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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 18, 1999
CORE LABORATORIES N.V.
(Exact name of registrant as specified in its charter)
THE NETHERLANDS NOT APPLICABLE
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
0-26710
(Commission File Number)
HERENGRACHT 424
1017 BZ AMSTERDAM
THE NETHERLANDS NOT APPLICABLE
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (31-20) 420-3191
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 18, 1999, Core Laboratories N.V. (the "Company") executed a
definitive merger agreement to purchase all of the outstanding shares of
GeoScience Corporation ("GeoScience"), approximately seventy-nine percent of
which is owned by Tech-Sym Corporation ("Tech-Sym"). In connection with the
merger agreement Tech-Sym has given an irrevocable proxy to the Company to vote
all shares that Tech-Sym owns in favor of the approval of the merger.
Accordingly, approval of the merger by GeoScience stockholders is assured. Under
the terms of the merger agreement, the Company will exchange 0.6788 common
shares and $2.46 in cash for each GeoScience share, resulting in an issuance of
approximately 6.8 million shares and a payment of approximately $25 million in
cash using additional borrowings from its revolving credit facility. Core
Laboratories will assume the current outstanding indebtedness of GeoScience of
approximately $33 million. In addition, the existing stock options held by
employees and directors of GeoScience will be assumed by the Company as options
to purchase the Company's common shares, subject to an adjustment for the
exchange ratio. Consummation of the merger is subject to certain customary
conditions.
GeoScience, located in Houston, Texas, has approximately 500 employees with
operations in the United States, United Kingdom and Singapore. GeoScience
provides marine seismic data acquisition systems with a product line that
includes marine streamers, ocean bottom cable and state of the art radio
telemetry systems. GeoScience is currently developing new fiber optic, solid
streamer imaging technologies to improve existing systems. After completion of
the merger, GeoScience will conduct its future business under its industry
recognized tradename "Syntron".
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A). FINANCIAL STATEMENTS OF ACQUIRED COMPANY.
The Company will file required financial statements of the acquired
business within sixty (60) days.
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(B). PRO FORMA FINANCIAL INFORMATION.
The Company will file within sixty (60) days the required pro forma
financial statements.
(C). EXHIBITS.
The following exhibits are filed herewith:
10.1 Agreement and Plan of Merger by and among Core
Laboratories N.V., Syntron Inc., GeoScience
Corporation, and Tech-Sym Corporation, dated as of
January 18, 1999.
99.1 News Release of Core Laboratories N.V. regarding
Acquisition of GeoScience Corporation dated January
19, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORE LABORATORIES N.V.
Dated: February 2, 1999 By: /s/ Richard L. Bergmark
----------------------------------------
Richard L. Bergmark
Chief Financial Officer and Treasurer
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INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
------- -----------
10.1 Agreement and Plan of Merger by and among Core
Laboratories N.V., Syntron Inc., GeoScience
Corporation, and Tech-Sym Corporation, dated as of
January 18, 1999.
99.1 News Release of Core Laboratories N.V. regarding
Acquisition of GeoScience Corporation dated January
19, 1999.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CORE LABORATORIES N.V.,
SYNTRON INC.,
GEOSCIENCE CORPORATION,
AND
TECH-SYM CORPORATION
DATED AS OF JANUARY 18, 1999
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
SECTION 1.1. The Merger..................................................
SECTION 1.2. Closing.....................................................
SECTION 1.3. Effective Time..............................................
SECTION 1.4. Effect of the Merger........................................
SECTION 1.5. Articles of Incorporation and Bylaws........................
SECTION 1.6. Directors and Officers......................................
</TABLE>
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
<TABLE>
<S> <C> <C>
SECTION 2.1. Effect on Stock.............................................
SECTION 2.2. Exchange of Certificates....................................
</TABLE>
ARTICLE III
SHAREHOLDER APPROVAL; BOARD
OF DIRECTORS OF ACQUIROR
<TABLE>
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SECTION 3.1. Shareholder Approval........................................
SECTION 3.2. Appointment of a New Director...............................
</TABLE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TARGET AND TARGET PARENT
<TABLE>
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SECTION 4.1. Organization, Qualification, Etc............................
SECTION 4.2. Capitalization..............................................
SECTION 4.3. Corporate Authority Relative to this Agreement; No
Violation...................................................
SECTION 4.4. Reports and Financial Statements............................
SECTION 4.5. No Undisclosed Liabilities..................................
SECTION 4.6. No Violation of Law.........................................
SECTION 4.7. Environmental Laws and Regulations..........................
SECTION 4.8 Employee Benefit Matters....................................
SECTION 4.9. Absence of Certain Changes or Events........................
SECTION 4.10. Investigations; Litigation..................................
SECTION 4.11. Information Statement; Proxy Statement; Registration
Statement; Other Information................................
SECTION 4.12 Certain Business Practices..................................
SECTION 4.13. Lack of Ownership of Acquiror Common Shares.................
SECTION 4.14. Tax Matters.................................................
SECTION 4.15. Opinion of Financial Advisor................................
SECTION 4.16. Required Vote of Target Stockholders........................
SECTION 4.17. Intellectual Property.......................................
SECTION 4.18. Severance Payments..........................................
SECTION 4.19. Title to Properties.........................................
SECTION 4.20. Intercompany Balances and Agreements........................
SECTION 4.21. Year 2000 Compliance........................................
SECTION 4.22. Voting Agreement and Irrevocable Proxy......................
</TABLE>
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB
<TABLE>
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SECTION 5.1. Organization, Qualification, Etc............................
SECTION 5.2. Capitalization..............................................
SECTION 5.3. Corporate Authority Relative to this Agreement; No
Violation...................................................
SECTION 5.4. Reports and Financial Statements............................
SECTION 5.5. No Undisclosed Liabilities..................................
SECTION 5.6. No Violation of Law.........................................
SECTION 5.7. Absence of Certain Changes or Events........................
SECTION 5.8. Proxy Statement; Information Statement; Registration
Statement; Other Information................................
SECTION 5.9. Lack of Ownership of Target Common Stock....................
SECTION 5.10. Certain Business Practices..................................
SECTION 5.11. Opinion of Financial Advisor................................
SECTION 5.12. Required Vote of Acquiror Shareholders......................
SECTION 5.13. Year 2000 Compliance........................................
SECTION 5.14. Tax Matters.................................................
SECTION 5.15. Environmental Laws and Regulations..........................
SECTION 5.16 Employee Benefits...........................................
SECTION 5.17. Investigations; Litigation..................................
</TABLE>
ARTICLE VI
COVENANTS AND AGREEMENTS
<TABLE>
<S> <C> <C>
SECTION 6.1. Conduct of Business by Target or Acquiror...................
SECTION 6.2. Investigation...............................................
SECTION 6.3. Cooperation.................................................
SECTION 6.4. Affiliate Agreements........................................
SECTION 6.5. Employee Stock Options, Incentive and Benefit Plans.........
SECTION 6.6. Filings; Other Action.......................................
SECTION 6.7. Further Assurances..........................................
SECTION 6.8. Anti-takeover Statute.......................................
SECTION 6.9. No Solicitation.............................................
SECTION 6.10. Public Announcements........................................
SECTION 6.11. Indemnification.............................................
SECTION 6.12. Indemnification of Directors and Officers...................
SECTION 6.13. Additional Reports..........................................
SECTION 6.14. Accounting Treatment........................................
SECTION 6.15. Stockholder Agreement.......................................
SECTION 6.16. Covenant of Target Parent...................................
SECTION 6.17 Executive Retirement Agreement..............................
SECTION 6.18 Tax-Free Reorganization.....................................
SECTION 6.19 Gain Recognition Agreement..................................
SECTION 6.20 Working Capital Advances....................................
SECTION 6.21 Update Disclosure; Breaches.................................
SECTION 6.22 Target Parent's Withdrawal from Target Benefit Plans........
SECTION 6.23. Intercompany Relationships..................................
SECTION 6.24. Payment of 1998 Taxes.......................................
</TABLE>
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ARTICLE VII
CONDITIONS TO THE MERGER
<TABLE>
<S> <C> <C>
SECTION 7.1. Conditions to Each Party's Obligation to Effect the
Merger......................................................
SECTION 7.2. Conditions to Obligations of Target to Effect the Merger....
SECTION 7.3. Conditions to Obligations of Acquiror to Effect the
Merger......................................................
</TABLE>
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
<TABLE>
<S> <C> <C>
SECTION 8.1. Termination or Abandonment..................................
SECTION 8.2. Termination Fee.............................................
</TABLE>
ARTICLE IX
MISCELLANEOUS
<TABLE>
<S> <C> <C>
SECTION 9.1. Survival of Representations and Warranties..................
SECTION 9.2. Expenses....................................................
SECTION 9.3. Counterparts; Effectiveness.................................
SECTION 9.4. Governing Law...............................................
SECTION 9.5. Notices.....................................................
SECTION 9.6. Assignment; Binding Effect..................................
SECTION 9.7. Severability................................................
SECTION 9.8. Enforcement of Agreement....................................
SECTION 9.9. Miscellaneous...............................................
SECTION 9.10. Headings....................................................
SECTION 9.11. Subsidiaries; Significant Subsidiaries; Affiliates..........
SECTION 9.12. Finders or Brokers..........................................
SECTION 9.13. Amendment...................................................
SECTION 9.14. Waiver......................................................
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 18, 1999 (this
"Agreement"), is among CORE LABORATORIES N.V. ("Acquiror"), SYNTRON INC.
("Sub"), GEOSCIENCE CORPORATION ("Target") and TECH-SYM CORPORATION ("Target
Parent").
WHEREAS, Target is a corporation duly organized and existing under the laws
of the State of Nevada, Acquiror is a corporation duly organized and existing
under the laws of The Netherlands, Sub is a corporation duly organized and
existing under the laws of the State of Nevada and is a wholly-owned subsidiary
of Acquiror, and Target Parent is a corporation duly organized and existing
under the laws of the State of Nevada and the owner of 79.12% of the outstanding
common stock of Target, and each party has the address set forth in Section 9.5
hereof;
WHEREAS, the Board of Supervisory Directors of Acquiror and the respective
Boards of Directors of Sub, Target and Target Parent have approved and have
declared advisable the merger of Sub with and into Target (the "Merger"), upon
the terms and subject to the conditions set forth herein, whereby each issued
and outstanding share of the common stock, par value $0.01 per share, of Target
("Target Common Stock") not owned directly by Target or Acquiror will be
converted into the right to receive 0.6788 of common shares, par value NLG 0.03
per share, of Acquiror ("Acquiror Common Shares") and cash of $2.46, and have
determined that the Merger and the other transactions contemplated hereby are
consistent with, and in furtherance of, their respective business strategies and
goals;
WHEREAS, Target Parent, in its capacity as a stockholder of Target, has
executed a voting agreement and irrevocable proxy (the "Voting Agreement and
Irrevocable Proxy") of even date herewith granting Acquiror or its designee the
authority to vote Target Parent's shares of Target Common Stock in favor of (i)
approval of the Merger in accordance with this Agreement and (ii) the adoption
of this Agreement, and against any transaction or proposal that would impede,
frustrate, prevent or nullify the Merger;
WHEREAS, the parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the issuance
of Acquiror Common Shares in the Merger will qualify as a reorganization under
the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, for financial accounting purposes, the parties acknowledge that
the Merger will be accounted for as a purchase and the parties acknowledge that
all economic benefits and risks of Target are transferred to the Surviving
Corporation (as defined in Section 1.1) as of the date hereof, and, to the
extent any provision of this Agreement and its exhibits is in conflict with this
principle, the parties agree that this principle shall be controlling;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Chapter 92A of the Nevada
Revised Statutes ("Nevada Law"), Sub shall be merged with and into Target at the
Effective Time (as defined in Section 1.3). Following the Effective Time, the
separate corporate existence of Sub shall cease and Target shall be the
surviving corporation (the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of Nevada.
SECTION 1.2. Closing. The closing of the Merger (the "Closing") will take
place at such time and date to be specified by the parties (the "Closing Date"),
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VII, unless another time or date
is agreed to by the
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parties hereto. The Closing will be held at the offices of Vinson & Elkins
L.L.P. in the city of Houston, Texas or as otherwise agreed to by the parties
hereto.
SECTION 1.3. Effective Time. Subject to the provisions of this Agreement
and in accordance with Nevada Law, as soon as practicable on the Closing Date,
the parties shall file Articles of Merger (the "Articles of Merger") with the
Secretary of State of the State of Nevada, in such form as required by, and
executed and acknowledged in accordance with the relevant provisions of, Nevada
Law. The Merger shall become effective at the later of the date of filing of the
Articles of Merger or at such time within 90 days of the date of filing as is
specified in the Articles of Merger (the "Effective Time").
SECTION 1.4. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Nevada Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the properties, rights,
privileges, powers and franchises of Sub and Target shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Sub and Target shall
become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5. Articles of Incorporation and Bylaws. At the Effective Time:
(a) the articles of incorporation of the Surviving Corporation shall be amended
and restated to adopt the articles of incorporation of Sub, as in effect
immediately prior to the Effective Time (except the name of the Surviving
Corporation shall be "Syntron Inc."), until thereafter changed or amended as
provided therein or by applicable law.
(b) the bylaws of the Surviving Corporation shall be amended and restated
to adopt the bylaws of Sub, as in effect immediately prior to the Effective Time
(except the name of the Surviving Corporation shall be "Syntron Inc."), until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.6. Directors and Officers. The directors and officers of Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their respective successors are duly elected and
qualified (or their earlier resignation or removal), as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of Sub, Target or the holders of any
securities of Target or Sub:
(a) Cancellation of Target-Owned Stock and Acquiror-Owned Stock. Each
share of Target Common Stock that is owned directly by Target as treasury
stock or by Acquiror shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) Conversion of Target Common Stock. Subject to Section 2.2(f), each
share of Target Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares to be canceled in accordance with
Section 2.1(a)) shall be converted into the right to receive (i) 0.6788 of
an Acquiror Common Share and (ii) $2.46 in cash (the "Cash Consideration")
(together, (i) and (ii) being referred to herein as the "Merger
Consideration"). As of the Effective Time, all such shares of Target Common
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Target Common Shares (the "Certificates") shall cease to have
any rights with respect thereto, except the right to receive: (i)
certificates representing the number of whole Acquiror Common Shares into
which such shares have been converted ("Acquiror Certificates"), (ii)
certain dividends and other distributions in accordance with Section
2.2(d), (iii) cash in an amount equal to the product that is obtained by
multiplying (A) the Cash Consideration by (B) the whole number of shares of
Target Common Stock surrendered, and (iv) cash in lieu of fractional
Acquiror Common Shares in accordance with Section 2.2(f), without interest.
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(c) Conversion of Common Stock of Sub. Each issued and outstanding
share of common stock, par value $0.01 per share, of Sub shall be converted
into one validly issued, fully paid and nonassessable share of common stock
of the Surviving Corporation.
SECTION 2.2. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Acquiror shall deliver (or cause to be delivered) to American
Stock Transfer & Trust Company, or another bank or trust company designated by
it (the "Exchange Agent"), for the benefit of the holders of shares of Target
Common Stock for exchange in accordance with this Article II, Acquiror
Certificates evidencing Acquiror Common Shares issuable pursuant to Section
2.1(b) and funds sufficient to make payment of the Cash Consideration payable
pursuant to Section 2.1(b). The Acquiror Certificates, together with any
dividends or distributions with respect thereto, and the cash funds, each
referred to in the preceding sentence, are hereafter collectively referred to as
the "Exchange Fund".
(b) Notice of Exchange. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the Merger Consideration pursuant
to Section 2.1, (i) 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 the Exchange Agent and shall be in
such form and have such other provisions as Acquiror and Target may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.
(c) Exchange Procedures. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in exchange
therefor: (i) an Acquiror Certificate representing that number of whole Acquiror
Common Shares which such holder has the right to receive pursuant to the
provisions of this Article II, (ii) a check payable to the order of such holder
representing payment of certain dividends or other distributions in accordance
with Section 2.2(d), (iii) a check payable to the order of such holder
representing payment of the Cash Consideration for each share of Target Common
Stock evidenced by the Certificate surrendered and (iv) a check payable to the
order of such holder representing payment of cash in lieu of any fractional
Acquiror Common Share in accordance with Section 2.2(f), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Target Common Stock which is not registered in the transfer records of
Target, an Acquiror Certificate and cash may be issued and paid to a person
other than the person in whose name the Certificate so surrendered is registered
if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such issuance shall pay any transfer or
other nonincome taxes required by reason of the issuance of Acquiror Common
Shares to a person other than the registered holder of such Certificate or
establish to the satisfaction of Acquiror that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive, upon such surrender, Acquiror Certificates
representing the number of whole Acquiror Common Shares into which the shares of
Target Common Stock formerly represented by such Certificate have been
converted, the Cash Consideration, certain dividends or other distributions in
accordance with Section 2.2(d) and cash in lieu of any fractional Acquiror
Common Share in accordance with Section 2.2(f). No interest will be paid or will
accrue on any cash payable to holders of Certificates pursuant to the provisions
of this Article II.
(d) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Acquiror Common Shares with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the Acquiror Common Shares represented thereby, and no cash
payment in lieu of fractional Acquiror Common Shares shall be paid to any such
holder pursuant to Section 2.2(f), and all such dividends, other distributions
and cash in lieu of fractional Acquiror Common Shares shall be paid by Acquiror
to the Exchange Agent and shall be included in the Exchange Fund, in each case
until the surrender of such Certificate in accordance with this Article II.
Subject to the effect of applicable escheat or similar laws, following surrender
of any such Certificate there shall be paid to the holder of the Acquiror
Certificate representing whole Acquiror Common Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date
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after the Effective Time theretofore paid with respect to such whole Acquiror
Common Shares and the amount of any cash payable in lieu of a fractional
Acquiror Common Share to which such holder is entitled pursuant to Section
2.2(f) 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
such surrender and with a payment date subsequent to such surrender payable with
respect to such whole Acquiror Common Shares.
(e) No Further Ownership Rights in Target Common Stock. All Acquiror Common
Shares and Cash Consideration issued or paid upon the surrender for exchange of
Certificates in accordance with the terms of this Article II shall be deemed to
have been issued (and paid) in full satisfaction of all rights pertaining to the
shares of Target Common Stock theretofore represented by such Certificates.
There shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Target Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(f) No Fractional Shares. (i) No Acquiror Certificates or scrip
representing fractional Acquiror Common Shares shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of Acquiror
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Acquiror.
(ii) As promptly as practicable following the Effective Time, the Exchange
Agent will determine the excess of (A) the number of whole Acquiror Common
Shares delivered to the Exchange Agent by Acquiror pursuant to Section 2.2(a)
over (B) the aggregate number of whole Acquiror Common Shares to be distributed
to holders of Target Common Stock pursuant to Section 2.2(b) (such excess being
herein called the "Excess Shares"). Following the Effective Time, the Exchange
Agent will, on behalf of former stockholders of Target, sell the Excess Shares
at then-prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"), all
in the manner provided in Section 2.2(f)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent will be executed
on the NYSE through one or more member firms of the Exchange and will be
executed in round lots to the extent practicable. The Exchange Agent will use
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of Target Common Stock, the Exchange Agent
will hold such proceeds in trust for the holders of Target Common Stock (the
"Common Shares Trust"). The Surviving Corporation will pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such sale of
the Excess Shares. The Exchange Agent will determine the portion of the Common
Shares Trust to which each holder of Target Common Stock is entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of Target Common Stock is
entitled (after taking into account all shares of Target Common Stock held at
the Effective Time by such holder) and the denominator of which is the aggregate
amount of fractional share interests to which all holders of Target Common Stock
are entitled.
(iv) Notwithstanding the provisions of Section 2.2(f)(ii) and (iii), the
Surviving Corporation may elect at its option, exercised prior to the Effective
Time, in lieu of the issuance and sale of Excess Shares and the making of the
payments hereinabove contemplated, to pay each holder of Target Common Stock an
amount in cash (without interest), rounded up to the nearest cent, equal to the
product obtained by multiplying (A) the fractional share interest to which such
holder (after taking into account all shares of Target Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the closing
price for one Acquiror Common Share as reported on the NYSE Composite
Transactions Tape (as reported in The Wall Street Journal, or, if not reported
thereby, any other authoritative source) on the Closing Date, and, in such case,
all references herein to the cash proceeds of the sale of the Excess Shares and
similar references will be deemed to mean and refer to the payments calculated
as set forth in this Section 2.2(f)(iv).
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(v) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Target Common Stock with respect to any
fractional share interests, the Exchange Agent will make available such amounts
to such holders of Target Common Stock subject to and in accordance with the
terms of Section 2.2(d).
(g) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Acquiror, upon demand, and any holders
of the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Acquiror for payment of their claim for Merger
Consideration, any cash in lieu of fractional Acquiror Common Shares and any
dividends or distributions with respect to Acquiror Common Shares.
(h) No Liability. None of Acquiror, Target, Target Parent, Sub or the
Exchange Agent shall be liable to any person in respect of any Acquiror Common
Shares (or dividends or distributions with respect thereto) or cash from the
Exchange Fund in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificate shall
not have been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration, any
other cash payable to the holder of such Certificate pursuant to this Article II
or any dividends or distributions payable to the holder of such Certificate
would otherwise escheat to or become the property of any governmental body or
authority) any such Merger Consideration or cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(i) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Acquiror, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Acquiror.
(j) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against Acquiror, Surviving Corporation or the Exchange Agent
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration and, if
applicable, any cash in lieu of fractional shares, and unpaid dividends and
distributions on Acquiror Common Shares deliverable in respect thereof, pursuant
to this Agreement.
(k) Tax Consequences. The parties hereto intend that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
ARTICLE III
SHAREHOLDER APPROVAL; BOARD
OF DIRECTORS OF ACQUIROR
SECTION 3.1. Shareholder Approval. Subject to the terms and conditions
contained herein, the issuance of Acquiror Common Shares in connection with the
Merger (the "Share Issuance") shall be submitted for approval to the holders of
Acquiror Common Shares to the extent required by the rules and regulations of
the NYSE. Acquiror shall recommend that its shareholders approve the Share
Issuance. This Agreement and the Merger shall be submitted for approval to the
holders of Target Common Stock. Target shall recommend that its stockholders
approve the Merger and this Agreement.
SECTION 3.2. Appointment of a New Director. Subject to the occurrence of
the Merger, Acquiror shall take all action necessary to recommend to its
stockholders, at the next annual meeting of its stockholders, the election of J.
Michael Camp as a Class III director on Acquiror's Board of Supervisory
Directors for a term
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expiring in 2001. For so long as Target Parent owns five percent (5%) or more of
the outstanding Acquiror Common Shares, Acquiror shall cause its management to
recommend to the Board of Supervisory Directors and the Board of Supervisory
Directors shall, to the fullest extent permitted by the laws of The Netherlands,
agree to include one individual designated by Target Parent in the slate of
Supervisory Directors submitted to the stockholders of Acquiror for election,
which individual initially shall be J. Michael Camp, for so long as J. Michael
Camp is affiliated with Target Parent; provided that, if J. Michael Camp is
unable to serve as a Supervisory Director, Target Parent shall be entitled to
designate such individual from the operating management of Target Parent with
the approval of Acquiror, which shall not be unreasonably withheld. Any
Supervisory Director designated by Target Parent shall not be entitled to any
compensation for serving as such, excluding payment or reimbursement of
reasonable out-of-pocket expenses in attending meetings of the Board of
Supervisory Directors. If, during the period Target Parent owns five percent or
more of the outstanding Acquiror Common Shares, it does not have a
representative on the Board of Supervisory Directors, then Target Parent shall
be entitled to designate one person, subject to the approval of Acquiror, which
shall not be unreasonably withheld, to attend all meetings of the Board of
Supervisory Directors of Acquiror as an observer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TARGET AND TARGET PARENT
Target and Target Parent represent and warrant to Acquiror and Sub that:
SECTION 4.1. Organization, Qualification, Etc. Target is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has the corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not, individually or in the aggregate, have a
Material Adverse Effect (as hereinafter defined) on Target. As used in this
Agreement, any reference to any state of facts, event, change or effect having a
"Material Adverse Effect" on or with respect to Target or Acquiror, as the case
may be, means such state of facts, event, change or effect that has had, or
would reasonably be expected to have, a material adverse effect on the business,
results of continuing operations or financial condition of Target and its
Subsidiaries, taken as a whole, or Acquiror and its Subsidiaries (as defined in
Section 9.11), taken as a whole, as the case may be. A Material Adverse Effect
shall not be deemed to include material adverse changes affecting the oilfield
services industry or the United States economy generally. The copies of Target's
Articles of Incorporation and Bylaws which have been delivered to Acquiror are
complete and correct and in full force and effect on the date hereof. Except as
set forth on Schedule 4.1, each of Target's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the power and authority to
own its properties and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, individually or
in the aggregate, have a Material Adverse Effect on Target. Except as set forth
on Schedule 4.1, all the outstanding shares of capital stock of, or other
ownership interests in, Target's Subsidiaries are validly issued, fully paid and
non-assessable and are owned by Target, directly or indirectly, free and clear
of all liens, claims, charges or encumbrances, except for restrictions contained
in credit agreements and similar instruments to which Target is a party under
which no event of default has occurred or arisen. There are no existing options,
rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Subsidiary of Target.
SECTION 4.2. Capitalization. (a) The authorized stock of Target consists of
35,000,000 shares of common stock, par value $0.01 per share and 5,000,000
shares of preferred stock, par value $0.01 per share ("Target Preferred Stock").
As of January 15, 1999, 9,985,350 shares of Target Common Stock and no shares of
Target Preferred Stock were issued and outstanding. Except for the issuance of
shares of Target Common
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Stock pursuant to the options referred to in clause 4.2(c) below, since
September 30, 1998, no shares of Target Common Stock or Target Preferred Stock
have been issued. All the outstanding shares of Target Common Stock have been
validly issued and are fully paid and non-assessable.
(b) Neither Target nor Target Parent is a party to, nor is aware of, any
voting agreement (other than the Voting Agreement and Irrevocable Proxy), voting
trust or similar agreement or arrangement relating to any class or series of its
capital stock, or any agreement or arrangement providing for registration rights
with respect to any capital stock or other securities of Target, other than the
registration rights in the Registration Rights Agreement dated as of May 14,
1996 between Target and Target Parent which shall be terminated on or prior to
the Closing Date.
(c) As of the date hereof, there were outstanding options to purchase an
aggregate of 862,225 shares of Target Common Stock under the Target Corporation
1996 Equity Incentive Plan (the "Target Stock Option Plan"), all of which are
set forth on Schedule 4.2(c). Other than as set forth in this Section 4.2 and on
Schedule 4.2(c), there are not now, and at the Effective Time there will not be,
any (i) shares of capital stock or other equity securities of Target outstanding
other than Target Common Stock issuable pursuant to the exercise of the stock
options described in this Section 4.2(c), (ii) other outstanding awards under
the Target Stock Option Plan, or (iii) outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any class of capital stock of Target, or contracts, understandings or
arrangements to which Target is a party, or by which it is or may be bound, to
issue additional shares of its capital stock or options, warrants, scrip or
rights to subscribe for, or securities or rights convertible into or
exchangeable for, any additional shares of its capital stock.
(d) Except as set forth on Schedule 4.2(d)(i), all outstanding shares of
capital stock of Target's Subsidiaries (i) are owned by Target or a wholly owned
Subsidiary of Target, free and clear of all liens, charges, encumbrances,
adverse claims and options of any nature, (B) were duly authorized and validly
issued and are fully paid and nonassessable, and (C) have not been issued in
violation of any preemptive rights. There are not now, and at the Effective Time
there will not be, any outstanding options, warrants, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any class of capital
stock of any Subsidiary of Target, or contracts, understandings or arrangements
to which Target or any Subsidiary of Target is a party, or by which any of them
is or may be bound, to issue additional shares of its capital stock or options,
warrants, scrip or rights to subscribe for, or securities or rights convertible
into or exchangeable for, any additional shares of capital stock of any
Subsidiary of Target. There are not now, and at the Effective Time there will
not be, any outstanding contractual obligations of Target or any Subsidiary of
Target to repurchase, redeem or otherwise acquire any outstanding shares of
capital stock or other ownership interests of any such Subsidiary or, except as
set forth on Schedule 4.2(d)(ii), to provide funds to or make any investment (in
the form of a loan, capital contribution or otherwise) in any such Subsidiary or
any other entity.
(e) Except for the Subsidiaries of Target set forth on Schedule 4.2(e)
hereto, Target does not, directly or indirectly, own of record or beneficially,
or have the right or obligation to acquire, any outstanding securities or other
interest in any corporation, partnership, joint venture or other entity.
SECTION 4.3. Corporate Authority Relative to this Agreement; No
Violation. Each of Target and Target Parent has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the respective Boards of Directors of Target and Target Parent and, except for
the approval and adoption of this Agreement and the Merger by the stockholders
of Target, no other corporate proceedings on the part of Target or Target Parent
are necessary to authorize this Agreement and the transactions contemplated
hereby. The Board of Directors of Target has determined that the transactions
contemplated by this Agreement are in the best interest of Target and its
stockholders. This Agreement has been duly and validly executed and delivered by
each of Target and Target Parent and, assuming this Agreement constitutes a
valid and binding agreement of the other parties hereto, this Agreement
constitutes a valid and binding agreement of each of Target and Target Parent,
enforceable
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against Target and Target Parent in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Except as set forth on Schedule 4.3, neither Target nor Target Parent is subject
to or obligated under any charter, bylaw or contract provision or any licenses,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or carrying out this Agreement. Other than in
connection with or in compliance with the provisions of Nevada Law, the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") (collectively,
the "Target Required Approvals"), no authorization, consent or approval of, or
filing with, any governmental body or authority is necessary for the
consummation by Target of the transactions contemplated by this Agreement.
SECTION 4.4. Reports and Financial Statements. Target has previously
furnished to Acquiror true and complete copies of:
(a) Target's Annual Reports on Form 10-K filed with the Securities and
Exchange Commission (the "SEC") for each of the years ending after the date
on which the Target Common Stock began trading publicly (the "Target IPO
Date");
(b) Target's Quarterly Reports on Form 10-Q filed with the SEC for the
quarters ended March 31, June 30 and September 30, 1998;
(c) each definitive proxy statement filed by Target with the SEC since
the Target IPO Date;
(d) each final prospectus filed by Target with the SEC since the
Target IPO Date; and
(e) all Current Reports on Form 8-K filed by Target with the SEC since
December 31, 1997.
Target has timely filed all reports, registration statements and other
filings, together with any amendments required to be made with respect thereto,
that it has been required to file with the SEC under the Securities Act and the
Exchange Act. All reports, registration statements and other filings (including
all notes, exhibits and schedules thereto and documents incorporated by
reference therein) filed by Target with the SEC since the Target IPO Date
through the date of this Agreement, together with any amendments thereto, are
collectively referred to as the "Target SEC Reports." As of the respective dates
of their filing with the SEC, the Target SEC Reports complied in all material
respects with the Securities Act, the Exchange Act and the rules and regulations
of the SEC thereunder, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. Except as set forth on Schedule 4.4, (i) each of
the consolidated financial statements (including any related notes or schedules)
included in the Target SEC Reports was prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be noted therein or in the notes or schedules thereto) and complied with the
rules and regulations of the SEC and (ii) such consolidated financial statements
fairly present the consolidated financial position of Target and its
Subsidiaries as of the dates thereof and the results of operations, cash flows
and changes in stockholders' equity for the periods then ended (subject, in the
case of the unaudited interim financial statements, to normal year-end audit
adjustments on a basis consistent with past periods).
SECTION 4.5. No Undisclosed Liabilities. Neither Target nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, except (a) liabilities or obligations
reflected in any of the Target SEC Reports and (b) liabilities or obligations
which would not have, or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Target.
SECTION 4.6. No Violation of Law. The businesses of Target and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 4.6 with respect to
Environmental Laws (as hereinafter defined)) except (a) as described in any of
the Target SEC Reports and (b) for violations or
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possible violations which would not have, or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Target.
SECTION 4.7. Environmental Laws and Regulations. Except in all cases as, in
the aggregate, have not had or would not reasonably be expected to have a
Material Adverse Effect on Target, Target and each of its Subsidiaries, (i) have
obtained all applicable permits, licenses and other authorizations which are
required under foreign, federal, state or local laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic materials or wastes into ambient air, surface water, ground water or land
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage disposal, transport or handling of pollutants, contaminants
or hazardous or toxic materials or wastes by Target or its Subsidiaries (or
their respective agents); (ii) are in compliance with all terms and conditions
of such required permits, licenses and authorizations, and also are in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirement, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder;
(iii) as of the date hereof, are not aware of nor have received written notice
of any event, condition, circumstance, activity, practice, incident, action or
plan which is reasonably likely to interfere with or prevent continued
compliance with or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
based on or resulting from Target's or any of its Subsidiaries' (or any of their
respective agents') manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling or the emission, discharge or release
into the environment, of any pollutant, contaminant, or hazardous or toxic
material or waste; and (iv) have taken all actions necessary under applicable
requirements of foreign, federal, state or local laws, rules or regulations to
register any products or materials required to be registered by the Company or
its subsidiaries (or any of their respective agents) thereunder.
SECTION 4.8. Employee Benefit Matters. (a) Except as set forth on Schedule
4.8, Target and its Subsidiaries have no Target Benefit Plans (as defined
below). Target has made or will make available to Acquiror prior to the Closing
Date copies of each of the following (individually, a "Target Benefit Plan," and
collectively, the "Target Benefit Plans") which is sponsored, maintained or
contributed to by Target or any of its Subsidiaries for the benefit of the
employees of Target or any of its Subsidiaries, or has been so sponsored,
maintained or contributed to within six years prior to the date of this
Agreement:
(i) each "employee benefit plan," as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (including, but not limited to, employee benefit plans which are
not subject to the provisions of ERISA);
(ii) each personnel policy, stock option plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy, or agreement, deferred
compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment
agreement, and each other employee benefit plan, agreement, arrangement,
program, practice, or understanding which is not described in Section
4.8(a)(i).
(b) There has been furnished to Acquiror, with respect to each Target
Benefit Plan required to file such report and description, the most recent
report on Form 5500 and the summary plan description.
(c) Neither Target nor its Subsidiaries contribute to or have an obligation
to contribute to, and have not at any time within six years prior to the date of
this Agreement contributed to or had an obligation to contribute to, any
employee benefit plan that is subject to Section 302 of ERISA, Section 412 of
the Code, or Title IV of ERISA (including, without limitation, a multi employer
plan within the meaning of Section 3(37) of ERISA).
(d) Except as otherwise set forth on Schedule 4.8 or as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Target (excluding for purposes of applying the
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foregoing standard of materiality the representation in clause (vii) which shall
not be subject to any standard of materiality):
(i) Target and its Subsidiaries have substantially performed all
obligations, whether arising by operation of law or by contract, required
to be performed by them in connection with the Target Benefit Plans, and,
to the knowledge of the officers and directors of Target, there have been
no defaults or violations by any other party to the Target Benefit Plans;
(ii) Each Target Benefit Plan has been administered and operated in
substantial compliance with its governing documents and applicable law,
including, where applicable, ERISA and the Code;
(iii) Each Target Benefit Plan intended to be qualified under Section
401 of the Code (A) 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, (B) has received a favorable determination
letter from the Internal Revenue Service regarding such qualified status,
(C) 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 (D) has
not been operated in a way that would adversely affect its qualified
status;
(iv) There are no actions, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of the officers and
directors of Target, threatened against, or with respect to, any of the
Target Benefit Plans or their assets;
(v) No act, omission or transaction has occurred which would result in
imposition on Target or any of its Subsidiaries of (A) breach of fiduciary
duty liability damages under Section 409 of ERISA, (B) a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA,
or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
(vi) There is no matter pending (other than routine qualification
determination filings) with respect to any of the Target Benefit Plans
before any governmental authority;
(vii) With respect to any employee benefit plan within the meaning of
Section 3(3) of ERISA, which is not a Target Benefit Plan but which is
sponsored, maintained, or contributed to, or has been sponsored,
maintained, or contributed to within six years prior to the date of this
Agreement, by Target Parent or any corporation, trade, business, or entity
under common control with Target or Target Parent, within the meaning of
Section 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA
("Target Commonly Controlled Entity"), (A) no withdrawal liability, within
the meaning of Section 4201 of ERISA, has been incurred, which withdrawal
liability has not been satisfied, (B) no liability to the Pension Benefit
Guaranty Corporation has been incurred by any Target Commonly Controlled
Entity, which liability has not been satisfied, (C) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, and (D) all
contributions (including installments) to such plan required by Section 302
of ERISA and Section 412 of the Code have been timely made; and
(viii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (A) require
Target or any of its Subsidiaries to make a larger contribution to, or pay
greater benefits or provide other rights under, any Target Benefit Plan
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 (B) except as provided in Section 6.5(a), create or give rise to any
additional vested rights or service credits under any Target Benefit Plan.
(e) Except as otherwise set forth in Schedule 4.8 or as will be provided to
Acquiror prior to the Closing Date, neither Target nor any of its Subsidiaries
is a party to any agreement, nor has any such entity established any policy or
practice, requiring it to make a payment or provide any other form of
compensation or benefit to any person performing services for such entity upon
termination of such services which would not be payable or provided in the
absence of the consummation of the transactions contemplated by this Agreement.
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(f) In connection with the consummation of the transactions contemplated by
this Agreement, no payments of money or other property, acceleration of
benefits, or provisions of other rights have or will be made hereunder, under
any agreement contemplated herein, or under the Target Benefit Plans that would
be reasonably likely to result in imposition of the sanctions imposed under
Sections 280G and 4999 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.
SECTION 4.9. Absence of Certain Changes or Events. Since September 30,
1998, except as contemplated by this Agreement and except as disclosed in the
Target SEC Reports or as set forth in Schedule 4.9, Target and its Subsidiaries
have conducted their business only in the ordinary and usual course, and there
has not been (i) any Material Adverse Effect on Target, or any condition, event
or development that reasonably may be expected to result in a Material Adverse
Effect; (ii) any material change by Target in its accounting methods, principles
or practices; (iii) any revaluation by Target or any of its Subsidiaries of any
of their respective assets, including, without limitation, writing down the
value of inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (iv) any entry by Target or any of its Subsidiaries
into any commitment or transaction material to Target and its Subsidiaries,
taken as a whole; (v) any declaration, setting aside or payment of any dividends
or distributions in respect of Target Common Stock or any redemption, purchase
or other acquisition of any of its securities or any securities of any of its
Subsidiaries; (vi) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of Target
and its Subsidiaries, taken as a whole; (vii) any increase in indebtedness for
borrowed money other than an increase as a result of borrowings under existing
credit facilities or indebtedness incurred in the ordinary course of business;
(viii) any granting of a security interest in or lien on any material property
or assets of Target and its Subsidiaries, taken as a whole; or (ix) any increase
in or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan or any other increase in the compensation payable or to become
payable to any officers or key employees of Target or any of its Subsidiaries
other than those that are required under existing contractual arrangements.
SECTION 4.10. Investigations; Litigation. Except as described in any of the
Target SEC Reports or as set forth in Schedule 4.10, and except as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on Target:
(a) no investigation or review by any governmental body or authority
with respect to Target or any of its Subsidiaries is pending nor has any
governmental body or authority notified Target in writing of an intention
to conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to the
knowledge of Target's officers and directors, threatened) against or
affecting Target or its Subsidiaries, or any of their respective properties
at law or in equity, or before any federal, state, local or foreign
governmental body or authority.
SECTION 4.11. Information Statement; Proxy Statement; Registration
Statement; Other Information. None of the information with respect to Target or
its Subsidiaries to be included in the Information Statement (as defined below)
to be furnished in connection with the Target Meeting (as defined in Section
6.3(g)), the Proxy Statement (as defined in Section 5.8) or the Registration
Statement (as defined in Section 6.3(a)) will, in the case of the Information
Statement or the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the mailing of the Information Statement or the Proxy
Statement or any amendments or supplements thereto, or, in the case of the
Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by Target with respect to information supplied in writing
by Acquiror or any affiliate of Acquiror specifically for inclusion in the
Information Statement or the Proxy Statement. The Information Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder. The letters to
stockholders, and information statement to be distributed to stockholders in
connection with the Merger, the Share Issuance and
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any schedules required to be filed with the SEC in connection therewith are
collectively referred to herein as the "Information Statement".
SECTION 4.12 Certain Business Practices. None of Target, Target Parent, or
any of their Subsidiaries or any director, officer, employee or agent of Target,
Target Parent or any of their Subsidiaries has, in furtherance of any business
of Target: (i) used any funds for unlawful contributions, gifts, entertainment
or other unlawful payments relating to political activity, (ii) made any
unlawful payment to any foreign or domestic government official or employee or
to any foreign or domestic political party or campaign or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), (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 (the "SSA"), or (iv) made any other unlawful
payment.
SECTION 4.13. Lack of Ownership of Acquiror Common Shares. None of Target,
Target Parent, nor any of their Subsidiaries own any Acquiror Common Shares or
other securities convertible into Acquiror Common Shares.
SECTION 4.14. Tax Matters. (a) All federal, state, local and foreign Tax
Returns required to be filed by or on behalf of Target, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Target or any of its Subsidiaries (i) is a member (a "Current Target
Group") or (ii) has been a member within six years prior to the date hereof but
is not currently a member, but only insofar as any such Tax Return relates to a
taxable period which includes Target or any of its Subsidiaries and which ends
on a date within the last six years (a "Past Target Group", together with
Current Target Groups, an "Target Affiliated Group") have been timely filed, and
all such Tax Returns filed are complete and accurate except to the extent any
failure to file or any inaccuracies in such filed Tax Returns would not,
individually or in the aggregate, have a Material Adverse Effect on Target. All
Taxes due and owing by Target, any Subsidiary of Target or any Target Affiliated
Group have been paid, or adequately reserved for, except to the extent any
failure to pay or reserve would not, individually or in the aggregate, have a
Material Adverse Effect on Target. There is no audit examination, deficiency,
refund litigation, proposed adjustment or matter in controversy with respect to
any Taxes due and owing by Target, any Subsidiary of Target or any Target
Affiliated Group which would, individually or in the aggregate, have a Material
Adverse Effect on Target. All assessments for Taxes due and owing by Target, any
Subsidiary of Target or any Target Affiliated Group with respect to completed
and settled examinations or concluded litigation have been paid. As soon as
practicable after the public announcement of this Agreement, Target will provide
Acquiror with written schedules of (i) the taxable years of Target for which the
statutes of limitations with respect to federal income Taxes, have not expired,
and (ii) with respect to federal income Taxes those years for which examinations
have been completed, those years for which examinations are presently being
conducted, and those years for which examinations have not yet been initiated.
Target and each of its Subsidiaries has complied with all rules and regulations
relating to the withholding of Taxes, except to the extent any such failure to
comply would not, individually or in the aggregate, have a Material Adverse
Effect on Target.
(b) None of Target, Target Parent nor any of their Subsidiaries knows of
any fact or has taken any action that could reasonably be expected to prevent
the issuance of the Acquiror Common Shares in the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(c) Any amount or other entitlement that could be received (whether in cash
or property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of Target or
any of its affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any employee
benefit plan or other compensation arrangement currently in effect would not be
characterized as an "excess parachute payment" or a "parachute payment" (as such
terms are defined in Section 280G(b)(1) of the Code). For purposes of this
Agreement: (i) "Taxes" means any and all federal, state, local, foreign or other
taxes of any kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by any taxing
authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
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workers' compensation, unemployment compensation, or net worth, and taxes or
other charges in the nature of excise, withholding, ad valorem or value added,
and (ii) "Tax Return" means any return, report or similar statement (including
the attached schedules) required to be filed with respect to any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
SECTION 4.15. Opinion of Financial Advisor. The Board of Directors of
Target has received the opinion of Morgan Keegan & Company, Inc., dated the date
of this Agreement, a copy of which will be provided to Acquiror prior to the
Closing Date, to the effect that, as of the date of this Agreement, the Merger
Consideration is fair to Target's stockholders from a financial point of view.
SECTION 4.16. Required Vote of Target Stockholders. The affirmative vote of
the holders of a majority of the Target Common Stock present in person or by
proxy at a duly called meeting of stockholders at which a quorum is present is
the only vote of the holders of any class or series of capital stock of Target
required to approve the Merger and this Agreement. No other vote of the
stockholders or directors of Target is required by law, the Articles of
Incorporation or Bylaws of Target or otherwise in order for Target to consummate
the Merger and the transactions contemplated hereby. The voting of the shares of
Target Common Stock under the Voting Agreement and Irrevocable Proxy in favor of
the adoption of this Agreement and the approval of the Merger will be sufficient
to approve this Agreement and the Merger under Nevada Law and Target's charter
documents.
SECTION 4.17. Intellectual Property. Target and 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
Target reasonably believes are necessary for the conduct of the business of
Target and its Subsidiaries as currently conducted. A list of all such
intellectual property will be provided to Acquiror prior to the Closing Date.
Neither Target 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 Material Adverse Effect on Target. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will violate or breach the terms of or cause
any cancellation of any material license held by the Company or any of its
subsidiaries under, any patent, trademark, service mark, trade name, trade
secret or copyright.
SECTION 4.18. Severance Payments. None of Target nor 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 transactions
contemplated by this Agreement, nor will any of such persons be entitled to
severance payments or other benefits as a result of the Merger or the
transactions contemplated by this Agreement in the event of the subsequent
termination of their employment.
SECTION 4.19. Title to Properties. Target or its Subsidiaries, individually
or together, have good and marketable title to all of the properties reflected
in Target's consolidated balance sheet as of September 30, 1998 (the
"Consolidated Balance Sheet"), other than any properties reflected in Target's
Consolidated Balance Sheet that (i) have been sold or otherwise disposed of
since the date of Target's Consolidated Balance Sheet in the ordinary course of
business consistent with past practice or (ii) are not, individually or in the
aggregate, material to Target, free and clear of security interests or liens,
other than liens the existence of which is reflected in Target's Consolidated
Financial Statements, other than mechanics' and materialmen's liens and other
liens and encumbrances that would not significantly interfere with the current
use of such properties or that would not materially detract from their value.
Target or its Subsidiaries, individually or together, hold under valid lease
agreements all real and personal properties reflected in Target's Consolidated
Balance Sheet as being held under capitalized leases, and all real and personal
property that is subject to operating leases, and enjoy peaceful and undisturbed
possession of such properties under such leases, other than (i) any properties
as to which such leases have expired in accordance with their terms without any
liability of any party thereto since the date of Target's Consolidated Balance
Sheet and (ii) any properties that, individually or in the aggregate, are not
material to Target. Neither Target nor any of its Subsidiaries has
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received any written notice of any adverse claim to the title to any properties
owned by them or with respect to any lease under which any properties are held
by them, other than any claims that, individually or in the aggregate, would not
have a Material Adverse Effect on Target.
SECTION 4.20. Intercompany Balances and Agreements. All intercompany
agreements and balances between Target and Target Parent, including accounts
payable, loans, notes, receivables or any other amounts owed by Target or any of
its Subsidiaries to Target Parent or any of its affiliates are set forth on
Schedule 4.20.
SECTION 4.21. Year 2000 Compliance. The disclosures set forth in the Target
SEC Reports concerning potential computer hardware and software problems
associated with the Year 2000 are true, correct and complete in all material
respects.
SECTION 4.22. Voting Agreement and Irrevocable Proxy. Target Parent has the
corporate power and authority to enter into the Voting Agreement and Irrevocable
Proxy. The execution and delivery of the Voting Agreement and Irrevocable Proxy
have been duly and validly authorized by the Board of Directors of Target Parent
and no other corporate proceedings on the part of Target Parent are necessary to
authorize the Voting Agreement and Irrevocable Proxy. The Voting Agreement and
Irrevocable Proxy has been duly and validly executed by Target Parent and such
instrument constitutes a valid, binding and irrevocable obligation enforceable
against Target Parent in accordance with its terms. Target Parent is not subject
to or obligated under any charter, bylaw or contract provisions or any license,
franchise or permit or subject to any order or decree, which would be breached
or violated by executing and delivering the Voting Agreement and Irrevocable
Proxy. No authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the execution, delivery and
operation of the Voting Agreement and Irrevocable Proxy.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB
Acquiror and Sub represent and warrant to Target that:
SECTION 5.1. Organization, Qualification, Etc. Acquiror is a limited
liability company duly organized, validly existing and in good standing under
the laws of The Netherlands and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the state of Nevada and each has
the corporate power and authority to own its properties and assets and to carry
on its business as it is now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its properties or the conduct of its business requires such qualification,
except for jurisdictions in which such failure to be so qualified or to be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Acquiror. The copies of Acquiror's Articles of Association and
Bylaws and Sub's articles of incorporation and bylaws which have been delivered
to Target are complete and correct and in full force and effect on the date
hereof. Each of Acquiror's Significant Subsidiaries (as defined in Section 9.11)
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the power and authority to
own its properties and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, individually or
in the aggregate, have a Material Adverse Effect on Acquiror. All the
outstanding shares of capital stock of, or other ownership interests in,
Acquiror's Significant Subsidiaries are validly issued, fully paid and
non-assessable and are owned by Acquiror, directly or indirectly, free and clear
of all liens, claims, charges or encumbrances, except for restrictions contained
in credit agreements and similar instruments to which Acquiror is a party under
which no event of default has occurred or arisen. There are no existing options,
rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Significant Subsidiary of Acquiror.
SECTION 5.2. Capitalization. (a) The authorized capital of Acquiror
consists of (i) 100,000,000 Acquiror Common Shares, of which, as of December 31,
1998: (A) 29,298,419 are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and were not issued
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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 any agreement to
which Acquiror is a party or is bound; (B) no Acquiror Common Shares are held in
the treasury of Acquiror and (C) 1,785,000 Acquiror Common 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 Sub consists of 1,000 shares of
common stock, par value $.01 per share, of which, as of the date hereof, 1,000
shares are issued and outstanding. All of the issued and outstanding capital
stock of Sub is owned by Acquiror.
(b) The Acquiror Common Shares to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable.
(c) Neither Acquiror nor Sub is a party to, nor is aware of, any voting
agreement, voting trust or similar agreement or arrangement relating to any
class or series of its capital stock, or any agreement or arrangement providing
for registration rights with respect to any capital stock or other securities of
Acquiror.
(d) As of the date hereof, there were outstanding options to purchase an
aggregate of 1,708,210 Acquiror Common Shares under the 1995 Non-Employee
Director Stock Option Plan, as amended, of Acquiror, the 1995 Incentive Stock
Option Plan, as amended, of Acquiror, the ProTechnics 1992 Stock Option Plan and
those individual option agreements between Acquiror and certain members of the
management of ProTechnics Company and there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which
Acquiror or any Subsidiary of Acquiror is a party or by which Acquiror or any
Subsidiary of Acquiror is bound relating to the issued or unissued capital stock
of Acquiror or any Subsidiary of Acquiror, or securities convertible into or
exchangeable for such capital stock, or obligating Acquiror or any Subsidiary of
Acquiror to issue or sell any shares of capital stock, or securities convertible
into or exchangeable for such capital stock, of, or other equity interests in,
Acquiror or any Subsidiary of Acquiror.
(e) All outstanding shares of capital stock of Acquiror's Significant
Subsidiaries (i) are owned by Acquiror or a wholly owned Subsidiary of Acquiror,
free and clear of all liens, charges, encumbrances, adverse claims and options
of any nature, (ii) were duly authorized and validly issued and are fully paid
and nonassessable, and (iii) have not been issued in violation of any preemptive
rights.
SECTION 5.3. Corporate Authority Relative to this Agreement; No
Violation. Each of Acquiror and Sub has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Supervisory Directors of Acquiror and the Board of Directors of Sub
and, except for the approval of the stockholders of Acquiror of the Share
Issuance, no other corporate proceedings on the part of Acquiror or Sub are
necessary to authorize this Agreement and the transactions contemplated hereby.
The Board of Supervisory Directors of Acquiror has determined that the
transactions contemplated by this Agreement are in the best interest of Acquiror
and its stockholders and to recommend to such stockholders that they vote in
favor of the Share Issuance. This Agreement has been duly and validly executed
and delivered by Acquiror and Sub and, assuming this Agreement constitutes a
valid and binding Agreement of the other parties hereto, this Agreement
constitutes a valid and binding agreement of Acquiror and Sub, enforceable
against each of them in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Neither Acquiror nor Sub is subject to or obligated under any charter, by-law or
contract provision or any license, franchise or permit, or subject to any order
or decree, which would be breached or violated by its executing or, subject to
the approval by the stockholders of Acquiror of the Share Issuance, carrying out
this Agreement, except for any breaches or violations which would not,
individually or in the aggregate, have a Material Adverse Effect on Acquiror.
Other than in connection with or in compliance with the provisions of the laws
of The Netherlands, Nevada Law, the Securities Act, the Exchange Act, the HSR
Act and the securities or blue sky laws of the various states (collectively, the
"Acquiror Required Approvals"), no authorization, consent or approval of, or
filing with, any governmental body or authority is necessary for the
consummation by Acquiror of the transactions contemplated by this Agreement.
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SECTION 5.4. Reports and Financial Statements. Acquiror has previously
furnished to Target true and complete copies of:
(a) Acquiror's Annual Reports on Form 10-K filed with the SEC for each
of the years ended after the date on which the Acquiror Common Shares began
trading publicly on the NYSE (the "Acquiror IPO Date");
(b) Acquiror's Quarterly Reports on Form 10-Q filed with the SEC for
the quarters ended March 31, June 30 and September 30, 1998;
(c) each definitive proxy statement filed by Acquiror with the SEC
since the Acquiror IPO Date;
(d) each final prospectus filed by Acquiror with the SEC since the
Acquiror IPO Date; and
(e) all Current Reports on Form 8-K filed by Acquiror with the SEC
since December 31, 1997.
Acquiror has timely filed all reports, registration statements and other
filings, together with any amendments required to be made with respect thereto,
that it has been required to file with the SEC under the Securities Act and the
Exchange Act. All reports, registration statements and other filings (including
all notes, exhibits and schedules thereto and documents incorporated by
reference therein) filed by Acquiror with the SEC since the Acquiror IPO Date
through the date of this Agreement, together with any amendments thereto, are
collectively referred to as the "Acquiror SEC Reports." As of the respective
dates of their filing with the SEC, the Acquiror SEC Reports complied in all
material respects with the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Each of the consolidated financial
statements (including any related notes or schedules) included in the Acquiror
SEC Reports was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as may be noted
therein or in the notes or schedules thereto) and complied with the rules and
regulations of the SEC. Such consolidated financial statements fairly present
the consolidated financial position of Acquiror and its Subsidiaries as of the
dates thereof and the results of operations, cash flows and changes in
shareholders' equity for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end audit adjustments on
a basis consistent with past periods).
SECTION 5.5. No Undisclosed Liabilities. Neither Acquiror nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, except (a) liabilities or obligations
reflected in any of the Acquiror SEC Reports and (b) liabilities or obligations
which would not have, or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Acquiror.
SECTION 5.6. No Violation of Law. The businesses of Acquiror and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 5.6 with respect to
Environmental Laws) except (a) as described in any of the Acquiror SEC Reports
and (b) for violations or possible violations which would not have, or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Acquiror.
SECTION 5.7. Absence of Certain Changes or Events. Other than as disclosed
in the Acquiror SEC Reports, since September 30, 1998 the businesses of Acquiror
and its Subsidiaries have been conducted in all material respects in the
ordinary course and there has not been any event, occurrence, development or
state of circumstances or facts that has had, or would have or could not
reasonably be expected to have, a Material Adverse Effect on Acquiror.
SECTION 5.8. Proxy Statement; Information Statement; Registration
Statement; Other Information. None of the information with respect to Acquiror
or its Significant Subsidiaries to be included in the Proxy Statement to be
prepared and distributed in connection with the Acquiror Meeting (the "Proxy
Statement"), the Information Statement or the Registration Statement will, in
the case of the Proxy Statement or the
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Information Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or the Information Statement or any
amendments or supplements thereto, or, in the case of the Registration
Statement, at the time it becomes effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Acquiror with respect to information supplied in
writing by Target or any affiliate of Target specifically for inclusion in the
Proxy Statement or the Information Statement. The Proxy Statement will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 5.9. Lack of Ownership of Target Common Stock. Neither Acquiror nor
any of its Subsidiaries owns any shares of Target Common Stock or other
securities convertible into shares of Target Common Stock.
SECTION 5.10. Certain Business Practices. Except as disclosed in the
Acquiror SEC Reports, neither Acquiror nor any of its Significant Subsidiaries
nor any director, officer, employee or agent of Acquiror or any of its
Significant Subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful payments relating to political activity,
(ii) made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the FCPA, (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 SSA, or (iv) made any other unlawful payment.
SECTION 5.11. Opinion of Financial Advisor. The Board of Directors of
Acquiror has received the opinion of Dain, Rauscher, Wessels, dated the date of
this Agreement, a copy of which will be provided to Target prior to the Closing
Date, to the effect that, as of the date of this Agreement, the Merger
Consideration is fair to Acquiror from a financial point of view.
SECTION 5.12. Required Vote of Acquiror Shareholders. The affirmative vote
or consent of that number of Acquiror Common Shares that constitutes a majority
of the votes cast at the Acquiror Meeting is required by the NYSE to approve the
Share Issuance; provided that, the vote of over fifty percent (50%) of the
outstanding Acquiror Common Shares have been cast at such meeting. No other vote
of the shareholders of Acquiror is required by law or the Articles of
Association of Acquiror or otherwise in order for Acquiror to consummate the
Merger and the transactions contemplated hereby.
SECTION 5.13. Year 2000 Compliance. The disclosures set forth in the
Acquiror SEC Reports concerning potential computer hardware and software
problems associated with the Year 2000 are true, correct and complete in all
material respects.
SECTION 5.14. Tax Matters. (a) None of Acquiror nor any of its Subsidiaries
knows of any fact or has taken any action that could reasonably be expected to
prevent the issuance of the Acquiror Common Shares in the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code.
(b) All federal, state, local and foreign Tax Returns required to be filed
by or on behalf of Acquiror and each of its Significant Subsidiaries have been
timely filed, and all such Tax Returns filed are complete and accurate except to
the extent any failure to file or any inaccuracies in such filed Tax Returns
would not, individually or in the aggregate, have a Material Adverse Effect on
Acquiror. All Taxes due and owing by Acquiror or any Subsidiary of Acquiror have
been paid, or adequately reserved for, except to the extent any failure to pay
or reserve would not, individually or in the aggregate, have a Material Adverse
Effect on Acquiror. There is no audit examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by Acquiror or any Subsidiary of Acquiror which would,
individually or in the aggregate, have a Material Adverse Effect on Acquiror.
(c) Acquiror, or if applicable, any qualified subsidiary (as defined in
Treas. Reg. Section 1.367(a)-3(c)(5)(vii)) or any qualified partnership (as
defined in Treas Reg. Section 1.367(a)-3(c)(5)(viii) has been engaged in an
active trade or business outside the United States (as defined in Treas. Reg.
Section 1.367(a)-2T(b)(2) and (3)) for the entire 36-month period immediately
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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 Target as determined
pursuant to Treas. Reg. Section 1.367-3(c)(3)(viii).
(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 Target or that are shareholders of Target
who own at least five percent (5%) of either the total voting power or total
value of Target 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 Target.
SECTION 5.15. Environmental Laws and Regulations. Except in all cases as,
in the aggregate, have not had, or would not reasonably be expected to have, a
Material Adverse Effect on Acquiror, Acquiror and each of its Significant
Subsidiaries, (i) have obtained all applicable permits, licenses and other
authorizations which are required under foreign, federal, state or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by Acquiror or its Subsidiaries (or their respective agents); (ii) are in
compliance with all terms and conditions of such required permits, licenses and
authorizations, and also are in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirement, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; (iii) as of the date hereof, are not aware
of nor have received written notice of any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with or which would give rise to
any common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, based on or resulting from Acquiror's or any of its
Subsidiaries' (or any of their respective agents') manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling or the
emission, discharge or release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable requirements of foreign, federal, state or
local laws, rules or regulations to register any products or materials required
to be registered by the Company or its Significant Subsidiaries (or any of their
respective agents) thereunder.
SECTION 5.16 Employee Benefits. Except as otherwise set forth on Schedule
5.16 or as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Acquiror or as reported to the
authorities pursuant to voluntary compliance resolution and reporting
procedures:
(a) Acquiror and its Significant Subsidiaries have substantially
performed all obligations, whether arising by operation of law or by
contract, required to be performed by them in connection with each of the
employee benefit plans which is sponsored, maintained or contributed to by
Acquiror or any of its Significant Subsidiaries for the benefit of the
employees of Acquiror or any of its Significant subsidiaries, each of which
is listed on Schedule 5.16, (individually, an "Acquiror Benefit Plan," and
collectively, the "Acquiror Benefit Plans"), and, to the knowledge of the
officers and directors of Acquiror, there have been no defaults or
violations by any other party to the Acquiror Benefit Plans;
(b) Each Acquiror Benefit Plan has been administered and operated in
substantial compliance with its governing documents and applicable law,
including, where applicable, ERISA and the Code;
(c) Each Acquiror 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
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made until a date after the Closing Date, (ii) has received a favorable
determination letter from the Internal Revenue Service 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 are no actions, suits, or claims pending (other than routine
claims for benefits) or, to the knowledge of the officers and directors of
Acquiror, threatened against, or with respect to, any of the Acquiror
Benefit Plans or their assets;
(e) No act, omission or transaction has occurred which would result in
imposition on Acquiror or any of its Significant Subsidiaries of (i) breach
of fiduciary duty liability damages under Section 409 of ERISA, (ii) a
civil penalty assessed pursuant to subsections (c), (i) or (l) of Section
502 of ERISA, or (iii) a tax imposed pursuant to Chapter 43 of Subtitle D
of the Code;
(f) There is no matter pending (other than routine qualification
determination filings) with respect to any of the Acquiror Benefit Plans
before any governmental authority; and
(g) With respect to any employee benefit plan, within the meaning of
Section 3(3) of ERISA, which is not an Acquiror Benefit Plan but which is
sponsored, maintained, or contributed to, or has been sponsored,
maintained, or contributed to within six years prior to the date of this
Agreement, by any corporation, trade, business, or entity under common
control with Acquiror, within the meaning of Section 414(b), (c), (m), or
(o) of the Code or Section 4001 of ERISA ("Acquiror Commonly Controlled
Entity"), (i) no withdrawal liability, within the meaning of Section 4201
of ERISA, has been incurred, which withdrawal liability has not been
satisfied, (ii) no liability to the Pension Benefit Guaranty Corporation
has been incurred by any Acquiror Commonly Controlled Entity, which
liability has not been satisfied, (iii) no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, and (iv) all contributions
(including installments) to such plan required by Section 302 of ERISA and
Section 412 of the Code have been timely made.
SECTION 5.17. Investigations; Litigation. Except as described in any of the
Acquiror SEC Reports and except as would not, individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect on Acquiror:
(a) no investigation or review by any governmental body or authority
with respect to Acquiror or any of its Subsidiaries is pending nor has any
governmental body or authority notified Acquiror in writing of an intention
to conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to the
knowledge of Acquiror's officers and directors, threatened) against or
affecting Acquiror or its Significant Subsidiaries, or any of their
respective properties at law or in equity, or before any federal, state,
local or foreign governmental body or authority.
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ARTICLE VI
COVENANTS AND AGREEMENTS
It is further agreed as follows:
SECTION 6.1. Conduct of Business by Target or Acquiror. During the period
from the date of this Agreement and continuing until the earlier of the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 8.1 (the "Termination Date"), and except as may
be agreed to by the other parties hereto in writing or as may be expressly
permitted pursuant to this Agreement:
(a) Target:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted;
(ii) shall use commercially reasonable efforts to preserve, and
shall cause each of its Subsidiaries to use commercially reasonable
efforts to preserve, intact its business organizations and goodwill,
keep available the services of its officers and employees as a group,
subject to changes in the ordinary course, and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with them;
(iii) shall confer at such times as Acquiror may reasonably request
with one or more representatives of Acquiror to report operational
matters and the status of ongoing operations and to follow such
directions with respect to operational matters as Acquiror may
reasonably request, subject to the authority of the Board of Directors
to manage the affairs of Target as required by applicable law;
(iv) shall notify Acquiror of any emergency or other change in the
normal course of its or its Subsidiaries' respective businesses or in
the operation of its or its Subsidiaries' respective properties and of
any complaints, investigations or hearings (or communications indicating
that the same may be contemplated) of any governmental body or authority
if such emergency, change, complaint, investigation or hearing would
have a Material Adverse Effect on Target;
(v) shall not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock;
(vi) shall not, and shall not permit any of its Subsidiaries to
enter into or amend any employment, severance or similar agreements or
arrangements with any of their respective directors or executive
officers, except as contemplated in Section 6.1(a)(xii) of this
Agreement;
(vii) shall not, and shall not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination (other than the Merger), or, other than in the
ordinary course of business and in any case subject to (iii) above, any
acquisition of any assets or securities, any disposition of any amount
of assets or securities or any release or relinquishment of any contract
rights;
(viii) shall not propose or adopt any amendments to its Articles of
Incorporation or Bylaws;
(ix) shall not, and shall not permit any of its Subsidiaries to,
issue any shares of their capital stock, or effect any stock split or
otherwise change its capitalization as it existed on September 30, 1998,
except as contemplated herein and except for the issuance of Target
Common Stock with respect to the exercise of options (A) outstanding on
September 30, 1998 under the Target Stock Option Plan in accordance with
the terms on the date thereof and (B) pursuant to that certain agreement
dated August 25, 1998 between Target and Petroleum Geo-Services (U.S.),
Inc.;
(x) shall not, and shall not permit any of its Subsidiaries to,
grant, confer or award (A) any options, warrants, conversion rights or
other rights, not existing on the date hereof, to acquire any shares of
its capital stock or (B) any other awards under the Target Stock Option
Plan excluding
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annual automatic grants to non-employee directors in connection with
Target's 1999 annual stockholders meeting;
(xi) shall not, and shall not permit any of its Subsidiaries to,
purchase or redeem any shares of its stock;
(xii) shall not, and shall not permit any of its Subsidiaries to
amend the terms of their respective employee benefit plans, programs or
arrangements or any severance or similar agreements or arrangements in
existence on the date hereof, or adopt any new employee benefit plans,
programs or arrangements or any severance or similar agreements or
arrangements except (A) as contemplated by this Section 6.1 or Section
6.5 or (B) for the assumption by Target of the obligations of Target
Parent pursuant to the Executive Retirement Agreement dated April 26,
1994 between Target Parent and Richard F. Miles (the "Miles Retirement
Agreement") and the release of the obligations of Target Parent
thereunder;
(xiii) shall not, and shall not permit any of its Subsidiaries to,
enter into any loan agreement, except as set forth in Section 6.20
hereof and except for any loan agreement related to the permanent
financing for the manufacturing facility being constructed by Target as
set forth on Schedule 6.1, the terms of which shall be subject to the
consent of the Acquiror, which consent shall not be unreasonably
withheld;
(xiv) shall not, and shall not permit any of its Subsidiaries to
make any Tax election or settle or compromise any Tax liability; and
(xv) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or
take any action which would make any representation or warranty in
Article IV hereof untrue or incorrect; and
(xvi) shall not, and shall not permit any of its Subsidiaries to,
settle, compromise or otherwise terminate any litigation, claim or other
settlement negotiation.
(b) Acquiror:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and cause each of its
Subsidiaries to use its reasonable best efforts, to preserve intact its
business organizations and goodwill in all material respects, keep
available the services of its officers and employees as a group, subject
to changes in the ordinary course, and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with them;
(iii) shall not propose or adopt any amendments to its Articles of
Association or by-laws;
(iv) shall not issue any shares of their capital stock, except upon
exercise of rights or options issued pursuant to existing employee
incentive or benefit plans, programs or arrangements and non-employee
director plans (including, without limitation, shares issued in
connection with stock grants or awards or the exercise of rights or
options granted in the ordinary course of business consistent with past
practice pursuant to such plans, programs or arrangements) or effect any
stock split or otherwise change its capitalization as it existed on
January 18, 1999 (except as contemplated herein);
(v) shall not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock;
(vi) shall not, and shall not permit any of its Significant
Subsidiaries to, grant, confer or award (A) any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock or (B) any other awards under
the Acquiror Stock Option
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Plans in each case under (A) and (B) for or at exercise or strike prices
less than the fair market value of the Acquiror Common Shares;
(vii) shall not, and shall not permit any of its Subsidiaries to,
purchase or redeem any shares of its stock;
(viii) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or
take any action which would make any representation or warranty in
Article V hereof untrue or incorrect;
(ix) shall not, and shall not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination (other than the Merger), or, other than in the
ordinary course of business, any acquisition of any assets or
securities, any disposition of any amount of assets or securities or any
release or relinquishment of any contract rights to the extent such
action would materially delay the Merger or the transactions
contemplated therein.
SECTION 6.2. Investigation. Each of Target and Acquiror shall afford to one
another and to one another's officers, employees, accountants, counsel and other
authorized representatives full and complete access during normal business
hours, throughout the period prior to the earlier of the Effective Time or the
date of termination of this Agreement, to its and its Subsidiaries' plants,
properties, contracts, commitments, books, and records (including but not
limited to tax returns) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities laws
and shall use their reasonable best efforts to cause their respective
representatives to furnish promptly to one another such additional financial and
operating data and other information as to its and its Subsidiaries' respective
businesses and properties as the other or its duly authorized representatives
may from time to time reasonably request. Acquiror shall also afford to Target
Parent such access.
SECTION 6.3. Cooperation. Target and Acquiror shall together, or pursuant
to an allocation of responsibility to be agreed upon between them:
(a) prepare and file with the SEC as soon as is reasonably practicable
the Proxy Statement, the Information Statement and a registration statement
on Form S-4 under the Securities Act with respect to the Acquiror Common
Shares issuable other than to Target Parent in the Merger (the
"Registration Statement"), and shall use their reasonable best efforts to
have the Proxy Statement and the Information Statement cleared by the SEC
under the Exchange Act and the Registration Statement declared effective by
the SEC under the Securities Act; provided, however, that no amendment or
supplement to the Proxy Statement or the Registration Statement will be
made by Target or Acquiror without the approval of the other party (which
approval shall not be unreasonably withheld or delayed). Target and
Acquiror each will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, the issuance of any stop
order, the suspension of the qualification of the Acquiror Common Shares
issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information;
(b) as promptly as practicable after the Registration Statement shall
have become effective, mail the Information Statement or the Proxy
Statement, as the case may be, to their respective stockholders;
(c) as soon as is reasonably practicable take all such action as may
be required under state blue sky or federal or state securities laws in
connection with the transactions contemplated by this Agreement;
(d) promptly prepare and file with the NYSE listing applications
covering the shares of Acquiror Common Shares issuable in the Merger or
upon exercise of Target stock options and use its reasonable best efforts
to obtain, prior to the Effective Time, approval for the listing of such
Common Stock, subject only to official notice of issuance;
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(e) cooperate with one another in order to lift any injunctions or
remove any other impediment to the consummation of the transactions
contemplated herein;
(f) cooperate with one another in obtaining opinions of Andrews &
Kurth L.L.P., counsel to Target, and Vinson & Elkins L.L.P., counsel to
Acquiror, dated as of the Effective Time, to the effect that the Merger
qualifies as a reorganization under the provisions of Section 368(a) of the
Code; and
(g) Target shall call and hold a meeting of its stockholders (the
"Target Meeting") as promptly as practicable for the purposes of obtaining
the approval of the Merger and this Agreement by the stockholders of Target
required under Nevada Law (the "Target Stockholder Approval") and Acquiror
shall call and hold a meeting of its stockholders (the "Acquiror Meeting")
as promptly as practicable for the purpose of obtaining the approval of the
Share Issuance by the stockholders of Acquiror as required by the rules of
the NYSE (the "Acquiror Stockholder Approval"). Target and Acquiror shall
use their best efforts to hold the Target Meeting and the Acquiror Meeting
on the same day and as soon as practicable after the date on which the
Registration Statement becomes effective.
SECTION 6.4. Affiliate Agreements. Target shall, prior to the Effective
Time, deliver to Acquiror a list (reasonably satisfactory to counsel for
Acquiror), setting forth the names and addresses of all persons who are, at the
time of the Target Meeting, in Target's reasonable judgment, "affiliates" of
Target for purposes of Rule 145 under the Securities Act. Target shall furnish
such information and documents as Acquiror may reasonably request for the
purpose of reviewing such list. Target shall use its reasonable best efforts to
cause each person who is identified as an "affiliate" in the list furnished
pursuant to this Section 6.4 to execute a written agreement on or prior to the
Effective Time, in substantially the form of Exhibit 6.4(a) hereto.
SECTION 6.5. Employee Stock Options, Incentive and Benefit Plans.
(a) At the Effective Time, automatically and without any action on the part
of the holder thereof, each option (a "Target Plan Option") to purchase shares
of Target Common Stock granted under the Target Stock Option Plan (whether or
not vested) which remains as of such time unexercised in whole or in part shall
be assumed by Acquiror and become an option (an "Assumed Option") to purchase
that number of Acquiror Common Shares obtained by multiplying the number of
shares of Target Common Stock issuable upon the exercise of such Target Plan
Option by the Option Exchange Ratio (as defined below) at an exercise price per
share equal to the per share exercise price of such Target Plan Option divided
by the Option Exchange Ratio. The Assumed Option (1) shall provide the optionee
with the same vesting and other rights which he had under the Target Plan Option
before such assumption and (2) shall not give the optionee additional vesting or
other rights which he did not have under the Target Plan Option before such
assumption; provided, however, that (x) each Assumed Option with respect to an
employee of Target or a Subsidiary of Target shall provide for the full vesting
of such Assumed Option upon the involuntary termination by the Acquiror of the
optionee's employment with the Acquiror and its affiliates for a reason other
than cause within the one-year period commencing on the Closing Date, (y)
following the Merger, each Assumed Option of a non-employee director of Target
or Target Parent shall continue to be exercisable for the remainder of its term,
without regard to (i) such person ceasing to be a director of Target or Target
Parent or (ii) Target ceasing to be a Subsidiary of Target Parent, and (z)
following the Merger, each Assumed Option of an employee of Target Parent or a
Subsidiary of Target Parent (other than Target or a Subsidiary of Target) shall
continue to be exercisable for the remainder of its term, subject to the current
provisions in the related Target Plan Option concerning retirement, disability,
death, or other termination of employment. For purposes of the preceding
sentence, the term "cause" shall mean that the optionee (i) has been convicted
of a misdemeanor involving moral turpitude or of a felony, (ii) has engaged in
gross negligence or willful misconduct that he knows or should know is injurious
to Acquiror or any of its affiliates, (iii) has willfully disregarded any
written corporate policies established by Acquiror, or (iv) has materially
breached any material provision of any written agreement between the optionee
and the Acquiror or any of its affiliates. For purposes of this Section 6.5,
"Option Exchange Ratio" shall mean the fraction obtained by dividing (a) the sum
of (1) $2.46 plus (2) 0.6788 multiplied by the closing price of an Acquiror
Common Share on the New York Stock Exchange as of the date of this Agreement by
(b) the closing price of an Acquiror Common Share on the New York Stock Exchange
as of the date of this Agreement.
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(b) As soon as practicable after the Effective Time, Acquiror shall (i)
deliver to the holders of the Target Plan Options appropriate agreements
evidencing Acquiror's assumption of such options and (ii) file a registration
statement on Form S-8 (or any successor or other appropriate forms) with respect
to the Acquiror Common Shares issuable in respect of the Assumed Options.
Acquiror shall use all reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Assumed Options remain
outstanding.
(c) At the Effective Time, Acquiror agrees to assume the Target Stock
Option Plan with such amendments thereto as may be required to reflect the
Merger and the terms and provisions of this Section 6.5, including, without
limitation, the substitution of Acquiror Common Shares for Target Common Stock
thereunder.
(d) The Board of Directors of Target (or a duly appointed committee thereof
responsible for the administration of the Target Stock Option Plan in accordance
with the terms of such plan) shall, prior to or as of the Effective Time, take
all necessary actions, pursuant to and in accordance with the terms of the
Target Stock Option Plan and the instruments evidencing the Target Plan Options,
to provide (1) for the conversion of the Target Plan Options into the Assumed
Options in accordance with paragraph (a) of this Section 6.5 and (2) that no
consent of the holders of the Target Plan Options is required in connection with
such conversion.
(e) To the extent permitted by applicable law, Acquiror shall cause
employees of Target and its Subsidiaries to receive credit for purposes of
eligibility to participate, vesting, and eligibility to receive benefits (but
not benefit accrual) under any employee benefit plan, program or arrangement
established or maintained by the Acquiror or the Surviving Corporation for
service accrued or deemed accrued prior to the Effective Time with Target or any
of its Subsidiaries, as the case may be; provided, however, that such crediting
of service shall not operate to duplicate any benefit or the funding of any such
benefit.
SECTION 6.6. Filings; Other Action. Subject to the terms and conditions
herein provided, Target, Target Parent and Acquiror shall (i) promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act, (ii) use reasonable efforts to cooperate with one another in
(A) determining whether any filings are required to be made with, or consents,
permits, authorizations or approvals are required to be obtained from, any third
party, the United States government, the government of The Netherlands or any
agencies, departments or instrumentalities thereof or other governmental or
regulatory bodies or authorities of federal, state, local and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby and (B)
timely making all such filings and timely seeking all such consents, permits,
authorizations or approvals, and (iii) use reasonable efforts to take, or cause
to be taken, all other actions and do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective the transactions
contemplated hereby, including, without limitation, taking all such further
action as reasonably may be necessary to resolve such objections, if any, as the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
state antitrust enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other person may assert under relevant
antitrust or competition laws with respect to the transactions contemplated
hereby. In addition, Target Parent shall take full responsibility for all
applicable filings of Target under any federal or state securities laws and
regulations and any federal, state or local tax statutes or regulations
applicable to Target, including the filing of Target's Form 10-K for the year
ended December 31, 1998, if required, and payment of any (i) foreign, federal
and state income taxes applicable to periods ending on or prior to December 31,
1998, and (ii) other Taxes, excluding income taxes, that exceed the aggregate
amount of tax accruals, excluding income taxes, applicable to periods ending on
or prior to December 31, 1998.
SECTION 6.7. Further Assurances. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers of Target and Acquiror shall take all such
necessary action.
SECTION 6.8. Anti-takeover Statute. If any "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated
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hereby, each of Target and Acquiror and the members of their respective Boards
of Directors shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
SECTION 6.9. No Solicitation. From and after the date of this Agreement,
none of Target, Target Parent or any Subsidiary of Target shall, directly or
indirectly, through any officer, director, employee, representative or agent of
Target, Target Parent or any of the Subsidiaries of Target, (i) solicit or
knowingly encourage, including by way of furnishing information, or take any
other action to knowingly facilitate the initiation of any inquiries or
proposals regarding (A) any merger, combination, tender offer, share exchange,
sale of shares of capital stock or similar business combination transactions
involving Target or its Subsidiaries, or the acquisition, directly or
indirectly, of a material interest in any voting securities of Target or its
Subsidiaries or (B) any sale or other disposition, directly or indirectly, of 5%
or more of the assets of Target and its Subsidiaries, taken as a whole (any of
the transactions specified in clauses (A) or (B) being referred to herein as a
"Target Acquisition Transaction"), (ii) negotiate or otherwise engage in
discussions with any person (other than Acquiror, Sub or their directors,
officers, employees, agents and representatives) with respect to any Target
Acquisition Transaction, (iii) enter into any agreement, arrangement or
understanding requiring it to terminate or fail to consummate the Merger or any
other transactions contemplated by this Agreement; (iv) agree to endorse or
endorse any Target Acquisition Transaction; or (v) withdraw or otherwise revoke
its recommendation of the Merger to its stockholders.
SECTION 6.10. Public Announcements. Except as may be required by applicable
law, no party hereto shall make any public announcements or otherwise
communicate with any news media or any other party, with respect to this
Agreement or any of the transactions contemplated hereby without prior
consultation with the other parties as to the timing and contents of any such
announcement or communications; provided, however, that nothing contained herein
shall prevent any party from (i) promptly making all filings with governmental
authorities or disclosures by the stock exchange on which such party's capital
stock is listed, as may, in its judgment, be required or advisable in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or (ii) disclosing the terms of this Agreement
to such party's legal counsel, financial advisors or accountants in furtherance
of the transactions contemplated by this Agreement.
SECTION 6.11. Indemnification.
(a) Target Parent's Indemnity. Target Parent hereby agrees to indemnify,
defend and hold Acquiror (and if the transactions contemplated hereby are
consummated, Target), harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, attorneys' fees
and expenses (collectively, "Damages"), asserted against or incurred by Acquiror
(and if the transactions contemplated hereby are consummated, Target) by reason
of or resulting from a breach of any representation, warranty or covenant of
Target or Target Parent contained herein or in any agreement executed by Target
Parent which is required to be executed pursuant to, or contemplated by this
Agreement.
(b) Conditions of Indemnification. (i) The obligations and liabilities of
Target Parent (in this Section 6.11 referred to as the "indemnifying party") to
any other party (in this Section 6.11 referred to as the "party to be
indemnified") under Section 6.11(a) with respect to Damages resulting from the
assertion of liability or other claims by third parties shall be subject to the
following terms and conditions:
(A) With reasonable promptness after receipt of notice of any claim by
a third party, the party to be indemnified shall give the indemnifying
party written notice thereof together with a copy of such claim, process or
other legal pleading, and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing and at
its own expense; provided, however, that the party to be indemnified may
participate in the defense with counsel of its own choice and at its own
expense. If the indemnifying party undertakes such defense, the indemnified
party shall cooperate with the indemnifying party in such defense and make
available to the indemnifying party, at such party's expense, all
witnesses, pertinent records, materials and information in its possession
or under its control relating thereto as is reasonably requested by the
indemnifying party.
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(B) If the indemnifying party does not elect to defend against such
claim, the party to be indemnified will (upon further notice to the
indemnifying party) have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of the
indemnifying party and at the indemnifying party's expense, subject to the
right of the indemnifying party, to assume the defense of such claims at
any time prior to settlement, compromise or final determination thereof.
(C) Anything in this Section 6.11 to the contrary notwithstanding, the
indemnifying party shall not settle any claim without the consent of the
party to be indemnified unless such settlement involves only the payment of
money and the claimant provides to the party to be indemnified a release
from all liability in respect of such claim. If the settlement of the claim
involves more than the payment of money, the indemnifying party shall not
settle the claim without the prior consent of the party to be indemnified,
which consent shall not be unreasonably withheld.
(ii) In the event that the party to be indemnified asserts the existence of
Damages (but excluding Damages resulting from the assertion of liability or
other claims by third parties), it shall give written notice to the indemnifying
party. Such written notice shall state that it is being given pursuant to this
Section 6.11, specify the nature and amount of the Damages asserted and indicate
the date on which such assertion shall be deemed accepted and the amount of the
Damages deemed valid Damages (such date to be established in accordance with the
next sentence). If the indemnifying party, within sixty days after the mailing
of notice by the party to be indemnified shall not given written notice to the
party to be indemnified announcing its intention to contest such assertion of
the party to be indemnified, such assertion shall be deemed accepted and the
amount of Damages shall be deemed valid Damages. In the event, however, that the
indemnifying party contests the assertion of Damages by giving such written
notice to the party to be indemnified within said period, then if the parties
hereto, acting in good faith, cannot reach agreement with respect to such
Damages within thirty days after such notice, the contested assertion of Damages
shall be resolved by a court having jurisdiction in the matter.
(c) Limitation on Remedy for Breach of Representations and
Warranties. Notwithstanding the foregoing, Acquiror's right to obtain
indemnification from Target Parent shall be subject to the following provisions:
(i) with respect to the representations made in Sections 4.4, 4.5,
4.6, 4.9, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, and 4.21,
Target Parent shall be obligated to indemnify Acquiror for any damages
resulting from a breach of any such representation or warranty only to the
extent that the circumstances, events, actions or omissions that caused the
breach occurred or arose prior to the Target IPO Date; and
(ii) Notwithstanding any other provision hereof, (A) Target Parent
shall not have any liability under Section 6.11 for any such breaches
unless the aggregate liability for all breaches exceeds $1,000,000 and then
only for such liability in excess of $1,000,000, and (B) the aggregate
liability of Target Parent for all such breaches shall not exceed
$20,000,000.
SECTION 6.12. Indemnification of Directors and Officers. (a) Acquiror and
the Surviving Corporation agree that the indemnification obligations set forth
in the Articles of Incorporation and Bylaws of Target, 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 Target or its Subsidiaries.
(b) For four years from the Effective Time, Acquiror shall use its best
efforts to provide to the persons who serve as directors and officers of Target
as of the date hereof similar or comparable director and officer liability
insurance protection as that provided by Target to such individuals as of the
date hereof. Acquiror shall be entitled to seek a tail policy or other
comparable coverage to satisfy such obligation.
SECTION 6.13. Additional Reports. Target and Acquiror shall each furnish to
the other copies of any reports of the type referred to in Sections 4.4 and 5.4
which it files with the SEC on or after the date hereof, and Acquiror shall
furnish to Target Parent copies of any such reports filed by Acquiror. Target
and Acquiror, as the case may be, represents and warrants that as of the
respective dates thereof, such reports will not
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contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement therein, in
light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present the financial
position of Target and its consolidated Subsidiaries or Acquiror and its
consolidated Subsidiaries, as the case may be, as of the dates thereof and the
results of operations and changes in financial position or other information
included therein for the periods or as of the date then ended (subject, where
appropriate, to normal year-end adjustments), in each case in accordance with
past practice and GAAP consistently applied during the periods involved (except
as otherwise disclosed in the notes thereto).
SECTION 6.14. Accounting Treatment. The parties acknowledge that, for
financial accounting purposes, the Merger shall be accounted for as a purchase
transaction occurring effective as of January 18, 1999. The parties acknowledge
that all economic benefits and rights of Target be transferred to the Surviving
Corporation as of the date hereof.
SECTION 6.15. Stockholder Agreement. Each of Target Parent and Acquiror
covenants and agrees to enter into a stockholders agreement dated as of the
Effective Time in the form attached hereto as Exhibit A.
SECTION 6.16. Covenant of Target Parent. Target Parent shall not take (or
cause to be taken) any action that would in any way terminate, impede,
frustrate, nullify or prevent the operation of the Voting Agreement and the
Irrevocable Proxy.
SECTION 6.17 Executive Retirement Agreement. Target and Target Parent
covenant to obtain an actuarial analysis of the obligations underlying the Miles
Retirement Agreement and Target Parent shall transfer to Acquiror cash or cash
equivalents equal to 45% of the actuarial value of such obligations as of the
Effective Time.
SECTION 6.18 Tax-Free Reorganization. (a) Acquiror shall not take (or cause
to be taken), any action, which under Section 367 of the Internal Revenue Code
of 1986, as amended (the "Code"), and the United States Treasury Regulations
issued thereunder, would result in the acceleration of the recognition of gain
for United States federal income tax purposes to a stockholder of Target with
respect to any Acquiror Common Shares received pursuant to the Merger; provided
however, in no event shall any obligation under this Section 6.18(a) extend
later than the end of the fifth (5th) taxable year following the taxable year in
which the Merger occurs.
(b) Acquiror shall provide Target Parent such information, as and when
requested by Target Parent, that is required to inform Target Parent of any
disposition of any property that would require Target Parent to recognize gain
under Section 367 of the Code and the Treasury Regulations issued hereunder.
SECTION 6.19 Gain Recognition Agreement. Target Parent shall file a Gain
Recognition Agreement annually as required in accordance with Section 1.367(a)-8
of the United States Treasury Regulations by the due date, including extensions,
of Target Parent's Tax Return that includes the year of the Merger.
SECTION 6.20 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 Target with working capital as may be
reasonably required by Target in the ordinary course of its business in exchange
for notes payable by Target, together with interest at an annual rate of 8% and
with a maturity date of June 30, 1999; provided that, any such notes shall
become immediately due and payable to Acquiror in the event of a termination of
this Agreement.
SECTION 6.21 Update Disclosure; Breaches. From and after the date of this
Agreement until the Effective Time, each party hereto shall promptly notify the
other party hereto in writing of (i) the occurrence, or non-occurrence, of any
event that would be likely to cause any condition to the obligations of any
party to effect the Merger and the other transactions contemplated by this
Agreement not to be satisfied, or (ii) the failure of Target or Acquiror, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it pursuant to this Agreement which would be
likely to result in any condition to the obligations of any party to effect the
Merger and the other transactions contemplated by
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this Agreement not to be satisfied; provided, however, that the delivery of any
notice pursuant to this Section 6.21 shall not cure any breach of any
representations or warranty requiring disclosure of such matter prior to the
date of this Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.22 Target Parent's Withdrawal from Target Benefit Plans. On or
before the Closing Date, but effective no later than immediately prior to the
Effective Time, Target Parent shall cause (a) Target Parent, its Subsidiaries
(other than Target and its Subsidiaries), and all other adopting employers
(other than Target and its Subsidiaries) under each Target Benefit Plan to cease
to be sponsors, adopting employers, and/or otherwise participating in the Target
Benefit Plans and (b) all of the obligations and liabilities of the Target
Benefit Plans (other than the Target Stock Option Plan) to pay or provide
benefits to the employees, consultants and directors of all such withdrawing
entities to be transferred from the Target Benefit Plans and assumed by employee
benefit plans or arrangements established and sponsored by Target Parent or one
of its Subsidiaries (other than Target and its Subsidiaries).
SECTION 6.23. Intercompany Relationships. All intercompany obligations and
balances between Target and Target Parent, including accounts payable, loans,
notes, receivables or any other amounts owed by Target or any of its
Subsidiaries to Target Parent or any of its affiliates, including those set
forth on Schedule 4.20, shall be terminated, eliminated or otherwise contributed
to the capital of Target on or prior to the Closing Date. All intercompany
contracts and agreements set forth on Schedule 4.20 will be terminated, and will
have no further force and effect, on or before the Closing Date. No interest
shall accrue or be payable after the date hereof in connection with any such
agreements or balances.
SECTION 6.24. Payment of 1998 Taxes. Acquiror shall reimburse Target Parent
to the extent that the amount of income Taxes paid by Target for the taxable
year ended December 31, 1998 (including any amounts prior to the date of this
Agreement or hereafter) exceeds the final foreign, federal and state Tax
liability amount of Target for such period.
SECTION 6.25. Target Credit Facilities. Target Parent and Acquiror shall
cooperate and shall make all reasonable efforts prior to the Effective Time to
assist Target in continuing the credit facilities set forth on Schedule 5.2 in
effect immediately after the Effective Time, which reasonable efforts on the
part of Target Parent shall include, without limitation, initiating discussions
with the lenders thereunder for such purposes.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or governmental body or authority which prohibits
the consummation of the Merger substantially on the terms contemplated
hereby. In the event any order, decree or injunction shall have been
issued, each party shall use its reasonable efforts to remove any such
order, decree or injunction.
(b) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, to the extent not
prohibited by the SEC, all of the Acquiror Common Shares issuable in the
Merger shall have been registered under the Securities Act pursuant to the
Registration Statement and no stop order suspending such effectiveness
shall have been issued and remain in effect.
(c) The Acquiror Common Shares issuable in the Merger and pursuant to
the exercise of stock options under Target's Stock Option Plan shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
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(d) Any applicable waiting period under the HSR Act with respect to
the transactions contemplated by this Agreement shall have expired or been
terminated and any other Target Required Approvals and Acquiror Required
Approvals shall have been obtained, except where the failure to obtain such
other Target Required Approvals and Acquiror Required Approvals would not
have a Material Adverse Effect on Target or Acquiror, as the case may be.
(e) Each of Target and Acquiror shall have received an opinion of its
tax counsel, Andrews & Kurth L.L.P. and Vinson & Elkins L.L.P.,
respectively, in form and substance reasonably satisfactory to it, based on
customary representations from Target and Acquiror and dated as of the
Effective Time, to the effect that the issuance of the Acquiror Common
Shares in the Merger will qualify for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
none of Target, its stockholders, Acquiror and Sub shall recognize gain or
loss for federal income tax purposes as a result of the issuance of the
Acquiror Common Shares in the Merger (other than, with respect to any Cash
Consideration or cash paid in lieu of fractional Acquiror Common Shares).
SECTION 7.2. Conditions to Obligations of Target to Effect the Merger. The
obligation of Target to effect the Merger is further subject to the conditions
that (a) the representations and warranties of Acquiror contained herein shall
be true and correct as of the Effective Time with the same effect as though made
as of the Effective Time except (i) for changes specifically permitted by the
terms of this Agreement, (ii) that the accuracy of representations and
warranties that by their terms speak as of the date of this Agreement or some
other date will be determined as of such date and (iii) where any such failure
of the representations and warranties in the aggregate to be true and correct in
all respects would not have a Material Adverse Effect on Acquiror, (b) Acquiror
shall have performed in all material respects all obligations and complied with
all covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time, (c) Acquiror shall have delivered to Target a
certificate, dated the Effective Time and signed by its Chairman of the Board
and Chief Executive Officer or a Senior Vice President, certifying to the
effects set forth in clauses (a) and (b) above, and (d) Acquiror or Target shall
have assumed (pursuant to a written instrument in form reasonably satisfactory
to Target) all liability and obligations to Richard F. Miles pursuant to the
Miles Retirement Agreement, and Mr. Miles shall have consented in writing to
such assumption.
SECTION 7.3. Conditions to Obligations of Acquiror to Effect the
Merger. The obligation of Acquiror to effect the Merger is further subject to
the conditions that (a) the representations and warranties of Target contained
herein shall be true and correct as of the Effective Time with the same effect
as though made as of the Effective Time except (i) for changes specifically
permitted by the terms of this Agreement, (ii) that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such date and (iii) where
any such failure of the representations and warranties in the aggregate to be
true and correct in all respects would not have a Material Adverse Effect on
Target, (b) Target and Target Parent shall have performed in all material
respects all obligations and complied with all covenants required by this
Agreement to be performed or complied with by them prior to the Effective Time,
(c) stockholders representing at least a majority of the outstanding capital
stock of Acquiror shall have approved the Share Issuance, (d) Acquiror shall
have received all of the Affiliate Letters required to be delivered to it
pursuant to Section 6.4, (e) Target and Target Parent shall have terminated the
Registration Rights Agreement dated May 14, 1996 in writing, and (f) each of
Target and Target Parent shall have delivered to Acquiror a certificate, dated
the Effective Time and signed by its respective Chairman of the Board, Chief
Executive Officer and President or Senior Vice President, certifying to the
effects set forth in clauses (a) and (b) above.
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ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.1. Termination or Abandonment. Notwithstanding anything contained
in this Agreement to the contrary, this Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by the
respective stockholders of Target and Acquiror:
(a) by the mutual written consent of Target, Target Parent and
Acquiror;
(b) by either Target or Acquiror if the Effective Time shall not have
occurred on or before June 30, 1999; provided, that the party seeking to
terminate this Agreement pursuant to this clause 8.1(b) shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;
(c) by either Target or Acquiror if (i) a statute, rule, regulation or
executive order shall have been enacted, entered or promulgated prohibiting
the consummation of the Merger substantially on the terms contemplated
hereby or (ii) an order, decree, ruling or injunction shall have been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger substantially on the terms contemplated hereby
and such order, decree, ruling or injunction shall have become final and
non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause 8.1(c)(ii) shall have used its reasonable
best efforts to remove such injunction, order or decree;
(d) by Acquiror if the approval of the stockholders of Acquiror
contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote or consent;
(e) by Acquiror if a tender offer or exchange offer for 10% or more of
the outstanding shares of capital stock of Target is commenced prior to the
Target Meeting, and the Board of Directors of Target fails to recommend
against acceptance of such tender offer or exchange offer within the time
period presented by Rule 14e-2 by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange
offer by its stockholders); or
(f) by Target, if Acquiror shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in
Section 7.2(a) or (b), and (ii) is incapable of being cured by Acquiror or
is not cured within 30 days of notice of such breach or failure;
(g) by Acquiror, if Target shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in
Section 7.3(a) or (b), and (ii) is incapable of being cured by Target or is
not cured within 30 days of notice of such breach or failure.
Except as provided in Sections 8.2 and 9.2 of this Agreement or the
confidentiality obligations in Section 6.10, in the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void, there shall be no liability on the part of Acquiror, Sub, Target or Target
Parent or any of their respective officers or directors to the other and all
rights and obligations of any party hereto shall cease, except that nothing
herein shall relieve any party from liability for any misrepresentation or
breach of any covenant or agreement under this Agreement.
SECTION 8.2. Termination Fee. If this Agreement is terminated by Acquiror
pursuant to Section 8.1(b), (e) or (g) and at the time of such termination a
Takeover Proposal (as hereinafter defined) shall have been made by any person or
entity and prior to January 1, 2000, Target shall enter into any agreement with
such person or entity providing for the acquisition of Target (an "Acquisition
Agreement"), Target shall promptly pay a termination fee of $5.0 million payable
by wire transfer of same day funds to Acquiror concurrently with the earlier of
the entering into of such Acquisition Agreement or the consummation of such
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transaction. For purposes hereof, a "Takeover Proposal" means any inquiry,
proposal or offer, or any expression of interest by any third party relating to
Target's or Target Parent's willingness or ability to discuss a proposal or
offer, for a merger or other business combination involving, or any purchase of,
more than 10% of the assets or capital stock of Target. Target Parent shall pay
or cause to be paid such termination fee (instead of Target) if Target Parent
enters into an Acquisition Agreement to which Target is not a party. If the
Merger is terminated by Acquiror pursuant to Section 8.1(g), a Takeover Proposal
has not been made at the time and Target does not enter into any Acquisition
Agreement prior to January 1, 2000, then Target shall pay Acquiror a termination
fee of $3.0 million payable by wire transfer of same day funds. If this
Agreement is terminated by Target pursuant to Section 8.1(f), Acquiror shall pay
Target a termination fee of $3.0 million payable by wire transfer of same day
funds. The payment and receipt of any fees under this Section 8.2 shall not
preclude the availability of any other remedies under this Agreement, by law or
in equity.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Survival of Representations and Warranties. For purposes of
Section 6.11 hereof, the representations and warranties made by Target and
Target Parent pursuant hereto shall survive the Merger for twelve (12) months
after the Effective Time, and upon the termination of such 12-month period,
shall terminate and be of no further force or effect, except to the extent that
a claim notice relating to a specific matter is delivered in good faith in
accordance with the provisions of Section 6.11 prior to the expiration of the
12-month period. Notwithstanding the foregoing, the representations and
warranties set forth in Sections 4.7, 4.8, 4.10 and 4.14 shall survive the
Closing until the expiration of any applicable statute of limitations, including
extensions thereof.
SECTION 9.2. Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, except that (a)(i) the filing fees in connection with any HSR Act
filing and any SEC filings, (ii) the commissions and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with the sale of Excess Shares and (iii) the
expenses incurred in connection with the printing and mailing of the Joint Proxy
Statement, shall be shared equally by Target and Acquiror and (b) all transfer
taxes shall be paid by Target. Notwithstanding the foregoing, Acquiror agrees to
pay up to $300,000 in fees payable by Target to Morgan Keegan & Company, Inc.
solely in connection with the transactions contemplated hereby and Target Parent
shall be responsible for any fees, payments or liabilities in excess of such
amount.
SECTION 9.3. Counterparts; Effectiveness. This Agreement may be executed in
two or more consecutive counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered (by telecopy or otherwise) to the
other parties.
SECTION 9.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of Texas without regard to
the principles of conflicts of laws thereof, except that Nevada law shall apply
to the Merger.
SECTION 9.5. Notices. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective (a)
if given by telecopy, when such telecopy is transmitted
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to the telecopy number specified in this Section 9.5 and the appropriate
telecopy confirmation is received or (b) if given by any other means, when
delivered at the address specified in this Section 9.5:
To Target:
GeoScience Corporation
1700 Park Row
Houston, Texas 77084-4925
Telecopy: (713) 780-1445
Attention: Richard F. Miles
To Target Parent:
Tech-Sym Corporation
10500 Westoffice Drive, Suite 200
Houston, Texas 77042-5391
Telecopy: (713) 780-3524
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Andrews & Kurth L.L.P.
4200 Chase Tower
600 Travis Street, Suite 4200
Houston, Texas 77002
Telecopy: (713) 220-4593
Attention: Thomas P. Mason
To Acquiror:
Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and
General Counsel
c/o 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
SECTION 9.6. Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement, the
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Voting Agreement and the Irrevocable Proxy shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 9.7. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
SECTION 9.8. Enforcement of Agreement. The parties hereto agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement, the Voting
Agreement and the Irrevocable Proxy by them and that in addition to all other
remedies available to them, each of them shall be entitled to the fullest extent
permitted by law to an injunction restraining such breach, violation or default
or threatened breach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or other
security being required.
SECTION 9.9. Miscellaneous. This Agreement:
(a) along with the Confidentiality Agreement and the agreements
referred to in Section 6.1(a)(ix) and contained in the disclosure referred
to in Section 6.1(b)(viii) constitutes the entire agreement, and supersedes
all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter
hereof and thereof; and
(b) except for the provisions of Section 6.5 (other than Section
6.5(e)) and 6.11 hereof, is not intended to and shall not confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 9.10. Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
SECTION 9.11. Subsidiaries; Significant Subsidiaries;
Affiliates. References in this Agreement to "Subsidiaries" of Target or Acquiror
shall mean any corporation or other form of legal entity of which more than 50%
of the outstanding voting securities are on the date hereof directly or
indirectly owned by Target or Acquiror, as the case may be. References in this
Agreement to "Significant Subsidiaries" shall mean Subsidiaries (as defined
above) which constitute "significant subsidiaries" under Rule 405 promulgated by
the SEC under the Securities Act. References in this Agreement (except as
specifically otherwise defined) to "affiliates" shall mean, as to any person,
any other person which, directly or indirectly, controls, or is controlled by,
or is under common control with, such person. As used in this definition,
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management or policies of a Person,
whether through the ownership of securities or partnership of other ownership
interests, by contract or otherwise. References in the Agreement to "person"
shall mean an individual, a corporation, a partnership, an association, a trust
or any other entity or organization, including, without limitation, a
governmental body or authority.
SECTION 9.12. Finders or Brokers. Except for the engagement of Morgan
Keegan & Company, Inc. by Target pursuant to the engagement letter dated January
15, 1999 previously provided to Acquiror, neither Target nor any of its
Subsidiaries has employed any investment banker, broker, finder or intermediary
in connection with the transactions contemplated hereby who might be entitled to
any fee or any commission in connection with or upon consummation of the Merger
payable by Target or any of its Subsidiaries.
SECTION 9.13 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that no amendment may be
made which would reduce the amount or change the type of consideration into
which each share of Target Common Stock shall be converted pursuant to this
Agreement upon consumma-
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tion of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 9.14. Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (b) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by any other party
with any of the agreements or conditions contained herein; provided, however,
that after the Target Stockholder Approval is obtained, there may not be,
without further approval of such stockholders, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or changes the form of
the consideration to be delivered to the holders of Target Common Stock
hereunder other than as contemplated by this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
TECH-SYM CORPORATION
By: /s/ J. MICHAEL CAMP
------------------------------------
Name: J. Michael Camp
Title: President
GEOSCIENCE CORPORATION
By: /s/ RICHARD F. MILES
------------------------------------
Name: Richard F. Miles
Title: President
CORE LABORATORIES N.V.
By: Core Laboratories International
B.V.,
its sole Managing Director
By: /s/ JACOBUS SCHOUTEN
--------------------------------
Jacobus Schouten
Managing Director
Core Laboratories International
B.V.
SYNTRON INC.
By: /s/ JOHN D. DENSON
------------------------------------
Name: John D. Denson
Title: Vice President/Secretary
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[CORE LAB LOGO]
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
For more information, contact:
Richard L. Bergmark, 713-329-7403
Fax: 713-939-8295
CORE LABORATORIES PLANS MERGER WITH GEOSCIENCE
- ----------------------------------------------
HOUSTON (19 January, 1999) -- Core Laboratories announced that it has executed a
definitive merger agreement to purchase, through a combination of cash and Core
Lab (NYSE: "CLB") common stock, all of the outstanding shares of GeoScience
Corporation (NASDAQ: "GSCI"), approximately eighty percent of which is owned by
Tech-Sym Corporation. Under the terms of the merger agreement, Core will
exchange 0.6788 shares of CLB and $2.46 in cash for each GSCI share.
Collectively, Core will issue approximately 6.8 million shares and pay
approximately $25 million in cash for all outstanding GSCI shares. The offer
implies a $17.90 per share offer price based on the CLB closing price on 15
January, 1999, of $22.75. Core Lab also will assume the current outstanding
indebtedness of GeoScience of approximately $33 million. Therefore, the implied
total enterprise value of the transaction will equal approximately $200 million.
Houston-based GeoScience has approximately 500 employees with operations also in
the United Kingdom and Singapore. The company recorded over $94 million in 1997
revenues and has become the market share leader in providing marine seismic
data-acquisition systems. The GeoScience product line includes marine streamers,
ocean bottom cables and state-of-the-art radio telemetry systems. GeoScience is
currently developing new fiber optic, solid streamer, and downhole imaging
technologies to improve existing systems. After completion of the merger,
GeoScience will conduct all future business under its industry recognized
tradename "Syntron", which is synonymous with the highest levels of technology
and quality.
The combination of GeoScience and Core Laboratories further positions both
companies to participate in the rapidly developing reservoir characterization
and 4D multicomponent seismic markets. Advancements in GeoScience's seismic
recording technology, including solid streamers and deep ocean bottom cables,
combined with Core's reservoir description, specialized seismic data processing
and petroleum engineering technologies will be critical to successful efforts to
provide permanent reservoir monitoring services.
Currently, several prototype reservoir monitoring projects are being implemented
worldwide for the purposes of increasing the ultimate hydrocarbon recovery from
a field by 20 percent or more. Many of these projects are utilizing fixed
seismic arrays buried below weathered zones onshore, below the soft-sediment
interface offshore and placed in wellbores to
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<PAGE> 2
increase multicomponent seismic signal-to-noise ratios. Detailed seismic
attributes, derived utilizing specialized seismic data processing, are then
correlated to various petrophysical and phase behavior data sets to describe the
reservoir rocks and fluids of the reservoir system. As the field is produced,
operators can monitor the change, or lack of change, of these reservoir
description parameters. This information is then used to more fully exploit
areas of the reservoir system where hydrocarbons are not effectively being
produced. The development and implementation of these new technologies take on
added importance in low crude oil price environments.
"The proposed transaction with Core Laboratories allows the continued
technological progression of GeoScience while allowing Tech-Sym to further
concentrate on developing our telecommunications and defense-related
technologies," said J. Michael Camp, President and CEO of Tech-Sym. "The
divestment also will provide more flexibility for Tech-Sym to execute our
strategic plan to increase shareholder value." Mr. Camp will be nominated to the
Core Laboratories' Board of Directors at its next scheduled shareholder meeting.
The transaction, which will utilize purchase accounting, has received unanimous
approval from the boards of directors of Core, Tech-Sym and GeoScience and is
subject to the approval of the requisite shareholders. Closing is expected by
the end of April, 1999. Based on the most recent analysts' earnings projections
for GeoScience and Core, and projected moderate cost consolidation savings, the
merger should be accretive to Core Lab's 1999 earnings.
GeoScience President Richard F. Miles said, "Joining forces with Core gives us
immediate access to potential new markets and ensures our combined exposure to
the reservoir management market. We initially wanted to develop our own
reservoir description services in-house but Core brings us a leading,
differentiated, and unique industry combination."
"The GeoScience merger represents the continued execution of our business
strategy and will come as no surprise to our clients and the investors and
analysts that have closely followed our progress," said David M. Demshur,
President and CEO of Core. "All of the clients, employees and shareholders of
both companies will benefit from the combination of our technologies. Reservoir
characterization and permanent reservoir monitoring are tomorrow's markets, and
we will continue to position Core for the oilfield of year 2000 and beyond."
Core Laboratories N.V. (NYSE: CLB) is a leading provider of proprietary and
patented reservoir description, production enhancement, reservoir management and
reservoir monitoring services. The Company has over 70 offices in more than 50
countries and is located in every major oil-producing province in the world. The
Company's outlook is subject to various important cautionary factors as more
fully described in the Company's 1997 Form 10-K filed 31 March, 1998, and in
other securities filings.
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