAGE> 100
If you are in agreement with the foregoing, please sign the form
of agreement in the space below provided on a counterpart of this Agreement and
return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Issuer and the Company.
Very truly yours,
CORE LABORATORIES, INC.
By
--------------------------------------
Title:
CORE LABORATORIES N.V., by
its sole Managing Director
Core Laboratories International B.V.
By
--------------------------------------
Jacobus Schouten,
Managing Director
The foregoing is hereby agreed
to as of the date thereof.
THE FRANKLIN LIFE
INSURANCE COMPANY
By
------------------------------
Title:
<PAGE> 101
If you are in agreement with the foregoing, please sign the form
of agreement in the space below provided on a counterpart of this Agreement and
return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Issuer and the Company.
Very truly yours,
CORE LABORATORIES, INC.
By
--------------------------------------
Title:
CORE LABORATORIES N.V., by
its sole Managing Director
Core Laboratories International B.V.
By
--------------------------------------
Jacobus Schouten,
Managing Director
The foregoing is hereby agreed
to as of the date thereof.
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By
------------------------------
Title:
<PAGE> 102
If you are in agreement with the foregoing, please sign the form
of agreement in the space below provided on a counterpart of this Agreement and
return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Issuer and the Company.
Very truly yours,
CORE LABORATORIES, INC.
By
--------------------------------------
Title:
CORE LABORATORIES N.V., by
its sole Managing Director
Core Laboratories International B.V.
By
--------------------------------------
Jacobus Schouten,
Managing Director
The foregoing is hereby agreed
to as of the date thereof.
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
By
------------------------------
Title:
<PAGE> 103
If you are in agreement with the foregoing, please sign the form
of agreement in the space below provided on a counterpart of this Agreement and
return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Issuer and the Company.
Very truly yours,
CORE LABORATORIES, INC.
By
--------------------------------------
Title:
CORE LABORATORIES N.V., by
its sole Managing Director
Core Laboratories International B.V.
By
--------------------------------------
Jacobus Schouten,
Managing Director
The foregoing is hereby agreed
to as of the date thereof.
PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By
------------------------------
Title:
<PAGE> 104
If you are in agreement with the foregoing, please sign the form
of agreement in the space below provided on a counterpart of this Agreement and
return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Issuer and the Company.
Very truly yours,
CORE LABORATORIES, INC.
By
--------------------------------------
Title:
CORE LABORATORIES N.V., by
its sole Managing Director
Core Laboratories International B.V.
By
--------------------------------------
Jacobus Schouten,
Managing Director
The foregoing is hereby agreed
to as of the date thereof.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA INVESTMENTS, INC.
By
------------------------------
Title:
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